Finance outlook remains mixed in the face of high interest rates
The Economist Intelligence Unit's latest report, "Financial Outlook 2024" provides an in-depth analysis of how elevated interest rates will impact the financial services sector globally.
The report findings are based on comprehensive research and forecasts covering nearly 200 countries through 2024. Some key highlights:
Interest rates are expected to remain high in most major markets, with only gradual decreases starting in the second half of 2024 as central banks slow hikes.
Banks will continue enjoying substantial net interest income and margins through 2024 as rates outpace deposit increases. The EIU forecasts net interest income will rise significantly in the US, China, Germany, India, Japan, and the UK.
Fixed-income investors and asset managers will benefit from positive bond returns, while property funds face challenges as interest expenses rise for heavily indebted owners.
Young fintech firms face difficult fundraising conditions as risk-averse investors flock to safer, higher-yielding options. Valuations may be trimmed in private funding rounds.
Insurers are predicted to retreat from high-risk locations for wildfires, floods, and storms due to rising climate change impacts and regulatory pressure.
The report offers valuable insights for financial businesses seeking to understand the macro environment and make strategic plans accordingly. Readers are encouraged to review this in-depth analysis of how interest rate policy will shape sector fortunes in the year ahead.