Global Economic Summary as of 27 May 2024
This summary extends beyond weekly data to incorporate additional information, providing a more comprehensive and informed perspective on the economy. The economic landscape is shaped not only by weekly news but also by a culmination of data and unexpected, instantaneous events. Therefore, this update aims to offer a more continuous and holistic view of the economic conditions.
USA
The US economy grew at an annualized rate of 1.6% in Q1 2024, reflecting decelerations in consumer spending, exports, and government spending, partly offset by an increase in residential investment. The AI sector attracted $15 billion in the first quarter, contributing to productivity gains. Inflation remains a concern, with the Consumer Price Index (CPI) rising 3.4% year-over-year, influencing Federal Reserve's tightening policies, which could impact both bond and equity markets. The unemployment rate is 3.9%.
China
China's economy grew by 5.3% in Q1 2024, driven by a 5.6% rise in industrial production and significant AI investments in smart manufacturing and autonomous vehicles, totalling $20 billion. Inflation for April 2024 is at 0.3%. However, trade tensions and regulatory changes present potential risks. The unemployment rate is 5%.
Eurozone
The Eurozone experienced a modest growth of 0.3% in Q1 2024. Industrial production rose by 1.8%, and ESG investments attracted €15 billion in April, spurred by new sustainability standards. Inflation is at 2.6% year-over-year, prompting cautious monetary policies from the European Central Bank. The unemployment rate is 6.5%.
UK
The UK economy grew by 0.6% in Q1 2024, with manufacturing output increasing by 2.3%. The AI sector, particularly in healthcare and financial technology, is seeing increased investment. Inflation was 2.3% year-over-year, and the Bank of England's cautious interest rate policies are key factors for investors to monitor. The unemployment rate is 4.3%.
Switzerland
Switzerland's economy grew by 0.3% in Q1 2024, with low unemployment and steady retail sales growth. Significant AI investments in precision manufacturing and healthcare reached CHF 2 billion. The country's stable policies and low inflation at 1.4% make it a safe haven for investors, with robust ESG initiatives attracting CHF 5 billion.
Canada
Canada's 0.9% growth in Q1 2024 was driven by smart agriculture and healthcare technologies, with AI investments of CAD 3 billion. While retail sales and job growth are strong, inflation at 2.7% year-over-year poses a concern, influencing the Bank of Canada's cautious interest rate approach. The unemployment rate is 6.1%.
Australia
Australia's most recent GDP growth was 1.5% year-over-year in Q4 2023, fueled by strong exports and consumer spending. AI investments in mining and healthcare technologies totalled AUD 4 billion. The Reserve Bank of Australia is managing moderate inflation at 3.6% year-over-year for Q1 2024 through careful monetary policies. The unemployment rate is 4.2%.
New Zealand
New Zealand's economy contracted 0.3% year-over-year in Q4 2023, with retail sales up 1.6%. Significant AI investments in agricultural technologies are noteworthy. Inflation is high at 4%, highlighting the importance of the Reserve Bank of New Zealand's monetary policies for market stability. The unemployment rate is 4.2%.
Japan
Japan's economy grew by 1.2% in Q1 2024, with a focus on robotics and advanced manufacturing technologies, investing JPY 500 billion in AI. Inflation is at 2.5% year-over-year for April. Despite low inflation, global uncertainties impact economic policies. Investors should watch for opportunities in technological innovations and export-driven growth. The unemployment rate is 2.6%.
Singapore
Singapore's economy grew by 3% in Q1 2024, driven by manufacturing and financial services. Investments in smart city technologies and fintech reached SGD 1.5 billion. With low unemployment and moderate inflation at 2.7%, Singapore remains attractive for investors, with crucial policies from the Monetary Authority of Singapore managing inflation and recession risks.
What to Expect
- FX Markets:
- USDCNY: Expect significant fluctuations due to China's large AI investments and trade tensions, with potential swings in either direction based on trade relations and regulatory changes.
- USD vs EUR: Likely USD appreciation relative to EUR due to more robust US economic growth and AI investments, contrasted with Eurozone's modest growth and geopolitical uncertainties.
- GBPUSD: GBP might remain stable or slightly depreciate against USD due to post-Brexit adjustments and high inflation in the UK, while the US shows stronger economic performance.
- AUD and NZD: Both AUD and NZD may experience moderate volatility. Strong growth prospects from technological advancements support these currencies, but global uncertainties and domestic inflation pressures could cause fluctuations.
- USD vs SGD: SGD might appreciate against USD due to Singapore's stable policies, strong economic growth, and significant investments in smart city technologies and fintech.
- Bonds: Government bond yields reflect central bank actions and inflation concerns. Higher yields in the US and Eurozone indicate ongoing inflation worries.
- Equities: Stock markets may remain volatile due to inflation, interest rate changes, and geopolitical uncertainties. Look for growth in sectors like AI, ESG, and technology-driven industries.