JPM Global Outlook 2024

J P M O R G A N Global Economic Research
21 November 2023
Correction (See disclosures for details)
I am not in love but I’m open to

persuasion
Global economic outlook 2024
• Global GDP (2.8% Q4/Q4) and core CPI (4.1%) gains well exceeded Economic and Policy Research
expectations this year Bruce Kasman
(1-212) 834-5515
• A large and synchronized monetary tightening drag has been blunted by
bruce.c.kasman@jpmorgan.com
a resilient private sector and positive fiscal and commodity price shocks JPMorgan Chase Bank NA
• Growth is resilient but divergent. Manufacturing stalled, while Western Joseph Lupton
Europe flirted with recession (1-212) 834-5735
joseph.p.lupton@jpmorgan.com
• Inflation is elevated but divergent. Goods prices are now stabilizing, while JPMorgan Chase Bank NA
service price inflation remains high Michael S Hanson
• Growth is poised to slow as positive shocks fade, while rising yields and (1-212) 622-8603
tighter credit bite michael.s.hanson@jpmchase.com
JPMorgan Chase Bank NA
• We expect subpar 2.1%ar global GDP growth in 1H24 Nora Szentivanyi
• Inflation moderation should be limited by lingering damage to supply and (44-20) 7134-7544
nora.szentivanyi@jpmorgan.com
a shift in inflation psychology: core CPI gains should settle at 3%ar in
J.P. Morgan Securities plc
1H24
Bennett Parrish
• Boil the frog narrative sees erosion in private-sector health amidst (1-212) 622-9003
sustained restrictive policies and sluggish growth bennett.parrish@jpmchase.com
JPMorgan Chase Bank NA
• Pressure likely concentrated in business sector where margins should
Maia G Crook
compress, prompting slower hiring and spending (1-212) 622-8435
• Vulnerability likely to build gradually: We see a 25% chance of recession maia.crook@jpmorgan.com
J.P. Morgan Securities LLC
by 1H24, 45% by 2H24, and 60% by 1H25
• Our bottom-up country forecasts do not incorporate a 2024-25 recession:
US and Western Europe growth slips below 1%, EM anticipated to grow
at trend-like 3.8%
• We do not believe inflation can be controlled on a sustained expansion
path, but recent developments soften our skepticism
• US supply-side performance has been impressive this year, easing labor
markets despite strong growth
• Domestic demand shortfalls in China and Europe point to a potential
ongoing disinflationary impulse
• Soft-landing outcome dependent on inflation decline that allows
monetary easing to begin by about midyear
• A mild recession is not a mild event and would generate a meaningfully
more adverse outcome than a sluggish growth soft landing Contents
I am not in love but I’m open to persuasion 2
2023: Mo’ growth, inflation and tightening 4
Manufacturing a weak link 4
Consumer: US soars while Europe sleeps 5
EM resilience shines through… again 6
China lifts but is imbalanced 6
Boiling the frog is underway 7
Recipe for a soft landing 11
Balance sheet paint to keep on drying 13
Summary tables 15
See page 21 for analyst certification and important disclosures.
www.jpmorganmarkets.com
This document is being provided for the exclusive use of Lunpin Hon at Sino Suisse Private Wealth Management.
Bruce Kasman (1-212) 834-5515 Michael S Hanson (1-212) 622-8603 Global Economic Research
bruce.c.kasman@jpmorgan.com michael.s.hanson@jpmchase.com
JPMORGAN
JPMorgan Chase Bank NA persuasion
Joseph Lupton (1-212) 834-5735 Nora Szentivanyi (44-20) 7134-7544 21 November 2023
joseph.p.lupton@jpmorgan.com nora.szentivanyi@jpmorgan.com
Table 1: Global real GDP

I am not in love but I’m open to persuasion % change, Q4/Q4
2024 (%ar)
Our 2023 global outlook was published a year ago as a tide of 2022 2023 2025
1H 2H
1H23 recession forecasts were rising for both the US and Global (2.3) 1.8 2.8 2.1 1.9 2.4
Europe. The central tenet of the outlook (“Wait for it”) DM (1.3) 1.1 1.6 0.9 0.7 1.5
pushed against this tide, arguing for resilience amidst sluggish US (1.5) 0.7 2.8 0.9 0.6 1.9
Euro area (1.0) 1.8 0.3 0.6 0.7 1.1
and divergent growth. While recognizing a building drag Japan (0.9) 0.3 1.6 1.4 0.7 0.6
from synchronized monetary tightening, important sources of UK (0.7) 0.7 0.7 0.4 -1.0 0.4
lift—related to COVID normalization, unwinding 2022 com- EM (3.7) 2.8 4.4 3.9 3.7 3.7
EM ex China (2.9) 2.7 3.3 2.7 3.0 3.5
modity price shocks, and continued fiscal stimulus—were China (4.5) 2.9 5.4 5.1 4.3 3.9
anticipated to blunt its impact. India (6.0) 6.0 6.4 5.1 6.0 6.2
EMAX (3.1) 2.7 3.4 2.8 3.1 3.5
Korea (2.0) 1.5 2.1 1.8 2.5 2.2
More fundamentally, the risk of private sector retrenchment EMEA EM (1.8) 0.7 2.8 1.8 1.9 2.7
was viewed as modest. Elevated inflation and tight labor mar- CEE (1.9) 1.7 1.7 2.4 3.0 2.8
kets usually emerge in a maturing expansion where private Türkiye (3.1) 3.9 4.0 1.7 0.0 5.0
South Africa (0.6) 1.5 1.3 1.2 1.4 1.3
sector leverage, overextension, and profit margin compres- Latam (1.5) 2.6 1.7 1.7 2.0 2.5
sion magnify the impact of monetary tightening. But the Mexico (1.4) 4.3 3.3 3.3 0.8 1.8
forced saving and government policy supports engendered by Brazil (1.5) 2.5 2.3 2.3 2.1 1.7
Source: J.P. Morgan Global Economics. Potential in parentheses.
the pandemic lockdowns broke this link. Put simply, 2023 pit-
ted late-cycle inflation dynamics against mid-cycle private Our forecast for global growth resilience and a large but
sector fundamentals. incomplete inflation slide in 2023 have been validated. But
three related developments are tempering our soft-landing
Figure 1: Scenario evolution skepticism. First, global nominal GDP grew 1.5%-pt faster
% probability, by forecast date
Recession in than anticipated this year, delivering stronger-than-expected
60 2024-1H25 gains in corporate profits as well as in household wealth and
50 labor income. Monetary tightening has thus generated little
40 erosion in private sector health. Second, last year’s tail-risk
Soft-landing threats to the expansion did not materialize, and the transmis-
30
sion of monetary policy to broader financial conditions has
20
Recession been more limited than projected. Indeed, 384bp of global
10 in 2023 tightening over 2022-23 sharply increased borrowing costs
0 but has not materially depressed asset prices or generated sig-
Dec 22 Feb 23 Apr 23 Jun 23 Aug 23 Oct 23 Dec 23
Source: J.P. Morgan Global Economics nificant stress in credit and funding markets.
This forecast for resilience was not, however, an endorsement Finally, global core CPI rose more than expected this year,
of a soft-landing (Figure 1). Supply bottlenecks and labor but new disinflationary impulses have emerged. In the US,
market dislocations were expected to fade and push inflation both labor supply and productivity gains have been stronger
lower, but damage to mobility and labor supply was expected than anticipated, a development that has eased US labor mar-
to linger. Combined with a shift in inflation psychology, con- ket tightness in the face of above-trend growth. Elsewhere,
strained supply looked likely to keep inflation above central weak domestic demand has created excess capacity in Germa-
bank comfort zones. Sustained restrictive stances to lower ny and China: large manufacturers that could sustain down-
inflation were expected to gradually undermine private sector ward pressure on finished goods prices globally.
health. Our baseline “boil the frog” narrative saw this dynam-
ic leading to an early end to the global expansion and placed It is thus no surprise that a tide of soft-landing optimism is
only a small 20% probability on scenarios in which the global now on the rise, boosting asset prices and expectations for
economy achieved low inflation and an expansion that early policy ease. Indeed, the bottom-up forecasts by our
extended well beyond 2024. economists see the global economy avoiding recession over
2024-25 and sustaining growth close to its potential pace
(Table 1). Our top-down views have become more open to a
soft-landing scenario (to 40%) but remain biased towards an
end to the global expansion by mid-2025 (Figure 2).
JPMORGAN
JPMorgan Chase Bank NA 21 November 2023
Joseph Lupton (1-212) 834-5735 Nora Szentivanyi (44-20) 7134-7544
Figure 2: Global outlook scenarios tion at around 3%, largely because of continued upward
Probabilities in parentheses are conditional on "Boil the frog" Recession BY: pressure on labor costs and service prices (Table 2).
Big Damage done: 25% 1H24: 25%
Boil the squeeze (42%)(Recession, 1H24) Table 2: Global CPI
frog %Q4/Q4
60% Wait for it: 20%
(33%) (Slow disinflation, High-for- 2017-19 2021 2022 2023 2024
long, then break) 2H24: 45% Headline 1.8 5.2 7.9 3.7 2.7
Soft 1H25: 60% Energy 1.3 24.3 18.9 -4.6 0.5
Too darn hot: 15%
landing (25%)
(Sticky inflation>3%, Food 2.3 4.4 11.2 5.2 3.2
40% more hikes, then break) Core 1.8 3.6 5.9 4.1 2.9
Goldilocks: 40%
Source: J.P. Morgan Global Economics (Inflation cools, rates fall) Goods 0.7 5.5 5.6 2.2 0.5
Services 2.0 2.7 5.6 4.9 4.3
Our probability tree gives significant weight to both the grad- Source: National sources, J.P. Morgan. Details on request. Excludes China and Türkiye. Core
goods and services detail only available for a subset of economies.
ual emergence of a boil the frog or soft-landing scenario,
while incorporating a modest risk that the global economy
slides into recession in early 2024. The latest data are point- • Central banks likely to stay high-for-long. In the face
ing to continued resilience and limited financial market stress, of sticky inflation, current market expectations for an ear-
reinforcing this view. A more gradual path to the next reces- ly start to DM easing cycles are likely to be disappointed.
sion will likely make it difficult to distinguish between sce- Rather than cuts, our global baseline assumes central bank
narios as we turn into 2024. Specifically, there are a number rhetoric will need to maintain their tightening bias, a
of elements in our 1H24 forecasts that are observationally development that will put upward pressure on short-term
equivalent on these two paths. Specifically: interest rates and lead to an additional tightening of finan-
cial conditions.
• Global GDP growth slows to a below-potential pace.
After accelerating to a 2.8% gain this year, we expect • Supply softens with demand. In our boil the frog scenar-
global growth to slow to a below-potential 2%ar in 1H24. io, the recent pickups in productivity growth (in the US)
Along with a continued drag from tight monetary policy and labor supply growth (more broadly) are expected to
and rising yields, the fading of this year’s significant posi- fade. If realized, supply-demand imbalances will likely
tive shocks should weigh on overall growth. percolate back to the surface, diminishing disinflationary
pressures and lifting inflation expectations.
• Service sector cools, manufacturing remains soft.
Growth rotated sharply towards the service sector over the • Business shows limited appetite to cushion. In an envi-
past year, but normalization of the COVID-depressed ronment of expected profit margin compression and tight
parts of services is now over. In addition to contributing financial conditions, we expect business attitudes to grad-
to slower GDP growth, a moderating service sector should ually turn cautious, leading to a stall in capex and hiring.
be a catalyst for slowing global employment growth. At Once this begins, a negative feedback loop between busi-
the same time, global industry is unlikely to see much lift ness caution and moderating household income growth
in the coming months, as final goods demand growth will significantly raise recession vulnerability.
looks to have struggled in the latest data. There is an alternative branch of our “boiling the frog” narra-
• DM underperforms EM. While the DM is set to slow to tive in which this year’s upside surprises to global growth and
a below-potential pace of growth in 1H24, the EM is set inflation are extended. To the extent that demand growth
to outperform in response to policy easing and fading proves stronger and business has more pricing power than
food inflation. Fiscal supports in China also are providing anticipated, global core inflation will likely remain well
support for growth. The result will be a sluggish global above a 3% pace. Such an outturn would be unacceptable to
economy no longer fueled by US exceptionalism. central banks and prompt another round of rate hikes. This
could potentially see the Fed, and others, hiking another 50-
A global economy heading down the road to recession should 100bp. In that event, the financial market shock would likely
be distinguished from one gliding toward a soft-landing based spark a deeper and more synchronized global recession.
on the following developments:
In considering alternative scenarios, it is important to recog-
• Core inflation should remain sticky at 3%. The central
nize that recessions represent a significant break in economic
condition for a recession dynamic to take shape is infla-
tion that fails to give sufficient comfort to central banks to performance that reverberates broadly and over time. As
relax their restrictive stances. Although headline inflation such, even a mild recession should not be viewed as a mild
is expected to drop next year, we look for tight labor mar- event and would likely differ substantially from a soft-landing
kets and a shift in inflation psychology to keep core infla- path in which growth was persistently sluggish. For the US,
JPMORGAN
mild recessions have normally produced a rise in the unem- levels of inflation, there was only limited additional monetary
ployment rate of 2%-pts or more and have had a lasting nega- tightening in 1H23 than had been expected, with most central
tive influence on credit markets. Recessions are also reliably banks pausing by midyear. However, our economists’ forecast
disinflationary. For these reasons, central banks are likely to for 2H23 easing has been scaled back materially, and the
move immediately and aggressively if they recognize a reces- cumulative revision to the year-ahead policy rate outlook has
sion has taken hold, even in an environment of still-elevated been substantial (Figure 4).
inflation.
Figure 4: Rolling revision to global outlook
2023: Mo’ growth, inflation and tightening %-pt cumulative revision to year ahead outlook
1.5 Policy rates
Recognizing that aggressive and synchronized tightening by Core CPI
central banks have posed an elevated risk to the global expan- 1.0
sion, we have augmented the presentation of our modal fore-
casts with an assessment of alternative scenarios. To track the 0.5
GDP
evolution of the likelihoods of these various scenarios, we uti-
lize a framework in which the interaction of policy actions 0.0
and guidance, financial conditions, and private sector vulner-
-0.5
ability determine the risk of an early end to an expansion Oct 22 Dec 22 Apr 23 Jul 23 Oct 23
(Figure 3). Monetary policy has both long and variable lags, Source: J.P. Morgan Global Economics
in large part because its transmission to financial market con-
ditions can vary widely. Monetary policy is also not the only Manufacturing a weak link
game in town, and other impulses that emanate from “shocks” 2023’s solid global growth masks notable divergences in per-
to markets and changes in government policies need to be formance. By sector, a recovery in global services has been
identified. Finally, macroeconomic outcomes ultimately accompanied by a stall in industry. Manufacturing in the year
depend on how financial market moves impact behavior. through September is down 1.7% in the US, 6.4% in the Euro
Income dynamics, balance sheet positions, and sentiment all area, and 3.3% in Japan. The EM has fared somewhat better.
play a role in determining the vulnerability of the private sec- After reaching its pre-pandemic trend-path in late 2021, glob-
tor to retrench in the face of central bank tightening. al manufacturing has fallen back and now is 1% below its
pre-pandemic trend as of 3Q23 (Figure 5).
Figure 3: Cyclical framework
Boil the frog Figure 5: Global real GDP, decomposed relative to potential
Shocks Index, 4Q19=100
101
Non-manufacturing
Central Behavior, 100
Bank hikes vulnerability 99
98 Manufacturing
Financial Soft
conditions 97
landing
96
Source: J.P. Morgan Global Economics 95
94
Through the lens of this framework, the broad contours of our 2019 2020 2021 2022 2023 2024
2023 forecast materialized: the US and global economy Source: National sources, J.P. Morgan. Details on request.
avoided recession in response to positive shocks and the lack

