Komo said that even if developed economies do not drastically relax their monetary policies, there is still a 30% chance that the global economy will continue to expand!
J.P. Morgan has withdrawn its forecast for the global recession in the first half of 2024, and currently believes that the probability that the global economy will achieve a “soft landing” before the end of next year is 55%.
A report written by J.P. Morgan analysts Bruce Kasman (Bruce Kasman) and Joseph Lupton (Joseph Lupton) mentioned in a report on Tuesday that “surprisingly positive developments relating to balance sheets, US supply-side performance, and global financial conditions challenge the idea that interest rate hikes will damage economic growth in a 'warm boiled frog' style.”
The bank previously feared that long-term high interest rates would inhibit private sector profit growth, raise the cost of debt burdens, and slow down economic expansion. However, given that current optimistic economic data depicts a better outlook, J.P. Morgan now predicts that the global economy will have a 55% chance of a soft landing by at least the end of next year. Furthermore, in its soft landing outlook, the bank also proposed another possibility, that is, the possibility that the global economy will continue to expand is 30% without significant monetary policy relaxation in advanced economies.
“Our recent major shift concerns the relationship between interest rates and the economic expansion cycle,” Kasman and Lupton wrote.
Analysts pointed out that although inflation in the world's major economies remains high and expectations of interest rate cuts are weakening, J.P. Morgan notes that the global financial situation has not been negatively disrupted, and key indicators show that the pressure from monetary austerity policies is rapidly fading.
In terms of corporate profits, despite high policy interest rates, companies in developed markets surpassed profit expectations last year, and profit margins were close to historic highs, showing unusually strong profitability.
Meanwhile, America's resilient labor market has led to strong growth in productivity and employment.
However, J.P. Morgan CEO Jamie Dimon (Jamie Dimon) painted a less optimistic picture in his recent letter to shareholders. He believes that the actual probability that the economy will achieve a soft landing is much lower than that reflected in market prices. He pointed out the sharp rise in food and energy prices, higher borrowing costs, and the increasing risk of a recession.
“We are probably entering one of the most turbulent geopolitical eras since World War II,” Dimon said.