Take Two: US inflation continues to fall; China growth expected to slow
- 14 October 2024 (3 min read)
What do you need to know?
US annual inflation slowed for the sixth consecutive month in September to 2.4%, a three-and-a-half-year low - down from 2.5% in August albeit above an expected 2.3%. Core inflation, which excludes more volatile food and energy prices, edged higher to 3.3% from 3.2% in August. Notably, minutes of the Federal Reserve’s latest meeting showed officials debated whether to go ahead with September’s bumper 50-basis-point (bp) interest rate cut instead of a more modest 25bp. However, the new inflation data adds a sense of caution to the policy outlook – we expect 25bp cuts in both November and December.
Around the world
China’s economic growth is expected to slow to 4.3% in 2025 from 4.8% this year and 5.2% in 2023, due to property market weakness alongside low consumer and investor confidence, according to a new World Bank report. The recently announced fiscal support may provide a short-term boost but longer-term growth “will depend on deeper structural reforms,” it said. AXA IM predicts China’s economy will grow by 4.8% in 2024 and 4.4% in 2025. The wider Developing East Asia and Pacific region continues to grow faster than the rest of the world, the World Bank said - it forecasts growth for the region of 4.8% in 2024, dropping to 4.4% in 2025.
Figure in focus: 5,500 GW
The world’s renewable power capacity is set to increase by over 5,500 gigawatts (GW) between 2024 and 2030 – meaning renewables will meet nearly half of global electricity demand by the end of the decade, according to a new report by the International Energy Agency (IEA). The new capacity would equal the entire current power capacity of China, the European Union, India and the US combined. Though this growth falls short of the goals set at COP28, which aimed to triple the world's renewable energy capacity by 2030, the IEA suggests that achieving this aim is still feasible if governments capitalise on near-term opportunities for action.
Words of wisdom
Silver Economy: The silver economy is the sum of all economic activity that serves the needs of people aged 50 and over, according to a European Commission definition. As seniors expect to live longer, work for longer and deploy their accumulated wealth and earnings, they’re creating fresh growth prospects for businesses catering to their needs. Japan is among the countries with a significant ageing population, while China has one of the fastest growing ageing populations in the world - and some businesses are increasingly serving the senior demographic by customising their services to align with the preferences of older consumers.
What's coming up?
The UK and Canada respectively report their latest employment and inflation numbers on Tuesday. The UK issues its own inflation update on Wednesday, with the Eurozone following on Thursday, when the European Central Bank (ECB) meets to decide on interest rates. In September, Eurozone annual inflation fell below the ECB’s 2% target for the first time since mid-2021, raising expectations it could ease monetary policy quicker than anticipated. On Friday Japan announces inflation numbers and China publishes its third quarter (Q3) economic growth data – the world’s second largest economy grew 4.7% year on year in Q2, below market expectations.
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