What's on the horizon for the global economy?
Our weekly updated overview highlights the key releases of global economic market data from around the globe and provides an economic outlook for 2024 by region.
- Our Week Ahead podcast explores the key themes driving global markets next week
- Our Global Economic Markets Data Calendar shows upcoming events happening over the week
- We provide an outlook overview region by region
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Our view in a nutshell
Japan
- Japan’s economy will likely remain on a recovery path, exceeding potential, starting in Q2 2024.
- This year’s shunto wage hikes have proved materially higher than last year's, increasing the stickiness of inflation through 2025.
- The LDP’s presidential election will be held on 27 September, but will not lead to material policy changes, in our view.
- We expect the BOJ to make an additional rate hike in December 2024, followed by two hikes in 2025.
Asia
- We expect Asia’s export growth to gradually ease, due to softening global demand, fading price effects and the end of frontloading.
- Growth divergences exist: Taiwan, India and Singapore are likely to outperform, while China and Thailand could disappoint.
- Inflation is closer to the trough but should remain within target. Rising freight rates are a risk to goods price inflation.
- The rate cutting cycle has begun, led by RBNZ and BSP. We expect RBI, BOK and BI to follow suit, and the rest to stay on hold.
- Korea: Amid the BOK’s focus on financial stability, we expect only three 25bp cuts by end-2025, starting this October.
- India: Amid softening but stable growth and lower inflation, we expect the RBI to deliver 100bp of rate cuts, starting in October.
- Indonesia: Populist measures of the incoming government raise fiscal risks while current account deficits continue to widen.
- Australia: We expect below-trend growth, rising unemployment, gradually easing inflation and rate cuts from February 2025.
- New Zealand: The economy is very weak and inflation is approaching the target band. We forecast aggressive rate cuts.
China
- We see new headwinds, such as plummeting equity financing, strengthening tax collection and a financial sector crackdown.
- Ongoing headwinds include fading pent-up demand, property fallout, local government debt and investment in “green” sectors.
- We believe Beijing is headed in the right direction on ending the housing crisis, as its policy focus shifted to home delivery.
- But this is a daunting task, patience is needed as it will take time for Beijing to fully prepare.
United States
- The labor market is slowing, and risks remain skewed to the downside. Gradual cooling is more likely than a sharp deterioration.
- We expect the Fed will ease by 75bp this year, with consecutive 25bp cuts in September, November and December.
- If job losses continue to trend higher or financial conditions tighten significantly, the likelihood of 50bp cuts would rise.
- Disinflation is continuing. Moderating wage growth and slower rent inflation will continue to weigh on service prices.
- Progress on inflation will give the Fed room to respond aggressively to downside risks in growth and markets.
Euro Area
- We expect a gradual recovery in GDP in 2024, with growth rising to 0.4% q-o-q by end-2025.
- We see euro area core inflation above target through 2024-2025, but services inflation momentum gradually slowing.
- The ECB cut rates by 25bp in June 2024. We forecast another 125bp of cuts at a quarterly pace until September 2025.
- The ECB began full roll-off of its APP portfolio redemptions in July 2023. Partial PEPP tapering began in July 2024.
United Kingdom
- UK GDP bounced strongly in H1 after last year’s weakness. Surveys point to a continuation of positive growth in H2 and beyond.
- Upside risks: low unemployment, strengthening surveys. Downside risks: past monetary tightening and below-average confidence.
- Headline inflation is back to target, but services inflation is proving more sticky and could take some time to normalise.
- The BoE began cutting rates in August. We see quarterly cuts thereafter (3.5% terminal in 2026).
For more information read our weekly report here.
Contributor
Aichi Amemiya
Senior US Economist
George Buckley
Chief UK & Euro Area Economist
Ting Lu
Chief China Economist
Kyohei Morita
Chief Economist, Japan
Euben Paracuelles
Southeast Asia Economist
David Seif
Chief Economist for Developed Markets
Rob Subbaraman
Head of Global Macro Research
Sonal Varma
Chief Economist, India and Asia ex-Japan
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