In the latest release of the 'Global Recession Watch' report on January 31, 2024, economic analysts - Karen Harris, Managing Director, Macro Trends Group, New York; Dunigan O'Keeffe, Partner, San Francisco; Jeffrey Crane, Partner, Chicago, and Jason Heinrich, Partner, Chicago - provided an assessment of the world's economies. The report, revealing both optimism and concerns, coincides with official declarations of recession in two major global economies - Japan and the United Kingdom.
US economy surges with 3.1 percent YoY GDP Growth, but recession fears intensify
Despite the surprising 3.1 percent YoY GDP growth in the US during the fourth quarter of 2023, concerns loom over an impending recession due to an inverted yield curve since July 2022. Inflation, a persistent challenge, increased from 3.1 percent to 3.4 percent in December, according to their findings.
Eurozone stagnates: Q4 2023 GDP growth at meager 0.1 percent, inflation rises to 2.9 percent
Europe faced structural challenges, with the eurozone reporting a meager 0.1 percent YoY GDP growth in Q4 2023 and inflation rising to 2.9 percent in December. UK's struggle with inflation at 4.2 percent, with minimal GDP growth since Q3 2022, added to the global economic uncertainties, the report also outlined.
China's sluggish growth, Japan's inflation peaks, and India shines
As per the report, in the Asia-Pacific region, China's growth remained slow, while Japan experienced its highest inflation in four decades at 2.6 percent year over year. In contrast, India exhibited strong real GDP growth of 7.6 percent from July to September 2023. The report also emphasized Geopolitical fragility, highlighted by the ongoing war in Ukraine and evolving conflicts in the Middle East, added to economic uncertainty, emphasising the need for companies to stay vigilant and prepare for various economic and geopolitical scenarios.
Japan enters recession: Economy falls to 4th place globally
Adding to these concerns, Japan's economy contracted in Q4 2023, slipping to the world's fourth-largest, trailing Germany.
Japan's economy contracted in Q4 2023, slipping to the world's fourth-largest, trailing Germany. GDP shrunk by 0.4 percent, marking a technical recession amid weak domestic consumption. Analysts anticipate a Q1 2024 rebound, citing stabilized inflation and expected wage growth. Goldman Sachs predicts 1 percent growth in Q1 2024, emphasizing a likely rebound in private consumption and capital expenditure. Analysts expect upward revisions in March and project the Bank of Japan ending negative interest rates in April.
UK in recession
Simultaneously, the United Kingdom has entered into a recession, with a 0.3 percent contraction in GDP during the last quarter of 2023, following a 0.1 percent decline in the previous quarter. The Office for National Statistics cited major drags on growth in manufacturing, construction, and wholesale, offset by slight increases in hotels and rentals of vehicles and machinery. This economic downturn poses a challenge for Prime Minister Rishi Sunak, especially as the ruling Conservative Party faces local elections and with a national election expected later in the year. Finance minister Jeremy Hunt expects low growth due to high interest rates but emphasizes signs of the economy turning around.
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