ING 2024 Outlook: Not The Year Of A Strong Economic Rebound

ING writes that in 2024, "the global economy will do well to recall the wise words of Mary Poppins: a spoonful of sugar helps the medicine go down. So get your sugar cubes ready: 2024 will not be the year the global economy will see a strong rebound. In fact, it currently looks like we'll see a combination of this year’s trends in China and Europe and a clear landing, be it soft or hard, for the US economy."

• US: 0.5% GDP growth - "base case: modest recession, a sharp fall in inflation and Fed rate cuts from the spring."
• Eurozone: 0.3% GDP growth - "higher rates prompt a mild technical recession over the winter... the overall trend of disinflation should remain intact throughout the next year...with wage growth likely having peaked"
• Japan: 1.2% GDP growth - "solid wage growth to support the BoJ’s long-awaited sustainable 2% inflation target and tight labour conditions to support private consumption.BoJ’s first step toward normalisation will be scrapping its yield curve control program, which is likely to happen in 1Q... soon after the BoJ confirms the results of the spring salary negotiations, the central bank will likely take a 10bp hike in the second quarter but hold its short-term policy rate at 0.0% until the end of the year."
• China: 5.0% GDP growth - "The general theme remains one of deleveraging and adjustment to an economy that is less reliant on property for its growth. The economy will manage to hit the government’s 5% target this year but it may struggle to equal it next year."
• EM: Asia: "The fact that China continues to struggle and that most of its growth is centred on low-leakage consumer spending isn’t providing much of a lift to the rest of Asia either through the export channel." CEE: "The region will continue the cutting cycle, but each country will do so in its own way."
• Rates: "The big question is what happens to longer tenor rates. The answer is they usually fall, too, right out of the curve. There is a nagging fear that the US back end might struggle to perform due to fiscal pressures. But we are of the opinion that the bond market obsession with the rate cycles hould dominate"
• FX: "it seems a little too early for the dollar to embark on its big cyclical downswing because US short-dated rates are still near 5%, and overseas growth prospects still look quite bleak. Our preference is that the dollar decline is more of a slow-burn story through the first quarter of 2024 before gaining some momentum ahead of the first Fed cut in the summer."
• Note: ING's outlook was published on Nov 30