First, the United States is likely to lead Western countries out of the current "stagflation period" and toward a new "recession period."
The global economy is currently in a special phase triggered by the pandemic, which is part of a new economic cycle that began four years ago. By next year, major economies will try to break out of stagflation, but they will also enter a recession.
The United States and the European Union, for example, have been particularly prominent during periods of stagflation. The United States stimulated the economy through quantitative easing, which led to severe inflation;Not only does the EU have quantitative easing, but the impact of the Russia-Ukraine conflict has exacerbated the inflation problem.
In order to combat inflation, economies such as Europe and the United States have taken measures such as raising interest rates. The United States, which has raised interest rates 11 times, has now reached 525%~5.5%, while Europe has also moved from negative interest rates to 4%. However, by 2024, while inflation is likely to be under control, the global economy could enter a recession cycle. For example, the United States has now brought inflation to 32%, but at the same time, various economic data in the United States also indicate that the American economy will enter a recession.
Second, the large-scale water release policy may be activated again.
Central banks in Europe and the United States are likely to take some radical measures to stimulate the economy in response to a possible crisis. Among them, the United States, which has the hegemony of the dollar, may once again adopt an accommodative policy. This inevitably raises concerns that the scale of U.S. bond issuance will be further expanded, and the possibility of default on U.S. bonds will continue to increase.
In addition, there is also a recession in the Eurozone, and the pace of the recession will accelerate next year, in response to this, the market believes that the date of the EU rate cut will be June 2024. Some countries have already begun to cut interest rates, such as the South American country Peru, which has cut interest rates three times in a row due to deflation. Brazil has also started cutting interest rates.
Perhaps the most anticipated is the economic growth of Asian countries, led by China.
At present, economic growth in India and Vietnam has exceeded market expectations, and Japan is also likely to emerge from decades-long deflation.
And more importantly, China, which is huge, is returning to growth, with GDP growth exceeding 5%, and in 2024, it is possible to increase further.
Falling into recession?China will actually say "against"!
Overall, if the black swan event happens again, the global economy could sink deeper into trouble, stagflation could be prolonged, and even recessions could continue to intensify. Therefore, we must remain highly vigilant and fully prepared for the future state of the economy.