Asset Management: Monthly Macro Insights - March 2024

Global growth resilience expected in 2024 masks the continuation of sharp regional divergences. Although headline inflation in most G20 countries is projected to continue its normalisation, it is unlikely to be back to target before the end of 2025, and upside risks remain elevated. In fact, central banks may be forced to remain prudent to ensure that underlying inflationary pressures are durably contained.

Challenges for the US…

Last year, growth was particularly buoyant in the US amid high government spending and strong household consumption. However, after two years of pent-up demand, fuelled in part by surging credit card debt, massive government stimulus and the run-down of the excess savings accumulated since the beginning of the pandemic, the consumption engine may lose steam this year despite lower inflation strengthening real wage growth. Meanwhile, even though investors seem to underplay the downside risks for the US economy, inflation has generally surprised to the upside.

…and for the Eurozone

At the end of 2023, Eurozone GDP was broadly at the same level as in the third quarter of 2022. Contrary to the US, consumption and investment barely moved last year, while the weak positive contribution to growth of external demand was driven by imports falling more than exports.

Looking ahead, the European Commission economic sentiment index unexpectedly fell in February, suggesting no imminent rebound in GDP amid the fastest tightening cycle in the history of the Eurozone. In addition, the ECB could upset investors’ hopes of significant rate cuts in 2024. The inflation surprised to the upside in February and, more fundamentally, the combination of mediocre productivity and elevated wage growth implies the unit labour cost growth remains above rates compatible with medium-term inflation objectives.

Murky outlook in China

The growth target and macroeconomic policy stance have been revealed at the National People’s Congress. The 2024 growth target was set at 5 per cent, the same as in 2023, though this will be much harder to achieve given the more challenging base effect. By setting the bar high for this year, the authorities might have signalled their plans to provide stronger support for the economy, or instead tried to boost consumer and business confidence.

Read the full version of Monthly Macro Insights - March 2024

by Marc-Antoine Collard, Chief Economist and Head of Economic Research

Read more articles

  • Rothschild & Co hires Brandon Aebersold and Parry Sorensen as Managing Directors in North America

    Press releases

    Senior hires bolster the firm’s Restructuring team in the United States.

  • Asset Management: Monthly Macro Insights - July 2024

    Market Commentary

    Business confidence fell at the end of Q2-24, casting doubts on the positive momentum going into the second half of the year, while rising political uncertainty add to an already complicated conduct of monetary policy.

  • French election

    Strategy Blog

    In the second round of France's parliamentary election, Marine Le Pen's RN unexpectedly fell from first to third place as a result of widespread tactical voting and targeted withdrawals by other parties. In this blog we assess the potential economic impact of the vote.

  • Polls, policy and portfolios

    Perspectives podcast

    As we enter the second half of the year, political developments continue to hold our attention. However, what concerns us as citizens does not always align with what affects us as investors.

  • First thoughts on the UK election

    Strategy Blog

    A decisive election result means that Labour will form a government for the first time in 14 years and Sir Keir Starmer will become Prime Minister today. In this strategy blog we take an early look at the potential economic consequences of this change in government.

  • Few US stocks drive global markets

    Monthly Market Summary

    US mega-cap names led a narrowly-focused advance in June's stock markets while president Macron’s snap election announcement added uncertainty to European markets.

Back to top