Please see below article received from EPIC Investment Partners this morning, which provides a global economic update.
The global economy is showing signs of recovery after a turbulent few years, with inflation easing and growth improving, albeit still subdued by historic standards. Beneath this surface calm lie significant challenges that threaten long-term stability. Policymakers now face a crucial opportunity to address these weaknesses by improving public finances, restoring business and consumer confidence, and implementing strategies to boost productivity.
Despite relatively steady economic activity, businesses and households across major economies are struggling to rebound from the period of high inflation. Confidence remains fragile, as revealed by the Brookings-Financial Times Tracking Indexes for the Global Economic Recovery (TIGER). Political uncertainty, geopolitical tensions, and weak growth prospects have further dampened optimism.
The TIGER index shows that while global growth is gaining momentum, it is uneven and largely driven by the United States. Other advanced and emerging economies, including China, are grappling with rising debt and ineffective policymaking. Although the US and India are relatively healthy, confidence levels have dropped significantly across both well-performing and struggling nations. Eswar Prasad, senior fellow at the Brookings Institution, has described a widespread “sense of gloom and uncertainty.”
Ahead of the IMF-World Bank meeting, which begins today, IMF managing director Kristalina Georgieva has warned of a difficult combination of low growth and high debt, which could hamper efforts to stabilise public finances. While she urged governments to address their deteriorating finances, she cautioned that the challenging economic environment might limit progress.
Political instability and weak consumer and business confidence are complicating global prospects. In the US, despite falling unemployment and strong demand, consumer confidence has declined due to concerns over rising public debt and political uncertainties. A similar disconnect between economic indicators and sentiment is evident elsewhere.
Germany, the eurozone’s largest economy, faces high energy costs, stagnant productivity, and rising competition from China. France is struggling with fiscal problems that threaten both economic and political stability, while Japan’s interest rate hikes have failed to boost domestic consumption. Meanwhile, China is facing deflationary pressures and weak private-sector confidence, in stark contrast to its earlier role as a global growth engine.
Though India remains a bright spot, with strong infrastructure investment and high-value sector growth, the global economy still faces significant risks. Policymakers must act decisively to strengthen public finances and restore confidence, or long-term stability will remain uncertain.
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Chloe
22/10/2024