MUFG Economic Research Office releases 2024 outlook report; considers five key questions for the year ahead
New York, NY (January 18, 2024) – Mitsubishi UFJ Financial Group (MUFG’s) Economic Research Office issued its 2024 outlook report titled “Five Key Questions for 2024,” in which contributors Henry Cook, Senior Economist, London; Agron Nicaj, U.S. Economist, New York; and Sai Yabuki, Japan Economist, Tokyo, explore major global macro themes for the next 12 months.
2023 can be summarized as a year of resilience as advanced economies avoided sharp downturns despite rapid monetary policy tightening. The U.S. economy was a particularly bright light with buoyant domestic demand driving an upswing through the year. The Japanese economy also expanded strongly in H1 2023, before losing steam in the second half of the year. It’s been tougher going in Europe with the euro area economy now teetering close to a mild technical recession against a broader backdrop of stagnation.
This tees up some key questions for the year ahead from a macro perspective, the most important of which relates to the durability of the U.S. expansion. As it stands, a so-called U.S. ‘soft landing’ seems increasingly plausible, although we still look for a cyclical slowdown. “We expect real GDP growth to weaken in the first half of 2024, but for consumers to have enough strength, bolstered by a strong labor market, to keep consumption growth in positive territory,” writes Nicaj.
The European economy, starting from a position of relative weakness, may be able to catch up a little ground in the second half of the year. We are also cautiously optimistic about the outlook for the Japanese economy.
Despite this, we suspect that markets are currently pricing in too much in the way of rate cuts given our U.S. soft landing/no imminent recession call, although we do expect easing from the Fed, ECB and BoE this year. Meanwhile, the BoJ is likely to be swimming against the global monetary policy tide as it will look to raise interest rates back to positive territory.
To access the complete outlook report, please visit the MUFG Americas website here.
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Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global network with approximately 2,000 locations in more than 40 countries. MUFG has nearly 120,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing. The Group aims to “be the world’s most trusted financial group” through close collaboration among our operating companies and flexibly respond to all the financial needs of our customers, serving society, and fostering shared and sustainable growth for a better world. MUFG’s shares trade on the Tokyo, Nagoya, and New York stock exchanges.
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