By now you should be very sceptical of anyone who tries to predict the future, even if it is only for the next year. We know that there will be surprises, great or small.

Still, there are at least two key themes to keep our eyes on. Firstly, the great post-Covid global interest rate hiking cycle is coming to an end. This is true in the US – the most important economy in the world – and Europe, as well as in South Africa, a relatively unimportant economy. It is also true in other large emerging markets. China and Japan are the main outliers. Japan is the only country to welcome inflation after decades of economic languor, and therefore its central bank never raised interest rates. In China, inflation has been falling – a sign of underlying economic weakness. Its central bank has been cutting rates.

So, the big question for 2024 is how quickly central banks can start reversing interest rate increases. This, of course, will depend on whether inflation continues to decline, or whether it proves to be sticky. This is subject to a multitude of factors, including geopolitics, the oil price, food prices, rental costs, wage growth, and ultimately, the strength of demand in each economy.

Given the uncertainty, central banks are likely to remain cautious and not to be in a hurry to cut rates. The last thing they want to see is inflation flaring up again.

Nonetheless, even if rate cuts are slow to arrive next year, it still means 2024 should be defined by falling borrowing costs and easing financial conditions, as opposed to the tightening we experienced during the past two years. It should be a more constructive backdrop for markets. 

Secondly, next year will see important elections in many countries. The UK must go to the polls before January 2025, but realistically this will happen earlier. The US presidential elections are on the first Tuesday of November, with the vote likely to see a rematch of 2020’s Biden vs Trump battle. Brace yourself, it is going to be a long year of non-stop campaigning and wall-to-wall media coverage. The outcome may have significant economic and geopolitical implications. But remember that it also matters which party controls Congress. In a tight election, it might be that one party wins the White House and the other the legislature. In that case, there is likely to be more noise than heat.

South Africa’s election will take place in April or May, and for the first time since the advent of democracy, the ANC can no longer take for granted that it will win by a simple majority. We may be entering the age of coalitions at national level for the first time, and in several provinces. It could be a different political landscape to what we are used to. However, it should still result in broad policy continuity, for better or for worse. There is likely to be ongoing but slow progress in tackling load shedding and poor performance of our ports and railways, the economy’s biggest headwinds. The age-old South African tradition of moving a few steps forward and a few steps back is likely to be a feature of 2024.