2024 Investment Outlook

Executive Summary

After nearly two years of policymakers fighting inflation, our 2024 outlook centers on the balance between growth durability versus the stickiness of inflation. Despite several quarters of restrictive monetary policy, the global economy — particularly in the US — has remained remarkably resilient. We think the global economy is entering a brief period of below-trend growth driven by recent monetary policy tightening, which we believe markets have already partially priced in. Questions remain over the path of inflation, however. In our view, the disinflation process will continue over our outlook horizon, and growth will slow further in H1 before starting to improve in H2, starting in the US. As inflation softens and policymakers begin to introduce rate cuts, we look for risk assets to see renewed strength.

We see inflation falling over the outlook horizon and nearing central bank targets by the end of 2024. With inflation having peaked and gradually falling and many major economies showing some signs of pressure from policy tightening, we believe monetary policymakers have now reached the end of their tightening cycles. As inflation falls, we expect real policy rates to rise and, in response, central bankers to cut rates to ease any additional pressure on growth, employment and wages. We expect this easing to begin late in the first half of 2024. We anticipate that rate cuts — combined with falling inflation — will set the stage for a recovery, putting the global economy on a path to trend growth accompanied by real wage growth in the second half of 2024.

We believe that early in 2024, markets will begin to discount an economic recovery; policy support should solidify and increase global risk appetite as the year progresses. However, we do not anticipate a significant rebound due to the shallowness of the slowdown.

Read the Full Outlook


Stay up to date with our insurance insights newsletter