• Saturday, March 02, 2024
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Goldman Sachs, JP Morgan, others express divergent views on 2024 global economic outlook

Goldman Sachs, JP Morgan (1)

Goldman Sachs, JP Morgan, BlackRock, UBS, and other reputable global investment banks have expressed divergent views about what to expect from the global economy in 2024. While some were optimistic of economic recovery in 2024, others exhibited either a pessimistic stance or a cautious yet optimistic view, considering the prevailing headwinds observed in 2023 and 2022.

Headwinds spoken about ranged from the US Fed, the European Central Bank, the Bank of England, and other major central banks regressive interest rate decisions to the waning negative impacts on global supply-value chain business that the ongoing Russia-Ukraine war has had on the global economy.

Additionally, factors such as rising food prices and overall inflation worldwide contributed to the challenges faced by the global economy.

Whichever factors these investment banks have taken into account to make their predictions for 2024, these predictions should be a guide on what to expect for various yield-generating financial assets. These assets encompass government bonds, stocks or equities, and real estate, offering insights into potential trends and outcomes.

What is Goldman Sachs forecast for 2024?

Goldman Sachs experts are upbeat about the 2024 global economy, foreseeing improved worldwide economic growth, boosted household incomes, enhanced manufacturing, and potential support from central banks if growth falters. However, their optimism doesn’t extend to the US, where they predict a minimal likelihood of a recession in the upcoming year.

They, however, advised the global investing public to invest in various assets for better returns due to higher interest rates.

As captured in their report titled “Macro Outlook 2024: The Hard Part is Over,” the global investment banking giant said, “We continue to see only limited recession risk and reaffirm our 15% US recession probability. We expect several tailwinds to global growth in 2024, including strong real household income growth, a smaller drag from monetary and fiscal tightening, a recovery in manufacturing activity, and an increased willingness of central banks to deliver insurance cuts if growth slows.

“Most major DM central banks are likely finished hiking, but under our baseline forecast for a strong global economy, rate cuts probably won’t arrive until 2024 H2. When rates ultimately do settle, we expect central banks to leave policy rates above their current estimates of long-run sustainable levels.

“We expect returns in rates, credit, equities, and commodities to exceed cash in 2024 under our baseline forecast. Each offers protection against a different tail risk, so a balanced asset mix should replace 2023’s cash focus, with a greater role for duration in portfolios.

“The transition to a higher interest rate environment has been bumpy, but investors now face the prospect of much better forward returns on fixed income assets.”

“Although we expect US real income growth to slow from the outsized 4 percent pace seen in 2023 to 2¾% in 2024, this should still be sufficient to support consumption and GDP growth of at least 2%. Meanwhile, both the Euro area and the UK should see a meaningful acceleration in real income growth—to around 2% by end-2024—as the Russian gas shock fades.”

Read also: Global economy needs Africa to prosper, says IMF

What is BlackRock’s forecast for 2024?

Blackrock, a global giant in the fields of investment, advisory, and risk management solutions with a presence in more than 36 countries, was cautiously optimistic about the global economy in 2024.

The advisory firm preferred to devote more attention to how long-term trends such as AI growth and overlooked medical innovations can offer investors better returns amidst market volatility.

According to analysts at Blackrock, investors may need higher returns for stock risks due to economic changes. However, Mexico and India should benefit the most from globalisation changes.

In its report released earlier this month, BlackRock said, “A more volatile macroeconomic regime, alongside relatively high rates, may mean investors need to demand greater compensation for taking on equity risk; they can meet this higher performance bar by getting precise about targeted opportunities.

“We focus our 2024 Thematic Outlook on: the growth of AI; medical innovations being overlooked given low current revenue; and countries—such as Mexico and India—that could benefit from the rewiring of globalisation.”

What is UBS’s forecast for 2024?

Another in line to make their forecast is global investment banking giant UBS, which recently acquired Credit Suisse. UBS posited that in a slower economy, good-quality companies with strong finances tend to perform well. They favour the US tech sector for its quality and growth potential, especially in AI.

Apparently, UBS expects bonds to perform better in 2024, supporting stocks if economic growth doesn’t sharply decline.

In general, they are overly optimistic that investors should expect positive returns from a balanced portfolio in 2024.

In their report, they said, “First, while we expect slower economic growth to weigh on earnings growth among cyclical companies, we think quality companies—those with a high return on invested capital, strong balance sheets, and reliable income streams—will still grow earnings despite a tougher operating backdrop.

“History shows that quality stocks tend to outperform in environments of slowing activity when the economy is in the “late cycle.

“Overall, we believe 2024 should be a good year for investors who put their money to work in balanced portfolios, with positive prospective returns across stocks, bonds, and alternative investments.”

Read also: Drug-resistant superbugs threaten global economy, Nigeria among worst hit

What is JP Morgan’s forecast for 2024?

