A recent report on the Global Economic Outlook & Strategy by Citi Chief Economist Nathan Sheets highlights key trends in the global economy. Despite recent global developments such as China’s stimulus announcement and central bank rate cuts, global growth remains solid yet slightly below trend.
The report shows that the global economy performed better than expected in the third quarter, leading to an upward revision of the forecast for global growth to 2.6% this year. The U.S., UK, Canada, and Mexico have outperformed expectations, contributing to the positive outlook for 2023.
Global Purchasing Managers’ Indexes reveal a two-track global economy, with the services sector showing strength while the manufacturing sector is in contraction. Countries like Germany and Spain have experienced different economic performances due to their focus on goods production versus services.
In terms of risks to the outlook, geopolitical tensions, election risks, and concerns about the U.S. labor market are noted. Long-term risks related to global debt levels and fiscal performances are also highlighted, especially for major economies with high debt levels and fiscal deficits.
Global inflation trends show a return to pre-pandemic levels, with core goods inflation falling sharply while services inflation remains sticky. Central banks are adjusting policies in response to decreasing inflation, with rate cuts expected from major central banks like the Fed, ECB, and Bank of Japan.
The U.S. economy continues to show strength driven by consumer spending, though concerns remain about the labor market. In the euro area, growth is expected to be lackluster, with the ECB’s policy changes aimed at unlocking credit growth. China’s economy is facing challenges such as slowing growth, high debt levels, and geopolitical tensions.
Overall, the report provides insights into the global economic landscape, highlighting key trends and risks across different regions. The detailed forecasts and country-specific discussions in the report offer valuable information for investors and policymakers navigating the current economic environment.