of typical late-expansion vulnerabilities. Although monetary We anticipated a midyear rotation in demand towards manu-
policy tightening compressed housing activity and prompted facturing that would narrow this sectoral gap. This rotation
a tightening in bank credit standards, global GDP is tracking began to take hold as a pickup in global retail spending and
an above-potential 2.8% Q4/Q4 gain, more than a percentage recovery in Asian tech activity generated a 2%ar rise in glob-
point higher than both our forecast at the start of the year and al factory output last quarter. However, the latest develop-
its 2022 gain. ments show consumer goods spending growth softening and
business capex growth stalling at the end of 3Q23 (Figure 6).
Meanwhile, CPI inflation fell sharply from its 7.4% 2022 As a result, most of the brief reacceleration in manufacturing
pace but, looking past drops in food and energy price infla- last quarter now looks likely to be limited by a recent acceler-
tion, global core CPI is tracking a 4.1% increase (ex. China ation in stockbuilding.
and Turkey)—well above our forecast. Despite still-elevated
JPMORGAN
Figure 6: Global goods supply and demand Figure 8: Real GDP relative to pre-pandemic potential path
%3m, saar (through Sep 2023 tracking) % deviation; thru 3Q
12 Retail 2.0 US
9 Capex sales
6 Now 0.0
EMU
3
-2.0
0
-3 -4.0 China
-6 Inventory EM
contrib. proxy Manufacturing ex-Chn
-9 -6.0
Jan 22 Jul 22 Jan 23 Jul 23 2020 2021 2022 2023
Source: National sources, J.P. Morgan. Details on request. Source: J.P. Morgan Global Economics
The near-term fate of global industry will rest on the path Most other regions generated above-trend performance this
ahead for final demand. The latest data is not encouraging: year—with notable strength in non-China Asia— and saw a
final goods demand disappointed through September, and modest narrowing in the post-pandemic growth shortfall (Fig-
October business surveys continued to signal a stall. The ure 9). Europe has been the notable weak link, with a growth
more forward-looking ratio of new orders to inventory PMI stall widening an already significant cumulative growth gap.
painted a particularly downbeat message as of October (Fig-
ure 7). Figure 9: Real GDP growth, year-to-date
%-pt deviation from potential
Figure 7: Global manufacturing PMI and output
1.5
Ratio of DI (thru October) %3m, saar (thru September)
PMI: New Orders / 1.0
1.20 Mfg output 12
Inventories
(actual) 0.5
1.15 8
1.10 0.0
4
1.05 -0.5
0
1.00 -1.0
0.95 -4 US Japan India Global EMAX LatAm China DM W. CE4
Source: J.P. Morgan Global Economics Europe
0.90 -8
07 09 11 13 15 17 19 21 23
Source: S&P Global, national sources, J.P. Morgan. Details on request. The divergence of the US from other DM economies owes in
large part to differences in consumer spending (Table 3).
Consumer: US soars while Europe sleeps Whereas US real consumer spending has soared 9.9% since
4Q19, spending elsewhere in the DM economies has been
Although the sectoral gap between manufacturing and servic-
roughly unchanged. This can be partly explained by higher
es narrowed in 2023, an already large regional imbalance
real income growth, where the large US fiscal supports con-
widened further. Turning into this year, the US was the only
stituted an important difference. Meanwhile, labor markets
major economy that had fully returned to its pre-pandemic
remain tight across the DM, and headline inflation has come
path. With GDP tracking a 2.8%(4Q/4Q) increase this year, it
down significantly this year.
is currently estimated to stand 1.5% above its trend-path (Fig-
ure 8).
JPMORGAN
Table 3: Fundamental drivers of consumer spending gain, with EMX (i.e., EM ex. China) tracking a 3.3% rise.
%chg from 4Q19 to latest (chg for DSR, wlth-inc, saving rate, sentiment)
US EMU UK Japan G-4
Real PCE 9.9 0.2 -1.5 0.0 4.5
Figure 11: EM private sector's S-I balance
Income % of GDP
Nominal 23.9 16.2 18.4 2.7 18.5 10 Private S-I gap
Real 6.4 2.9 2.8 -3.1 4.2 8 CAD
Wealth Fiscal deficit
6
Nominal 32.2 20.3 20.9 12.7 25.5 4
Real 12.4 3.2 0.0 7.4 8.1 2
Consumer prices 18.7 17.7 21.4 5.7 17.1
0
Saving rate -3.1 2.3 3.5 -3.1 -0.2
Debt-service ratio 0.16 -0.04 -0.16 0.25 0.09 -2
Wealth-income 0.52 0.24 0.13 0.48 0.42 -4
Consumer sentiment -1.6 -1.8 -1.1 -0.7 -1.5 05 08 11 14 17 20 23
Source: J.P. Morgan Global Economics. Excludes China, Russia, and Türkiye.
Source: National sources, J.P. Morgan. Details on request. UK wealth adjusted for pension and
insurance, Japan wealth is financial wealth. DSR data include forecasts through 3Q23.
EM private
The sources of this resilience are strong private-sector bal- sector's S
It remains a puzzle as to why European households have been ance sheets bolstered by high savings and low debt, over
much more reluctant to tap their stronger balance sheets. 300bp of disinflation that supported real household incomes,
Wealth gains supported a sharp move lower in the US saving and a modest 0.5%-pt of GDP loosening of fiscal policy.
rate over the past two years, running more than 3%-points EMX private savings (proxied by the savings-investment gap)
below its 4Q19 level, to help cushion a 2021-22 purchasing has remained above pre-pandemic levels, which helped to
power squeeze. The same is true for Japan, where real finance the widening of fiscal deficits without having to
incomes have been compressed by still-weak wage gains. By increase foreign borrowing; i.e., current account balances
contrast, the saving rates of both the Euro area and UK are remained broadly unchanged (Figure 11). Together with the
2-3%-pts above their 4Q19 levels (Figure 10). This has hap- calibrated easing of still-high real policy rates, domestic
pened despite a wealth-income ratio that is higher than before financial stability was preserved in the face of volatile global
the pandemic and positive real income gains. The outturns financial conditions. Indeed, the narrowing spread between
suggest a unique turn toward household caution in Europe. EMX local currency and US bond yields reflected a reduction
in risk premiums (Figure 12).
Figure 10: Personal saving rate deviation
Figure 12: EM risk premium
%pt, deviation from 4Q19 level
%-pts, EM local currency less US 10y yield
15
5 2005-15
10 avg
4 2016-19
UK avg
5
EMU 3
0
Japan 2
US
-5
2019 2020 2021 2022 2023 2024 1
Source: National sources, J.P. Morgan. Details on request. 05 07 09 11 13 15 17 19 21 23
Source: J.P. Morgan. GBIEM yield excluding Argentina, China, Russia, & Türkiye.
The consumer malaise in Europe poses generates two-sided

