Global PMI indices improved slightly in January but remain at a very low level and cannot be taken as a sign of global activity regaining momentum at the start of 2023.
Outlook for GDP growth, inflation, interest rates and exchange rates
The latest economic indicators updated on February 20, 2023 and the coming calendar
The political crisis worsened in Peru over the last two months. In the very short term, political instability should continue, and weigh on the economic outlook.
While goods disinflation is expected to increase, or even turn into deflation in the coming months, services inflation is expected to show more inertia (due in particular to the shelter component), slowing the overall decline in inflation.
In the manufacturing sector, the global Purchasing Managers’ Index (PMI) showed a slight improvement in January following ten months of declines though still in contraction territory (49.1 points). With the exception of Japan, where the index remained stable, 26 of the 33 countries for which data for January was available reported increases.
The latest economic indicators updated on February 13 2023 and the coming calendar
"España Digital 2026", “Estrategia Española de Ciencia, Tecnología e Innovación 2021–2027” and “España 2050”: since the pandemic, there has been no lack of structural programmes designed to increase the competitiveness of the Spanish economy. The Spanish Government is right: the country's fundamental problems, which contributed to the 2011 crisis, persist today. Spain has one of the lowest levels of private and public investment and one of the lowest stocks per capita of productive capital in Europe. In addition, the country still suffers from a significant productivity deficit when compared to its major European partners, a deficit which it is struggling to make up as it is intrinsically linked to its low capital stock
While the US labour market has been very tight since the 2021 economic recovery, first signs of a slowdown are emerging. The extent of this slowdown will be key to ensuring the expected disinflation and the gradual return to price stability.
Tunisia is raising concern. The CDS premium on 5-year sovereign bonds has risen from less than 730 basis points (bps) at the end of November to 1072 bps currently. At this level, the country is joining the category of emerging issuers considered to be close to default by investors. There are many reasons for this.
The latest economic indicators updated on February 6 2023 and the coming calendar
In China, the official PMIs published on January 31st and the most recent mobility indicators show that domestic demand is rebounding faster than expected following the end of the zero covid policy and the re-opening of the country. This trend should strengthen further in the coming months assuming the epidemic curve continues to improve. We now expect economic growth to be slightly over 5% in 2023, up from 3% in 2022.
According to our estimate, the trade deficit (goods) reached almost EUR 160 billion in 2022, after 85 billion in 2021. This sharp deterioration is mainly due to the rise in the prices of French energy imports, including oil. However, it seems that the balance on manufactured goods has also continued to deteriorate, including when viewed in terms of volume.
With the war in UKraine, the European Union (EU) has had to find alternative sources of energy supply in emergency and at a significant cost.
GDP growth surprisingly increased in the 4th quarter, reaching +0.1% q/q (after +0.2% q/q in the 3rd quarter), compared with -0.2% based on our forecast. Corporate investment was one of the factors behind this relative resilience, with a further rise of 1.2% q/q (having already grown by 3.8% q/q in the 3rd quarter). Conversely, consumer spending was undoubtedly the weak link in demand, with a drop of 0.9% q/q.
On an annualised basis, US GDP increased 2.9% in the fourth quarter compared to the third. This healthy increase implies only a mild quarterly slowdown. The result was also better than the consensus expectation. However, a detailed analysis shows causes for concern. About half of the increase in GDP reflects inventory rebuilding, although this comes after a negative contribution in the previous two quarters. Personal consumption expenditures have also contributed approximately half of the GDP increase, but investments in structures had a negligible impact and residential investments continue to act as a drag, suffering from high mortgage rates. Moreover, in the final quarter of 2022, GDP only grew 1.0% versus the same quarter of 2021
Some discrepancies have become apparent in the most recent surveys. Uncertainty about US economic policy, based on media coverage, has continued on an upward trend since mid-April 2021, on the back of the tightening of monetary policy by the Federal Reserve. The European Commission's economic uncertainty index fell slightly, due to less uncertainty in the various sectors of activity, with the exception of households.
The latest economic indicators updated on January 30 2023 and the coming calendar
The French economy is exposed to both negative and positive factors. The recession risk is significant, as inflation acceleration has weighed and should continue to weigh on consumer appetite. However, some factors may drive growth, as e.g. the gradual recovery of their output to pre-Covid levels. Many sectors have already reached this target, but the manufacturing sector (particularly automotive and aeronautics) still experiences various factors limiting their production. If these bottlenecks ease, growth may well surprise on the upside.
Surprisingly, according to European Commission surveys such as the Standard Poor's Global PMIs, the business climate improved quite significantly in the Eurozone despite the accumulation of setbacks. The improvement was evident in all activity sectors as well as in relation to advanced components (for new orders). However, the level of the surveys remains relatively depressed.
Business climate indicators in recent months have been affected by the significant impact of the energy shock, as well as by fears that this shock will get worse during the winter. The difficulties linked to the international context (before China’s economy opened up again) have also hurt the German economy.
