According to the latest Mastercard Economic Outlook report, by 2024, consumers and businesses will face key decisions concerning spending and investments, with budgets strained by price rises and interest rates. This year, the global economic situation seems to be returning to a more “normal” state than before, but there is still a push to achieve a new balance, especially in the context of high interest rates, wage growth and inflation. At the same time, the position of consumers is strengthening, which is a result of decreasing inflation rates while maintaining stable real economic growth.
Using publicly available data, aggregated and anonymized Mastercard transaction data, and models predicting economic activity, the Mastercard Economics Institute identifies the most important issues that will shape the global economic landscape this year. The economic forecast “Economic Outlook 2024” refers to strengthening the position of consumers, gradual easing of inflationary pressure and correcting the strategies undertaken by central banks. Based on data from 45 markets, four key insights have been established:
1. Consumers will primarily cater for their “needs” and “wants”, not “impulses”
Even in the face of high inflation, which absorbs a significant portion of household budgets allocated for basic needs, discretionary spending will remain extremely important for consumers, dominated by travel and entertainment. This means that creators such as Taylor Swift or Beyoncé and phenomena like “Barbenheimer” continue to attract attention, effectively encouraging new experiences that fit into the current cultural canon. On the other hand, to satisfy their curiosity about the world at a reasonable cost, tourists from European countries are increasingly choosing travel destinations that are friendlier for the wallet. A tourism boom is particularly seen in the Middle East and North Africa region.
2. Employment as the basis of a strong consumer position
Consumers remain resistant to downturns – such statements have been made throughout the past year and we will hear them again in 2024 because consumers’ ongoing high purchasing power results from a good situation in the labor market.
3. Decreasing inflationary pressure will enable central banks to correct course
According to Mastercard Economics Institute, it is highly probable that central banks have now ended their cycles of raising interest rates. This year, in response to falling inflation in conditions of moderate economic growth, it is expected to see a gradual easing of monetary policy and its partial normalization.
4. Dressing room in your own living room – revenues from e-commerce exceed those from in-store sales
Thanks to efficient deliveries, online shops currently offer consumers virtually unlimited possibilities for making last-minute purchases, allowing to add products to the basket that can then be freely tried on at home. The growth in e-commerce revenue not only reflects an increase in the number of online stores, but also indicates growing customer loyalty, who, becoming increasingly familiar with online shopping, are happy to return to the same e-stores.
