In Q3 2024, the global economy experienced mixed performance, with high interest rates leading to a slowdown in growth, while inflation showed signs of moderation. Major economies like the U.S. and Europe saw weaker consumer spending and investment, while Asia presented varied outcomes — China’s recovery lagged, and India maintained strong growth. Australia’s economy grew moderately, with easing inflation but persistent challenges in consumer spending and housing due to tighter monetary policy. The outlook for Q4 remains uncertain, influenced by central bank decisions, geopolitical risks, and China’s economic trajectory.
Global Economic Overview
The global economy in Q3 2024 has experienced mixed results across major regions, driven by various factors such as inflation management, interest rate adjustments, geopolitical tensions, and technological advancements. Some key trends are worth noting:
- Slowdown in Global Growth: Global growth has slowed compared to previous quarters, driven by high interest rates in many developed economies. Central banks, notably the Federal Reserve, ECB, and Bank of England, have maintained tighter monetary policies to curb inflation, resulting in reduced consumer spending and lower business investments.
- Inflation Moderation: Inflation has shown signs of easing in major economies, but it remains above central banks’ target levels in most regions. Supply chain improvements, falling energy prices, and reduced global commodity demand have all contributed to this decline. However, core inflation, especially in services, remains sticky.
- Energy Markets and Commodities: Global energy markets have experienced price fluctuations, particularly oil and gas. Oil prices briefly spiked in response to geopolitical tensions in the Middle East, but weaker global demand kept prices within moderate ranges. Industrial metals prices have remained subdued due to weaker manufacturing activity.
United States: GDP growth slowed to 2.0% in Q3, with higher interest rates reducing consumer spending. The Fed maintained rates, while the housing market weakened due to elevated mortgage rates.
Eurozone: Growth stagnated as high interest rates constrained spending and output, with Germany struggling in manufacturing but stable in services.
United Kingdom: The economy stagnated with high inflation and continued rate hikes, dampening spending and investment.
China: Recovery slowed with 4.4% growth in Q3, hampered by weak real estate and exports despite government stimulus.
India: Strong domestic demand pushed Q3 growth above 6.0%, with stable inflation supporting a neutral monetary stance.
Japan: Economic conditions improved with higher consumer spending and export gains from a weaker yen, though inflation remains above target.
Australia
Economic Growth: Q3 GDP growth slowed to 1.8%, with weaker household spending and lower demand from China. Exports held steady, but lower commodity prices cut revenue.
Inflation and Monetary Policy: Inflation eased to 4.1%, though core inflation stayed high. The RBA maintained a 4.35% cash rate, with potential for future hikes.
Labour Market: Unemployment remained low at 3.8%, but job growth and wage increases softened. Key sectors faced labour shortages amid slower immigration.
Housing Market: Higher rates stalled home prices and sales, while rents continued to rise, adding affordability challenges.
External Sector: Export volumes were stable, but weaker demand from China lowered prices. Tourism and education sectors saw a recovery with increased international arrivals.
Business Investment: Mining investment was stable, but new investments slowed. Other sectors remained cautious due to high borrowing costs.
Investment Markets
Over the course of the quarter and the year to September 30, 2024, market indices indicate there has been strong positive contributions across markets. Commodities is the exception and has varied from negative to marginally positive on a month-to-month basis through the quarter. This has caused volatility to increase
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