In retrospect, in forecasting 2023 macroeconomic outcomes,
risk to the outlook. European growth could get a boost should
we likely overestimated the drag on domestic demand from
consumers wake up to the ample resources at their disposal.
the monetary tightening of the previous 18 months. Typically,
The downside risk is that continued weak demand eventually
before the start of a monetary tightening cycle, private sav-
translates into a sharp break in business hiring and capex that
ings dwindle and leverage rises, such that even a modest rate
sparks a recession.
hike sharply contracts demand (allowing for the usual mone-
tary transmission lags). But the initial conditions in this hik-
EM resilience shines through… again ing cycle were different: savings were high and leverage low.
Alongside this year’s US GDP growth surprise, the resilience Private sector credit (as a share of GDP) in EMX had broadly
of emerging market economies was also impressive. Nearly flatlined since the 2013 Taper Tantrum. Even after recovering
all large EM economies are tracking an above-potential GDP from its pandemic low, the loan-to-deposit ratio in banks
JPMORGAN
remains well below its mid-2000 levels. These atypical initial productivity-led growth.
conditions are likely to have blunted the impact of the 500bps
of monetary tightening in EMX and helped to buoy domestic Public sector spending and exports have been important
demand this year. sources of growth this year, supporting a solid gain in China
factory output. At the same time, consumer spending on ser-
China lifts but is imbalanced vices have also rebounded smartly post lockdowns. However,
absent a more material shift in private sector investment, the
Economic activity in China started the year strong, as the
risks to our forecast that China GDP expands 5% in 2024 are
reopening from extended COVID lockdowns generated a
skewed to the downside.
surge in consumer spending. As this dynamic proved more
fleeting than expected, policy supports were introduced
around midyear. At the same time, strong global demand bol- Boiling the frog is underway
stered exports. However, China remains a fundamentally Although the global economy delivered a strong performance
imbalanced economy. Factory output is expanding rapidly in 2023, we believe the seeds for an early end to the expan-
after faltering earlier in the year. However, with domestic sion are now being sown. The path ahead will likely deliver
demand falling short, the threat of deflation is imparting a sluggish growth and generate pressures that increase the risk
material disinflationary impulse to the rest of the world. of a slide into recession. But we see these pressures building
gradually and see only a modest risk of a downturn as we turn
The weakness in China owes to a range of factors. Foremost into 2024. However, we anticipate three developments will
is the real estate sector, where the legacy of years of borrow- raise to 60% the likelihood of an end to global expansion in
ing is causing severe financial challenges. However, the the next 18 months.
impact is also felt in real activity, as private housing starts
have plunged over the past two years and continue to move 1. 2023 positive “shocks” are now fading
lower (Figure 13). Perhaps more concerning, however, is the
lack of private investment in fixed assets, which has moved This year’s growth resilience in the face of a synchronized
sideways for two years with no sign of re-engaging. At the monetary policy drag was closely associated with other
same time, household consumer goods spending is picking up impulses that generated lift. While new “shocks” could come
after being severely depressed through the lockdowns, but the on the scene, these positive impulses are set to fade.
recovery has been far more lackluster than expected.
• Service sector normalization close to over. The initial
phase of the post-pandemic recovery saw mobility restric-
Figure 13: China domestic demand tions limit service sector spending while lifting demand
Index, Dec 2019=100 (FAI is 12mav) for goods. Service sector normalization gathered steam in
Private
120 Real 2H22, and the removal of China’s zero-COVID policy
FAI
110 retail sales
100
provided an additional boost. Even as tighter monetary
90 policy contributed to a stall in factory output, service sec-
80 tor activity jumped 3.2% over the past four quarters (Fig-
70 ure 14), a development that boosted employment growth
60
50
in these labor-intensive sectors. However, the service sec-
Private tor rebound is now nearly complete, and survey data has
40
housing starts
30 weakened recently, suggesting that both the pace of ser-
13 15 17 19 21 23 vice sector activity and global employment growth are
Source: NBS, J.P. Morgan
poised to slow (Figure 15).
The softening in private sector demand owes largely to two
material shocks. First, a set of government regulatory deci-
sions since late 2020 engendered a loss of faith in the long-
standing predictability of China’s policy and regulatory
framework, which, in turn, had a pernicious effect on private
sector confidence. In addition, these regulatory changes sig-
naled a bias towards state-owned over private enterprises and
towards high-end manufacturing over high value-added ser-
vices (education, gaming, finance, etc.). Second, restrictions
on technology transfers by the West have hurt both state and
private high-value tech sectors critical to China’s plans for
JPMORGAN
Figure 14: Global GDP by sector even our own expectations this year. In Europe, a range of
%q/q, saar subsidies were implemented to cushion the jump in ener-
8 gy prices. In China, policymakers adjusted at mid-year to
offset the slowing re-opening bounce and real estate sec-
6 Non-manufacturing
tor drags. Perhaps the biggest surprise, however, has been
4 the considerable US fiscal impulse. In our 2023 outlook,
2
we noted that the 2022 slide in US government outlays
was turning and would support growth alongside a sharp
0 rise in this year’s cost of living adjustment for Social
Manufacturing
-2 Security. This impulse proved far larger than anticipated.
2021 2022 2023 2024 Adjusting for the accounting of student loan debt, the
Source: National sources, J.P. Morgan. Details on request.
Federal budget deficit (as a share of GDP) is estimated to
have risen by more than 3%-pts. US government spend-
Figure 15: Global (ex. China) employment and services PMI
ing, roughly 20% of GDP, rose 4.5% in the year through
%3m/3m, saar DI, sa
3Q23, with broad gains across federal, state and local lev-
5 Services activity 60
Employment PMI
els (Figure 17). Despite continued spending on defense
4 58 and by states, fiscal policy is set to turn modestly restric-
3 56 tive next year.
2 54
Figure 17: US government spending
1 52
%oya
0 50 Fed, non-defense
12
Defense
-1 48
9
12 14 16 18 20 22 24
Source: National sources, S&P Global, J.P. Morgan. Details on request. 6
3
• Commodity price shocks fade from the scene. The fall 0

in global headline CPI inflation from 7.4% in 2022 to its -3
current 3.6%ar can be partly tied to the unwind of com- State & local
-6
modity price shocks related to Russia’s 2022 invasion of 15 16 17 18 19 20 21 22 23
Ukraine. After surging 18% last year, energy CPI is track- Source: BEA, J.P. Morgan
ing a 3% decline this year. At the same time, food price

inflation fell from 11.2% in 2022 to an estimated 5% in 2. Sticky inflation keep stances restrictive
2023. The collapse in energy and food inflation was a As the numerous supports to growth in 2023 fade to the back-
powerful boost to purchasing power this year that is ground, the drag of tighter monetary policy will likely weigh
unlikely to be repeated. If anything, the combination of more heavily on the expansion. This is particularly so as we
geopolitical risk premia and El Niño should keep energy expect core CPI inflation to remain above 3% through 1H24,
and food CPI on an upward trajectory over the coming preventing the Fed and other major central banks from easing.
year (Figure 16). Global core CPI rose more rapidly than had been expected
over the past twelve months (4.2% in October), but it has
Figure 16: Global CPI - ex China and Türkiye moderated significantly since midyear. Over the past three
%3m saar, both scales
months, core inflation is running at a 3.3%ar globally, slow-
15 Food 75
ing to a 3.4%ar in the US and dropping to a 2.6%ar in the
Core Euro area.
10 50
5 25
0 0
Energy
-5 -25
2019 2020 2021 2022 2023 2024
Source: National sources. J.P. Morgan Global Economics. Details on request.
• Fiscal stimulus ends. Fiscal supports to growth surprised
JPMORGAN
Figure 18: Global core CPI - ex China and Türkiye Figure 20: Global GDP and unemployment rate (ex. China)
%3m saar %-pt deviation, both scales
8 Services 2 -1.0
U-rate relative to 4Q2019
6 1 (inverted) -0.5
4 0 0.0
-1 0.5
2
Core goods -2 GDP relative 1.0
0 to pre-pandemic potential path
-3 1.5
-2 -4 2.0
15 16 17 18 19 20 21 22 23 24
Source: National sources, J.P. Morgan. Details on request. 2020 2021 2022 2023
There are good reasons not to extrapolate this move into an Developments over the past year provide evidence that both
inflation return to central bank targets. The latest inflation channels are contributing to the persistence of core inflation.
slide has come from more volatile components of the price A telling supply indicator is the continued tightness of labor
basket and looks likely to moderate in its intensity. Notably, markets despite the fading of pandemic dislocations.
global core goods price appears to have stalled while service Although global GDP (ex. China) remains 1.1%-pt below its
price inflation remains elevated (Figure 18). In the US, the pre-pandemic pace, global unemployment rates (ex. China)
divergence between those components of the core price bas- are 0.5%-pt lower (Figure 20).
ket generally viewed as volatile or sticky has widened dra-
matically in recent months (Figure 19). Figure 21: DM unemployment rate and wages
%, sa %oya
Figure 19: US core CPI 3 5.0
% change over 3 months, saar Atlanta sticky Unemployment rate 4.5
4 Wages
8 25 (inverted)
4.0
Atlanta flexible 5 3.5
6 20
6 3.0
Cleve. 15 2.5
4 median 7
10 2.0
2 8 1.5
5
9 1.0
0 0 96 01 06 11 16 21
-2 -5 Source: National sources, J.P. Morgan. Details on request.
2018 2019 2020 2021 2022 2023
Source: FRB, J.P. Morgan
Figure 22: Short-term inflation expectations
FRBNY median
% 1y-ahead
More fundamentally, we argued a year ago that the pandemic
6
looked to be altering key elements of the price and wage set- EC median
ting dynamic that had held core inflation close to 2% for 5 1y-ahead
4 US 1y1y
more than two decades. Two developments informed this inflation swap
judgement. The first was that damage to supply following the 3
pandemic, reflected in labor markets and global supply 2
chains, would likely linger. The second was the salience of 1 EA 1y1y
inflation. 2021-22 delivered the largest and longest-lasting inflation swap
0
inflation shock of the past three decades, which threatened to 06 08 10 12 14 16 18 20 22 24
become embedded in price and wage setting psychology. Source: FRBNY, ECB, J.P. Morgan
The evidence on salience is less direct but no less compelling.

