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- US: Evidence of further disinflation, softening employment, and declining consumer sentiment supportive of Fed rate cuts in the near future
- China: Slower GDP growth buoyed by external trade in 1H24; domestic consumption sentiment recovery hinges on labour market conditions
- Singapore: Brighter growth prospects with 2Q24 advance GDP growth ticking up on the back of manufacturing recovery; we revise our 2024 growth forecast from 2.2% to 2.7%
- Indonesia: BI to hold rates steady and maintain a cautious stance while inflation continues to moderate; we remain mindful of prevailing FX risks
Related Insights
US: Muddied outlook. Fed officials have become more confident about US inflation resuming its decline after a sticky first quarter. CPI inflation fell for a third month in June, posting its first negative m/m reading since May 2020. June’s PCE deflators, released later this month, should mirror the softer CPI readings. PCE inflation fell to 2.6% y/y in May, hitting the Fed’s forecast for 4Q24, while core inflation declined to 2.6%, falling below the Fed’s 2.8% forecast.
US advance retail sales were unchanged m/m in June vs. expectations for a 0.3% decline, with May’s figure revised from 0.1% to 0.3%. However, retail sales slowed to 2.3% y/y in 1H24 vs. 3.5% in the same period last year. Fed Governor Adriana Kugler reiterated it would be “appropriate to begin easing monetary policy later this year” on evidence of further disinflation and softening employment, with the futures market increasing the odds of a Fed cut in September to 103.5%. Despite investor concern on a second Trump presidency and its implications for global trade, particularly with China, softer economic data have provided some counterbalance.
The International Monetary Fund’s (IMF) World Economic Outlook Update partially offset the uncertainty over the global economy. IMF maintained the forecast for world growth at 3.2% for 2024 but upgraded 2025’s outlook from 3.2% to 3.3%. The IMF projected a recovery in world trade growth to 3.25% in 2024-2025 from quasi stagnation in 2023. For 2024, it downgraded US growth by 10 bps to 2.6%, upgraded Europe by 10 bps to 0.9%, and the UK by 20 bps to 0.7%. China received the largest upgrade among the biggest economies by 40 bps each in 2024 and 2025 to 5.0% and 4.5%, respectively. 
China: GDP growth buoyed by external demand. GDP growth slowed from 5.3% y/y to 4.7% y/y, with sequential growth decelerating from 1.6% q/q in 1Q to 0.7% in 2Q24. The slowdown was attributed to extreme weather and insufficient domestic aggregate demand. The much-anticipated Third Plenary Session of the 20th Communist Party of China Central Committee was held in Beijing this week – closely watched areas include developing strategic industries, fiscal system reforms, and further opening up to foreign investment.
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