Institutional investors could face a mild economic recession in the U.S. at the end of the first half of 2024, according to a new report from Amundi Asset Management.

It projected the global economy to grow by 2.4 per cent in 2024, with U.S. growth estimated at just 0.8 per cent, down from 2.4 per cent in 2023. Conversely, emerging market growth is estimated at 3.6 per cent, with India and China expected to grow by 5.8 per cent and 3.9 per cent, respectively.

Read: Survey finds 77% of U.S. institutional investors worried about inflation and interest rates in 2024

However, inflation concerns may be mitigated due to slowing interest rate hikes, said the report, projecting the U.S. Federal Reserve will adjust from rate hikes to rate cuts, with the first cut expected at the end of the first half of 2024. In addition, U.S. wage growth could also slow inflation. Despite the potential for a mild recession, there’s also the possibility of a year-end rally as institutional investors move toward a dynamic asset allocation approach, boosted by a strong bond market.

The report noted a tightening economy and the upcoming U.S. presidential election are two key risk factors looming over institutional investors 2024. In addition, the risk associated from growing U.S. debt levels is increasing, as the Congressional Budget Office projects the debt-to-GDP ratio to surpass a record 180 per cent.

In Canada, the report projected a similar economic path to the U.S., forecasting a 2.2 per cent increase in the consumer price index at the end of 2024, compared to a 3.4 per cent increase in 2023. It noted the housing supply continues to be one of Canada’s leading economic concerns, with population growth severely outpacing home construction.

Read: Rising bond yields, frontier markets top of mind for institutional investors in 2024: expert