The last few years have seen significant changes in the global economy. The world is grappling with the effects of the COVID-19 pandemic and subsequent geopolitical tensions. What can we expect in 2024? Analysts at XTB have analyzed the most critical economic issues in their report.
Since 2020, the global situation is extremely tense. First, the COVID-19 pandemic halted economies, broke supply chains and forced controlled stimulation. Just as it seemed the situation was moving towards normalization, an armed conflict between Ukraine and Russia ensued, causing significant volatility in the commodities market. The economic effects were quickly apparent, with the global economy suffering from high inflation.
End of 2023 Brings Hope
The report presented by XTB gives hope that 2024 might be a significantly better year for financial markets. There were great concerns that the most severe monetary policy tightening in decades might lead to a global recession, which could have a colossal impact on the markets.
“So far, the economic slowdown has been limited. Moreover, some indicators suggest that the economic downturn might already be behind us,” claim XTB analysts.
Consumer demand in the US remains surprisingly strong, despite fears of a slowdown – Source: XTB Research. The data particularly refers to the situation in the United States. Successive macroeconomic readings are getting better and it seems that the situation is slowly returning to normal. The market interprets the significant narrative change of the Federal Reserve as a desire to lower interest rates in 2024, potentially saving the US from a serious slowdown.
Tense Situation in Europe
Unfortunately, data on European markets don’t look as promising. Europe is distinctly disappointing. According to XTB analysts, this could have serious repercussions.
“Economic activity indicators such as PMI show that the situation in Europe is definitely the most difficult among all key economic regions. We observed a particularly deep drop in the manufacturing sector,” is written in the report.
According to experts, factors responsible for the weakness of European PMI include inventory accumulation after the COVID-19 pandemic, extremely high energy prices, progressing de-globalization, and the ambitious climate policy of the European Union. For a moment, it seemed that consumers would drive the European economy through the service sector, but it appears to be the opposite.
“Currently, it’s hard to see positive prospects for consumer demand in 2024. In summary, the US economy is doing well at the moment, but Europe is very close to recession, the intensity of which will be determined by global factors,” forecast XTB analysts.
What Awaits the Polish Economy?
The upcoming year in the Polish economy should be extremely interesting. Current data clearly indicate that we are currently in a phase of economic acceleration. This sounds quite promising, but we must remember the persistent problem of inflation significantly diverging from the direct inflation target. This places possible interest rate cuts in our country under serious question.
XTB analysts believe that the current situation in Poland is caused by multiple disruptions of the natural business cycle. Moreover, there are even prospects for the arrival of a second inflation wave, indicating many difficult decisions from the Monetary Policy Council.
“Truth be told, the Polish economy managed to slide through the worst times in part thanks to a highly stimulating fiscal policy. Now when there is a strong increase in real incomes, this process should accelerate. However, this means pushing back the prospect of returning inflation to the 2.5% target. Inflation should fall to around 4-5% in early spring, but then it may slightly increase and if consumption accelerates, further decrease could be complicating,” forecasts the XTB Analysis Department.
What will all of this mean for the zloty and the most important currency pairs? How could the mentioned economic forecasts affect the capital market? Or will Bitcoin again set records in terms of valuation? Find the answers to these and many other questions in the “Outlook 2024” report prepared under the leadership of Dr. Przemysław Kwiecień and Michał Stajniak, CFA.
