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| According to the IMF, the European economy is likely to avoid recession and a "soft landing" soon. (Source: Bloomberg) |
Specifically, the IMF analyzed that the European economy is unlikely to collapse even though the European Central Bank (ECB) has continuously raised interest rates for over a year to curb high inflation.
Rising wages have been a key factor supporting Europe’s economic recovery, but the IMF has also warned that the wage hikes could lead to higher inflationary pressures, especially if productivity does not improve in line with the new wages.
Assessing economic growth in other regions of the world, the IMF said that there are not many major changes in the short term, major economies such as the US and China have shown many signs of recovery, but there are still many hidden risks.
In the United States, consumer inflation expectations have rebounded to their highest level since 2021, driven by continued increases in gas prices. Data from the U.S. Census Bureau shows that inflation continues to cause significant financial strain for many Americans.
U.S. households used more credit cards in the third quarter of 2023. Strong spending helped boost economic growth. But credit card debt repayments are becoming less effective among millennials, those with student loans, and those with auto loans.
China, Asia's largest economy and the world's second largest, recorded good growth in the third quarter of 2023. However, China's efforts to attract foreign investors to return are still facing difficulties and exports have shown little sign of improvement.
The Hong Kong Special Administrative Region (China) government has lowered its economic growth forecast for this year, signaling that difficult times are still ahead. The recovery of one of the world's largest financial centers after the Covid-19 pandemic has not reached the expected speed.
The most positive trend in global economic activity today, according to the IMF, is emerging economies. Brazil is a prime example, where retail sales are expected to rise further after national policymakers pledged to maintain the pace of interest rate cuts in the coming months.
Saudi Arabia, the world's largest oil producer, is trying to diversify its economy and develop its domestic auto industry, aiming to become a global hub for electric vehicle batteries.
Looking at other economies, the IMF said the Reserve Bank of Australia (RBA) continued to raise interest rates to a new record high, which is likely to have a more severe impact on the economic growth of the Oceanian country. Poland's central bank unexpectedly paused its easing cycle amid persistently high inflationary pressures, while Mexico kept interest rates at a record high for the fifth consecutive meeting...
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