The three “wild cards” of 2024 – central banks policy rates, inflation, growth – have quietly turned better results than anyone expected.
Central bank interventions brought inflation to more comfortable levels, better still, with a reasonable prospect of a soft landing (e.g. no recession) in all major global economies. Global growth has partially suffered, not surprisingly in light of the complicated geopolitical course, with the 2022 Russian invasion of Ukraine and the 2023 attack on Israel by Hamas. With the world order visibly shifting away from over half a century of globalization and cooperation in trade & policy, that vision of prosperity heads to gradual re-definition, and the drift out of it is an evident cause of the slowdown in global economic growth.
Countries fiscal toolboxes, reforms, policies for growth are – and will continue to – make the difference in this changing global environment. Worldwide growth has been mild yet solid. The U.S. GDP rose +2.9% (2024 forecast) thanks to positive industrial policies and fueled by the Artificial Intelligence revolution. China slowed down compared to 2023, The Eurozone recovered slightly and is foreseen at +0.9%, with inflation (which has been largely driven by supply shocks) contained but still at +2.5%. In Switzerland, the policy rate cuts started earlier in the year, bringing the policy rate at 1% and undoubtably support growth stabilization.
With the current rate, Switzerland is expected to increase its GDP by 1% with inflation of 1.2% (2024 forecast); projections for 2025 are GDP +1.5% and inflation of 0.6% (all figures are forecasts). Compared to major economies, Switzerland however sits on one amongst – by far – the lowest public debts. Which enables wider space for policy reforms and sets the country as the powerful cornerstone of stability. In equity markets, volatility pivoted to opportunity rather than strong concern about economic fundamentals, which aligns with signals of normalization of economic activity. Growth fundamentals within range will likely continue to be the North Star to navigate concentration in equity markets, and Artificial Intelligence the driving force and force of change boosting a new ecosystem.
In Switzerland, financial players have intercepted new highly innovative digital products and services: the industry is rapidly moving to complement their traditional financial quotas and high levels of expertise with new real-added value products and exclusive access to high-performing private markets. Swiss family offices are uniquely positioned to benefit from key factors: country stability, and their structural flexibility to customize offering, adaptable to the fast-paced environment of new and alternative products. As reported recently by Deloitte Private, hedge funds will be the first players to be outgrown by family offices, whose assets are expected to hit globally 5.4 trillion USD by 2030.
The trend reflects the global attractiveness of new technology and the increasing demand for greater flexibility and control over investments, as opposed to the product-driven offering of banks. Regulated specialized private financial management provide a more strategic alternative, that create real value to clients. Holistic, flexible, long-term portfolios strategies integrating innovative and exclusive products, built and billed based on performance and real cost optimization, are back in vogue.
Article edited by Angela Cavezzan
Risk Manager, Financial Services
This article is for information purposes only and does not constitute any investment offer or advice. This information should not be regarded as a substitute for obtaining individual advice.