Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
The Macro Brief – The global economy in 2024
35 Plays1 year ago
Janet Henry, Global Chief Economist, assesses the complicated backdrop facing policymakers as they attempt to keep inflation on a steady downward trajectory. Disclaimer: https://www.research.hsbc.com/R/61/BJWxSX6 Stay connected and access free to view reports and videos from HSBC Global Research follow us on LinkedIn https://www.linkedin.com/feed/hashtag/hsbcresearch/ or click here: https://www.gbm.hsbc.com/insights/global-research.
Hosted on Acast. See acast.com/privacy for more information.
Recommended
Transcript
Introduction to HSBC Global Viewpoint
00:00:00
Speaker
Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
00:00:11
Speaker
Make sure you're subscribed to stay up to date with new episodes.
00:00:14
Speaker
Thanks for listening.
00:00:15
Speaker
And now onto today's show.
00:00:17
Speaker
This podcast was recorded on the 4th of January 2024 by HSBC Global Research.
00:00:22
Speaker
All the disclosures and disclaimers associated with it must be viewed on the link attached to your media
2024 Economic Outlook Overview
00:00:26
Speaker
player.
00:00:26
Speaker
You can follow this weekly podcast on Apple and Spotify or wherever you get your podcasts by searching for The Macro Brief.
00:00:38
Speaker
Hello, Happy New Year and welcome to the Macrobrief.
00:00:41
Speaker
I'm your host Peter Stegall in London.
00:00:45
Speaker
2024 is set to be an eventful year for the global economy.
00:00:47
Speaker
Inflation may have slowed by more than expected over the past few months and the aggressive policy tightening employed by the major central banks appears to be over.
00:00:56
Speaker
But keeping inflation on a steady downwards trajectory is not going to get any easier, with geopolitical shifts and countless elections posing further risks to what is an already complicated picture.
Challenges in Global Economy
00:01:07
Speaker
So to discuss the outlook for the year ahead, I'm joined by our global chief economist, Janet Henry.
00:01:12
Speaker
Janet, welcome.
00:01:13
Speaker
Thank you, Peter.
00:01:14
Speaker
So, Janet, what kind of shape is the world economy in as we head into 2024?
00:01:19
Speaker
Well, it's not actually as bad as many anticipated about a year ago, but it is quite uneven and a quite mixed picture.
00:01:27
Speaker
In fact, some of the recent growth numbers out of the US and China have not been as disappointing as many had anticipated.
00:01:36
Speaker
But as we look at the year ahead, there's lots that are already quite unusual.
00:01:42
Speaker
You know, we have seen inflation fall, as you mentioned in your introduction, but we haven't seen a big rise in unemployment.
00:01:48
Speaker
And usually it's a rise in unemployment that leads a drop in inflation.
00:01:53
Speaker
Also, we know that the past impact of fiscal policy and what that meant for savings may not yet have run its course.
00:02:01
Speaker
We've got a lot of uncertainty regarding the China outlook and further policy stimulus measures that may be coming through there in the course of 2024.
00:02:10
Speaker
And central banks are watching because they know that monetary policy feeds through with a lag.
00:02:15
Speaker
And in many countries, we haven't seen the full impact of the interest rate rises that have already happened over the course of the last year.
00:02:22
Speaker
And there are also some uncertainties regarding the fiscal outlook.
00:02:27
Speaker
It hasn't been restrictive, even as monetary policy has.
00:02:30
Speaker
And let's not forget some enormous transformational shifts that really took a dramatic step forward over the course of the last year or more.
00:02:38
Speaker
So it's a very complex
Central Banks' Strategies for 2024
00:02:39
Speaker
picture.
00:02:39
Speaker
And you called your report Navigating the Global Disorder, a striking title.
00:02:44
Speaker
And why was that?
00:02:45
Speaker
Well, it has become increasingly challenged.
00:02:49
Speaker
Obviously, there are some significant conflicts underway in the world.
00:02:54
Speaker
And as we look at 2024, as has been widely reported, there are over 70 countries in the world that will be undergoing some kind of election.
00:03:04
Speaker
And that will have an impact on policies.
00:03:07
Speaker
And in a world where we were already seeing growing signs of trade protectionism and different priorities by different governments in a whole number of other areas, that adds to the complexities in different influences of those factors on the outlook for growth and inflation.
00:03:25
Speaker
And of course, that uncertainty makes life much trickier for central banks.
00:03:29
Speaker
What are the key factors that policymakers will be looking at as they decide whether to hike or cut, in your view?
00:03:35
Speaker
Well, central banks, their task really is to manage inflation.
00:03:40
Speaker
They need to deliver price stability over the medium term, which in most countries, certainly the advanced economies, is generally defined at around 2%.
00:03:51
Speaker
So their recent message from them has been in the last few months that they will be data dependent.
00:03:58
Speaker
Inflation, while it has surprised on the downside over the last few months, is still above 2%.
00:04:04
Speaker
They need to be sure that it does continue to move down towards their targets and hopefully stay in that broad range.
00:04:12
Speaker
And they'll hope to do that without a big rise in unemployment.
00:04:16
Speaker
So they'll be watching the labour market data and the inflation data in particular to decide when the time is right.
00:04:23
Speaker
And they know that there are risks.
00:04:25
Speaker
If they cut interest rates too soon, then inflation could actually reignite.
00:04:29
Speaker
If they leave it too late to cut interest rates,
00:04:32
Speaker
then actually they could deliver a harder landing.
