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The Danish managing director is convinced that 2024 will be a historic year, but fears strong growth.
The global economy is not heading for a recession, believes a top Danish manager. Photo: – / AFP / NTBPublished: Published:
Yesterday 10:45
– It is very rare, if ever, for this to happen.
This is what Bo Bejstrup Christensen, chief portfolio manager at Danske Bank, tells E24. He monitors a pool of money worth NOK 300 billion and determines the level of risk there. Now he throws history aside and waits for an upturn.
In 2022, Christensen hit a nerve when he announced that 2023 would be good for the stock market. He now expects an increase of 5-8 percent for the broad S&P 500 index in the USA in 2024.
He estimates the probability of a recession in the USA at around 10 percent.
– To put it in a numerical perspective, if you look at the Bloomberg consensus, there is still a 50 percent risk of a recession over a 12-month horizon, he says.
Bo Bejstrup Christensen, chief portfolio manager at Danske Bank. Photo: Danske Bank
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The battle between economists, analysts and the market has long been over whether there will be a soft or hard landing.
A soft landing occurs when central banks manage to achieve their goal of reducing inflation without plunging the economy into a recession with high unemployment. A hard landing occurs when the economy collapses in the task of reducing inflation.
Postdoctoral fellow at the University of Oslo, Martin Blomhoff Holm says that it has almost never happened that the global economy was able to avoid a recession after a wave of interest rate hikes like we did.
– I would be surprised if the global economy runs smoothly without a major recession. The fact that the USA is apparently doing so well is very positive. Let’s hope it lasts, it will be good news for everyone, he says.
Central Bank Governor Ida Wolden Bache, flanked by chief economist Kjersti Haugland tv from the DNB and postdoctoral researcher Martin Blomhoff Holm from the University of Oslo. Photo: Ole Berg-Rusten / NTB
– This time it’s different
Christensen says it’s the investments that convince him there won’t be a recession anytime soon. Neither in the USA nor in Europe.
He believes this is the difference between today and previous periods of frequent rate hikes:
According to the chief portfolio manager, the recovery phase in the USA from 2009 to 2020 was the longest ever.
– Normally during such an upswing you build too many houses and invest too much. Consumers buy too many cars or borrow too much money. Look at the dotcom bubble or the real estate bubble.
And when the interest rate hike comes, you have to curb investments and consumption.
– Then there will be a recession. This time it’s different, he says.
– This time consumers did not feel the need to cut their investments because they had not invested too much in the first place.
Fears a strong upswing
Christensen is certain of an upswing, but he is more uncertain about its strength.
– “The question we are more focused on this year is whether growth in the US is proving too strong,” he says.
Several central banks are starting to fear rate cuts this year, including Norges Bank, which has cut rates. The US Federal Reserve expects one, the markets expect around six, while analysts are somewhat more cautious.
– If growth is too strong, as was the case in the second half of last year, there is a real risk that pressure on the labor market will return and inflation will pick up again. he warns.
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