In the tumultuous landscape of capital markets in 2023, marked by economic uncertainties, market volatility, and geopolitical instability, a report by consulting and auditing firm PricewaterhouseCoopers (PWC), accessed by “Arabia Business,” suggests reasons for cautious optimism in the future.
Despite the challenges, stabilizing inflation and the potential for a Federal Reserve rate cut in 2024 contribute to a more positive outlook, reports Al-Anba daily.
As 2024 unfolds, signs indicate a gradual easing of last year’s persistent inflation, attributed primarily to the Federal Reserve’s monetary tightening efforts. While concerns about the “higher for longer” interest rate environment and deficits may impede growth, a notable aspect is the US economy’s annual GDP growth of 5.2% in the third quarter, more than doubling the previous quarter.
While PwC anticipates that the US economy is unlikely to face a recession in the near term, the consulting firm expects real GDP growth to decelerate from an estimated 2.4% in 2023 to around 1.4% in 2024. The Federal Reserve, shifting its focus from battling inflation to promoting growth, may not opt for immediate interest rate cuts but aims to stimulate growth at a quicker pace than in past cycles.
The macroeconomic environment will play a pivotal role in shaping the health of the 2024 IPO market and influencing investor willingness to embrace a more normalized level of risk. PwC assigns a 60% probability to a “soft landing” for the US economy, a 20% chance of a “hard landing” (pessimistic downside case), and a 20% chance of “no landing” (optimistic upside case). The IPO market in 2024 is expected to respond positively to the soft landing or no landing scenarios but not to the hard landing scenario, as per PWC’s analysis.