(Bloomberg) — The International Monetary Fund shaved its global growth forecast for next year, citing accelerating risks from wars and trade protectionism.
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Meantime, the Bank of Canada stepped up the pace of interest-rate cuts and signaled that the post-pandemic era of high inflation is over. Policymakers lowered the benchmark overnight rate by 50 basis points, the most since March 2020, to 3.75%.
Chinese banks also cut their lending rates after easing by the central bank at the end of September, part of a series of measures aimed at reviving economic growth and halting a housing market slump.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:
World
Global output will expand 3.2%, 0.1 percentage point slower than a July estimate, the IMF said in an update of its World Economic Outlook released on Tuesday. The fund has been cautioning for a couple of years that the world economy is likely to expand at its current mediocre level in the medium term — too little to give nations the resources they need to reduce poverty and confront climate change.
The global economy is heading toward year end with unexpected tailwinds as slowing inflation clears a path for an unlikely soft landing. At the same time, political hurdles lie ahead. Hanging over the outlook is the toss-up US presidential election that offers starkly different economic outcomes for the world. That comes on top of soaring government debt, escalating conflict in the Middle East, the grinding war between Russia and Ukraine, and tensions in the Taiwan Strait.
The collapse of the Soviet Union and the formation of the World Trade Organization a few years later spurred a shift toward export-oriented manufacturing rather than tariff-protected local industry as the best path to sustainable development. The strategy lifted hundreds of millions from poverty in China and beyond. But that playbook is less and less able to generate the economic expansion poorer countries need to raise standards of living.
US & Canada
Canada’s jumbo cut — expected by markets and economists in a Bloomberg survey — aims to boost economic growth and keep inflation close to the 2% target. Headline price pressures slowed to 1.6% in September and are no longer as broad, with inflation expectations now trending closer to normal.
A growing share of mid-income households were willing to thrust their debt into riskier territory last year to make the leap to home ownership, according to a Bloomberg analysis of 10 million federal home-loan records from 2018 to 2023.
US stocks are unlikely to sustain their above-average performance of the past decade as investors turn to other assets including bonds for better returns, Goldman Sachs Group Inc. strategists said. The S&P 500 is expected to post an annualized nominal total return of just 3% over the next 10 years, according to an analysis by strategists including David Kostin. That compares with 13% in the last decade, and a long-term average of 11%.
Asia
The cuts to the loan prime rate — which is set by a group of big Chinese banks — come after the PBOC outlined steps last month to encourage households and companies to borrow money. The measures include lowering interest rates and unlocking liquidity to encourage bank lending.
South Korea’s economy barely grew last quarter following an earlier contraction, underscoring the risks from a softening export rally, broadening geopolitical tensions and a US presidential race that may impact trade-reliant nations.
China will account for less than half of global steel consumption in 2024 for the first time in six years, according to the World Steel Association, as the decline in the country’s real estate sector pummels demand for the metal.
Europe
The downtrend in private-sector activity in the euro-area extended into a second month with the region’s two top economies weighing on output and little sign of a recovery to come.
The Bank of Russia hiked its key interest rate to a record high, surpassing the level it imposed after President Vladimir Putin ordered the invasion of Ukraine, and signaled future tightening was possible as policymakers grapple with persistent inflation.
Emerging Markets
Saudi Arabia’s revenue from oil exports has slumped to the lowest in more than three years as sluggish demand growth weighs on crude prices.
The number of companies in Colombia filing for insolvency this year is on track to reach its highest level in a decade, heaping pressure on President Gustavo Petro to pull the country out of its economic doldrums.
–With assistance from Ann Choi, Enda Curran, Anthony Di Paola, Erik Hertzberg, Paul-Alain Hunt, Sagarika Jaisinghani, Andrea Jaramillo, Sam Kim, John Liu, Yujing Liu, Eric Martin, Oscar Medina, Mark Niquette, Jana Randow, Martin Ritchie, Michael Sasso, Zoe Schneeweiss, Kai Schultz, Shruti Srivastava, Greg Sullivan, Alex Tanzi, Randy Thanthong-Knight and Alexander Weber.
