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What is in store for next year?
Macro

What is in store for next year?

Reflecting on 2023, marked by geopolitical upheavals and central banks’ efforts to combat inflation, 2024 holds uncertainties.
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Last year, when I reflected on 2022 as a year of “events, dear boy, events” (with thanks to ex-UK primer minister Harold MacMillan), I hoped that 2023 would bring a bit more order and certainty, but that didn’t unfold. Instead, added to the Ukraine war, which sadly appears to be moving towards something more long-term, we had further geopolitical disturbance in October with events in the Middle East. Meanwhile, markets spent most of the year reacting to central banks and their continued interest rate hikes as they moved to contain inflation. Another factor which made markets unpredictable and volatile. 

Looking to 2024

Geopolitics will, once again, play a central role. In 2024, for the first time, more than half the world’s population will vote in an election, according to The Economist. A lot will hang on the result of the US election and if, as current polls suggest, President Trump is returned to office it won’t be without global consequences. Perhaps the rapprochement between China and US will stall and support for Ukraine will wane. President Biden’s Inflation Reduction Act could be watered down. Each will have their impact on global markets.

Interest rates will be a focal point again, with mounting evidence that they have reached their peak, but markets are bracing themselves for an extended period at a ‘flat top’. The Fed will be looking to avoid a US recession and guide the economy to a soft landing. Expectations for a “constructive” year in the US remain, among our equity teams

At the time of writing, world leaders are gathering in the UAE for COP28. The societal and economic transition to net zero will have differing impacts, depending on where people live and a large focus of this year’s conference will be how to make this transition fair. My hope is that COP is a springboard for action in 2024 and not only supports poorer countries, but also developed nations who need to transition in a way that will sustain people and communities and avoid economic destruction. As we await action that will determine the course of our planet’s survival, it is perhaps another MacMillan saying that we should reflect on: “History is apt to judge harshly those who sacrifice tomorrow for today.”

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