Diverging paths ahead in global economy

Countries around the globe are recovering from the pandemic's impact at varying speeds. This post examines the different economic trajectories through ten insightful charts. Access the dashboard of this insight here

Global Economic Growth Rates

As we move beyond the pandemic, economic growth rates have become less synchronized and have not yet recovered to pre-shock trends. While, for example, growth is strong in the USA, Latin America, or India, it is one step lower in some regions and countries such as China, and the Euro Area.

Inflation Rates Comparison

Global inflation surged during the pandemic recovery, but recent trends reveal varied inflation rates, with some countries managing to stabilize prices more effectively than others. The 0%-2% range of inflation in the past has now shifted to 2%-4%, even in Japan.

Monetary Policy Divergence

Monetary policies diverge as countries tailor their approaches to unique economic circumstances. For instance, the US is expected to cut rates, while Japan plans to raise rates by October.

US Economic Performance

The US economy has outperformed other developed markets, growing at or above trend. However, inflation, particularly driven by housing prices, remains a significant concern.

European Economic Struggles

Europe's economic performance has lagged, with weaker GDP and consumer spending. Climate change, demographics, and Brexit continue to hinder growth.

Japan's Economic Prospects

Japan is set to raise interest rates in October, driven by efforts to create domestic inflation and a virtuous cycle between wages and prices.

China's Economic Rebalancing

China faces challenges from its prolonged pandemic impact and property market slowdown. However, recent policy decisions aim to stabilize the sector and boost economic confidence.

Asia's Export Recovery

Asia's export cycle recovery, particularly in sectors like semiconductors, chemicals, and autos, continues to bolster the region's growth outlook.

Monetary Policy in Asia

Asian central banks show diverse monetary policies, with some focusing on financial stability and others on aligning with US Fed policy. Rate cuts are expected in several countries, while others may hold or hike rates.

Structural Changes in Asian Trade

Asia is undergoing structural changes in trade dynamics with China. Countries like India, Vietnam, and Malaysia are emerging as key beneficiaries of the China-plus-one strategy, adjusting their trade dependencies.