Page 27 - SA Chamber UK February Newsletter. 2024

no obvious catalyst in sight to lift prospects significantly, European economic growth
will probably remain anaemic, and flirt with contraction in 2024.

China is the wildcard
Talking of disappointment, a strong rebound in China’s economic growth in 2023 was
anticipated by many 12 months ago. At just 5.2%, the country somehow managed to

hit its annual gross domestic product (GDP) growth target. However, this still fell short
of the 6% or even 7% expansion that some economists had pencilled in as the economy
reawakened from its long period of COVID-19 restrictions. A so-called balance sheet
recession, coupled with a troubled real estate sector that is mired in debt and a loss of
confidence, can all be blamed.

Chinese authorities vow to support the economy and lift the gloom, but their actions
have been too limited to turn things around much, so far. Given the prolonged pessimism
over the country’s prospects, the good news is that, with consensus anticipating real GDP
expansion of just 4.6% in 2024, there is room for a positive surprise.

Geopolitical tensions flashing red

Given the ongoing conflict in Ukraine, as well as events in Gaza since October and with the
forthcoming US presidential race heating up, it was easy to predict that geopolitics would
be a big feature of 2024. We’re only a month in, and flare-ups in the Red Sea have already
been added to the long list of possible flashpoints that investors should monitor.

Encouragingly, the impact of recent events on energy costs – which tend to react to any
tensions in the Middle East – has been limited so far, with oil prices having been remarkably
stable. This may be the calm before the storm. But it is also an important reminder that
geopolitics rarely has a long-lasting effect on financial markets.

Steady as we go
Despite all the noise and scary headlines over the last few months, the outlook for 2024
continues to be one of slower growth, weaker inflation and lower rates. That said, the

year is unlikely to be plain sailing and docile, with the potential for the macroeconomic
and geopolitical landscapes to change rapidly. This is why, above all else, appropriately
diversified portfolios will be essential.

By Julien Lafargue, Chief Market Strategist, Barclays Private Bank

THE CHAMBER WOULD LIKE TO TAKE THIS OPPORTUNITY TO THANK BARCLAYS
FOR THEIR SPONSORSHIP OF THE AWARDS AND GALA DINNER. YOUR ONGOING
SUPPORT IN ASSISTING US TO HIGHLIGHT THE ROLE OF THE SOUTH AFRICAN
CHAMBER OF COMMERCE UK IS MUCH APPRECIATED.

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SA CHAMBER UK NEWSLETTER FEBRUARY 2024