World Bank forecasts slower global growth in 2024

The World Bank forecasts global GDP growth of just 2.4% in 2024, a deceleration from 2.6% in 2023 and the weakest year of global output since the pandemic in 2020. Advanced economies will mark a notable slowdown to growth of 1.2% from 1.5% last year while emerging market economies will be roughly steady on aggregate at 3.9%. China’s economy will slow to growth of just 4.5% according to the World Bank from more than 5% last year while India will see output accelerate to 6.4%, marginally faster. The multilateral lender noted “sluggish global trade and the tightest financial conditions in decades” as being behind the weaker performance this year.

For the MENA region, the World Bank expects an improvement in activity to 3.5% from less than 2% last year. That acceleration is on the back of oil production increases once cuts from Q1 come to an end. The World Bank forecasts growth of 3.7% in the UAE, faster than our forecast of 3.3% and expects a strong recovery in Saudi Arabia to 4.1% from a modest recession last year.

Industrial production in Germany dropped in November by 0.7% m/m, recording its sixth consecutive monthly decline. The drop in November was spread across almost all sectors with intermediate goods down 0.5%, capital goods lower by 0.7% and construction dropping almost 3% m/m. The production numbers follow weak industry orders released earlier in the week and seem to affirm that Germany’s economy contracted at the end of last year.

Unemployment in the Eurozone dropped to 6.4% in November, marginally lower than in October, but nevertheless matching historic lows hit earlier in 2023. Unemployment in Germany was steady at 3.1% while France’s unemployment held at 7.3%.

Today’s Economic Data and Events

• 11:00 TU industrial production Nov
• 19:00 US wholesale inventories Nov

Fixed Income

• US Treasuries closed higher for a second session overnight with yields on the 2yr UST down 1bps to 4.3642% and the 10yr yield almost 2bps at 4.0133%. Benchmark government bonds elsewhere were sold off with yields on 10yr gilts up about 1bps and bund yields gaining 5bps to 2.185% despite the disappointing industrial production numbers out of Germany.

FX

• The US dollar closed higher against peers overnight in choppy trading ahead of tomorrow’s release of US CPI. EURUSD dropped about 0.2% to 1.0931 while GBPUSD fell 0.3% to 1.271 and USDJPY rose by 0.2% to 144.48.
• Commodity currencies were also offered overnight with USDCAD rising by 0.3% at 1.339 while AUDUSD fell almost 0.5% to 0.6687 and NZDUSD sank 0.2% to 0.6239.

Equities

• US equity markets reversed some of the prior day’s gains with the Dow Jones down 0.4% and the S&P 500 giving up about 0.2%. The NASDAQ closed slightly higher although was near flat on the day. European markets were more negative with a 0.4% drop in the EuroStoxx and a 0.1% decline in the FTSE.
• Asian markets have opened up broadly positively with the Nikkei up a strong 1.7% while the Hang Seng is trading slightly higher.
• Local markets closed stronger overnight with the DFM up 0.7% and the ADX adding 0.6%. The Tadawul, however, dropped by 0.4%.

Commodities

• Oil prices recovered some of the prior day’s losses overnight with Brent futures up 1.9% at USD 77.59/b and WTI adding slightly more than 2% to USD 72.24/b. Data from the API pointed to a 5m bbl draw in crude stocks last week though that was offset by large builds in both gasoline and distillate stockpiles.
• The EIA revised up its 2024 US oil production forecast to 13.2m b/d and forecasts output of 13.4m b/d in 2025. The agency forecasts a modest draw in global stockpiles of about 120k b/d in 2024.