Research Briefing | Dec 4, 2023

APAC Key themes 2024 – A year of living cautiously

In 2024, the main influence on Asia is likely to be a global slowdown, particularly in China and the US. Moreover, governments have limited policy space to deal with these headwinds. Other negative influences, however, are set to ease further, including domestic inflation, external pressure on interest rates, and softening semiconductor prices. Overall, we expect a bumpy year as issues become more country-specific and policy responses and economic outcomes diverge.

This research report expands on these key themes:

  1. Growth will be hard to find as the focus shifts to balance sheet repair. The external influences on Asia are changing and some negative influences finally seem to be abating. This is likely to be the year of balance sheet consolidation for both the government and the private sector.
  2. The disconnect between current accounts, exchange rates, and interest rates should normalise. As external pressures become less influential in 2024, we expect a return to some standard relationships: as growth slows, rates soften, as do currencies.
  3. China’s growth bounce is cyclical, but its problems are structural. The Chinese economy appears to have been hit particularly badly by Covid, but there has been a modest bounce back recently: Q3 growth was 1.3% q/q sa after growing by 0.8% in Q2. However, we think the bounce will likely be temporary.
  4. India’s surge is everywhere, and sentiment is bullish. India is likely to be the fastest growing G-20 economy in 2023 and 2024. There is much to cheer but also much to be done, especially on governance, health, and the environment.
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