SocGen 2024 Outlook: Resilient But Sluggish Growth

In its 2024 global outlook, Société Générale expects "sluggish" growth driven by “high degree of utilisation, especially labour, higher interest rates, and less lift from fiscal policy”.

• Global outlook: “We believe growth will continue to prove resilient in 2024 but remain rather sluggish and weaker than in 2023. We expect a US recession around mid-2024, though brief and shallow.”
• Interest rates: Sees “dangerous underpricing” of risk of rates picking up again across advanced economies - "it is not so clear if the pivot has occurred, or how near it is”. Sees Fed cutting 150bps in 2024, ECB 25bps, almost closing rate differential.
• US: GDP growth 0.9% 2024, 2.7% 2025. US recession to materialize most likely mid-24 on surge of longer-term interest rates, inflicting further damage on housing market/automobile production/investment activity. More lax on fiscal policy compared to EZ.
• Eurozone: GDP growth 0.8% 2024, 1.1% 2025. Expects little movement, and fiscal tightening. “Excess household savings persist, but are not being spent in Europe”. EUR to appreciate vs $ (1.16 EURUSD Dec-24 target) alongside decreasing rate differentials.
• Japan: GDP growth 0.7% 2024, 1.4% 2025. "Unlikely to repeat" strong 2023 growth, JPY to appreciate vs $ (130.0 USDJPY Dec-24 target),
• China: GDP growth 4.5% 2024, 4.2% 2025. “The fragile state of the Chinese economy has been a persistent worry”. Two sources of concern: a) Stellar historic growth was powered by real estate sector, which is suffering; b) Private business sector hit by CCP-focused, tougher regulated policy.
• Asset allocation: “expect a steeper yield curve” “rate differentials are expected to narrow, providing some headwinds for the dollar”.
• Note: The SocGen 2024 outlook was published on 16 November.