2024 will bring higher-growth and a more complex landscape

2024 may be the first year of our post-pandemic “normal” in a range of areas, from interest rates to labor market dynamics and government policy shifts. However, this environment will be characterized by huge complexity. Companies will need to navigate uncertain price sensitivity, lingering risks stemming from elevated credit costs, and disruptive geopolitical and policy moves by governments.

Economic Growth

There is some good news about the global economy in 2024. After fears of recession for 2023, and demand that surprised to the upside, it’s clear that companies are not seeing a dramatic drop in global growth, followed by a rapid slowdown, but a deceleration followed by a gradual increase in growth momentum heading into 2024. Our expectation is for global growth this year to average 2.9% YOY, followed by 3.1% YOY in 2024, driven by accelerations in Europe and emerging markets.

Inflation Risks

Below the headline numbers, however, lies a complex picture. Inflation will slow, but food prices are under significant risk of acceleration. This could put further pressure on consumers, already dealing with two years of eroding real incomes and purchasing power. We are already seeing signs of accelerating price sensitivity and that is likely to become much more pronounced despite the better growth picture next year.

Interest Rates

Interest rates will start to come down after peaking in 2023. However, in many geographies, these will not land close to their pre-pandemic average, most importantly in the US and Europe. This will extend pressures on rate-sensitive industries – from housing and construction to durable goods and will constrain corporate investment and consumer borrowing.

Geopolitical Risk

We will also see considerable risks on the policy and political side. Some will be linked to elections (from South Africa to Taiwan, with several key elections happening next year – and of course culminating in the US presidential election in November 2024). Some will come from geopolitical tensions that will remain high – Russia’s war in Ukraine and US-China tensions. Others will stem from government policy shifts, particularly around industrial policy, that require companies to align their investment, footprint, and commercial priorities more closely with the requirements of public sector stakeholders across geographies.

Calibrating your strategy in a complex environment

This high-growth, high-complexity environment will require careful management of resources, continued focus on profitability, and executional excellence from teams ranging from marketing to pricing and government affairs.  

Key Trends

  • Falling but still-high interest rates will drag on growth in 2024
  • Lower inflation and strong labor markets will support consumer spending
  • Monitoring political risk will become a priority for multinationals in 2024

FrontierView’s much anticipated Global Outlook for 2024  outlines expectations you can use to pressure-test your planning for next year, including data and analysis on growth areas, segments of opportunity, all major markets and regions, inflation, credit costs, and political risk. 

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