Medium-term market expectations of inflation have remained
relatively well anchored, but a wide range of near-term infla-
tion expectations have remained elevated this year despite the
sharp fall in commodity price inflation (Figure 22). Consis-
tent with this signal, DM wage inflation has shifted more
sharply than anticipated and is currently at a 4.7% oya pace,
more than twice its average over 2016-19 (Figure 21). More
JPMORGAN
recent pressure on DM wages appears to be coming from cen- ure 24). At the same time, bank credit standards have been
tralized wage settlements in Western Europe and Japan, tightening for a full year now, and the combination of higher
where adjusting to the 2021-22 inflation spike is a key factor borrowing rates and more restrictive conditions is also weigh-
in the wage bargaining process. ing on credit demand (Figure 25).
Based on the view that US and Euro area core inflation is 3. Undermining private sector health
poised to remain close to 3% during 1H24, central banks are
As this year’s positive “shocks” fade and central banks main-
unlikely to deliver the easing currently priced into markets. If
tain restrictive stances, global growth should moderate in the
this view proves accurate, market pricing for end-2024 rates
coming quarters. The key to the boil-the-frog scenario is that
will likely need to adjust upward in coming quarters (Figure
private sector health is also undermined, elevating vulnerabil-
23).
ities of a break in behavior.
Figure 23: Market pricing of end-2024 policy rates
As noted above, a key channel generating this shift is the con-
% p.a; dashed lines for current policy rates
tinued tightening in financial conditions—sustained high
7.0 interest rates create pressure on asset prices and credit avail-
6.5 EM*
6.0
ability—as sluggish growth interacts with sustained restric-
5.5 tive policy stances. This environment is expected to erode
5.0 economic health in a number of ways. Although the maturity
4.5 US structure of private sector debt has been termed out, debt ser-
4.0 vicing costs are on the rise as existing debt gradually rolls
3.5
over (Figure 26).
3.0
Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23
Source: J.P. Morgan, Bloomberg Finance L.P. *Excludes China, Russia, and Türkiye. Figure 26: Household debt and debt servicing, DM
% of income; both scales
Figure 24: US 10y yield around Fed tightening 125 11.5
%-pt chg, t=start of Fed hike cycle 120 Debt income ratio 11.0
Mar 22 10.5
115
3.0 10.0
110
9.5
2.0 105
Feb 94 9.0
100 Debt service ratio
1.0 Jun 99 Jun 04 8.5
95 8.0
0.0 99 01 03 05 07 09 11 13 15 17 19 21 23
Source: BIS, national sources, J.P. Morgan Global Economics. Details on request.
Dec 15 Jan 88
-1.0
t-6m t t+6m t+12m t+18m t+24m Figure 27: Global nominal GDP and corporate profits
Source: Bloomberg Finance L.P., J.P. Morgan
%oya (4-qtr chg); both scales (profits 2qtr avg)
18 120
Figure 25: G4 business credit standards
15 Profits 90
Net % tightening (standards), net % increase (demand)
12 60
40 Standards 9
30
20 6
3 0
0 0 Nominal GDP -30
-3 -60
-20 98 00 02 04 06 08 10 12 14 16 18 20 22
Source: J.P. Morgan; MSCI earnings, Bloomberg Finance, L.P.
Demand
-40
03 08 13 18 23 A corporate profit margin squeeze had been expected this
Source: Fed, ECB, BoE, BoJ, J.P. Morgan
year in an environment of rising labor costs alongside moder-
ating growth and inflation. Although global profit growth
This repricing will add to the tightening in monetary condi- slowed, upside surprises to both real GDP and price inflation
tions now underway. Increases in risk-free yields have far generated over 6% nominal GDP growth over the past four
exceeded anything seen in past rate hiking cycles in the US, quarters, significantly slowing down this process. However,
boosting borrowing costs to households and businesses (Fig-
10
JPMORGAN
over the coming four quarters we expect nominal GDP to modest but still-elevated 25% probability on a near-term
slow to roughly 5%ar amidst still-elevated labor costs. recession in 1H24.
Against this backdrop, a compression in profits should take
hold (Figure 27). Much more likely, in our global view, is that pressures contin-
ue to build and a recession takes hold sometime between mid-
Finally, sentiment is an important driver of behavior, and this 2024 and early 2025. Specifically, a recessionary dynamic
backdrop is expected to maintain a significant drag on already could unfold as inflation slips below wage gains alongside
depressed readings of global household and business confi- elevated interest costs. Such a combination could generate
dence (Figure 28). sufficient pressure on margins to drive a retrenchment by
businesses (“Wait for it”). Prior to a recession, labor markets
Figure 28: Global confidence are likely to remain tight, which is likely to keep upward
Std. dev from 2010-19 avg. pressure on wage inflation.
2
Manufacturing At the same time, inflation is moderating—even if not fast
1 enough to get back to central bank targets by end-2024. While
0 this takes some pressure off central banks, it is unlikely to be
-1
enough to start an early easing cycle. The combination of fall-
Consumer
ing pricing power with an extended period of elevated bor-
-2 rowing costs would weigh on business profit margins (Figure
(ex. China)
-3 30). At some point, this pressure would spark cost cutting that
00 05 10 15 20 involves layoffs and reduced capital expenditures. Once this
happens, a recession would begin.
Recessions represent breaks in economic performance. The
Figure 30: Corporate borrowing cost and profit margin
source of this break, promoted by restrictive monetary policy
%pa %MSCI earnings / revenue
and increasing private sector vulnerability, is often linked to a
2 12
negative growth shock that magnifies existing drags. It is thus US BBB yield 10y
inherently difficult to time a recession, and our presentation 10
4
of probability scenarios is guided by an underlying humility 8
in forecast timing. 6
6
8 DM Profit Margin
Figure 29: Global (ex-China) business spending 4
%oya; both scales Employment Capital 10 2
4 expenditures 12 96 98 00 02 04 06 08 10 12 14 16 18 20 22
Source: Bloomberg Finance, L.P., MSCI, S&P, J.P. Morgan
3 9
2 6 Another possibility is that growth and pricing power remain
firm as businesses can pass on rising costs, sustaining infla-
1 3
tion above central bank comfort zones and warranting higher
0 0 rates that eventually break the back of the expansion (“Mo’
-1 -3 GDP, CPI”). In this case, we would expect to see central
90 93 96 99 02 05 08 11 14 17 20 23 banks restarting their hiking cycles and pushing rates up—
Source: National sources, J.P. Morgan. Details on request. perhaps as much as another 100bp. Assuming this move is
matched elsewhere in the world where inflation proves too
We consider a number paths to recession. The first is simply sticky, a global synchronized hard landing would ensue.
that the past year of tight financial conditions and still-elevat-
ed inflation have done sufficient damage to fundamentals to Recipe for a soft-landing
spark a pullback in activity sometime during 1H24. While we
do not yet see such a dynamic underway, the recent slowing Our global outlook puts weight on a view that sees high-for-
in hiring and global capex could be signaling a shift towards long policy stances gradually bringing about an early end to
business caution (Figure 29). In this environment, it would the expansion. However, the official baseline (based on the
not take much of an adverse shock for early recession to bottom-up calls from our economists) looks for a soft landing.
materialize—particularly in Europe, where various activity This call has merit and it is worth considering the conditions
measures have been flirting with a contraction. We place a under which it will be realized. In this scenario, the material
11
JPMORGAN
tightening by central banks over the past 18 months would be The interaction of productivity and labor costs are key to how
accompanied by a rebalancing of demand and supply condi- both profits and inflation unfold. Changes in the profit margin
tions that allows for a low inflation expansion to be sustained (m) can be described as Δm ≈ π − (ω − ρ), whereby pricing
without generating a break in behavior. inflation (π) is contrasted with the growth of unit labor costs,
defined as wage inflation (ω) less productivity growth (ρ) .
Soft landings are not common, and there are no modern While wage pressures are a concern for corporate profitabili-
examples of a sustained growth phase following synchronized ty, these can be offset if productivity is also rising. The 2021-
global monetary tightening (here). The US has, however, had 22 surge in DM wage inflation was made worse by a collapse
three soft landing episodes since 1960. The Fed raised policy in productivity growth (Figure 32). This is not surprising
rates by more than 250bp during 1964-66, 1983-84, and since the recovery over the past year has been driven largely
1994-95. The 1960s expansion lasted three years beyond Fed by a normalization in the service sector, which is less produc-
tightening, while the 1980s and 1990s episodes saw expan- tive than the goods sector. However, as this dynamic has
sions extend for more than five years. mostly played out, productivity growth is already starting to
rise again.
Two important features of these soft landing episodes are
worth highlighting. First, none of these episodes generated Figure 32: Unit labor cost determinants, Developed Market
labor market slack or reduced wage pressures. Rather than %oya; Through 3Q23 est.
cutting costs on labor, firms initially absorbed some of the 5
impact of monetary tightening by accepting a margin com- 4
pression. Second, in each of these soft landing episodes, the 3
Fed quickly reversed course, easing within six months of its (+) Wages
2
final hike. This calibration away from restrictive stances,
1
combined with other positive growth impulses, boosted
demand and bolstered business confidence in a manner that 0
(-) Productivity
extended the economic expansion. -1
00 02 04 06 08 10 12 14 16 18 20 22
Source: Bloomberg Finance, L.P., J.P. Morgan; DM recession bars
Signs of an emerging corporate cushion are encouraging giv-
en its important role in soft landings (Figure 31). DM Under the Goldilocks scenario, margins could remain elevat-
employment and capex continue to show resilience despite a ed if DM productivity growth recovers to a 1%ar pace, while
stall in profits over the past year (here). Looking to 1H24, a wage inflation moderates somewhat to a still-solid 3.5%ar.
slowing in nominal GDP growth, alongside still elevated This moderation of unit labor costs would broadly align with
labor costs, suggests further margin compression and a need inflation settling at a 2.5%ar pace, an outcome that would
for firms to continue to provide this cushion. likely be palatable to central banks (Figure 33). In this scenar-
io, the gap between pricing and unit labor costs growth would
Figure 31: US corporate profits and employment remain negligible and thus so would the downward pressure
%chg 8q saar; soft landings: Two years after peak rate shaded on profit margins. In short, a productivity lift could generate
40 Profits Employment 6 sufficient income for corporates and households, while also
still allowing for inflation to return to target and central banks
4 to gradually ease rates.
20
2
Figure 33: Margin drivers under Goldilocks, Dev Mkt
0 Goldilocks
0 %oya; Through 2Q23, fcst 3Q23-4Q24 to get Goldilocks
Scenario
7
-20 -2 6
5 (+) Pricing power
60 65 70 75 80 85 90 95 00 05 10 15 20 (GDP deflator)
Source: BEA, BLS, J.P. Morgan 4
3
2
Business spending and hiring will likely moderate further, 1
necessitating a new positive impulse to stabilize revenue 0
-1 (-) Unit labor
growth and business confidence in order to arrest this dynam- cost
-2
ic next year. Recent market movements point to a likely path:
00 02 04 06 08 10 12 14 16 18 20 22 24
if inflation moderates further and provides an opportunity for Source: Bloomberg Finance, L.P., national sources, J.P. Morgan; DM recession bars.
early central bank easing, supportive financial conditions
could boost earnings and sentiment.
12
JPMORGAN
With the above framework in mind, three developments over trend path. Excess capacity in China is adding significant-
the past year have surprised us in a manner that raises opti- ly to downward pressure on import prices in the DM and
mism that a more complete alignment of global demand and is a disinflationary impulse that is likely to linger (Figure
supply might be achieved without the need for a recession: 35).
• Strong US supply. The US economy has grown 2.9% Figure 35: US and Euro area import prices from China
over the past four quarters, a full percentage above most %6m, ar
US Euro area
estimates of its potential, even as the unemployment rate 10 40
has risen 0.3%-pts. Behind this constructive performance
lies better news on the supply side. Labor productivity
5 20
surged last quarter and posted a 2.2% increase over the
past four quarters, close to a percentage point above the
last expansion’s trend (Figure 34). In addition, the US 0 0
labor force has increased at twice its demographic trend
pace thus far this year—a development related to both ris- -5 -20
ing immigration flows and prime-aged labor-force partici- 04 06 08 10 12 14 16 18 20 22 24
Source: BLS, Eurostat, J.P. Morgan
pation. The upshot of this news is that realized potential
has risen faster than GDP—at about 3.5% over the past
year. At the same time, unit labor cost growth has slowed Balance sheet paint to keep on drying
to 1.9%. Nearly all DM central banks have begun quantitative tighten-
ing (QT) as they reduce the footprint of their balance sheets.
Figure 34: DM labor productivity
As of end-October, the aggregate DM central bank balance
Index, 4Q19 = 100; US thru 3Q, rest thru 2Q
sheet stood at $22.3 trillion, down $3.1tn (12.2%) from its
108
US peak in March 2022 (Figure 36). We expect this gradual
106
104
unwinding process to continue, largely in the background,
102 UK unless a material economic contraction or a substantial dislo-
100 Euro area cation in financial markets were to occur.
98
96 Figure 36: DM central bank balance sheet
94 Trillion USD 12m change, trillion USD
16 17 18 19 20 21 22 23 28 9.0
Source: BLS, ECB, ONS, J.P. Morgan
24 Stock Flow 7.5
6.0
20 4.5
• Sleeping Western European consumer. By contrast, 16 3.0
Europe has not generated strong supply-side performance. 12 1.5
Indeed, the Euro area unemployment rate has declined 0.0
8 -1.5
0.2%-pts over the past four quarters despite stagnant GDP.
4 -3.0
While regional supply has been weak, there is hope that 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
downward pressure on core inflation will be achieved Source: DM central banks, J.P. Morgan Global Economics
through weak demand. As noted earlier, Western Europe-
an has not generated real consumer spending gains since Table 4: DM central bank balance sheets
12m diff as of Dec, $bn
4Q19, a development that is now starting to generate sig-
2018 2019 2020 2021 2022 2023 2024
nificant downward pressure on core inflation across the Fed -385 115 3161 1431 -258 -754 -930
region. ECB 244 -32 2473 1695 -639 -1109 -776
BoJ 204 139 860 141 -132 401 -66
• China excess capacity. Considerable downward pressure BoE 34 -12 388 274 -27 -188 -177
on goods price inflation to date has largely reflected a fad- BoC 4 3 312 -35 -65 -70 -111
ing of COVID-related bottlenecks. This anticipated disin- RBA -6 0 91 197 0 -42 -80
flationary impulse is likely to fade further over coming RBNZ 1 -3 28 10 7 -2 -6
Total 93 210 7313 3711 -1113 -1763 -2146
quarters. However, a year of sustained weakness in global Source: Fed, ECB, BoJ, BoE, BoC, RBA, RBNZ, J.P. Morgan
manufacturing has pushed the path of factory output
below its pre-pandemic trend path. This excess capacity Based on our projections, we expect a further decline in the
in global industry is concentrated in China, where IP lev- aggregate DM central bank balance sheet to $19.9tn by the
els are currently close to 13% below their pre-pandemic end of 2024. That would be represent a $5.4tn reduction from
13
JPMORGAN
its 2022 peak—unwinding a bit less than half the $11.3tn

