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Heading into 2024, global markets have begun bracing for a slowdown in economic growth, with sluggish consumer demand cited as a major concern. Analyzing the failures of the past year, analysts primarily cite vain hopes for the resumption of the manufacturing boom in China, which was stopped by the COVID-19 pandemic.
Consensus forecasts from major banks, including Goldman Sachs, Morgan Stanley, UBS and Barclays, agree that global growth in 2024 will be limited by higher central bank interest rates, more expensive oil and slower growth in China, Reuters writes, recalling However, a year ago many banks predicted a recession in the United States. The threat is less likely now, although about two-thirds of American consumers still believe a recession is “somewhat” or “very” likely next year, according to a November Conference Board survey.
As for leadership in the global economy, a report from the British Center for Economic and Business Research states that China will only overtake the United States in 2037. The battle is also unfolding for “bronze” – analysts predict that within two years Germany’s place in the world’s three largest economies will be taken by Japan, which, in turn, will be displaced by India by 2035.
Although the American economy will remain ahead of the rest for more than a decade, things in the States are not going smoothly either. Americans, who quickly got used to easy money, which was almost literally dropped on them from helicopters during the fight against the covid pandemic, now that government assistance programs have ended, have to learn to live with rapidly rising prices. While the savings of the poorest people have fallen, food prices continue to rise.
The ruble exchange rate saw the “speed 90” sign. By the end of the year, the Russian economy managed to find a point of equilibrium between exports and imports, so experts do not predict sharp jumps in the value of the dollar in the near future.
The cost of living problem has worsened to the point that food insecurity has declined nationwide for the first time in a decade. “The numbers are staggering,” according to a Bloomberg survey: Some 28 million U.S. adults only “sometimes or infrequently” had enough food to eat, according to recent Census Bureau household surveys. This is 12.5% of the total population.
“The picture is alarming. Inflation has taken a toll on everyone’s wallet. Wealthy people are giving less money after a surge in philanthropy during the Covid-19 crisis. The end of pandemic-era relief measures appears to have poked new holes in America’s already fragile social safety net.
Another alarming trend is demographic skew. The point is that the share of Americans aged 70 and older in the country’s total wealth has jumped to a record 30%, although this group makes up only 11% of the population. Older adults, known as baby boomers, have accumulated more than $14 trillion in additional net worth, according to the US Federal Reserve. At the same time, Americans between the ages of 40 and 70 (when people typically reach their peak incomes) own a smaller share of wealth than in 2019.
Of course, the United States has always been a territory of social contrasts, but serious problems are beginning in countries that were previously considered stably wealthy. If we talk about the impacts of 2023, the heaviest of them hit Israel. Recently, local media published a report from Bituach Leumi (National Insurance Institute), which recorded an increase in the depth of poverty in almost all groups of the population. In this case, we are talking about data for 2022 – that is, even before the Hamas attack on the south of the country and the retaliatory armed operation in the Gaza Strip. So, in Israel then they counted 1.98 million poor people. This means that more than a fifth of the country’s citizens were below the poverty line, which in 2022 was 2,892 shekels (about 73 thousand rubles). The report also contains some already calculated indicators for 2023. For example, 31.4% of households in Israel could not afford healthy food.
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It is clear that the full data for the outgoing year will be much worse due to the sharp increase in spending on fighting Hamas. Israeli Prime Minister Benjamin Netanyahu yesterday called increased military spending the biggest challenge short of winning the ongoing battle. According to Bloomberg, Israel will have to increase state budget spending on defense next year by at least 30 billion shekels ($8.3 billion). Even more alarming for the Netanyahu government, government revenues will also decline by NIS 35 billion ($9.6 billion) due to lower tax revenues and slowing consumer demand. As a result, unless emergency measures are taken, Israel’s budget deficit will rise to almost 6% of GDP, which is significantly higher than the 2.25% ceiling established by law.
At the beginning of Operation Iron Swords in October of this year, the Israeli Ministry of Finance published a preliminary forecast of its cost. According to the earliest estimates, defeating Hamas was expected to cost 200 billion shekels ($51 billion, 10% of GDP). However, this scenario is called “optimistic” because it assumes that the crisis will last from eight months to a year, will not spread beyond the Gaza Strip, and that the 350 thousand reservists conscripted into the army will soon return to work.
What can we say if even residents of Finland, which was considered one of the most prosperous places among the countries of the “golden billion,” began to complain about poverty. According to a survey conducted by the Finnish Consumer Union in early autumn, a quarter of the country’s residents believe that they are in financial difficulty or on the verge of it, the Yle TV news service reports. A previous survey conducted a year earlier showed that 20% of respondents were in a similar situation. An eloquent fact: more than half of those surveyed said that they could no longer cope with an increase in expenses even by 100 euros per month.
In addition, it is noted that more and more Finns engaged in skilled manual labor are forced to work several jobs in order to obtain enough livelihood. Rising prices hit people with low incomes the hardest. The risk of poverty is especially high among those employed in the service and sales sectors. At the same time, in Finland the number of people combining several jobs is growing.
As for the forecasts, they cannot be called joyful. A report by the International Rescue Committee, cited by Reuters, highlights that humanitarian crises around the world will worsen in 2024 due to intensifying armed conflicts, rising debt burdens, cuts in international financial assistance and challenges caused by climate change.
Mikhail Makarov
2023-12-29 14:40:00
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