The momentum in global economic activity, according to the S&P Global Composite PMI Index, continued to strengthen at the beginning of the second quarter, helped by a number of positive events in recent months, such as falling energy prices, the gradual normalization of disruptions in global supply chains, the opening of the borders of the Chinese economy after the removal of anti-pandemic restrictions at the end of 2022, as well as a strong labor market, which, combined with a slowdown in inflationary pressures, is helping to boost household incomes. Supported by continued momentum in the services sector, the global composite PMI remained on an upward trajectory in May for the sixth consecutive month, hitting an 18-month high of 55.5 points (+0.1) above the critical unchanged level of 50 units. which demarcates the growth / contraction prospects for the fourth month.
According to a revised OECD report, the global economy is expected to grow at a rate of 2.7% in 2023, compared to 3.3% in 2022. November 2022 estimate.
At the same time, the main consumer price index for the world economy continued its downward trend in recent months in May, mainly due to underlying effects from energy prices, although the pace of slowdown remains softer than originally expected, while the corresponding indices for the main economies should remain well above the medium-term target of central banks. At the same time, strong concerns remain that inflation will remain high for longer than originally forecast, as the strong labor market in many of the largest economies, despite signs of partial slowdown, remains highly tense, contributing to strong wage growth and strong upward pressure on the structural services index.
Given these conditions, some major central banks (Australia and Canada) are reconsidering their stance and moving forward with new, unexpected rate hikes, leaving open the possibility of further hikes, thereby raising investor doubts about how close they are to the end of the monetary tightening cycle. – credit policy.
* Department of Financial Analysis and Research of International Capital Markets of Eurobank.
Source: Kathimerini
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