FX.co ★ Top 5 risks to global economy in 2024

1. US labor market instability

After rocketing up in 2023, the US economy is now on the verge of significant changes, and not for the better. A cooling US jobs market in the face of the Fed's aggressive policy threatens the country’s economic performance. According to Bloomberg, an uptick in the unemployment rate to 4.1% could lead to a significant decline in consumer spending, which in turn would weigh on US economic growth.

2. China’s real estate crisis

The Chinese economy is going through tough times. One of its main challenges is an acute crisis in the construction industry amid the government's attempts to suppress speculation and keep housing affordable. Evergrande was the first major real estate developer to face bankruptcy. After that, a wave of defaults swept across the country. Further distress in the country's real estate industry could have a severe blow to its economy, experts warn.

3. Europe's faltering economy

The German economy, pressured by high energy prices, was the world’s worst-performing major economy in 2023. Like other EU countries, Germany is facing an uphill economic battle in 2024, Bloomberg predicts. The main challenges will be the transition of the industrial sector to alternative energy sources after the region has weaned itself off cheap Russian gas as well as the restructuring of global supply chains due to the US-China conflict. All of this could tip the EU into a prolonged recession.

4. Japan's monetary policy

For years, investors - from pension funds to individuals - have poured money into overseas assets, making Japan one of the world's largest lenders. Now when the Bank of Japan is considering raising the yield on its government bonds, there is a risk of a massive capital return to the country. This could trigger unprecedented turmoil in the global financial markets. On the other hand, if the regulator is too slow to raise interest rates, markets may question its hawkish tilt, bringing the yen down.

5. Obstacles facing India on its journey towards global economic leadership

Despite rapid growth, the Indian economy is currently facing a number of challenges, including high unemployment and insufficient job creation to meet the needs of the population. This is why Bloomberg experts caution investors against overly optimistic expectations regarding the Indian economy's role as an engine for global economic growth.