Global Macroeconomic Analysis（2024Q3）

The global economy continues to experience low growth. Inflation levels in major developed economies have receded, but further declines face challenges. Monetary policies are gradually shifting toward easing, while heightened geopolitical risks are exerting pressure on trade and investment. The analysis below summarizes the economic performance of major economies, monetary policy adjustments, and global economic trends.

I. Economic and Financial Market Overview of Major Economies

Divergent Recovery in Developed Economies
The U.S. reported a Q3 annualized GDP growth rate of 2.8%, but manufacturing PMI remained below the expansion-contraction threshold for six consecutive months, indicating significant economic divergence. The Eurozone saw a 0.9% year-on-year GDP increase, though its manufacturing PMI has been in contraction for 27 months. The U.K.'s GDP rose by 0.7% year-on-year, showing improvement, while Japan’s GDP grew by 2.9% annualized, driven by a rebound in domestic demand.

Broad Decline in Inflation
The U.S. CPI rose 2.4% year-on-year, marking its lowest level since March 2021. The Eurozone's HICP fell to 1.7%, below the inflation target for the first time. Inflation also eased in the U.K. and Japan, reaching 1.7% and 2.5%, respectively.

Stable Labor Markets
The U.S. unemployment rate dropped to 4.1%, accompanied by gains in non-farm payrolls. Labor markets in the Eurozone and Japan remained generally stable, although structural challenges persist.

Divergent Trends in International Financial Markets
Technology stocks drove global stock market recovery in 2024, with the S&P 500 index up 20.8% year-to-date. Adjustments in monetary policy led to declines in government bond yields. Meanwhile, the U.S. dollar index experienced volatility and gave up its yearly gains by the end of September amid interest rate cut expectations.

II. Monetary Policy Adjustments in Major Economies

Rate Cuts as the Dominant Trend
The U.S. Federal Reserve reduced the federal funds rate by 50 basis points. The European Central Bank and the Bank of England also cut rates while reducing the size of their balance sheets. In contrast, the Bank of Japan implemented a modest rate hike, tightening its monetary policy.

Policy Divergence in Emerging Markets
Some emerging economies, such as India and Malaysia, maintained steady rates, while others, including Brazil and South Africa, adopted rate cuts to stimulate growth. Nigeria, on the other hand, continued to raise rates to curb inflation.

III. Key Issues and Trends to Watch

Weak Global Economic Recovery
Organizations such as the IMF project that global economic growth in 2024 will fall below historical averages. While the restructuring of global value chains favors emerging markets, it poses challenges to China’s export competitiveness.

Challenges to Sustained Inflation Decline
Rising commodity prices and persistent service inflation remain significant hurdles. Geopolitical tensions have pushed up global commodity prices, and rapid wage growth in the U.S. and Europe constrains further price declines.

Slowing Trade and Investment Growth
Geopolitical conflicts and unilateralism have disrupted international trade, resulting in subdued trade and investment growth. The IMF projects global trade growth of 3% this year, below the average of the past two decades. Foreign direct investment continues to decline, with subsequent political policy adjustments likely to be key determinants of economic performance.

Conclusion
In Q3 2024, the global economy seeks pathways to recovery amidst challenges. Geopolitical risks, the sustainability of inflation reductions, and fluctuations in international trade and investment will remain critical factors shaping the global economic outlook.

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