Wealth Outlook 2024 - Slow then grow

12 Wealth Outlook 2024 | Our outlook Slow then grow Entering the third phase: bull/bear/bull The massive swings in global output and inflation driven by COVID in the early 2020s are fading into the history books. The immediate world growth outlook is modest, far from “roaring” like the “Twenties” of a century ago. However, prospects for a sustained expansion after a near-term period of slower growth are solid. We expect global growth to strengthen in 2025 after another year of convalescence in 2024 ( FIGURE 1 ). Investors should recognize this “Slow then grow” pattern. It’s a transition that is unfolding in three distinct phases: 1) Massive fiscal and monetary stimulus by policymakers around the world drives equity and bond markets to unusually strong returns in 2020-2021, despite the pandemic shock. 2) G lobal markets then suffer a payback in 2022- 2023. This period was one of just three years in the last century during which combined bond and stock returns were negative together. 3) After a “valuation reset” for both stocks and bonds, we see a period of lower inflation, slower growth and higher earnings ahead. 2024 should start slower and see the economy accelerate as the year progresses. These "third-phase" conditions could offer stronger return opportunities in 2024 and 2025. FIGURE 1 Citi Global Wealth (CGW) real gross domestic product (GDP) forecasts CGW Real GDP Forecasts (%) 2020 2021 2022 2023E 2024E 2025E US -2.8 5.8 1.9 2.4 1.6 2.6 China 2.2 8.5 3.0 5.5 4.0 4.0 EU -6.3 5.6 3.4 0.5 0.4 1.3 UK -11.0 7.6 4.3 0.6 0.6 1.5 Global -3.2 5.9 3.3 2.6 2.2 2.8 CGW EPS Forecasts (%) 2020 2021 2022 2023E 2024E 2025E S&P 500 -13.5 46.9 6.0 0.9 5.1 6.8 Source: Citi Global Wealth Investments and Bloomberg as of November 12, 2023. All forecasts are expressions of opinion and are subject to change without notice and are not intended to be a guarantee of future events. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance. Past performance is no guarantee of future results. Real results may vary.