Global economy may have dodged recession in 2023 but experts forecast slowdown in 2024

JPMorgan's Global Head of EM Economics, Jahangir Aziz predicts a slowdown in the global economy for the year 2024. Despite the unexpected growth experienced by several major economies in 2023, including the US and India, Aziz said there are signs of a forthcoming soft landing and the need for a disinflation process to prompt central banks, particularly the US Federal Reserve, to initiate rate cuts.

Aziz highlighted the actions of Latin American and European central banks, which have already begun cutting rates. However, he noted that Asian economies face limitations in following suit due to minimal margins over the US Federal Reserve's decisions. According to Aziz, unless the Fed initiates rate cuts, Asian economies will be constrained in their response to the impending economic slowdown.

Robert Sockin, Global Economist at Citi, echoed concerns about a potential economic slowdown despite the current resilience. Sockin suggested that policymakers may adopt a dovish stance to support the economy and prevent a recession. He hinted at the possibility of a faster reduction of the balance sheet and more rapid Federal Reserve cuts than initially anticipated.

In his earlier interview with CNBC-TV18, Robert Sockin, Global Economist at Citi said that he does not anticipate any rate cuts in the US until July next year.

Sockin says although there is uncertainty around when the rate cuts start, he expects the cuts to be deeper than the Fed is guiding.

Sockin expressed a more pessimistic view, stating, "We are still in the recession camp, with the economy projected to enter a recession in Q2 of this year, resulting in two quarters of negative growth in Q2 and Q3. However, he reassured that this anticipated recession would be relatively mild compared to historical standards."

Ed Yardeni, President of Yardeni Research had earlier told CNBC-TV18 that the US Federal Reserve may be cautious in rate cuts and it wouldn't be surprising if it starts speaking more firmly about not lowering rates too quickly or too much, to prevent people from expecting too many rate cuts.

"Now, there could be some correction (in the market), if and when the market starts to conclude that the Fed isn't going to be quite as easy, as is, has been discounted recently. I will not be surprised if the Fed officials come out talking quite hawkish, trying to convince people not to overreact here and anticipate too much of an easy move," he said in an interview with CNBC-TV18.

As the global economy navigates uncertainties and varying opinions from experts, the financial community is closely monitoring key indicators and policy decisions to gauge the trajectory of economic growth in 2024.