US slowdown amid political, geopolitical uncertainty

US rate hikes in 2023 are showing effects on the labour market and demand, while political and geopolitical risks remain high. Signs of a slowdown are evident with weak credit growth and slowing consumer spending expected to continue into the second half of 2024, leading to a significant deceleration in real GDP growth, although not dipping into recession territory.

According to Fitch Ratings, disinflation and a shift in global monetary policies have reduced the risk of severe credit issues from continued monetary tightening. The European Central Bank (ECB), Swiss National Bank (SNB), and Bank of Canada (BOC) have already cut rates, and the Federal Reserve is expected to make two cuts in the latter half of 2024.

Political uncertainty remains significant, with recent elections in major economies showing incumbents losing ground, and the upcoming US election in November potentially impacting global credit policies.

Geopolitical risks, such as ongoing conflicts in Ukraine and Israel’s war on Gaza, and broader strategic tensions among major powers, continue to affect trade, investment, and supply chains.

Attribution: Fitch Ratings