What's on the horizon for the global economy?
Our weekly updated overview highlights the key releases of global economic market data from around the globe and provides an economic outlook for 2024 by region.
- Our Week Ahead podcast explores the key themes driving global markets next week
- Our Global Economic Markets Data Calendar shows upcoming events happening over the week
- We provide an outlook overview region by region
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Our view in a nutshell
Japan
- Japan’s economy has been and will continue to be on a recovery path, exceeding potential, since Q2 2024.
- The Ishiba cabinet plans to expand fiscal policy through negotiations with some opposition parties such as DPP.
- On 18 October, Rengo released its basic concept for 2025 shunto with a wage hike target of ‘5% or above’.
- Fundamental support a rate hike in December 2024 while various uncertainties may lead the BOJ to a skip.
Asia
- We expect a soft growth patch in 2025, due to Trumponomics, weak China demand and slowing semiconductor sales.
- Countries with stronger domestic demand (Malaysia, Taiwan) should outperform, while India, Thailand and Korea could disappoint.
- Disinflation should sustain, exacerbated by the disinflationary impulse from a redirection of Chinese exports to the region.
- A divergence of monetary policies is likely, with both aggressive easing (RBI, BSP, BOK) and rate hikes (BNM and CBC).
- Korea: Amid deepening growth concerns, we expect the BOK to deliver another 75bp (three 25bp) of rate cuts by end-2025.
- India: Tight monetary policy is exacerbating the downside risks to growth. We expect 100bp of rate cuts, starting in February 2025.
- Indonesia: Populist measures of the new government raise fiscal risks while current account deficits continue to widen.
- Australia: We expect unemployment to drift higher, inflation to grind lower, and rate cuts from February 2025.
- New Zealand: Inflation is close to target, the economy weak, and policy still tight. We forecast further aggressive easing ahead.
China
- Under Trump 2.0, we expect exports to shift from a growth driver in 2024 to a growth drag in 2025.
- Beijing will very likely ramp up fiscal stimulus, with incremental borrowing of around 2.6% of GDP in 2025.
- We expect some initial stabilization of the property sector due to a low base, pent-up demand and Beijing’s stimulus.
- However, to deliver a real recovery, bolder measures are needed to clean the property market and revamp the fiscal system.
United States
- We expect a 25bp cut in December and just one cut in 2025, followed by a long pause due to inflationary shocks from tariffs.
- Tariffs and tax policy will be the focus for economic policy early in a second Trump administration.
- We anticipate tariff-driven inflation by mid-2025 will lead to a prolonged pause in the Fed’s easing cycle.
- The labor market is slowing, and risks remain skewed to the downside. Gradual cooling is more likely than a sharp deterioration.
Canada
- We expect the BoC to slow the pace of easing and deliver three consecutive 25bp cuts through April 2025.
- Inflation has returned to the BoC’s target range. Elevated shelter inflation is likely to moderate gradually as the BoC eases policy.
- The unemployment rate is set to continue to rise, and growth in real GDP per capita remains negative.
Euro Area
- We expect a slow recovery in economic growth, held back by soft consumption and a structurally weak German economy.
- We see core inflation above target through 2024-2025, but services inflation momentum gradually slowing.
- With weaker growth and inflation, we expect 25bp cuts at each ECB meeting until mid-2025 and a final cut in September to 1.75%.
- The ECB began full roll-off of its APP portfolio redemptions in July 2023. Partial PEPP tapering began in July 2024.
United Kingdom
- UK GDP bounced strongly in H1 after last year’s weakness. Surveys point to positive but slower growth in H2 2024.
- Upside risks: low unemployment, budget measures. Downside risks: past monetary tightening and below-average confidence.
- Headline inflation is close to target, but services inflation is proving more sticky and could take some time to normalise.
- After commencing the easing cycle in August 2024, we expect a continuation of quarterly cuts. Risks are for faster cuts.
For more information read our weekly report here.
Contributor
Aichi Amemiya
Senior US Economist
George Buckley
Chief UK & Euro Area Economist
Ting Lu
Chief China Economist
Kyohei Morita
Chief Economist, Japan
Euben Paracuelles
Southeast Asia Economist
David Seif
Chief Economist for Developed Markets
Rob Subbaraman
Head of Global Macro Research
Sonal Varma
Chief Economist, India and Asia ex-Japan
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