increase that occurred once the global pandemic hit.
Although Fed QT gets the most market attention, the ECB has
engaged in a larger post-pandemic balance sheet unwind, and
we expect that faster pace to continue at least into the middle
of next year (Table 4). From its peak in the spring of 2022,
the ECB has reduced its balance sheet by €1.8tn through last
month, and it should decline by another €800bn to end-2024
as TLTROs run down and assets in the APP mature. The ECB
should continue to have the largest balance sheet scaled to its
economy outside of the BoJ, which is expected to decline to
just under 48% of GDP at the end of this year and 42% at the
end of next year, from a pandemic-era peak of 67%.
By contrast, the Fed’s asset holdings are expected to shrink to

just below 28% of GDP at end-2023 and 24% at end-2024,
from a peak of nearly 36% in early 2022. That translates into
just over $1tn of runoff to date, and roughly $1.1tn next year.
The baseline for the Fed, as for most other DM central banks,
is that runoff continues in the background and is a function of
market indicators—specifically reserve scarcity for banks—
rather than the macroeconomy. Our strategists see reserves
remaining sufficiently plentiful (above $2.75tn) until at least
the end of 2024, with the runoff of Treasury holdings ending
then but the reduction in MBS holdings continuing.
The BoE started its QT policy earlier than the other G-4 cen-
tral banks and recently increased its planned reduction in gilts
for next year to £100bn (from £80bn previously). The BoE
also has been unique among the G-4 central banks in actively
selling assets, which should continue at £40bn for next year.
Additionally, the BoE’s Term Funding Scheme for small and
medium-sized enterprises has started to unwind as well. We
see the BoE’s balance sheet declining from about 36% of
GDP currently to 29% by the end of 2024.
The BoJ is in a very different place for monetary policy, as it

is still engaged in “Quantitative and Qualitative Easing” with
yield curve control, but over the past several months it has
broadly relaxed its YCC framework. That said, we think the
BoJ will continue to flexibly purchase assets to influence 10-
year JGB yields, with only a gradual reduction in the BoJ’s
balance sheet in 2024. At some point it is likely to start a de-
facto tapering, followed by QT, before the BoJ moves away
from its negative interest rate policy. Thus, we expect the
BoJ’s balance sheet to rise to a peak of 130% of GDP at the
end of this year, then very gradually begin to decline from
next spring, reaching 126% of GDP by end-2024. Indeed, the
BoJ is the only DM central bank expected to still be adding to
its balance sheet this year, and on net we look for the BoJ’s
balance sheet to be ¥3.8tn ($25bn) larger at the end of next
year than it is now.
14
JPMORGAN
The global economic outlook in summary

Real GDP Real GDP Consumer prices
% over a year ago % over previous period, saar % over a year ago
2022 2023 2024 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 2Q23 4Q23 2Q24 4Q24
United States 1.9 2.5 1.6 2.1 4.9 2.0 1.3 0.5 0.5 4.1 3.2 2.6 2.3
Canada 3.4 1.2 0.9 -0.2 0.4 1.5 0.8 0.8 1.0 3.5 3.3 2.1 2.1
Latin America 3.7 2.0 1.3 h 1.1 h 2.0 i -0.3 i 1.7 h 1.7 1.9 h 5.8 4.8 3.9 i 3.7 i
Argentina 5.0 -2.1 -3.0 -10.2 10.0 -12.0 -6.0 -1.5 1.5 114.5 215.9 431.0 211.0
Brazil 2.9 2.9 1.5 h 3.7 -1.2 -0.4 2.4 h 2.2 h 2.2 h 3.8 4.7 3.2 i 3.6 i
Chile 2.4 -0.1 2.0 -1.4 i 1.3 h 1.6 2.4 2.3 2.4 8.7 4.0 3.3 3.2
Colombia 7.3 1.2 1.0 -3.9 1.0 -1.5 1.0 2.0 3.0 12.4 9.7 8.5 4.9
Ecuador 2.9 1.4 1.5 10.4 1.0 0.3 0.5 1.5 0.7 2.0 2.4 2.6 2.1
Mexico 3.9 3.6 2.6 3.4 3.7 3.0 3.7 2.9 0.6 5.7 4.3 4.0 3.8
Peru 2.7 -0.5 2.1 1.3 0.4 3.3 3.0 -3.0 6.0 7.4 3.5 2.6 2.8
Uruguay 4.9 0.4 2.8 -5.5 i 4.5 i 6.0 2.0 3.0 2.5 9.3 h 8.6 h 6.9 h 4.5 i
Asia/Pacific 3.2 4.2 3.9 1.3 4.9 4.0 4.2 3.9 3.7 1.9 1.8 2.5 2.4 i
Japan 0.9 1.7 0.9 4.5 -2.1 0.5 1.3 1.6 0.7 3.4 3.5 4.6 3.2
Australia 3.7 1.9 2.1 1.4 1.3 1.5 2.5 2.2 2.7 6.0 4.3 4.0 3.6
New Zealand 2.7 1.5 1.9 3.5 3.3 -3.1 2.5 3.9 3.7 6.0 5.0 3.7 2.4
EM Asia 3.6 4.8 4.6 0.6 6.5 4.9 4.8 4.4 4.3 1.3 1.3 2.1 h 2.2 i
China 3.0 5.2 4.9 -0.8 6.9 5.5 5.5 4.7 4.5 0.1 0.0 1.2 1.8
India 7.2 6.2 5.7 5.0 6.5 5.2 4.8 5.5 5.9 4.6 5.9 h 5.6 h 4.8 i
Ex China/India 3.5 2.6 3.0 2.5 5.1 i 2.8 h 2.7 2.9 3.0 3.3 2.9 2.8 2.2
Hong Kong -3.5 3.3 3.0 -5.2 0.3 1.8 4.9 4.9 4.1 2.0 2.5 2.4 1.7
Indonesia 5.3 4.8 4.1 5.0 4.8 4.5 4.0 3.5 3.5 3.9 2.6 2.4 2.4
Korea 2.6 1.3 2.1 2.5 2.4 2.0 1.8 1.8 2.5 3.2 3.7 3.2 1.7
Malaysia 8.7 3.4 3.2 6.3 10.7 2.5 3.0 3.0 3.5 2.8 1.8 3.6 3.8
Philippines 7.6 5.1 4.2 -2.8 14.0 4.1 3.2 2.0 4.1 6.0 4.8 5.1 4.2
Singapore 3.6 0.7 0.6 0.3 1.2 0.3 0.2 0.5 1.0 5.1 3.8 2.9 2.1
Taiwan 2.4 1.3 3.7 5.6 10.5 3.5 2.5 2.5 2.6 2.0 2.7 2.1 1.5
Thailand 2.6 2.3 i 3.7 0.7 3.1 i 2.3 h 3.1 i 7.2 i 3.9 i 1.1 -0.2 1.1 2.3
Western Europe 3.6 0.5 0.4 i 0.5 -0.2 0.2 i 0.5 i 0.6 0.5 i 6.7 3.3 2.6 2.2 i
Euro area 3.4 0.5 0.4 i 0.6 -0.2 0.0 i 0.5 i 0.8 0.8 i 6.2 3.0 2.5 2.0
Germany 1.9 -0.1 0.2 i 0.6 -0.3 -0.3 i 0.3 i 0.5 i 0.5 i 6.9 2.6 i 2.1 i 2.0
France 2.5 0.9 0.6 i 2.3 0.4 0.0 i 0.5 i 0.8 0.8 i 6.1 4.4 2.6 i 2.1
Italy 3.9 0.7 0.3 i -1.5 0.2 0.3 i 0.5 i 0.5 i 0.8 i 7.8 1.3 i 0.9 i 1.1
Spain 5.8 2.4 1.3 h 1.8 1.3 1.5 h 1.3 h 1.3 1.0 i 2.8 3.8 i 4.1 i 2.9 i
Norway 3.7 1.2 0.5 i -0.2 0.5 0.5 i 0.5 i 0.7 i 0.8 6.5 4.6 h 2.4 i 2.2 i
Sweden 2.9 -0.5 -0.1 i -3.3 0.0 -0.8 0.0 i 0.5 i 0.8 i 9.8 5.5 h 3.3 i 2.0 i
United Kingdom 4.3 0.6 0.2 0.8 -0.1 1.0 0.8 0.0 -1.0 8.4 4.5 2.8 h 3.1 h
EMEA EM 2.3 2.3 2.1 4.6 4.1 0.2 2.4 1.2 1.7 12.5 15.9 16.5 10.8
Czech Republic 2.4 -0.4 1.0 0.6 -1.2 1.3 1.3 1.5 1.8 11.1 7.7 2.5 2.9
Hungary 4.6 -0.6 1.6 0.0 3.6 1.0 1.3 1.5 1.8 21.8 8.0 4.2 4.4
Israel 6.4 2.8 2.0 3.3 2.8 -10.0 6.0 6.0 5.0 4.6 3.6 2.6 2.2
Poland 5.3 0.5 2.8 1.2 5.7 1.5 3.5 1.8 2.8 13.0 6.7 4.6 5.5
Romania 4.5 1.2 3.5 5.4 1.6 2.0 2.4 4.5 6.6 10.7 7.5 6.9 5.5
Russia -1.9 3.2 1.8 3.1 5.9 2.8 0.5 0.3 1.0 2.7 7.0 7.4 5.0
South Africa 1.9 0.8 1.2 2.4 0.3 0.8 1.4 1.0 1.5 6.2 5.2 4.8 4.7
Turkey 5.5 4.0 2.7 14.6 4.5 -2.0 4.5 -1.0 -1.0 40.4 63.0 71.5 41.9
Global 2.9 2.6 2.2 1.4 h 3.5 2.1 i 2.3 1.9 1.9 4.3 3.5 3.4 2.9
Developed markets 2.6 1.6 1.1 1.6 2.0 1.1 i 1.0 i 0.7 0.6 i 5.0 3.4 h 2.8 2.4
Emerging markets 3.5 4.1 3.8 1.2 5.6 3.6 4.1 3.6 3.7 h 3.4 3.7 4.3 3.6
Emerging ex China 3.9 3.0 2.8 3.2 4.3 i 1.7 2.7 h 2.6 2.9 h 6.6 7.5 h 7.4 5.4
Global — PPP weighted 3.4 3.0 2.6 1.5 h 3.9 2.5 2.6 2.3 2.3 i 4.7 4.5 h 4.6 3.6
Source: J.P. Morgan Global Economics. The long-form nomenclature for China, Hong Kong, and Taiwan is Mainland China, Hong Kong SAR (China), and Taiwan (China)
15
JPMORGAN
G-3 economic outlook detail

