Asian institutions are divided on 2024 recession scenarios

Asian institutional investors have mixed views on how the global economy might play out in 2024, the newly released 2024 Natixis Institutional Outlook Survey shows.

For the survey, Natixis Investment Managers (Natixis IM) got responses from 500 institutional investors who collectively manage $23.2 trillion globally.

The survey found that institutional investors in Asia are concerned about the outlooks for the global economy, with 47% believing recession will be inevitable in 2024. Despite this, however, only 3% of respondents in Asia, and 8% worldwide, said their portfolio is recession-proof.

Dave Goodsell, executive director at Natixis Center for Investor Insight and in charge of the survey, pointed out that the data showed more nuanced responses, as the Asian respondents are not completely exposed to recession.

44% said that there is some protection in place, while 45% said their portfolios are balanced for a range of outcomes.

“It comes down to their views on whether there will be a recession – 47% may say it’s inevitable, 45% say there won’t be a recession at all. In Asia, 64% of institutions tell us they think there will be a soft landing,” Goodsell told AsianInvestor.

A FINE LINE

Institutional investors in Asia also seem split on inflation outlook heading into 2024, according to the Natixis IM survey.

While 36% of respondents in the region believe inflation will remain at elevated levels, 45% see reductions coming.

Overall, 59% of Asia respondents see higher inflation is the new normal and around the same percentage (56%) also expect rates to remain higher for longer.

“The views on inflation show that institutional investors in Asia recognize that policy makers need to walk a fine line,” Goodsell said.

At the same time, concerns around the Fed’s and other central banks’ interest rate policy persist, with a central bank policy error a concern for 39% of respondents.

“While rate hikes may have helped lower inflation, investors recognize that the same policy makers still have to manage through the second half of the equation and time any rate cuts so that they don’t reignite inflation,” Goodsell said.

He pointed out that 56% of Asia respondents are forecasting the Fed to cut interest rates. These rate cuts are not expected to happen until third quarter of 2024.

survey included 500 institutional investors in 27 countries throughout North America, Latin America, the Europe, Asia and the Middle East.