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Key views Global Monthly June 24
Growth indicators are showing signs of a pickup in the eurozone and China, while the US economy is gradually cooling. Big picture, the global economy is slowly converging towards a more trend-like pace of growth, and this remains our base case for the second half of 2024. Global trade and industry are slowly recovering, but a sharp rebound is unlikely while rates remain restrictive, and possible new trade tariffs pose an additional risk. Inflation has fallen significantly, and progress towards the 2% target has resumed in the US following the hiccup in early 2024. The impact of the conflict in the Middle East has receded and the inflation impact of the rise in shipping tariffs is likely to be minimal. The ECB has started lowering interest rates, and we expect falling inflation and a softening labour market to enable the Fed to do the same in September. Still, rates will stay high for some time yet, and this will keep a lid on the recovery.
ABN AMRO’s impactful journey in the UK
At a time when environmental and social concerns are paramount, ABN AMRO UK has harnessed the knowledge and expertise of its in-house sustainability team in the UK, as well as the sustainability expertise of colleagues in the Netherlands, to drive the conversation within the UK financial sector.
ABN AMRO delivers significant multi-million euro cross-border funding solution
ABN AMRO Commercial Finance & ABN AMRO Lease deliver significant multi-million euro cross-border funding solution to Oxalis Logistics Group, backed by Auctus Capital Partners AG
Macro Watch - Wage growth: How far does it need to fall?
The key to disinflation continuing will be a timely normalization in wage growth. We estimate wage growth needs to fall to ranges of 2.7-3.0% for the eurozone, 2.2-2.8% for the Netherlands, and 3.3-4.0% for the US in order for to inflation to fall to – and stay at – 2%. But central banks will likely cut rates before wages fall this far – otherwise they could be too late. This is due to the lags with which monetary policy affects the economy.
Key views Global Monthly February 2024
The global economy is likely to grow at a subdued pace in the near term, as high rates continue to bear down on demand in advanced economies, while China continues to face both cyclical and structural headwinds. Global trade and industry looks to be bottoming out, but a sharp rebound is unlikely while rates remain restrictive. On the positive side, inflation has fallen significantly and is now within touching distance of central bank targets. The Red Sea disturbances are unlikely to meaningfully impact inflation, but a major escalation in the Middle East could change matters. