Global economy continues to face subdued growth and popular discontent even it has avoided much-feared recession, as per the IMF’s MD Kristalina Georgieva. While investors and experts continue to read top news for the week, they should know that global activity remains weak in comparison to historical standards.
IMF believes that inflation has not been fully defeated, fiscal buffers are now been depleted and debt continues to shoot up. Collectively, these factors are posing a significant challenge to public finances in several countries.
Following are some of the top news for the week gone by:
Factory activity in Asia paints a mixed picture
Factory activity in a range of Asian economies weakened in the month of March. However, there were some brighter signs which were visible in China and South Korea.
Official Purchase Managers’ Index survey which was released for China on 31 March stated that factory activity saw expansion for 1st time in 6 months. Separate data exhibited that South Korean exports went up by 3.1% in March in comparison to the previous year.
However, manufacturing activity remained weak throughout most of Asia, which includes South Korea, where subdued domestic demand offset overseas sales, and in Japan, Malaysia and Vietnam.
Eurozone inflation falls
As per Reuters, inflation in Eurozone witnessed a fall in March. This might prompt European Central Bank to begin lowering the interest rates. Despite expectations that it will remain steady between February to March, growth in consumer price declined to 2.4% last month against 2.6% in February.
Underlying inflation went down from 3.1% to 2.9%, crushing the Eurostat expectations of ~3.0%. On the other hand, services inflation remained steady at ~4.0% for several months. This means that quick wage growth continues to keep prices in sector under pressure.
With inflation in eurozone declining steadily for over a year, it has declined at a faster rate against expectations since last autumn.
Rise in the US factory orders
New orders for the US-manufactured goods increased more than expectations in February, going up 1.4% after declining 3.8% in January. This was boosted by demand for machinery and commercial aircraft, with manufacturing regaining footing.
Global economists forecasted orders rebounding ~1.0%. They increased 1.0% year-on-year in February month. Manufacturing, a business that makes up for ~10.4% of the US economy, turned corner post struggling with the consequences of ~525 basis points worth of increases in interest rates from the US Fed since March 2022.
Commercial aircraft orders went up by ~24.6% in February, post declining 63.5% in the prior month. Overall, transportation orders recovered ~3.3% after tumbling ~18.3% in January month. Machinery orders saw an increase of ~1.8%, supported by the ~12.5% rise in mining, oil field and gas field machinery.
Moderation in the US inflation
The US prices saw some moderation in February, as cost of services, outside housing and energy, slowed significantly. This keeps the June interest rate cut from the US Fed on the table.
Economists and analysts believe that core services inflation continues to slow and this is likely to continue for the remainder of the year. It is believed that by the time the US Fed meets in June, the data should further prompt them to start the procedure for the rate cuts.
In the 12 months ended February, PCE inflation increased ~2.5% after rising ~2.4% in January. Despite subsiding of price pressures, pace has slowed from H1 of previous year. With this, inflation is still above the US Fed’s 2% target.
Policymakers expect at least 3 rate cuts this year. The financial markets believe that first rate cut will take place in June.
China’s new home prices
New home prices in China saw an increase at the fastest pace in over two and the half years in March in comparison to the month earlier. This was due to a slew of supportive steps taken by the Chinese economy for the recovery of crisis-hit property sector.
Average new home price throughout 100 cities saw an increase of ~0.27% on month in March. This exhibits the biggest rise since July 2021 month as per China Index Academy. In comparison, there was a 0.14% on-month gain in February.
China’s property sector, which is being considered as a pillar of economy, continues to be the target of one crisis or another. This comes after the regulatory crackdown on high leverage among developers that led to the liquidity crisis.
Post that, a series of stimulus measures were implemented by local policymakers. As per the recent report, Mega city Shanghai saw a highest price rise of ~1.09% and north-eastern city of Changchun saw significant drop of 0.68%.
UK shop prices increased at the slowest pace
The UK shop prices increased at slowest pace in more than 2 years in March, as per British Retail Consortium. With this, shop price inflation declined from 2.5% in February to 1.3%.
Japan’s economic output
Japan’s economic output saw a recovery to the full capacity in final quarter of previous year. Output gap came in at 0.02%. This was the first positive reading in ~15 quarters.
Turkey’s consumer inflation increased
Turkey’s consumer inflation increased to 68.5% in March. This was the 5th straight month of increases.
Momentum of industrial orders in Germany
Industrial orders increased in Germany in February, but by less than expected – 0.2%. However, the analysts were expecting a rise of 0.8%.
Philippines’ annual inflation
Annual inflation in the Philippines increased 3.7% in March from the year earlier.
US trade deficit
The US trade deficit was widened in February month. This was despite exports rising to record highs. With this, the rise was offset by the increase in imports.