Three months ago, we commented on the quick containment of the US and European banking turmoil by saying that - impressive as that was - it would be surprising if no other similarly disruptive risk event transpires during the second half. The year hasn’t ended yet, but we do declare ourselves surprised by the global economy’s ability to weather the ongoing monetary policy tightening without delivering more “victims”, so to speak.
To be sure, not every region has surprised to the upside. Our forecasts for both the UK and the eurozone remain essentially unchanged from three months ago, while our growth expectations for China have been reduced ever so slightly for both this year and next. The big upside surprise has undeniably been the United States, but we’ve also revised growth higher in Japan and Australia. In Japan, a big upside surprise in Q2 GDP forced a upgrade to 2023, though 2024 estimates are unchanged. In Australia, the fundamental story remains one of deceleration yet the timing is pushed out: while 2023 growth looks better, 2024 is a bit softer. As a result of all these permutations, global growth (PPP-weighted) is lifted by two tents and 2024 by one tenth.
Our new thought leadership series on China assesses the country in terms of its troubled property sector, GDP growth conundrum and potential geopolitical constraints. Explore here.