What’s in store for 2024: The Economy

Welcome to 2024!

For this first week of 2024, I’m going to summarise the stuff I’ve seen around the PEST landscape. PEST? Politically, Economically, Socially and Technologically. In the good old days, I’d make my own predictions but, over the years, there have been so  many people predicting things that it makes more sense to summarise what everyone else says and, at the end, give my own view. So, here it goes and, to start with, I’m going to turn to politics and economics with The Economist. Tom Standage, editor with The Economist, says that we have a number of key things to watch in 2024:

Elections: there will be more than 70 elections in 2024 in countries that are home to around 4.2bn people, the biggest in America where  Donald Trump has a one-in-three chance of regaining the presidency.

Wars: the Ukraine still needs more support in its military and economic fight, especially in Europe where is hopes to find a path towards EU membership; meanwhile, the Hamas/Israel spat will continue to challenge all countries, especially America where the overstretched superpower will struggle to keep up with the challenges this war presents. In general, America’s plan to focus more on its rivalry with a rising China, has been derailed by war in Ukraine and now Gaza. Russia, too, is distracted and losing influence.

Contraction: we became used to growth but, in the 2020s, markets are shrinking. This presents a particular challenge for China where global markets, sepcailly America, are starting to close their borders to Chinese imports and vice versa, vis-à-vis Apple iPhones by way of example. This may lead to a new cold war.

Climate: the climate debate continues and we will see a clean energy focus amongst all businesses. What is this clean energy thing? The  clean-energy transition is minting new green superpowers and redrawing the energy-resources map. Lithium, copper and nickel matter much more, while oil and gas, and the regions that dominate their supply, matter less.

Unity: perhaps ideological differences will be put aside as the world enjoys the Paris Olympics, astronauts (maybe) looping around the Moon, and the men’s t20 cricket World Cup. But it is just as likely that those hoping for some global unity will be stumped.

Innovation: AI was the topic of 2023 and it will continue. Businesses are adopting it, regulators are regulating it and techies continue to improve it. Debate will intensify over the best regulatory approach—and whether arguments over “existential risk” are a decoy that benefits incumbents.

There are other things rumbling away, but that’s pretty much the key themes of The Economist. Interestingly Goldman Sachs are very aligned with The Economist’s view:

• Financial markets aren't expecting a recession in 2024 as the US economy approaches a soft landing
• The UK economy, surprisingly resilient, will lag the US and EU
• Economic risks and AI disruptions loom on the investing horizon
• Small-cap companies are poised to catch up
• Investors turn bullish on equities
• The AI boom is different from the tech innovations of the past

Interestingly, in none of the above, is a discussion of the health of the consumer. What? Yes, the consumer. Are people in general happy and optimistic or worried and pessimistic. This is the question raised by Bloomberg, who ask that the “the gap between recession and any other kind of landing largely depends on the health of the consumer. On the one hand, consumers have had to put up with significant increases in the price of everything they want to buy. On the other, due mostly to Covid-era fiscal policies, they’ve also had unusually large cushions of savings to fall back on.”

Meantime, Saxo Bank sent me a great range of predictions for the year, including:

• With oil at $150, Saudis buy Champions League franchise
• World hit by major health crisis as obesity drugs make people stop exercising
• US heralds the end of capitalism with tax-free government bonds
• Generative AI deepfake triggers a national security crisis
• Deficit countries form ‘Rome Club’ to negotiate trade terms
• Robert F. Kennedy Jr wins the 2024 US presidential election
• Japan’s ‘lucky 7%’ GDP growth rate forces BoJ to abandon yield curve control
• Luxury plunges as EU goes Robin Hood, introducing wealth tax

It’s nice to have some bold views, of which these really resonarted. Oh, and just in case you are cynical about their views, here are a few predictions they made in previous years that came true:

• The plan to end fossil fuels gets a rain check (OP for 2022)
• Germany enters recession (OP for 2019)
• Volatility spikes after flash crash in stock markets (OP for 2018)
• Bitcoin triples in value, from the current $700 level to $2,100 (OP for 2017)
• Silver breaks golden shackles to rally 33% (OP for 2016)
• UK seen leaning toward 2017 exit from the EU (Brexit) on UKIP election landslide (OP for 2015)
• Brent crude drops to USD 80/barrel as producers fail to respond (OP for 2014)
• Gold corrects to USD 1,200 per ounce (OP for 2013)
• S&P500 falls 25% from its 2007 high to 1182 (OP for 2008)

Read more here equally, for more on 2024 from an economic and political perspective, it’s well worth reading The Economist’s World Ahead 2024.

There are also lots of others making political and economic predictions, but that’s my wrap for this first blog of 2024 and, from a personal level, my money is on a fantastic and prosperous new year … for some as Donald Trump poses the biggest danger to the world in 2024.