IMF sees global growth continuing to accelerate
The IMF updated its forecasts for global economic growth last week. This update, which comes just six weeks after the initial forecast was published, is a major upgrade. For the global economy, the IMF now predicts +4.9% growth year-on-year (YoY) in 2022 (a +0.5% rise from April’s estimate).
Within that figure, advanced economies saw the biggest growth upgrades, seeing a +0.8% average increase in estimates. Amongst them, the US received the biggest bump of all, seeing its growth forecast increased from +3.5% to +4.9%. In contrast, the IMF has held growth forecasts for emerging markets stable – a reflection of the disparity in access to Covid vaccines and relative abilities of countries to provide fiscal support to their economies. The important take-away from the IMF’s latest communication is that global growth remains robust, despite near-term headwinds from a resurgence of Covid in a number of countries.
An update on the latest macro-economic data releases
Last week saw several important economic data releases in the US. The IHS Markit US Manufacturing PMI fell to 61.2 in August, this was below forecasts but clearly above the crucial “50” level that indicates economic expansion. Existing home sales were up +2% month-on-month in July (well above market expectations) while new home sales rose by +1% (in-line with expectations). The median existing home price for all housing types was $359,900 in August – that’s a YoY increase of nearly +18%, and the 113th straight month of YoY gains, a very strong indication of a buoyant US property market.
In China, industrial production rose by +6.4% YoY in July, missing expectations but remaining at a healthy positive rate. This is the lowest reading of this metric in twelve months and is likely caused by the issue of supply bottlenecks and recent outbreaks of Covid cases in China holding back activity. Retail sales rose by +8.5% YoY in the same month, also a miss on expectations but maintaining positive momentum and, once again, likely a function of the short-term impact from renewed Covid restrictions and supply chain delays.
The IHS Markit Flash Composite PMI for the Eurozone region hit 59.5 in August, down from 60.2 in July but still remaining well above 50 and so continuing to indicate ‘expansion’. Growth estimates showed that the Eurozone bounced back from a technical recession (defined as two consecutive quarters of contraction) last month, when growth for Q2 2021 came in at +2%.
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