2023 2024
2022 2023 2024 3Q 4Q 1Q 2Q 3Q 4Q
United States
Real GDP 1.9 2.5 1.6 4.9 2.0 1.3 0.5 0.5 0.8
Private consumption 2.5 2.3 1.4 4.0 2.3 1.3 0.3 0.3 0.5
Equipment investment 5.2 -0.1 0.9 -3.8 1.0 1.5 1.0 0.8 1.0
Non-residential construction -2.1 11.3 2.0 1.6 1.1 1.0 1.0 1.0 1.0
Intellectual property products 9.1 4.7 3.7 2.6 6.6 3.0 3.0 3.0 5.5
Residential construction -9.0 -11.0 0.2 3.9 2.0 -1.0 -1.5 -1.5 4.0
Inventory change ($ bn saar) 128.1 42.0 65.0 80.6 45.5 39.5 58.8 80.5 81.2
Government spending -0.9 3.7 1.7 4.6 1.5 1.8 0.3 0.3 1.3
Exports of goods and services 7.0 2.6 0.8 6.2 3.5 1.0 -0.8 -0.8 0.3
Imports of goods and services 8.6 -1.6 1.4 5.7 1.0 1.5 1.5 1.8 2.8
Domestic final sales contribution 1.7 2.2 1.6 3.6 2.4 1.5 0.5 0.5 1.1
Inventories contribution 0.7 -0.4 0.1 1.3 -0.6 -0.1 0.3 0.4 0.0
Net trade contribution -0.4 0.6 -0.1 -0.1 0.2 -0.1 -0.3 -0.3 -0.4
Consumer prices (%oya) 8.0 4.1 2.5 3.6 3.2 2.8 2.6 2.4 2.3
Excluding food and energy (%oya) 6.1 4.8 3.1 4.4 4.0 3.5 3.0 2.9 2.8
Core PCE deflator (%oya) 5.2 4.2 2.5 3.9 3.4 2.8 2.5 2.5 2.4
Federal budget balance (% of GDP, FY) -5.3 -6.2 -5.9
Personal saving rate (%) 3.3 4.3 3.2 3.8 3.2 3.3 3.4 3.2 3.0
Unemployment rate (%) 3.6 3.6 4.2 3.7 3.8 3.9 4.1 4.3 4.4
Industrial production, manufacturing 2.7 -0.5 0.3 0.0 -0.2 0.8 0.5 0.4 0.3
Euro area
Real GDP 3.4 0.5 0.4 -0.2 0.0 0.5 0.8 0.8 0.8
Private consumption 4.2 0.4 1.0 0.5 1.0 1.3 1.3 1.0 1.0
Capital investment 2.8 1.0 0.0 0.0 -0.3 -0.3 -0.3 0.5 1.3
Government consumption 1.6 0.1 0.4 0.5 0.5 0.3 0.3 0.5 0.5
Exports of goods and services 7.3 0.5 1.6 2.0 2.0 2.0 2.0 2.0 2.0
Domestic final sales contribution 3.1 0.4 0.6 0.4 0.6 0.7 0.7 0.7 0.9
Inventories contribution 0.3 -0.3 -0.2 -0.7 -0.7 -0.2 0.0 -0.1 -0.2
Net trade contribution 0.0 0.3 0.0 0.1 0.1 0.1 0.1 0.1 0.1
Consumer prices (HICP, %oya) 8.4 5.5 2.3 5.0 3.0 2.6 2.5 2.0 2.0
ex food, alcohol and energy 3.9 5.0 2.8 5.1 4.0 3.3 2.9 2.6 2.5
General govt. budget balance (% of GDP, FY) -3.6 -3.2 -2.9
Industrial production 2.2 -2.4 -0.8 -3.9 -2.0 -1.0 1.0 2.0 2.0
Japan
Real GDP 0.9 1.7 0.9 -2.1 0.5 1.3 1.6 0.7 0.7
Private consumption 2.0 0.7 0.5 -0.2 1.2 0.8 1.0 0.6 0.6
Business investment 1.9 1.4 1.7 -2.5 2.0 4.0 3.0 2.0 2.0
Residential construction -3.7 2.1 1.0 -0.3 1.0 1.0 0.5 0.5 0.5
Public investment -7.3 2.1 -0.3 -2.0 0.0 0.0 0.0 -0.5 -0.5
Government consumption 1.2 0.4 1.0 1.2 -0.5 2.0 4.0 -2.0 -1.0
Exports of goods and services 5.1 2.2 1.5 2.1 -1.0 0.5 1.0 1.0 1.0
Domestic final sales contribution 1.2 0.9 0.8 -0.4 0.9 1.5 1.9 0.2 0.4
Inventories contribution 0.3 0.1 0.0 -1.4 0.6 -0.1 -0.3 0.5 0.3
Net trade contribution -0.5 0.7 0.1 -0.4 -1.0 -0.1 0.0 0.0 0.0
Consumer prices (%oya) 2.5 3.4 4.0 3.1 3.5 4.0 4.6 4.0 3.2
ex food and energy -0.1 2.7 2.5 2.7 3.1 2.8 2.8 2.3 2.2
General govt. net lending (% of GDP, CY) -10.4 -8.8 -8.9
Industrial production 0.0 -1.7 0.1 -4.9 -2.1 1.5 1.0 1.0 1.0
Memo: Global industrial production 0.7 0.2 1.8 3.8 1.7 1.8 2.0 1.8 1.7
%oya -0.2 0.6 1.1 2.3 1.8 1.8
Source: Government agencies and J.P. Morgan Global Economics. Details on request.
16
JPMORGAN
Real GDP
%q/q, saar, underlining denotes forecasts
2022 2023 2024 2025
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
United States -2.0 -0.6 2.7 2.6 2.2 2.1 4.9 2.0 1.3 0.5 0.5 0.8 2.0 2.3 1.8 1.8
Japan -2.6 4.7 -0.4 -0.2 3.7 4.5 -2.1 0.5 1.3 1.6 0.7 0.7 0.6 0.6 0.6 0.6
Canada 2.6 3.6 2.3 -0.1 2.6 -0.2 0.4 1.5 0.8 0.8 1.0 1.5 2.0 2.0 2.0 2.0
Australia 2.5 2.9 2.7 2.6 1.5 1.4 1.3 1.5 2.5 2.2 2.7 2.7 2.0 2.0 1.8 1.7
Euro area 2.8 3.3 1.4 -0.1 0.2 0.6 -0.2 0.0 0.5 0.8 0.8 0.8 1.0 1.0 1.3 1.3
Germany 4.1 -0.5 1.5 -1.6 -0.1 0.6 -0.3 -0.3 0.3 0.5 0.5 0.8 0.8 0.8 1.0 1.0
France -0.5 1.7 2.1 -0.1 0.3 2.3 0.4 0.0 0.5 0.8 0.8 0.8 1.0 1.0 1.3 1.3
Italy 0.4 5.7 1.4 -0.7 2.3 -1.5 0.2 0.3 0.5 0.5 0.8 0.8 0.8 1.0 1.0 1.0
Spain 1.0 10.3 2.1 2.0 2.3 1.8 1.3 1.5 1.3 1.3 1.0 1.0 1.3 1.3 1.5 1.5
Norway -0.3 4.9 1.9 2.1 0.8 -0.2 0.5 0.5 0.5 0.7 0.8 0.8 1.3 1.3 1.3 1.3
New Zealand 0.5 5.2 6.2 -2.2 0.0 3.5 3.3 -3.1 2.5 3.9 3.7 1.7 2.5 1.6 3.9 2.4
Sweden -2.6 3.2 1.7 -3.2 1.7 -3.3 0.0 -0.8 0.0 0.5 0.8 1.0 1.3 1.8 1.5 1.5
United Kingdom 2.1 0.4 -0.3 0.5 1.3 0.8 -0.1 1.0 0.8 0.0 -1.0 -1.0 -0.5 0.4 0.8 0.8
Argentina 3.1 7.0 1.8 -7.0 2.8 -10.2 10.0 -12.0 -6.0 -1.5 1.5 4.0 6.0 7.0 7.0 6.0
Brazil 3.9 4.2 1.8 0.4 7.5 3.7 -1.2 -0.4 2.4 2.2 2.2 2.0 2.0 1.8 1.5 1.5
Chile -3.1 -0.7 -4.8 0.2 2.2 -1.4 1.3 1.6 2.4 2.3 2.4 2.4 2.2 2.4 2.6 2.2
Colombia 4.9 6.5 3.5 -6.5 9.0 -3.9 1.0 -1.5 1.0 2.0 3.0 3.0 2.5 2.5 2.5 2.5
Ecuador 0.2 0.8 7.0 9.7 -12.0 10.4 1.0 0.3 0.5 1.5 0.7 1.5 3.0 2.5 2.0 1.5
Mexico 5.7 4.0 5.0 2.6 3.3 3.4 3.7 3.0 3.7 2.9 0.6 1.0 0.8 1.8 1.4 3.1
Peru 3.4 0.7 2.9 -0.2 -5.2 1.3 0.4 3.3 3.0 -3.0 6.0 3.0 3.2 3.5 3.2 3.0
China 4.7 -6.0 9.8 3.8 10.4 -0.8 6.9 5.5 5.5 4.7 4.5 4.1 3.7 3.7 4.1 4.1
Hong Kong -6.8 0.6 -9.8 0.1 23.6 -5.2 0.3 1.8 4.9 4.9 4.1 4.1 2.4 2.4 2.4 2.4
Indonesia 4.8 5.3 4.8 5.4 4.9 5.0 4.8 4.5 4.0 3.5 3.5 5.0 5.0 6.0 6.0 6.0
India 8.0 5.6 5.2 5.0 9.0 5.0 6.5 5.2 4.8 5.5 5.9 6.2 6.5 6.5 6.0 6.0
Korea 2.7 3.0 0.9 -1.2 1.3 2.5 2.4 2.0 1.8 1.8 2.5 2.5 2.3 2.3 2.3 2.3
Malaysia 10.1 17.3 9.0 -6.7 3.8 6.3 10.7 2.5 3.0 3.0 3.5 3.5 4.0 5.0 5.2 5.2
Philippines 6.4 3.4 10.0 8.1 1.8 -2.8 14.0 4.1 3.2 2.0 4.1 4.1 6.1 6.1 6.1 6.1
Singapore 5.6 -0.4 3.2 0.3 -1.6 0.3 1.2 0.3 0.2 0.5 1.0 2.0 2.5 2.5 2.5 2.5
Taiwan 3.9 -8.9 3.6 -1.9 -2.9 5.6 10.5 3.5 2.5 2.5 2.6 2.6 2.8 2.9 2.6 2.6
Thailand 2.1 3.7 3.4 -3.8 7.1 0.7 3.1 2.3 3.1 7.2 3.9 2.6 2.9 2.9 2.9 2.9
Czech Republic 2.4 0.6 -0.9 -1.6 0.2 0.6 -1.2 1.3 1.3 1.5 1.8 1.8 1.8 1.8 2.0 2.0
Hungary 6.1 3.2 -3.8 -2.5 -0.8 0.0 3.6 1.0 1.3 1.5 1.8 2.0 2.5 2.5 2.8 2.8
Poland 15.2 -5.9 4.9 -8.1 4.5 1.2 5.7 1.5 3.5 1.8 2.8 2.3 3.0 3.0 3.0 3.0
Romania 11.1 1.0 3.3 4.6 -2.9 5.4 1.6 2.0 2.4 4.5 6.6 6.1 -2.8 6.1 3.6 6.1
Russia -0.2 -21.5 5.4 7.5 5.1 3.1 5.9 2.8 0.5 0.3 1.0 1.5 1.5 1.5 1.5 1.5
South Africa 6.3 -3.3 7.3 -4.3 1.6 2.4 0.3 0.8 1.4 1.0 1.5 1.4 1.5 1.3 1.2 1.2
Israel -2.4 6.9 1.7 4.6 3.1 3.3 2.8 -10.0 6.0 6.0 5.0 4.3 4.5 4.5 4.0 3.5
Turkey 0.9 5.8 2.2 4.7 -0.5 14.6 4.5 -2.0 4.5 -1.0 -1.0 1.0 6.0 6.5 4.0 3.6
Global 1.8 -0.2 3.8 1.8 4.0 1.4 3.5 2.1 2.3 1.9 1.9 1.9 2.3 2.5 2.4 2.42
Developed market economies -0.1 1.5 1.8 1.2 1.7 1.6 2.0 1.1 1.0 0.7 0.6 0.7 1.4 1.6 1.4 1.4
Emerging economies 4.5 -2.5 6.6 2.7 7.3 1.2 5.6 3.6 4.1 3.6 3.7 3.6 3.5 3.7 3.7 3.8
G-7 -0.7 0.8 1.8 1.2 2.0 1.8 2.4 1.3 1.0 0.6 0.5 0.7 1.4 1.6 1.4 1.4
Latin America 3.7 4.1 2.5 -0.2 4.3 1.1 2.0 -0.3 1.7 1.7 1.9 2.1 2.2 2.6 2.3 2.7
Emerging Asia 4.8 -2.8 7.8 3.2 8.7 0.6 6.5 4.9 4.8 4.4 4.3 4.2 3.9 4.0 4.2 4.2
Emerging Europe1 3.9 -9.0 3.7 3.0 2.7 5.0 4.7 1.3 2.0 0.7 1.4 1.9 2.4 3.2 2.5 2.6
17
JPMORGAN
Real GDP
%oya, underlining denotes forecasts
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
