The Macro Brief - What next for the global economy?
Sep 29, 2023
auto_awesome
This podcast explores the economic outlook and the challenges faced by central banks in managing interest rates. It delves into the impact of rising oil prices on inflation and economic growth, as well as global growth revisions and inflation challenges. The final chapter covers the outlook for the global economy, an investment seminar, bond market analysis, and a primer on ASEAN economies and markets.
Central banks are uncertain about the duration of peak interest rates and maintain restrictive policies due to data dependency.
The rising oil price poses risks for oil-importing countries, hindering inflation reduction efforts and adding complexity to monetary and fiscal policy interactions.
Deep dives
Outlook for Interest Rates and Growth
After a period of rapid interest rate rises, central banks are uncertain about the duration of peak interest rates. While some emerging economies have started to cut rates, key major economies maintain restrictive policies and express the need for data dependency. The challenge lies in managing expectations due to various factors impacting the global economy.
Impact of Oil Price and Inflation
The rising oil price, although still below 2022 peak levels, poses risks for oil-importing countries, hindering inflation reduction efforts and potentially leading to persistent inflation. Central banks have been above their inflation targets for some time. The interaction of monetary and fiscal policy adds complexity, with governments adding demand during attempts to slow down, magnified by supply factors.
Global Growth Outlook and Uncertainty
Global growth estimates have been revised upward, mainly driven by the Americas and Japan, while China experiences growth disappointments. Elevated inflation persists in emerging economies, but central banks do not expect inflation to reach target levels until 2026. Forecasts for 2024 imply modest growth due to labor market tightness, limited interest rate reductions, and ongoing challenges, with a higher degree of uncertainty due to elections and fiscal policy.