All articles tagged with #global economic growth
The OECD reports that President Trump's tariffs are expected to slow global economic growth, with US GDP projected to decline from 2.8% in 2024 to around 1.5-1.6% in 2025-2026 if the tariffs remain in place, especially if trade disputes persist.
The International Monetary Fund (IMF) has raised its global economic growth outlook, expecting a 3.1% growth rate in 2024 and 3.2% in 2025, with inflation projected to decrease. The U.S. is anticipated to experience a soft landing with a slowdown in growth, while the euro area may struggle. Global trade is projected to grow at a slower rate, and concerns persist about the banking system's exposure to commercial real estate. The IMF foresees central banks maintaining current interest rates until the second half of 2024, and notes a trend of increasing protectionist measures impacting globalization.
The International Energy Agency (IEA) has raised its 2024 global oil demand growth forecast for the third consecutive month, now projecting a rise of 1.2 million barrels per day (bpd) compared to 2023, citing macroeconomic headwinds and an expanding electric vehicle fleet. Meanwhile, OPEC expects robust world oil demand growth of 1.8 million bpd in 2025, with higher global economic growth and solid activity in China contributing to the outlook.
Asian stocks fell, led by Chinese stocks, as weak signals from China and anticipation of key economic readings this week kept markets on edge. China's economic engines remained under pressure, raising concerns over the need for more stimulus measures. Australian commodity stocks were hit by concerns over China's role as a dominant trading destination. Weak PMIs in Japan, the euro zone, and the US added to worries about slowing global economic growth. This trend could invite further weakness in Asian markets if investors lock-in recent profits.
Analysts predict that weakening global economic growth will likely keep oil prices below $90 per barrel this year and next, unless the Hamas-Israel conflict escalates into a regional war, which could threaten oil supply and push prices above $100, potentially testing $115 per barrel. The average forecast for Brent Crude prices this year is $84.80 per barrel, with a slight increase to $86.62 per barrel next year. While slowing economic growth is seen as the main bearish factor for oil, the situation in the Middle East could be a significant driver of price surges if a supply disruption occurs. However, most experts do not expect prices to remain in the triple digits for long due to downward pressure from economic slowdown.
The escalating conflict in the Middle East, particularly between Israel and Ukraine, is raising concerns about its impact on global economic growth. President Biden is expected to request $14 billion in military aid for Israel and $60 billion for Ukraine as part of a $100 billion aid package. The risk of wider conflict is causing market volatility, with rising oil prices and geopolitical tensions posing risks to global economic activity. The Federal Reserve is closely monitoring the situation, as higher energy costs could lead to inflation and hinder central banks' efforts to control prices. The Fed is also concerned about the possibility of the economy overheating, despite recent interest rate hikes.
Crude oil prices rose slightly after the Energy Information Administration reported a decline of 500,000 barrels in US crude oil inventories for the week to June 9. However, gasoline and middle distillate inventories increased, and oil prices have been under pressure due to concerns about global economic growth. Despite this, news of additional Saudi cuts helped push prices higher.
Oil prices fell over $1 a barrel on Tuesday due to concerns about global economic growth, outweighing Saudi Arabia's pledge to deepen output cuts. Brent crude futures were down 1.96% to $75.21 a barrel, while U.S. West Texas Intermediate crude fell 2.04% to $70.68 a barrel. Weaker demand, stronger non-OPEC supply, potential recessions in the U.S. and Europe, and lower growth in China means Saudi's cut is unlikely to underpin a "sustainable price increase" into the high $80s-low $90s.
OPEC and its allies, including Russia, are unlikely to agree on further oil supply cuts at their meeting on Sunday in Vienna, despite a fall in oil prices towards $70 per barrel this week. The group had pledged voluntary cuts starting from May, adding to a 2 million barrels per day reduction agreed last year. However, concerns about global economic growth and demand have put pressure on oil prices, which are currently trading around $75 per barrel.
Gold and silver prices are down due to a rally in the US dollar index and a slight rise in US Treasury yields. Silver has been hit especially hard this week due to concerns about slowing global economic growth reducing consumer and commercial demand for the metals. Global stock markets were mixed overnight, and there are growing concerns about a US and/or global economic recession. The US dollar index is firmer, and the benchmark 10-year US Treasury note yield is presently fetching 3.412%.
Gold and silver prices are lower due to the potential for a slowdown in global economic growth that would crimp consumer and commercial demand for metals. U.S. stock indexes are pointing towards slightly lower openings when the New York day session begins. Recent U.S. economic data has come in generally upbeat, including U.S. non-farm jobs growth above to well above 200,000 the past year. Barring an unexpected banking turmoil flare-up or major geopolitical shock occurring in the coming months, the U.S. economy will likely have successfully attained a "soft landing" and will be set for more sustained growth in 2024.
Oil prices fell sharply on Wednesday, with West Texas Intermediate futures dropping more than 5% to settle at $67.61 per barrel, reaching its lowest level since December 2021, due to fears of a brewing banking crisis that could dent global economic growth. The drop came as global risk markets sold off following news that Credit Suisse's biggest investor, the Saudi National Bank, would not provide more assistance for the embattled bank. The Federal Reserve is slated to hold a policy meeting next week, with traders now showing nearly a 2-to-1 chance of rates staying at current levels.