The Americas 1.4 2.4 2.8 2.1 -3.1 6.0 2.3 2.3 1.5 1.6
United States 1.8 2.5 3.0 2.5 -2.2 5.8 1.9 2.5 1.6 1.5
Canada 1.0 3.0 2.8 1.9 -5.1 5.0 3.4 1.2 0.9 1.7
Argentina -2.1 2.8 -2.6 -2.0 -9.9 10.7 5.0 -2.1 -3.0 5.1
Brazil -3.3 1.3 1.8 1.2 -3.3 5.0 2.9 2.9 1.5 1.9
Chile 1.8 1.4 4.0 0.7 -6.1 11.7 2.4 -0.1 2.0 2.4
Colombia 2.1 1.4 2.6 3.2 -7.3 11.0 7.3 1.2 1.0 2.7
Ecuador -1.2 2.4 1.3 0.0 -7.8 4.2 2.9 1.4 1.5 2.0
Mexico 1.8 1.9 2.0 -0.3 -8.7 5.8 3.9 3.6 2.6 1.4
Peru 4.0 2.5 4.0 2.2 -11.0 13.3 2.7 -0.5 2.1 3.0
Uruguay 2.0 1.7 0.2 0.7 -6.3 5.3 4.9 0.4 2.8 2.2
Asia/Pacific 5.2 5.3 5.0 4.2 -0.6 6.6 3.2 4.2 3.9 3.5
Japan 0.7 1.7 0.6 -0.4 -4.3 2.3 0.9 1.7 0.9 0.7
Australia 2.7 2.4 2.8 1.9 -1.8 5.2 3.7 1.9 2.1 2.2
New Zealand 3.9 3.5 3.5 3.1 -1.5 6.0 2.7 1.5 1.9 2.6
China 6.7 6.8 6.6 6.1 2.2 8.1 3.0 5.2 4.9 4.0
Hong Kong 2.2 3.8 2.8 -1.7 -6.5 6.4 -3.5 3.3 3.0 3.1
India 8.3 6.8 6.5 4.0 -6.6 8.7 7.2 6.2 5.7 6.2
Indonesia 5.0 5.1 5.2 5.0 -2.1 3.7 5.3 4.8 4.1 5.3
Korea 2.9 3.2 2.9 2.2 -0.7 4.3 2.6 1.3 2.1 2.3
Malaysia 4.4 5.7 4.9 4.4 -5.5 3.1 8.7 3.4 3.2 4.6
Philippines 7.1 6.9 6.3 6.1 -9.5 5.7 7.6 5.1 4.2 5.3
Singapore 3.6 4.5 3.6 1.3 -3.9 8.9 3.6 0.7 0.6 2.2
Taiwan 2.2 3.3 2.8 3.1 3.4 6.5 2.4 1.3 3.7 2.8
Thailand 3.4 4.2 4.2 2.1 -6.2 1.6 2.6 2.3 3.7 3.2
Africa/Middle East 2.6 2.9 3.0 2.1 -3.5 7.2 4.3 1.9 1.6 3.0
South Africa 0.7 1.2 1.6 0.3 -6.0 4.7 1.9 0.8 1.2 1.4
Euro area 1.8 2.8 1.8 1.6 -6.2 5.9 3.4 0.5 0.4 1.0
Germany 2.1 3.0 1.0 1.1 -4.2 3.1 1.9 -0.1 0.2 0.8
France 1.0 2.5 1.8 1.9 -7.7 6.4 2.5 0.9 0.6 1.0
Italy 1.4 1.7 0.8 0.5 -9.0 8.3 3.9 0.7 0.3 0.8
Spain 3.0 3.0 2.3 2.0 -11.2 6.4 5.8 2.4 1.3 1.2
Norway 0.5 2.5 2.3 2.4 -3.4 4.2 3.7 1.2 0.5 1.1
Sweden 1.8 2.8 2.0 2.0 -2.3 5.9 2.9 -0.5 -0.1 1.2
United Kingdom 1.9 2.7 1.4 1.6 -10.4 8.7 4.3 0.6 0.2 -0.2
Bulgaria 6.4 6.2 -5.5 0.4 1.8 0.6 0.9 2.0 2.5 0.0
Czech Rep. 2.5 5.2 3.2 3.0 -5.5 3.6 2.4 -0.4 1.0 1.8
Hungary 2.2 4.3 5.4 4.9 -4.5 7.2 4.6 -0.6 1.6 2.3
Poland 3.1 4.8 5.9 4.5 -2.0 6.9 5.3 0.5 2.8 2.7
Romania 2.9 8.2 6.0 3.9 -3.7 5.8 4.5 1.2 3.5 3.5
Russia 0.2 1.8 2.8 2.2 -2.7 4.7 -1.9 3.2 1.8 1.4
Israel 4.4 4.4 4.2 3.8 -1.4 9.3 6.4 2.8 2.0 4.5
Turkey 3.3 7.5 3.0 0.8 1.9 11.4 5.5 4.0 2.7 3.5
All Europe 1.8 3.0 2.1 1.8 -5.9 6.3 3.3 0.8 0.7 1.0
Global 3.0 3.7 3.5 2.8 -2.9 6.3 2.9 2.6 2.2 2.2
Developed markets 1.7 2.5 2.3 1.8 -4.2 5.6 2.6 1.6 1.1 1.2
G-7 1.6 2.4 2.2 1.8 -4.1 5.5 2.2 1.7 1.1 1.1
Emerging Economies 4.8 5.4 5.1 4.3 -1.0 7.3 3.5 4.1 3.8 3.7
Latin America -0.4 1.7 1.6 0.5 -6.6 7.2 3.7 2.0 1.4 2.3
Emerging Asia 6.3 6.2 6.0 5.2 0.2 7.5 3.6 4.8 4.6 4.1
ex China 5.3 5.1 4.8 3.4 -3.9 6.1 4.8 3.8 4.0 4.4
ex China and India 3.7 4.2 3.9 3.0 -2.4 4.7 3.5 2.6 3.0 3.5
Emerging Europe 1.8 4.3 3.7 2.6 -2.0 6.6 1.9 2.3 2.2 2.3
18
JPMORGAN
Consumer prices
underlining denotes forecasts
2022 2023 2024 2025
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
%q/q, saar
United States 9.2 9.7 5.5 4.2 3.8 2.7 3.6 2.9 2.1 1.9 2.7 2.4 2.5 2.5 2.4 2.4
Japan 3.1 4.0 3.9 4.5 2.1 2.8 3.1 5.7 4.9 4.9 0.7 2.5 1.8 -4.9 0.7 2.5
Euro area 11.0 9.8 9.4 9.6 3.3 2.5 4.1 1.9 1.8 2.2 2.1 2.0 1.8 1.7 1.7 1.7
United Kingdom 7.5 16.4 7.8 11.5 5.9 8.0 1.8 2.5 5.5 1.1 3.5 2.5 3.4 0.7 2.5 1.7
%oya
United States 8.0 8.6 8.3 7.1 5.8 4.1 3.6 3.2 2.8 2.6 2.4 2.3 2.4 2.5 2.5 2.5
Japan 0.9 2.4 2.9 3.9 3.6 3.4 3.1 3.5 4.0 4.6 4.0 3.2 2.5 2.0 1.9 1.9
Canada 5.8 7.5 7.2 6.7 5.1 3.5 3.7 3.3 2.3 2.1 2.1 2.1 2.1 2.1 2.1 2.1
Australia 5.1 6.1 7.3 7.8 7.0 6.0 5.4 4.3 4.0 4.0 3.7 3.6 3.2 3.0 2.9 2.9
Euro area 6.1 8.0 9.3 10.0 8.0 6.2 5.0 3.0 2.6 2.5 2.0 2.0 2.0 1.9 1.8 1.7
Germany 6.1 8.3 9.4 10.8 8.7 6.9 5.7 2.6 2.4 2.1 1.6 2.0 2.0 1.9 1.8 1.7
France 4.2 5.9 6.5 7.0 7.0 6.1 5.5 4.4 3.2 2.6 2.2 2.1 2.0 1.9 1.9 1.8
Italy 6.0 7.4 8.9 12.5 9.5 7.8 5.8 1.3 1.0 0.9 0.6 1.1 1.5 1.6 1.6 1.7
Spain 7.9 8.9 10.0 6.5 5.0 2.8 2.6 3.8 3.1 4.1 3.0 2.9 2.8 2.5 2.1 1.9
Norway 3.8 5.8 6.7 6.6 6.6 6.5 4.5 4.6 4.3 2.4 2.3 2.2 2.6 1.8 1.7 1.9
New Zealand 6.9 7.3 7.2 7.2 6.7 6.0 5.6 5.0 4.3 3.7 2.7 2.4 2.2 2.2 1.9 1.7
Sweden 4.7 7.4 9.7 11.6 11.4 9.8 7.7 5.5 4.4 3.3 2.5 2.0 2.2 1.8 1.7 2.0
United Kingdom 6.2 9.2 10.0 10.8 10.2 8.4 6.7 4.5 4.4 2.8 3.2 3.1 2.6 2.5 2.2 2.1
Argentina 54.1 61.8 78.1 92.0 102.6 114.5 127.7 215.9 422.2 431.0 352.0 211.0 70.0 41.0 35.0 37.8
Brazil 10.7 11.9 8.6 6.0 5.3 3.8 4.6 4.7 4.0 3.2 3.4 3.6 3.5 3.5 3.5 3.4
Chile 8.3 11.5 13.6 13.0 11.8 8.7 5.6 4.0 2.9 3.3 3.0 3.2 3.6 3.8 3.5 3.2
Colombia 7.8 9.3 10.8 12.6 13.3 12.4 11.4 9.7 9.2 8.5 6.0 4.9 2.8 2.8 3.8 3.8
Ecuador 2.6 3.5 3.9 3.8 3.0 2.0 2.0 2.4 2.5 2.6 2.5 2.1 2.4 2.6 1.9 2.1
Mexico 7.3 7.8 8.5 8.0 7.5 5.7 4.6 4.3 4.0 4.0 3.6 3.8 4.2 3.9 3.9 3.9
Peru 6.2 8.3 8.6 8.4 8.6 7.4 5.0 3.5 2.8 2.6 2.3 2.8 2.8 2.8 3.0 3.0
China 1.1 2.2 2.7 1.8 1.3 0.1 -0.1 0.0 0.8 1.2 1.4 1.8 1.8 1.8 2.0 2.1
Hong Kong 1.5 1.5 2.7 1.8 1.9 2.0 1.9 2.5 2.3 2.4 2.1 1.7 1.9 2.1 2.2 2.4
Indonesia 2.3 3.8 5.0 5.5 5.2 3.9 3.1 2.6 2.5 2.4 2.4 2.4 2.5 2.6 2.8 3.0
India 6.3 7.3 7.0 6.1 6.2 4.6 6.4 5.9 5.6 5.6 4.9 4.8 4.6 5.0 5.0 5.0
Korea 3.8 5.4 5.9 5.2 4.7 3.2 3.1 3.7 3.2 3.2 2.4 1.7 1.7 1.5 1.4 1.3
Malaysia 2.2 2.8 4.5 3.9 3.6 2.8 2.0 1.8 2.5 3.6 3.7 3.8 2.8 1.8 1.8 1.8
Philippines 3.4 5.5 6.5 7.9 8.3 6.0 5.4 4.8 4.3 5.1 4.7 4.2 3.6 3.1 2.8 2.5
Singapore 4.6 5.9 7.3 6.6 6.1 5.1 4.1 3.8 3.4 2.9 2.4 2.1 1.8 1.7 1.8 1.8
Taiwan 2.8 3.5 2.9 2.6 2.6 2.0 2.4 2.7 2.0 2.1 1.8 1.5 1.8 1.8 1.8 1.8
Thailand 4.7 6.5 7.3 5.8 3.9 1.1 0.5 -0.2 -0.1 1.1 1.3 2.3 2.4 2.3 1.9 1.4
Czech Republic 11.2 15.8 17.6 15.7 16.4 11.1 8.0 7.7 2.2 2.5 2.3 2.9 3.1 3.1 3.1 3.0
Hungary 4.9 5.2 10.8 14.6 25.4 21.8 15.3 8.0 4.0 4.2 4.0 4.4 4.6 4.7 4.8 4.8
Poland 9.1 13.4 15.8 17.2 17.0 13.0 9.7 6.7 5.3 4.6 5.2 5.5 4.7 4.8 4.9 4.9
Romania 9.0 14.4 15.4 16.2 15.0 10.7 9.2 7.5 7.6 6.9 6.1 5.5 5.1 4.7 4.7 4.7
Russia 11.5 16.9 14.4 12.2 8.6 2.7 5.1 7.0 7.2 7.4 6.7 5.0 4.4 4.1 4.1 4.3
Israel 3.4 4.2 4.8 5.2 5.2 4.6 3.8 3.6 2.8 2.6 2.4 2.2 2.0 2.0 2.0 2.0
South Africa 5.8 6.6 7.7 7.4 7.0 6.2 5.0 5.2 5.2 4.8 4.8 4.7 4.9 4.8 4.7 4.6
Turkey 54.8 74.1 81.1 77.4 54.3 40.4 56.2 63.0 66.1 71.5 50.3 41.9 33.3 28.5 26.8 25.4
Global 5.8 7.3 7.7 7.3 6.0 4.3 4.0 3.5 3.4 3.4 3.0 2.9 2.7 2.6 2.6 2.6
Developed market economies 6.4 7.7 8.1 7.9 6.6 5.0 4.3 3.4 3.0 2.8 2.5 2.4 2.3 2.3 2.2 2.2
Emerging economies 4.9 6.8 7.2 6.4 5.3 3.4 3.6 3.7 4.0 4.3 3.7 3.6 3.3 3.2 3.2 3.3
G-7 6.4 7.6 7.8 7.6 6.4 4.9 4.2 3.3 2.9 2.7 2.4 2.3 2.3 2.3 2.2 2.2
Latin America 8.8 10.0 9.2 8.0 7.5 5.8 5.3 4.8 4.3 3.9 3.6 3.7 3.6 3.6 3.6 3.6
Emerging Asia 2.2 3.3 3.7 3.0 2.6 1.3 1.3 1.3 1.7 2.1 2.0 2.2 2.2 2.2 2.3 2.4
Emerging Europe 19.4 27.2 28.3 26.9 21.1 14.1 17.3 18.5 18.4 19.5 14.8 12.5 10.3 9.2 8.9 8.6
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JPMORGAN
Central Bank Watch
Official Current 4-qrtr change (bp) Forecast Forecast (%pa)

