Special Edition: 2024 Q1 Credit Conditions | COP28 Preview

Welcome to a special quarterly edition of Essential Economics.

We have nearly completed our flagship Credit Conditions Committee (CCC) round and this week published a suite of macro and credit documents. On the macro side, I argue that with the rate hike cycle near completion, it’s time to “stick the landing.” Our baseline soft landing scenario is predicated on continued strength in labor markets. This will allow central banks to lower rates and therefore ease financial conditions gradually once inflation is on a firm downward trend. We also published a full regional suite of macro and credit reports. Our global credit report comes out on Monday, followed by a pair of webinars to bring all of our key insights together. ?

This week, we also share a set of sustainability-focused publications in advance of COP28, the UN-sponsored government-level annual gatherings focused on climate action. The research from across S&P Global includes our most recent Sustainability Quarterly, which takes stock of how climate risks are impacting companies and countries around the world, and how they are responding to this challenge; and a Ratings publication on Lost GDP, arguing that over 4 percent of GDP is at risk annual should global warming does not say below 2 degrees Celsius. Finally, I will attend COP28 and plan to share my takeaways in next week’s Essential Economics.

Global Macro: All About the Landing

As the fast and furious rate hike cycle of the past one and a half years draws to a close, I argue that the next challenge is to “stick the landing.” Our baseline case for a soft landing is predicated on continued strength in labor markets. This will allow central banks to gradually cut rates once inflation is on a firm downward trajectory.

A soft landing is also a long landing, meaning a period of sub-potential growth is required to bring economies back to their sustainable path.

To read the global macro report, click here.

We also published a full suite of regional macro reports:

US: Cooling Off But Not Breaking by Satyam Panday

Eurozone: Headed For A Soft Landing by Sylvain Broyer

Asia Pacific: Emerging Markets Lead The Way by Louis Kuijs

Emerging Markets: Challenging Global Conditions Will Constrain Growth by Elijah Oliveros-Rosen

UK: More Stagflation Ahead by Marion Amiot

Canada: Growth Is Set To Continue Slowing by Satyam Panday

CCC Webinar: Global Credit Outlook 2024

Our Global Credit Outlook 2024, to be issued on October 4, will present our consolidated macro and credit outlooks for the year ahead. This includes our base-case forecasts, assumptions, and key risks for what promises to be another challenging period for the global economy and markets.

Preview our global themes in the regional credit reports:

North America: A Cluster Of Stresses by David Tesher

Europe: Adapting To New Realities by Paul Watters

Asia Pacific: China Slows, India Grows by Eunice Tan

Emerging Markets: Not Getting Easier by Jose Perez-Gorozpe

We will bring all of our quarterly credit conditions insights together in an October 5 webinar featuring yours truly and our senior credit analysts.

To register for the US/EMEA webinar (October 5, 9am EST), click here.

To register for the APAC webinar (October 5, 11am SG/HK time), click here.

COP28 Preview

COP28 has just begun in Dubai; it aims to provide us with a reality check on how far the world has come in tackling the climate crisis and how much of a course correction is needed.

Our COP28 publications include:

·??????? Our most recent Sustainability Quarterly takes stock of how climate risks are impacting companies and countries around the world, and how they are responding to this challenge.

·??????? ?Lost GDP: Potential Impacts Of Physical Climate Risks argues that over 4% of global GDP could be lost annually if global warming does not stay below two degrees Celsius.

I will be in Dubai (and Doha) next week for my first Conference of Parties, and plan to share my takeaways in next week’s Essential Economics. Stay tuned!