Take Two: OECD raises global growth forecast; S&P 500 hits 5,000
- 12 February 2024 (3 min read)
What do you need to know?
The Organisation for Economic Co-operation and Development (OECD) hiked its 2024 global growth forecast to 2.9%, up from the 2.7% it forecast in November. However, this remains below its 2023 estimate of 3.1%, while it left its 2025 expectation of 3.0% growth unchanged. The OECD highlighted that lower energy prices and reduced supply chain pressures have helped ease inflation, but that outcomes across nations are diverging. As such it raised its US growth forecast to 2.1% in 2024 from 1.5%, citing solid household spending and easier financial conditions, but cut its Eurozone outlook to 0.6% for this year and 1.3% for 2025, down from 0.9% and 1.5% respectively.
Around the world
The S&P 500 index traded through the 5,000 mark for the very first time on Thursday, helped by some strong company gains and positive news flow. US business activity grew at its fastest rate since July, as expectations of lower interest rates spurred expansion. The US composite Purchasing Managers’ Index (PMI) rose to 52.0 in January from 50.9 in December. The final services PMI was lower than the flash estimate, though signalled a modest increase, at 52.5 in January from 51.4 in December. Separately, Federal Reserve (Fed) Chair Jerome Powell indicated in an interview that he still expects three quarter-point rate cuts this year.
Figure in focus: 1.5°C
Global warming has breached 1.5°C across an entire year for the first time. According to the European Union’s (EU) climate service, the mean temperature between February 2023 and January 2024 was the highest ever at 1.52°C above the 1850-1900 pre-industrial average. The 2015 Paris Agreement saw world leaders pledge to limit warming to well below 2°C - but ideally to 1.5°C. More positively, think tank Ember found the EU accelerated its move away from fossil fuels last year, with their use dropping by a record 19% to their lowest ever level while renewables rose to a record 44% share.
Words of wisdom
Chunyun: Around nine billion trips are expected to be made across China during Chunyun, the 40-days around Chinese New Year when people travel home to celebrate - triple the pre-pandemic figure of three billion. Last week data showed China’s inflation fell at its fastest rate in 15 years to -0.8% year-on-year in January from -0.3% in December. This partly reflected the timing of Chinese New Year - it was in January 2023, boosting consumption last year, but this year falls in February - but underscores the country’s entrenched weak demand. Expectations of further state support helped the Shanghai Composite Index make its largest one-day gain since March 2022, jumping 3.2% last Tuesday.
What’s coming up?
The US issues its January inflation figures on Tuesday, when the UK reports its unemployment rate for December. The latest Eurozone ZEW Economic Sentiment Index – which reflects expectations of the bloc’s six-month economic outlook – is also published on Tuesday. On Wednesday, the UK reports its latest inflation numbers while the Eurozone publishes its second estimate of GDP growth for the last quarter of 2023. The UK and Japan follow with their respective fourth quarter GDP figures on Thursday, when the US also reports industrial production and retail sales figures.
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