JP Morgan was less direct about what to expect in 2024 but issued a statement saying, “Elections may seem like a big deal in the moment, but historically have had little bearing on what path the economy and market ultimately take.”

What is Morgan Stanley’s forecast for 2024?

Morgan Stanley is another global financial services firm to offer its insight on what to expect in 2024. According to the financial services firm in 2024, government bond markets might be puzzling, or, as it said, “the land of confusion,” due to central bank actions in 2023 and 2022. While rates are expected to fall, balance sheets will also decrease.

Morgan Stanley added that recent rate hikes by major central banks have made policy rates tighter than in decades, despite their balance sheets remaining larger than pre-pandemic levels.

The financial services firm, in their report published this month, said, “So we’re calling our 2024 outlook for government bond markets the land of confusion. And it’s because bond markets were whipped around so much by central banks in 2023 and 2022. In the end, what the central banks gave in terms of accommodative monetary policy in 2020 and 2021, they more than took away in 2022 and this past year.

“At least when it came to interest rate-related monetary policies. 2024, of course, is going to be a pretty confusing year for investors because, as you’ve heard, our economists do think that rates are going to be coming down, but so too will balance sheets.”

What is Fidelity international forecast for 2024?

Fidelity International projections for 2024 were also captured in their report titled “The Economy in 2024: Something Will Give,” and in it, the global investment company said that in 2024 they expect the US economy to start declining due to reduced savings, less government support, and tighter credit conditions for borrowings.

They also believe that interest rates in the US and other developed countries will soon reach their highest point. This might slow down economic growth.

They said that “if US and other developed world interest rates have not peaked already, then they will do so soon. And against this backdrop, growth will stall.”

Read also: How America is reshaping the global economy

What is Goldman Sachs Asset Management forecast for 2024?

According to Goldman Sachs Asset Management, an investment management solutions company that is an affiliate of Goldman Sachs, investors are expected to face greater uncertainties in 2024 due to changing geopolitical challenges in 2023.

They advised that what is needed in 2024 is an array of dynamic strategies, diverse investments, and pretty good risk management strategies.

This combination will be a crucial ingredient for success amid rising market volatility, changing costs, and global instability.

Long-term trends like sustainability and AI will drive new opportunities.

Accordingly, 2024 promises more returns across asset classes, sectors, and regions, with complex choices and tradeoffs.

“We believe investors will need dynamic solutions to successfully navigate change in 2024. Active strategies for traditional and alternative investments that can help deliver alpha will be important, along with diversification and risk management.

“Long-term disruptive trends in sustainability and technological innovation, including artificial intelligence (AI), should lead to exciting new realities,” said Michael Brandmeyer, global co-head and co-chief investment officer of the External Investing Group (XIG) at Goldman Sachs Asset Management.

Read also: JP Morgan extends investment banking dominance despite $13bn revenue dip

What is BNP Paribas Asset Management forecast for 2024?

BNP Paribas, in their forecast, said that “in 2024, the factors boosting the economy in 2023 will diminish. US spending will decrease, European economies may face recession, China’s property crisis continues, and tighter finances could affect growth and business earnings. Governments may reduce support, risking slower growth than anticipated.”

What is Lazard’s forecast for 2024?

Lazard, another global financial and investment advisory firm, said that in 2024, inflation rates are expected to keep decreasing. The Eurozone faced stagflation in 2023, but things should get better in 2024 as inflation eases.

What is Barclays macro outlook for 2024?

Contrary to the upbeat outlook from various global financial firms, Barclays, a major British bank operating across 30+ nations, is less optimistic.

The bank foresees challenging economic conditions in 2024 due to global tensions and divergent regional outcomes. Investors are cautioned to brace for market volatility and uncertainties.

In its report titled “Outlook 2024,” Barclays said, “Strong economic headwinds will likely persist in 2024, amid an increasingly fraught geopolitical backdrop and diverging fortunes in the key regions.

“Investors should brace both for uncertainty and for the market volatility that often accompanies it.

“Despite the obvious challenges, our report offers context on why it’s not all doom-and-gloom for investors. In addition to our macro and asset class analysis, you’ll find fresh insights on the fast-evolving sustainability space, as well as our latest perspectives from the field of behavioural finance.”

What is Vanguard’s forecast for 2024?

Vanguard Group, a US investment firm established in 1975 with a global asset value exceeding $7 trillion, anticipates a minor recession in the US for 2024, attributing it to elevated central bank rates.

The firm suggests that this move might alleviate inflation, enabling the Federal Reserve to potentially reduce rates later in the year.

However, they foresee these rates eventually stabilising at levels higher than the historical levels for the US economy.

It said, “The effect of higher central-bank interest rate targets is likely to send the U.S. economy into a mild recession in 2024 but also should help to further curb inflation and, in the second half of the year, allow the Federal Reserve to cut its policy rate. At the end of their cutting cycles, however, the rate targets of the Fed and other developed-market central banks are likely to be higher than we’ve grown accustomed to in recent years.”