Goldman Sachs 2024 Outlook: The Hard Part Is Over

Having seen the global economy outperform "even our optimistic expectations in 2023", Goldman Sachs expects "more disinflation is in store over the next year" but "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."

• Global: 2.6% GDP growth. "While monetary and fiscal policy will likely weigh on growth across the G10, the biggest drag is behind us...manufacturing activity should recover somewhat"
• US: 2.1% GDP growth. "we have more confidence that longer-run rates will ultimately settle higher than the Fed expected last cycle...A period of “higher for longer” yields may expose areas of vulnerability...although we do not expect these to threaten the overall economic outlook."
• Eurozone: 0.9% GDP growth. Despite a better 2024 growth profile, "the recent macro underperformance could signal larger scarring effects from the shock to energy supply, more exposure to the growth slowdown in China, or a more persistent drag from tighter financial conditions".
• Japan: 1.5% GDP growth. BoJ likely to start moving to exit YCC in the spring before exiting and raising rates in H2.
• China: 4.8% GDP growth. Near-term growth should benefit from further policy stimulus, but multi-year slowdown will likely continue.
• Rates: "challenge to higher returns is ... that the market is still pricing rate cuts that we think will not be delivered under our baseline forecasts"
• FX: "Without a clear challenger to the US growth story, the dollar is likely to remain strong."
• Note: Goldman's outlook was published Nov 8