(Bloomberg) — If the global economy is headed for a soft landing, there could be plenty of uncertainty along the way.
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As the world's financial elites gather in Washington for the International Monetary Fund, World Bank, and Group of 20 (G20) meetings, they weigh in on slowing growth, stubborn inflation, high interest rates and debt levels, and geopolitical concerns that are roiling markets. You will face a combination of risks.
Bloomberg Economics now sees global economic activity slowing to 2.9% this year, up 0.2 percentage points from December and calling it a “great escape,” but still below pre-pandemic pace. “It's significantly lower.”
IMF chief Kristalina Georgieva warned that the world was headed for a “decade of weakness and disappointment,” but also signaled that the fund's forecasts to be released on Tuesday would be slightly raised from the current 3.1%.
Against this backdrop, investors will be keeping a close eye on key attendees at the meeting. Scheduled speakers include Federal Reserve Chairman Jerome Powell, US Treasury Secretary Janet Yellen, UK Finance Minister Jeremy Hunt, and the governors of the European Central Bank, Bank of Japan, and Bank of England.
Current politics have prevented the G20 from participating in recent meetings, and it is likely that it will once again be unable to address the risk of polarizing its members.
Russia's war in Ukraine is entering its third year, with U.S. military support in question and Kiev's ability to pay for bullets and bonds increasingly in focus. Meanwhile, the war between Israel and Hamas in Gaza risks plunging the Middle East into a broader conflagration.
Both disputes are swirling over some of the world's biggest oil suppliers and are pushing up energy prices, a worrying sign for inflation opponents.
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The IMF has warned of the geopolitically-induced fragmentation of the global economy. The gulf is wide, between the United States and the European Union on the one hand, and China and Russia on the other, making the Global South a key battleground for business and influence.
Asked about geopolitical instability, Georgieva said: “The world is becoming more diverse and we must prepare well for further developments in the future.” “And it’s a world where we see divergences of purpose as well as economic fortunes.”
Next week will also focus on the deep debt crisis among several emerging market economies that have been feeding on cheap money, mainly from China, for nearly two decades. Now, poor countries are struggling to regain access to capital as creditors fight for their share, a competition that is having serious implications for Beijing's influence in global finance.
Bloomberg Economics says:
“A year of slightly slower global economic growth looks like a big escape compared to expectations that a recession would be the price of reining in runaway inflation.
The next big question is: With growth surprisingly strong, will central bank transformation be delayed? We have pushed back our request for the Fed's first action to July, which is still earlier than most of the market expected. ”
—Tom Orlick, Chief Economist.Click here for complete analysis
Other key highlights will include economic data from China, inflation and wage figures from the UK, and Canada's budget.
Click here to find out what happened last week. Below is a summary of what will happen next in the global economy.
USA and Canada
The U.S. data calendar begins with retail sales on Monday, with economists expecting modest growth as the first quarter draws to a close, highlighting consumer resilience but caution. There is. This figure does not take into account the effects of inflation and primarily reflects spending on goods.
March data on inflation-adjusted purchases, including service spending, to be released later in the month will provide a more comprehensive view of household demand.
Among housing-related data for next week, a government report on Tuesday is expected to show that home construction starts eased in March after strong growth in February. Home builders have been taking advantage of scarce inventory in the resale market over the past year.
Thursday's existing home sales statistics are expected to decline in March as rising mortgage rates and prices continue to constrain demand. The average interest rate on a 30-year fixed mortgage was below 7% at one point, but has risen on expectations that the U.S. Federal Reserve will not immediately lower borrowing costs.
The Federal Reserve's public event calendar is packed. In addition to Powell on Tuesday, New York Fed President John Williams also appeared on Bloomberg TV on Monday, along with Vice Chairman Philip Jefferson, Mary Daly, Thomas Birkin, Loretta Mester, Austan. – District Fed presidents including Mr. Goolsby and Rafael Bostic will also appear.
Canada's inflation data for March to be released on Tuesday could show a slight increase due to higher gas prices. Core metrics will come under scrutiny as Bank of Canada Governor Tiff Macklem assesses continued downward momentum in underlying pressures before cutting interest rates.
Finance Minister Chrystia Freeland will announce the budget on the same day. He has already announced several big-ticket deals and pledged to cut the deficit to C$40 billion ($29.2 billion).
Asia
China is in the spotlight, with first-quarter gross domestic product (GDP) statistics to be released on Tuesday showing the country is on track to meet official growth forecast of 5% in 2024. Probability is high.
The economy expanded in the first quarter, likely at 5% year-over-year, underscoring the need for a bit more policy support, but Goldman Sachs forecast an even stronger annualized growth of 7.5% in the first three months. We predict a high growth rate.
Growth in industrial production is expected to slow in March, and retail sales are expected to remain strong. The decline in real estate investment may have accelerated slightly.
China ended the week with trade data expected to slow headline export growth in March, mainly due to last year's higher baseline.
Elsewhere, Japan's consumer inflation rate likely slowed to 2.7% in March, marking the second full year that inflation has stayed above the Bank of Japan's 2% target. Japan has also obtained trade statistics, and export growth is expected to be stable.
In New Zealand, first-quarter statistics show that the rate of inflation may accelerate from the previous quarter, and in Australia, the unemployment rate is expected to rise in March.
Malaysia will also release its first quarter GDP, and Singapore will also release its trade statistics for March.
Europe, Middle East, Africa
The data highlight for this region is the United Kingdom. Wage statistics in Tuesday and Wednesday's Consumer Price Report will be scrutinized by BoE officials as they consider when to start cutting interest rates.
The numbers provide reassurance for policymakers, as underlying inflation, which excludes volatile factors such as energy, is likely to still be above 4%, and wage growth is likely to be even higher. may be limited.
Retail sales figures will also be released later this week, which could signal the strength of British consumers as the economy shows signs of a factory-led recovery taking hold.
Meanwhile, in the euro zone, industrial production will be a key indicator on Monday, with economists expecting an increase in February, but not likely to make up for last month's drop. Germany's ZEW Investor Sentiment Index will also be published.
Data in Nigeria on Monday was expected to show annual inflation accelerated in March from 31.7% in February due to a sharp decline in the naira, which lost about 30% of its value against the dollar in the first quarter. There is. This is mainly due to the second devaluation in January, which was aimed at allowing the naira to be traded more freely and closing the gap with the unofficial market rate.
Inflation remains subdued and is expected to accelerate slightly from 2.5% to 2.6% in March, Israeli data shows, as the war with Hamas continues to cause weak consumption.
In South Africa on Wednesday, higher fuel costs are expected to keep prices up by only 5.4% in March, compared with 5.6% in the previous month.
Neighboring Namibia's monetary authority is expected to keep its key interest rate unchanged at 7.75% to protect the country's peg with the rand and because of upside risks to the inflation outlook due to drought and soaring oil prices.
In general, attention will primarily be focused on the other side of the Atlantic. There, nearly all the region's finance ministers and central bankers are in Washington for the IMF meeting.
latin america
The early consensus is that Colombia's gross domestic product (GDP) proxy data fell as weak domestic demand and tight financial conditions slowed January's sharp growth rate.
Separate reports could also show that manufacturing, industrial production and retail sales have all been negative for the 12th consecutive month.
Peru's GDP index is likely to accelerate for the second consecutive month in February as the country's economy recovers from last year's worst recession in 33 years. The unemployment rate in March in the capital Lima is also attracting attention.
It's a light week for Argentina and Chile, with the former releasing March trade results and the latter releasing the central bank's survey of traders.
Mexico was also largely silent, with only the weekly foreign exchange reserves report and retail sales statistics for February released, with both the monthly and annual statistics for January being negative.
Brazil's central bank releases a weekly expectations survey (analysts don't expect inflation to return to target until 2027) and a GDP replacement report for February.
Brazil's incredible 2023 growth story ended 2023 strongly, extending into January.
The combination of a slightly negative output gap and lower interest rates has kept consumer demand strong, as evidenced by the 8.2% rise in retail sales in February.
–With assistance from Brian Fowler, Robert Jameson, Laura Dillon Cain, Vince Gaul, Monique Vanek, and Eric Martin.
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