- In 2024, a soft-landing scenario is expected for the global economy, with benefits for equities and fixed income.
- Protección projects economic growth between 1% and 1.5% for the Colombian economy in 2024.
- In terms of investment management, 2024 could be a different year for the individual investor and the entrepreneur, so inflation, employment, and credit rate indicators will represent challenges and opportunities that must be read considering risk appetite and investment horizon.
- Protección’s panorama markets will be presented by the company at the 2023 investment Summit that takes place this Tuesday, December 12th, within the framework of the World Congress 2023, which is being held for the first time in the city of Medellin.
Medellin, December 11th, 2023. Looking towards 2024, and according to analysis by Protección’s experts, business dynamics are expected to continue transforming under the influence of the economy, finances, and the evolution of consumer habits with a focus on sustainability. Over the course of 2023, these factors have triggered significant changes in the way businesses operate. Therefore, rapid adaptation to these emerging trends is presented as an imperative need for those companies seeking to stay ahead and thrive in a volatile environment.
Under that premise, and despite the high possibilities of recession at the beginning of this year, the main global central banks managed to contain inflationary pressures and keep economic activity in positive territory in 2023. For 2024, a soft-landing scenario is expected for the global economy, with benefits for equities and especially for fixed income before of a possible start of a rate cuts in large economies.
“From our analyzes we predict a 2024 with higher expectations in economic terms, although this scenario may be fragile and with some risks of damage generated by the lagged effects of monetary policy, the tensions of global geopolitics, the presidential elections in United States and the process of reforms in the local market,” explains Julián Cárdenas, Protección’s strategist specialist of savings and investment.
In that sense, at the local level, recent economic growth figures reflect a slower pace than expected due to the drop in investment. Factors such as restrictive monetary policy, lower execution, regulatory and political uncertainty contributed to this slowdown.
“In tune with the national and regional context, from Protección, we consider important that a positive environment be consolidated in the country that generates confidence in investors who want to bring or maintain their investments, moving away a little from the international noise that can permeate the markets. In that regard, we project economic growth between 1% and 1.5% for 2024 and we hope that at the end of 2023 there will be a fiscal improvement,” comments Juan David Correa, Protección’s president.
Although the large issuers in the world maintain the firm tone of high rates, in accordance with the evident signs of slowdown and the increase in unemployment, they will motivate the first interest rate cuts and possibly coordinated stimulus actions will be carried out, with high probability, in the second half of 2024.
“This change of gear will naturally generate an increase in volatility. We will possibly go through lower growth levels than the current ones, with lower prices and lower rates next year. Although there is currently good momentum in activity for the end of the year, the magnitude of the deceleration in the future is uncertain. The reduction in the pace of industrial production, the tighter financial conditions and the deterioration in labor market figures will have a greater effect on the cooling of the global economy,” explains Cárdenas.
As for inflation, it is projected to approach the upper limit of the issuer's target range (4%), with upward risks due to adjustments in the minimum wage, El Niño phenomenon, and disruptions in the global energy market. We anticipate that the Issuer will begin a process of cutting interest rates, with estimated adjustments close to 500 basis points in the year, starting from a current 13.25%.
“Given the possible greater volatility in financial assets that 2024 may offer us, people will need to maintain broad diversification in their investment strategies, placing the management of their resources in companies that have the knowledge and expertise in this sector” says Correa.
From the perspective of sustainability, it is anticipated that companies will continue to adopt responsible practices that transcend the search for financial results, orienting themselves towards generating a positive impact on society and the environment, considering Environmental, Social and Corporate Governance factors (ESG). An increase in interest in purpose-driven investments is projected, with projects meticulously designed to provide financial returns with social and environmental benefits.
Protección, for example, invests seeking to generate value for society and the planet, privileging investment in initiatives that are sustainable. Caring for and protecting more than 150 trillion pesos in assets and client’s assets (8 million people and 500,000 companies) is a primary commitment for the company.
“At the company, we are convinced that sustainable investment is a conviction, through which we generate value and leverage the growth and solidity, both companies and the resources that our clients have entrusted to us to build their future. Thus, the risks and opportunities that influence the generation of value and the sustainability of industries and the planet can be anticipated and managed” adds Correa.
It should be noted that, by 2024, Protección has its sights set with a continuous vision of meeting the assets goals of affiliates. The company will adjust to market changes to seek annual growth of 5% in all regions of the country and in all economic activities.
Protección’s panorama of the markets will be presented by the company at the 2023 investment Summit that will take place this Tuesday, December 12th, within the framework of the World Congress 2023, which is being held for the first time in the city of Medellin.
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About Protección:
Protección S.A. is an expert company in savings and investment, with 30 years of experience in the administration of resources for more than 130 trillion pesos from 8.3 million clients of Mandatory, Voluntary, and Severance Pension funds and more than 73 thousand pensioners. The company has transcended its category, energizing the focus of its business on the management of assets destined for mandatory pensions and severances, to take it to the next level that involves the mobilization and management of savings to be an ally of its groups of interest with the purpose of accompanying them in the fulfillment of their dreams and construction of their future.
