In our latest monthly macro outlook video, Paul Diggle, Chief Economist, gives our latest views on recessions, when central banks will cut interest rates, and political risk in 2024.

Key points:

  • The possibility of a ‘soft landing’ has increased in the US. However, our base case is still for a mild US recession starting mid-2024.
  • Europe and the UK are already in economic stagnation or contraction. Inflation there has been falling fast although the inflation-fight is by no means over.
  • Most major central banks have finished raising interest rates, except for the Bank of Japan. They will start cutting rates from mid-2024 at a speed and magnitude that will surprise markets.
  • China is stabilising and deflation there should ease soon. However, the troubled real estate sector continues to be a significant obstacle to recovery.
  • Political risk will be heightened next year with several important elections scheduled, including in the US and UK. Both countries will have limited room to use tax and spending to boost their economies.