00:04:35
Speaker
Not that that's a massive problem in itself, if that's what's needed to lower inflation, but if that hard landing resulted in inflation undershooting their targets for a sustained period, then that would be a policy failure too.
00:04:49
Speaker
So risks on both sides, and they're watching the data decide when they should start to move and then by how much.
00:04:56
Speaker
And so taking all of that into account, what's your forecast for the major central banks?
00:05:01
Speaker
What do you see them doing in 2024?
00:05:02
Speaker
Well, certainly for the Fed and the ECB, we have them both starting to cut interest rates in June.
00:05:10
Speaker
So a little bit later than is currently priced into financial markets.
00:05:14
Speaker
And also for both central banks, we expect them to cut by 75 basis points in 2024 and another 75 basis points in 2025.
00:05:24
Speaker
So with all those risks in mind, what's your forecast for inflation?
00:05:28
Speaker
We expect inflation to fall further in the coming two years.
00:05:32
Speaker
It won't necessarily be a smooth path every single month, but we expect inflation to fall gradually towards those central bank targets, certainly not below 2% for any kind of period.
00:05:45
Speaker
So as far as our global inflation forecasts are concerned, we've actually lowered our forecast for 2024 from 3% to 2.8% for the advanced economies.
00:05:57
Speaker
And from 7.9 to 7.8 for the emerging economies.
00:06:01
Speaker
And in 2025, for the advanced economies, we see inflation at 2.5, but for the emerging economies
Growth Prospects and Elections in 2024
00:06:09
Speaker
at 4.6%.
00:06:10
Speaker
And what about the outlook for growth?
00:06:12
Speaker
Well, the outlook for growth, our growth forecasts have changed even less.
00:06:16
Speaker
It's still a slowdown in 2024.
00:06:19
Speaker
We look for growth to slow from 2.7% in 2023 to 2.4 in 2024.
00:06:26
Speaker
And that's just 0.1 higher than we had previously.
00:06:29
Speaker
And a lot of that upward revision being driven by a small upgrade to the US.
00:06:34
Speaker
And in 2025, we look for some recovery to 2.6%.
00:06:40
Speaker
So still below those kind of pre-pandemic kind of growth rates.
00:06:45
Speaker
But I would highlight that for some of the emerging economies that are geopolitically well-placed and that have undergone a number of structural reforms and where their growth model suits with the future growth inflation mix globally, we're actually looking for growth to be on a stronger growth path.
00:07:03
Speaker
So in a lot of our work, we've highlighted the likes of India,
00:07:07
Speaker
parts of other parts of Asia like Indonesia and Vietnam, as well as some economies like Brazil, for instance, which is coming off a lower base, but is benefiting from some structural reforms and parts of the Middle East like Saudi Arabia and the UAE.
00:07:21
Speaker
So all in all, 2024 sounds like it's going to be an eventful year.
00:07:25
Speaker
Would you agree?
00:07:26
Speaker
Every year is eventful, but it is looking like this one will be a particularly eventful year simply by that broad array of elections that are underway.
00:07:36
Speaker
So obviously, when we think about election outcomes, we are thinking about what it means for fiscal policy, for tax changes, for spending changes.
00:07:45
Speaker
But actually, remember, a lot of these elections...
00:07:49
Speaker
whether it's those that are happening in the US or quite likely the UK, as well as the likes of Taiwan.
00:07:55
Speaker
A lot of those elections can also influence what happens to immigration policy and trade policy and energy policy, as well as energy transition needs regarding climate change.
00:08:08
Speaker
So, yes, very eventful year ahead, not just for central banks, but for politicians and for electorates.
00:08:16
Speaker
Janet, thank you very much.
00:08:18
Speaker
Thank you, Peter.
Climate and Security Reports
00:08:38
Speaker
For more details, please contact askresearch at hsbc.com.
00:08:43
Speaker
Now, we may be only a few days into January, but our team are off to a busy start.
00:08:47
Speaker
Here's a flavour of some of the reports we've published this week.
00:08:50
Speaker
Weixin Chan, head of ESG Research, says 2024 is going to be a waiting game when it comes to climate change, as key elections could shift climate ambition levels.
00:09:00
Speaker
Expect focus this year to be on the implementation of corporate's net-zero goals, climate finance, changes to electricity grids and the disruptive potential in AI and climate technology.
HSBC Asian Outlook 2024 Seminars
00:09:12
Speaker
Meanwhile, security concerns have intensified in the Red Sea region and Parrish Chain, head of Asia Transport Research, has been looking at the implications for the shipping sector.
00:09:22
Speaker
Container spot rates have soared by over 60% since mid-December and Parish says rerouting ships from the Suez Canal could tighten capacity in shipping markets.
00:09:31
Speaker
And finally, if you're one of our Asian clients, then you can join our team of economists and strategists at the HSBC Asian Outlook 2024.
00:09:40
Speaker
These in-person seminars are taking place from 15-18 January in Beijing, Shanghai, Hong Kong and Singapore.
00:09:47
Speaker
For more details on how to register, please contact your HSBC sales representative.
Podcast Summary and Subscription Invitation
00:09:52
Speaker
And to find out more about anything we've talked about on today's podcast, please email askresearch at hsbc.com.
00:10:02
Speaker
So that's it for this edition of the Macro Brief.
00:10:04
Speaker
Thanks very much for listening.
00:10:05
Speaker
We'll be back next week.
00:10:14
Speaker
Thank you for joining us at HSBC Global Viewpoint.
00:10:18
Speaker
We hope you enjoyed the discussion.
00:10:20
Speaker
Make sure you're subscribed to stay up to date with new episodes.