The global economy is expected to slow in 2024, but remain resilient. Growth will be driven by a number of factors.
Easing monetary policy: Central banks are expected to begin cutting rates in the second half of 2024, which will boost economic activity.
Strong consumer spending: Consumers are expected to continue spending, despite higher inflation and interest rates.
Continued wage growth: Wages are expected to continue to grow, which will support consumer spending.
Some risks to the economic outlook.
Geopolitical tensions: The ongoing war in Ukraine and other geopolitical tensions could disrupt supply chains and raise energy prices.
China's economy: China's economy is slowing down, which could have ripple effects on the rest of the world.
Financial instability: There is a risk of financial instability, particularly in emerging markets.
Asset Market Outlook
Equity markets are expected to be volatile in 2024, but ultimately post positive returns. Valuations are already elevated, so there is limited runway for increased valuations. However, earnings growth is expected to remain robust, which will support stock prices.
Fixed income markets are expected to be a good place to find income in 2024. Yields on bonds are at their highest levels in years, making them attractive for income investors.
Commodities are expected to be a mixed bag in 2024. Oil prices are expected to be relatively flat, and gold appears overvalued. Copper may be an exception, due to stronger-than-expected demand from China.
Investment for 2024:
Overweight high-quality fixed income. Yields on bonds have reached their highest levels in years, making them attractive for income investors.
Equal weight U.S. equities. U.S. equities are expected to outperform European and emerging-market equities in 2024.
Underweight emerging-market equities, except Mexico and India. China's lackluster growth is a major concern, but Mexico and India are expected to see stronger growth.
Investors should be aware that this is just a general outlook, and there is no guarantee that these predictions will come to pass. Investors should carefully consider their own risk tolerance and investment goals when making any decisions about their portfolios.