16 Oct 2024
After the global growth concerns that sprung up over the summer, in aggregate, data over the last few weeks have brought about some calm.
US labour market data look much healthier, after the 254k jobs added in September and the drop in the unemployment rate, even if some other variables point to workers losing confidence in their job prospects.
The rest of the US data remain robust as well. Consumer spending keeps ticking along, and the Atlanta Fed’s GDP now points to 2.5% growth (q-o-q annualised) in the third quarter. However, elsewhere across the world, the story isn’t quite as comforting.
We have seen further soft data in mainland China – with weaker surveys backing up subdued retail spending and still-weak construction activity. Authorities have responded with further stimulus; however, with consumer confidence at record lows, we don’t expect a rapid recovery in the data.
In Europe, there is little room for cheer. The manufacturing data have gone from bad to worse, and, despite still robust labour markets, consumers are not showing the same appetite to spend as those in the US. In the UK, where things are broadly improving, uncertainty over the budget has sapped consumer and business confidence.
There is also a clear sectoral split. The latest round of PMI data indicates a widening gap between the world’s manufacturing and service sectors – with the former showing further declines, while growth continues in the latter. This means that the uneven trade recovery is still reliant on electronics and US demand.
Against this backdrop, many of the cost pressures have muted a bit. Commodity prices are volatile but still lower than earlier this year, while shipping cost pressures continue to fade, despite the port strikes in the US and ongoing conflicts across the world.
And so more central banks are starting or accelerating their easing plans. The Federal Reserve’s 50bp cut in September may not be repeated in November, but we have seen more central banks either start to or prepare to move more aggressively with their easing cycles.
Finally, the US election is now only a few weeks away. The race remains extremely close – for both the presidency and Congress. The outcome of the election will play a big role in shaping the outlook for 2025 and 2026.
Our GDP growth forecasts are largely unchanged with an upgrade to the US and a smaller one to India offset by a downgrade to Europe, keeping our 2025 global GDP growth forecast unchanged at 2.6%, while we have edged up our 2024 forecast by 0.1% to 2.7%.
On inflation we keep our 2024 global forecast unchanged at 5.5%, even though we have lowered the forecast for the advanced economies from 2.8% to 2.6%, which has been offset by an increase in the emerging economy aggregate, mainly driven by Latin America. For 2025, our global inflation forecast has fallen from 3.7% to 3.3%.
Note: *India data is calendar year forecast here for comparability. Previous forecasts are shown in parenthesis and are from the Macro Monthly dated 11 July 2024.
Green indicates an upward revision, red indicates a downward revision.
Source: Bloomberg, HSBC Economics
Source: Bloomberg, HSBC
⬆ Positive surprise – actual is higher than consensus, ⬇ Negative surprise – actual is lower than consensus, ➔ Actual is in line with consensus
Source: LSEG Eikon, HSBC
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