CGSCIMB today (Dec 8) said they see slow and uneven economic growth prospects in 2024, as the lagged impact of restrictive policy rates could limit global economic expansion.
The research houses Economics Focus cited the U.S. is expected to achieve a ‘soft landing’, while the EU could see a limited pick-up in growth, and China could be on the cusp of a modest recovery.
The ASEAN-4 is expected to fare better, with support from a recovery in the E&E cycle, spillover from China, and domestic factors i.e. cash handouts & election.
Starting with dim prospects
CGCIMB projects global economic growth to remain slow and uneven in 2024F, impacted by softer GDP projection in the US, as the lagged impact of the restrictive monetary policy will further drag consumer spending, in our view.
That said, they also see global central banks shifting into an easing cycle, to some degree, as price stability is gradually restored. The firm projects the US will evade a recession with the economy achieving a ‘soft landing’.
The European Union, facing the loss of momentum in 2023, may see a limited pick-up in GDP growth. Meanwhile, China may not beat its post-reopening growth in 2023F but could nonetheless be on the cusp of a modest recovery, helped by active government policies and generous stimuli.
It’s brighter on the other side
On the other hand, ASEAN-4 is likely to fare better in 2024. CGSCIMB identified three key supports which are: 1) exports are expected to swing from contraction to growth amid an improvement in the electrical & electronics sector, putting the more externally oriented economies of Singapore, Malaysia and Thailand in a better position. 2) China’s rebound from the bottom and a consumption-driven policy objective may have a positive spillover effect on the region. 3) domestic demand is projected to be resilient owing to country specific events such as tourism recovery, elections, and cash handouts.
Malaysia: CGSCIMB estimates 2024F GDP growth at 4.6% yoy (2023F: 4.0%), owing to a potential recovery in external demand alongside sustained domestic demand. Private consumption growth as well as public investments are expected to drive economic growth ahead after several mid-term policies tabled this year.
Challenges to growth are policy shifts to more targeted subsidies.
Indonesia: They expect softer economic growth of 4.9% yoy in 2024F relative to our 2023F revised forecast of 5.1% yoy. CGCIMB also project strong economic growth momentum in 1H24 on the back of the elections, Ramadhan, and harvest season.
However, they believe 2H24 will be more challenging as: (1) 1H24 catalysts run out of steam, and (2) consumption softens post-election.
Singapore: CGCIMB expect higher GDP growth of 2.8% yoy in 2024F after a subdued 0.9% in 2023F. Barring other external shocks, exports are likely to rebound, partly reflecting the low base as well as nascent turnaround in the global electrical & electronics cycle. On the domestic side, they believe fiscal support provided in 2024 should help households cope with the increase in the cost of living.
Thailand: The firm projects 2024F GDP growth of 4.0% yoy (2023F: 2.5%), supported by 32m tourist arrivals, improving nominal exports, and enhancement to domestic demand with the boost from the government’s Digital Wallet cash handout. Additional borrowing, to fund the Digital Wallet programme, is expected to be manageable, as they project Thailand’s public debt to GDP would reach 66.6% in 2024F, still under its 70% debt ceiling.
Overall, downside risks to growth include prolonged tight monetary policy, further property sector woes in China, and extreme climate events.
On the upside, potential appreciation of regional currencies could soften inflation, and allow for greater growth in real income.