Last change Next mtg
rate rate (%pa) Last Next next change Dec 23 Mar 24 Jun 24 Sep 24 Dec 24
Global 4.96 132 -32 4.99 4.95 4.92 4.63 4.31
excluding US 4.76 138 -26 4.80 4.75 4.70 4.50 4.24
Developed 4.42 153 -31 4.42 4.42 4.40 4.11 3.69
Emerging 5.74 100 -34 5.81 5.72 5.66 5.40 5.21
Latin America 11.40 -21 -213 11.09 10.38 9.63 9.27 8.95
EMEA EM 14.42 696 13 15.21 15.07 15.38 14.55 13.69
EM Asia 3.29 6 -17 3.29 3.29 3.26 3.13 3.09
The Americas 6.24 126 -70 6.20 6.10 5.99 5.54 5.08
United States Fed funds 5.50 150 -50 26 Jul 23 (+25bp) 13 Dec 23 3Q 24 (-25bp) 5.50 5.50 5.50 5.00 4.50
Canada O/N rate 5.00 125 -25 12 Jul 23 (+25bp) 6 Dec 23 2Q 24 (-25bp) 5.00 5.00 4.75 4.75 4.50
Brazil SELIC O/N 12.25 -150 -275 20 Sep 23 (-50bp) 13 Dec 23 Dec 23 (-50bp) 11.75 10.75 9.75 9.50 9.50
Mexico Repo rate 11.25 130 -75 30 Mar 23 (+25bp) 14 Dec 23 Mar 24 (-25bp) 11.25 11.00 10.75 10.50 10.00
Chile Disc rate 9.00 -225 -350 26 Oct 23 (-50bp) 19 Dec 23 19 Dec 23 (-50bp) 8.50 7.75 6.00 5.50 5.00
Colombia Repo rate 13.25 225 -300 28 Apr 23 (+25bp) 19 Dec 23 19 Dec 23 (-50bp) 12.75 11.75 11.25 10.25 9.00
Peru Reference 7.00 -25 -250 9 Nov 23 (-25bp) 14 Dec 23 14 Dec 23 (-25bp) 6.75 6.00 5.25 4.50 4.50
Europe/Africa 6.33 337 -15 6.49 6.47 6.52 6.18 5.61
Euro area Depo rate 4.00 250 -25 14 Sep 23 (+25bp) 14 Dec 23 Sep 24 (-25bp) 4.00 4.00 4.00 3.75 3.25
United Kingdom Bank rate 5.25 225 0 3 Aug 23 (+25bp) 14 Dec 23 4Q24 (-50bp) 5.25 5.25 5.25 5.25 4.75
Norway Dep rate 4.25 175 -50 21 Sep 23 (+25bp) 14 Dec 23 20 Jun 24 (-25bp) 4.25 4.25 4.00 3.75 3.50
Sweden Repo rate 4.00 225 -50 21 Sep 23 (+25bp) 22 Nov 23 27 Jun 24 (-25bp) 4.00 4.00 3.75 3.50 3.00
Czech Republic 2-wk repo 7.00 0 -225 22 Jun 22 (+125bp) 21 Dec 23 Dec 23 (-25bp) 6.75 6.00 5.25 4.75 4.25
Hungary Base rate 11.50 -150 -450 21 Nov 23 (-75bp) 19 Dec 23 Dec 23 (-75bp) 10.75 9.00 7.75 7.00 6.25
Israel Base rate 4.75 200 -75 22 May 23 (+25bp) 27 Nov 23 1Q 24 (-25bp) 4.75 4.50 4.00 4.00 4.00
Poland 7-day interv 5.75 -100 0 6 Sep 23 (-75bp) 6 Dec 23 Nov 24 (-25bp) 5.75 5.75 5.75 5.75 5.25
Romania Base rate 7.00 25 -25 10 Jan 23 (+25bp) 12 Jan 24 Aug 24 (-25bp) 7.00 7.00 7.00 6.75 6.50
Russia Key pol rate 15.00 750 -300 27 Oct 23 (+200bp) 15 Dec 23 2Q 24 (-100bp) 15.00 15.00 14.00 12.00 10.00
South Africa Repo rate 8.25 200 -75 25 May 23 (+50bp) 23 Nov 23 May 24 (-25bp) 8.25 8.25 8.00 7.50 7.50
Turkey 1-wk repo 35.00 2450 1000 26 Oct 23 (+500bp) 23 Nov 23 23 Nov 23 (+250bp) 40.00 40.00 45.00 45.00 45.00
Asia/Pacific 2.85 13 -12 2.85 2.85 2.83 2.73 2.70
Australia Cash rate 4.35 150 0 7 Nov 23 (+25bp) 5 Dec 23 Feb 25 (-25bp) 4.35 4.35 4.35 4.35 4.35
New Zealand Cash rate 5.50 200 -75 24 May 23 (+50bp) 29 Nov 23 May 24 (-25bp) 5.50 5.50 5.25 4.75 4.50
Japan Pol rate IOER1 - 0.10 -3 10 28 Jan 16 (-20bp) 19 Dec 23 3Q 24 (+10bp) -0.10 -0.10 -0.10 0.00 0.00
Hong Kong Disc. wndw 5.75 -425 -50 26 Jul 23 (+25bp) - 3Q 24 (-25bp) 5.75 5.75 5.75 5.25 4.75
China 1-yr MLF 2.50 -25 -10 15 Aug 23 (-15bp) - 3Q 24 (-10bp) 2.50 2.50 2.50 2.40 2.40
Korea Base rate 3.50 50 -25 13 Jan 23 (+25bp) 30 Nov 23 3Q 24 (-25bp) 3.50 3.50 3.50 3.25 3.00
Indonesia BI RRR 6.00 75 -25 19 Oct 23 (+25bp) 23 Nov 23 3Q 24 (-25bp) 6.00 6.00 6.00 5.75 5.50
India Repo rate2 6.50 60 -50 8 Feb 23 (+25bp) 8 Dec 23 Jun 24 (-25bp) 6.50 6.50 6.25 6.00 6.00
Malaysia O/N rate 3.00 -250 0 3 May 23 (+25bp) 24 Jan 24 On hold 3.00 3.00 3.00 3.00 3.00
Philippines Rev repo 6.50 150 -25 26 Oct 23 (+25bp) 14 Dec 23 3Q 24 (-25bp) 6.50 6.50 6.50 6.25 6.00
Thailand 1-day repo 2.50 150 0 27 Sep 23 (+25bp) 29 Nov 23 1Q 25 (-25bp) 2.50 2.50 2.50 2.50 2.50
Taiwan Official disc. 1.88 25 0 23 Mar 23 (+12.5bp) 14 Dec 23 On hold 1.88 1.88 1.88 1.88 1.88
Source: J.P. Morgan. 1 BoJ sets the policy rate on IOER (O/N) and targets 10-year JGB yields as policy guidance
Bold denotes move since last GDW and forecast changes. Underline denotes policy meeting during upcoming week. Aggregates are GDP-weighted averages.
Any long-form nomenclature for references to China; Hong Kong; and Taiwan within this research material is Mainland China;
Hong Kong SAR (China) and Taiwan (China).
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JPMORGAN
Correction: Corrected potential growth estimates in Table 1.

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(buy) (hold) (sell)
Global Sovereign Research Universe* 8% 83% 9%
IB clients** 0% 51% 67%
*Please note that the percentages may not add to 100% because of rounding.
**Percentage of subject issuers within each of the "Overweight, "Marketweight" and "Underweight" categories for which J.P. Morgan
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JPM Global Outlook 2024

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JPM Global Outlook 2024

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J P M O R G A N Global Economic Research

Correction (See disclosures for details)

I am not in love but I’m open to

Table 1: Global real GDP

avoided recession in response to positive shocks and the lack

The consumer malaise in Europe poses generates two-sided

• Commodity price shocks fade from the scene. The fall 0

ing a 3% decline this year. At the same time, food price

• Fiscal stimulus ends. Fiscal supports to growth surprised

The evidence on salience is less direct but no less compelling.

its 2022 peak—unwinding a bit less than half the $11.3tn

By contrast, the Fed’s asset holdings are expected to shrink to

The BoJ is in a very different place for monetary policy, as it

The global economic outlook in summary

G-3 economic outlook detail

Central Bank Watch

Official Current 4-qrtr change (bp) Forecast Forecast (%pa)

Correction: Corrected potential growth estimates in Table 1.

appearances, and trading securities held by a research analyst account.

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