Investors brace for a return to secular stagnation and space innovation odyssey in 2024

By Newsdesk

January 09 2024
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As we move on from 2023, Stephen Dover, Chief Market Strategist and Head of Franklin Templeton Institute, sheds light on five emergent themes that could shape our future in 2024 and beyond.

Investors brace for a return to secular stagnation and space innovation odyssey in 2024

These surprises span the spectrum from economic shifts to vast innovations.

Dover points out that despite current optimism for a "soft landing" post-2023, next year could herald the unwelcome return of "secular stagnation." This economic malaise, familiar from 2010–2020, might re-emerge due to factors like global monetary policy tightening, waning fiscal stimuli, and stagnation in China's growth initiatives. He said, "While recessions may end in Europe, any recoveries will likely be weak...Soggy growth and the return to central-bank desired rates of inflation could mean that interest-rate cuts are on the way."

The vastness of space may become the next innovation hub with the manufacturing of new drugs and flawless silicon chips being proposed as potential pursuits in this unique environment. “Our economies and our lives will continue to be changed by innovation, but not always for the better," Dover posited, even as medical and technological advancements promise much. Still, for many, AI's industrial reshuffling may indeed translate to existential and professional uncertainty.

Mirroring the perplexities of our evolving world, innovation seems ever-present yet curiously absent from productivity statistics. Dover reflects on this paradox, suggesting that recent innovations lean towards consumption, and do not necessarily augment productivity. "Few of today’s innovations...offer such networking gains," he elucidates.

Electoral disappointments may loom large as voter disenchantment is predicted to remain palpable globally. Economic growth and falling inflation may not be enough to alleviate frustrations stemming from stagnant living standards and societal disheartenment. “Superficially, that seems odd...Yet frustration runs deeper," he remarks, citing a generational sense of unfulfilled expectations.

Lastly, Dover casts a cautious glance towards the credit market. The proliferation of debt post-financial crisis has created a precarious scenario that might come to a head as borrowing costs rise and economies slow. He anticipates increased scrutiny in the corporate credit landscape, stating, “Default risk will likely be on the rise."

These five bold predictions suggest a year rife with challenges and change, inviting stakeholders to prepare and adapt to a landscape that may not conform to the comforting familiarity of yesteryears or to the seductive allure of modern innovation.

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