Analysts anticipate that Canada’s economy will expand 0.9% in 2024 and 2% in 2025. The Bank of Canada is slightly more optimistic, expecting Canada’s economy to grow 1.2% in 2024 on improving consumer and business spending as borrowing costs fall and exports rise.
With the S&P 500 up 19.5% so far this year and close to an all-time high, it seems prudent to review recent market moves, evaluate the most recent financial results and consider the potential implications of falling interest rates.
Until a government is formed, we think French equity markets are likely to remain among Europe’s riskiest.
We expect GDP for the region to improve heading into yearend and in 2025, driven by steady domestic demand and the benefits for Asian exporters from solid global demand for consumer goods.
We would expect the relationship between emerging-market and developed-market equities to re-establish itself in the coming years as market compositions return to a more “normal” state.
Executive summary
The intense economic headwind from high interest rates is fading and relief is on the way as reduced inflation pressures have paved the way for central banks to loosen monetary conditions.
Economy
The global economy continues to decelerate and, while a mild recession is possible given deterioration in labour markets, we think the most likely scenario is that economies continue to expand over our forecast horizon.
Fixed Income
In the context of our forecast for modest economic growth and cooling inflation, it is reasonable to expect steady global monetary easing over the remainder of 2024 and into 2025.
Equity markets
Mega-cap technology stocks have greatly benefited from optimism regarding the productivity improvements that artificial intelligence could bring, but the enthusiasm for these stocks may be getting tested.