What to watch for in the world of finance and investment this year?

This article is NOT financial or investment advice)

A number of respected financial experts have predicted that 2023 will end globally with an economic slump and an entry into crisis. That has not materialized, even though most Western countries have been plagued by higher inflation. And how will it turn out this year? No one has a crystal ball, but at least in part it could hint at 5 issues and indicators, which we write about in detail below.

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1. Evolution of inflation in the Czech Republic

Last year, inflation was the number one issue, this time it is slowly receding from investors' crosshairs. Still, they should keep an eye on it to see if it drops as much as predictions suggest.

For Czech investors, price growth in the Czech Republic is particularly important, which is forecast by the Czech National Bank to be around 2.6% this year. The private sector — the owners of large domestic companies, for example — is not so optimistic. In any case, most experts agree that we are likely to see significantly lower inflation at the end of December 2024 than in the previous 2 years.

How exactly did inflation evolve during 2023? This is what we wrote about in separate article.
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2. House prices and demand for mortgages

Closely related to the braking of price growth is a topic that was not so much “on course” last year, but which in the end may become the most discussed issue of 2024, at least from an economic point of view. This topic is real estate, or its prices.

The Czech National Bank has started cutting interest rates due to falling inflation, which means, among other things, that Interest rates for mortgage applicants are also heading downwards. As a general rule, the more mortgages people take out, the greater the chance that they will make real estate more expensive.

So, after a brief stagnation, the market for apartments, houses and other real estate seems to be taking on new breath. Price increases can be expected mainly in Prague, Brno and other large cities, but it seems to increase in price even outside popular locations.In addition to lower interest rates, real estate prices will also be supported more lenient rules for obtaining a mortgage or Reduction of value added tax on new buildings.
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3. Performance of the Czech economy

Last year, the Czech economy was the only one in the entire European Union that did not recover sufficiently from the Covid years and mostly stagnated. At the end of this year, this should no longer apply, at least according to the predictions of the Ministry of Finance of the Czech Republic or various Czech economists. Although, for example, The Union of Industry and Transport of the Czech Republic estimatesThat the rebound from the bottom will be more gradual and slow.

However it turns out, the state of the domestic economy should definitely be monitored regularly, as it affects not only the lives of residents in the Czech Republic, but investors should also take it into account in their decisions. GDP (gross domestic product) is most often used as an indicator of the performance of the economy.

Gross domestic product (GDP) is a macroeconomic indicator that measures the value of all goods and services produced within the economy of a particular country over a certain period (most often a year). GDP is used both to evaluate the economic performance of a country and to compare the economies of different states.

4. Development of the economy and interest rates in the USA

Even for Czech investors, it is a great advantage if they have an idea of what is happening “behind a big puddle”. The economic development of the United States has long influenced the rest of the world.

For months now, experts, investors, and the general public have been debating whether the U.S. economy is going to recover. will fall into recession, or whether it will be a so-called smooth landing. So far it looks more like the second option, but of course the future is uncertain.

The US, too, has struggled with price rises in the recent past, although not as pronounced as some European nations. However, in 2024, the US central bank, the Fed, is likely to emulate the Czech and proceed to lower interest rates, which should have a positive effect not only on the real estate market there, but also on the growth of companies. They could then borrow money from banks on more acceptable terms, which is particularly crucial for technology companies.

5. Stock markets

U.S. stocks, in particular, were among last year's biggest surprises. The best-known S&P 500 index, which includes shares of the 500 largest U.S. companies, rose more than 24%, above the historical average.

It will be all the more interesting to watch the markets throughout this year. Economists' forecasts in the Czech Republic and across the ocean suggest that US equities will hardly repeat last year's performance. But the so-called emerging markets, for example, have a chance to shine.

At Investown, you always know how much your investment will earn

Whatever the economic trend, interest rates or house prices in 2024, nothing changes when it comes to investing at Investown. Our investors continue to know thanks to fixed incomehow much money and in what time the investment will bring them.

This article is not financial or investment advice

Investown does not provide financial and investment advice. This is an informative article with interesting facts from the world of economics. For specific advice, we recommend using the services of a financial or investment advisor.

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