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State Of the Global Economy 2024: An In-Depth Review

Global politics and economics have been in turmoil for several years. Sudden changes have become a normal occurrence. Unrest is growing in the Middle East. The Russia-Ukraine war is going into its third year. In this situation, geo-political issues can again push the world market. Shipping disruptions in the Red Sea in the face of attacks by Yemen's Houthi rebels are already driving up transport costs amid inflationary pressures. Meanwhile, OPEC Plus may reduce oil production to boost prices. Declining support for mainstream political parties and heightened Beijing-Washington tensions during the US election campaign could have a negative impact on the global economy.


Analysts believe that in 2024, a few factors may become the regulators of the global economy. Dutch private banking firm ABN AMRO has predicted that the economy will take a major hit in 2024. But there will be opportunities to overcome that shock. However, if Donald Trump is elected President of the United States, the situation may be different. In that case, the recovery of the economy will be difficult, the EU-China trade conflict will increase, the conflict between the West and China will reach a double level.


Elections are being held this year in countries that account for 60 percent of global GDP, including India, the European Union, and the United Kingdom. According to that, almost half of the people of the world will vote in their government elections in 2024. However, the world market will mainly focus on who is going to the White House. A group of analysts say that the country's capital market is under control in the last year of the US president's term. However, Bank of America refuses to accept that statement. They claim that the US S&P-500 index usually increases by 75 percent during election years.


Allianz Research, a US-based research firm, has warned that national elections in various countries in 2024 as a whole will increase economic uncertainty.

According to polls, the Labor Party is likely to win the next UK general election. However, RBC Wealth Management believes that there will be no major negative impact on the market.


Meanwhile, in November and December of last year, the stock and bond prices in the capital market were somewhat good, so many risky assets were saved. In 2023, the S&P-500 index ended with an all-time high of around 4,770 points. Many analysts expect it to increase further in 2024.


Mark Heffel, chief investment officer at UBS Global Wealth Management, predicts the S&P 500 will end up roughly where it started in 2024. However, he said there are special investment opportunities in quality stocks, including the US technology sector.


Britain's FTSE 100 index lagged other major indices last year. By the end of 2023, it had increased by less than 4 percent and reached 7,733 points. While the global markets have increased by 20 percent. Meanwhile, the blue chip index could make a big base. One in four investors in a poll of investors predicted the FTSE-100 would end the year at 8,000 points, Interactive reported.


Fears of recession in the UK


UK employment is expected to fall this year. The unemployment rate will rise to 5 percent this year and 5.2 percent in 2025. However, inflation is expected to come down. Morgan Stanley predicts annual average inflation will be 2.8 percent in 2024, up from 3.9 percent in November last year.


Meanwhile, fears of a recession in the UK economy at the end of 2023 are increasing. A small contraction was seen from July to September after the GDP data was updated. Morgan Stanley forecasts that the UK economy could shrink by 0.1 per cent in 2024, with at least two consecutive quarters of contraction due to a strategic recession.


Investors expect the Bank of England to cut interest rates from the current 5.25 in 2024 due to a weak economy and slower inflation. Homeowners looking to remortgage are already relieved to see improvements predicted. Major lenders have decided to keep fixed interest rate contract costs below 4 percent in some cases.


Markets generally bet against the theory of 'higher interest rates for longer'. According to this idea, central banks will restrict borrowing costs for a period of time to fight inflation. Both the US Federal Reserve and the European Central Bank are expected to cut interest rates several times in 2024. The Federal Reserve is forecast to cut interest rates to 3.75% to 4% by the end of the year, down from 5.25% to 5.5% now.


Inflation in the eurozone, the European economic zone, came close to the European Central Bank's (ECB) target of 2 percent last fall. ECB board member Isabelle Schnabel said in early December that this "significant" drop in inflation meant that interest rate hikes were now off the table.


Oxford Economics believes the global economy will end the year safely. But growth will be slower than in the post-2008 recession. A number of factors, including high interest rates and government spending pressures, are likely to slow it down.


Morgan Stanley predicts global growth will be 2.8 percent in 2024, down from an estimated 3 percent in 2023. China's influence on emerging markets will increase this year, despite the world's negative perception of the debt inflation cycle. Last year China saw massive housing defaults, which spilled over into other economies.


Société Générale, a French economic services organization, called the global economy 'stable but decelerating' in 2024. With the report, they also added a picture of the lazy animal 'Sloth'!

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