Where Will The Global Economy Land In 2024? -- Nouriel Roubini

Nouriel RoubiniHeading into 2024, most economists and market analysts have adopted a baseline scenario in which most major economies avoid both a recession and renewed inflation – the much-desired "soft landing." But the current encouraging consensus could still be derailed by any number of factors, not least geopolitics.

Nouriel Roubini -- Project Syndicate

Jan. 8, 2024

NEW YORK – Around this time a year ago, about 85 percent of economists and market analysts – including me – expected that the U.S. and global economy would suffer a recession.

Falling but still-sticky inflation suggested that monetary policy would grow tighter before rapidly easing once the recession hit; stock markets would fall, and bond yields would remain high.

Instead, the opposite mostly happened. Inflation fell more than expected, a recession was avoided, stock markets rose, and bond yields fell after going higher.

One therefore must approach any 2024 forecast with humility. Still, the basic task is the same: start with a baseline, an upside, and a downside scenario, and then assign time-varying probabilities to each.

The current baseline for many, though not all, economists and analysts is a soft landing: advanced economies – starting with the United States – avoid a recession, but growth is below potential and inflation continues to fall toward the 2 percent target by 2025, while central banks may start to cut policy rates in the first or second quarter of this year.

This scenario would be the best one for equity and bond markets, which have already started to rally in expectation of it.

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