Amundi: Global Investment Outlook for 2024

November 23, 2023

Amundi, the largest European asset manager, publishes its Global Investment Outlook for 2024. After a rocky 2023, Amundi expects a fragmented outlook in 2024, with global growth gradually weakening while inflation should temper but remain above central banks’ targets, until the end of the year.

Assuming the Middle East crisis remains contained, this weaker global economic outlook will be mainly driven by a slowdown in Developed Markets (DM).  Amundi forecasts 2024 global GDP growth at 2.5% and expect growth in DM to average 0.7% versus 3.6% in Emerging Markets (EM). The investment implications for the coming year are the following:

• United States – We expect the US will face a mild recession in the first half of 2024, as tight financial conditions begin to impact consumers and businesses. In H2, growth should stabilise below potential and inflation move closer to target. 
• Europe – Growth in the Eurozone should remain low, with mixed dynamics across countries, as fiscal policy becomes more restrictive on top of already tight monetary policy.
• Emerging Markets – are heading towards a cyclical downturn amid weak global demand. In China, additional fiscal stimulus will not reverse the trend towards lower growth. India emerges as a new power offering bright economic prospects amid strong domestic demand and investments. Finally, countries at the centre of new supply chain routes in Asia or rich in natural resources in Latin America should do better.
• Fixed income is king amid peaking rates – Quality bonds (sovereign or corporate) are the favoured asset class entering 2024. Gradually add duration and focus on investment grade credit, EM debt in hard currencies and Euro high yield short-term.
• Resilience in Equities – Entering 2024, stay defensive and focused on dividend sustainability, quality, and low volatility. Favour value in the US and Japan. When the Fed starts cutting rates, turn to more cyclical markets and sectors, such as Europe, Emerging Markets, and small caps. Themes to watch in equity will be the energy transition, healthcare, and artificial intelligence.
• Emerging Markets are a key performance engine – At the start of the year, favour fixed income hard currency debt, then add local currency debt when the Fed pivots. EM Equity should benefit from a rebound in earnings, particularly in Asia. Throughout the year, look at long-term (India) and nearshoring stories, as well as winners in the energy transition (commodity exporters like Brazil) and technological advances (China).
• Currency management will be a key factor in 2024, given expectations of a weaker US dollar.

Vincent Mortier, Group CIO of Amundi, said:

'Investing in 2024 will be all about quality sovereign & corporate bonds, and seeking growth through Asian equities, as this region should benefit from better economic prospects than the others. Investors should also seek opportunities through companies positioned on promising long-term themes such as the energy transition or supply chain relocations. Nevertheless, investors will have to wait until the second half of the year to consider European stocks.'

Overall,

• Investors need to navigate a fragmented economic outlook and higher volatility risk in 2024.
• Global growth will decelerate, driven by slowing developed economies and a mild recession in the US in H1.  Growth differential between Emerging and Developed Markets will reach a five year-high. India will grow faster than China.
• A reversal in monetary policy is expected, with Fed rate cuts towards the end of the first half. Fiscal policy will be less supportive in Developed Markets, amid high debt, and targeted to energy transition.
• Investors should focus on sovereign debt, quality credit and hard currency emerging market debt at the start of the year. Fed pivot will support risk assets, with Asian equities benefitting.

Monica Defend, Head of Amundi Investment Institute, added: 'Turning tides in growth, inflation, and monetary policy will generate opportunities for investors to add on risk assets during the year.'