Standard Chartered paints a picture of 2024’s global economy as a tightrope walk between a soft landing and potential pitfalls.
While growth is expected to slow marginally to 2.9 per cent from 3.1pc in 2023, the good news is that this dip might be just the right pace for a smooth descent from the aggressive central bank tightening of recent years.
Talking about the bank’s ‘Outlook 2024: Sailing with the Wind’ report, global chief investment officer Steve Brice said, “The impact of this tightening won’t be evenly distributed.
Developed economies, with their average growth forecast at a modest 1.2pc, are bracing for the brunt. Asia, however, remains the world’s bright spot, with growth expected to hold steady at 4.9pc.
While China’s performance might remain lukewarm, other Asian nations like India are poised for a post-election surge. Even the Middle East and Africa are projected to see improvement, with Saudi Arabia and the UAE leading the charge through economic diversification.”
Mr Brice was joined by Manpreet Gill, chief investment officer for Africa, Middle East and Europe, at the Gulf Hotel Bahrain Convention and Spa as they presented key highlights of the report and answered questions from key clients.
“But amidst the cautious optimism, a surprising twist emerges – a projected all-time high in global oil demand. This could complicate the inflation picture, already a source of concern. Core inflation’s stubborn persistence hints at deeper underlying pressures, further fuelled by factors like higher fiscal deficits, climate transition costs, and under-investment in fossil fuels,” Mr Gill said.
Geopolitical tensions, from the Middle East and Ukraine to the US-China rivalry and the upcoming US elections, add another layer of uncertainty to the mix.
For investors navigating this landscape, Standard Chartered Wealth Management offers a roadmap. Their 2024 Outlook report suggests a strategy of balancing macro developments with identifying attractive risk-reward opportunities.
For long-term stability, the report recommends prioritising high-quality developed market government bonds, particularly with longer maturities. Global equities, especially US and Japanese stocks, are initially favoured, with a broader diversification into both equities and bonds expected to deliver solid returns.
For those seeking short-term gains, the report identifies promising sectors like US communication services, technology and healthcare, as well as Chinese consumer discretionary, communication services, and technology. And for the currency-savvy, playing the USD range is seen as a potential avenue for profit.
But before taking the plunge, Mr Brice, offers a crucial reminder: consider your investment objectives, time horizon, and, most importantly, your risk tolerance. Discipline, he emphasises, is key. “Avoid being a forced seller due to emotions or financial needs, and prioritise protecting yourself from permanent losses.”
avinash@gdnmedia.bh
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