“This year’s survey offers clear signs that, however the slowdown plays out, for most companies the system will reset and the next phase will lift them up rather than cast them down,” said Gita Bal, global head of fixed income research at Fidelity International, announcing the results of the fund firm’s 2024 analyst survey. Photo: Fidelity International

“This year’s survey offers clear signs that, however the slowdown plays out, for most companies the system will reset and the next phase will lift them up rather than cast them down,” said Gita Bal, global head of fixed income research at Fidelity International, announcing the results of the fund firm’s 2024 analyst survey. Photo: Fidelity International

The global economy is moving beyond fears of a prolonged downturn, with analysts predicting corporate growth and Japan's resurgence amid easing inflation and geopolitical uncertainties, said Fidelity International on Monday.

For the first time post-pandemic, a majority of Fidelity’s analysts anticipate a decline in companies’ cost inflation over 2024, according to findings from Fidelity International’s annual analyst survey, published on Monday 5 February. The survey, encompassing responses from 137 analysts worldwide, posits that conditions are increasingly favourable for corporate expansion, with Japan poised to emerge as the global economic highlight of 2024.

Gita Bal, the global head of fixed income research at Fidelity International, remarked that inflation, once a predominant concern, especially labour wages, is on a rapid normalisation path in North America. This trend reflects a broader sentiment where, according to the survey, 61% of analysts foresee their sectors expanding in the next 12 months, up from 52% who currently share this outlook.

However, the survey also named sectors expected to face challenges, notably North American and European oil and gas firms, which may struggle due to lower commodity prices. Similarly, the financial sector is bracing for the impact of falling interest rates. Bal noted the added complexity of a year filled with elections around the globe, which, despite fuelling geopolitical uncertainties, has not dampened the positive outlook shared by management teams for 2024, except in the energy and financial sectors where sentiment is notably lower.

Japan

Japan’s economic resurgence is a central theme of the survey, with analysts expressing unprecedented optimism for the country’s financial prospects. Expectations for revenue, earnings growth and expanding margins in Japan outpace those for any other region. Furthermore, Japan is anticipated to lead in capital expenditure, returns on capital, dividend increases and the ability to pass on costs to consumers, said the report. This optimism marks a significant turn from the caution observed in the previous year’s survey and is underpinned by Japan overcoming decades of economic stagnation, now experiencing welcome price increases across the board.

Geopolitics

Despite the potential for electoral disruptions in a year dubbed as having the highest number of elections in history, 65% of analysts reported that their companies are largely ignoring election-related discussions. Only 28% felt that the geopolitical climate is affecting investment plans, the lowest since such questions were first included in the survey in 2017.

In her concluding remarks, Bal highlighted the transition from an era of zero interest rates and its associated challenges. She added that despite the tightening of corporate belts and the anticipated pressure on demand and pricing power, the survey’s insights suggest a resilient outlook for most companies, poised for a recovery phase that will elevate rather than depress their prospects.

Fidelity International is a retirement-oriented investment firm, managing $714.3bn in assets for 2.9m clients.

Related articles