The discussion surrounding the economic outlook for 2024 is multifaceted, with various factors influencing the global and United States economies. We are maintaining a bullish stance for 2024, despite potential slowdowns in global growth, particularly in China. Alongside China, Russia and several global commodity producers might experience a deceleration from their 2023 performance. Despite these challenges, the global economy is expected to grow, with significant contributions from the United States, India, Japan, and other Asian manufacturing hubs such as Taiwan, Thailand, Singapore, South Korea, and potentially Indonesia. Additionally, Mexico and other countries benefiting from nearshoring will likely see growth as they develop supply lines closer to the United States and Europe.
One major concern on the horizon is the potential escalation of conflict in the Middle East. The ongoing war in Ukraine appears to be at a stalemate, and we anticipate little change in this situation through 2024. Europe, meanwhile, has seen its growth stunted, partly due to hasty decisions in its transition to green energy, which has compromised its economic expansion and self-reliance. This transition, particularly the move away from alternatives like uranium and a zero fossil fuels policy, has significant implications. Europe’s military readiness is also a concern, as it is currently below safe levels.
In the Middle East, we do not foresee a significant escalation involving Hezbollah in the conflict, as it would be strategically unwise for them to risk a U.S.-supported Israeli response that could threaten their power in Lebanon. However, if Iran becomes more actively engaged with Israel and the U.S., or if Israel targets Iran’s nuclear sites, this could escalate the conflict and impact the markets. We expect the Israeli conflict with Hamas to continue, with Hamas being driven underground for a few years. Hezbollah is likely to maintain control in Lebanon, with countries like Saudi Arabia, the Arab Emirates, Jordan, and Egypt gravitating towards the U.S. economic sphere. These nations, wary of Iran, are more inclined to align with Western powers and Israel. Saudi Arabia is expected to lead these moderate, wealthy states with non-aggressive foreign policies, positioning themselves in opposition to Russia, China, Iran, and other authoritarian regimes. Caveat: we approach these issues from an economic perspective, seeking to understand the rational self-interest of ruling elites if we can; but the amount of duplicity, dishonesty, and skullduggery in the way foreign policy is conducted in authoritarian countries makes confident prediction of behavior impossible.
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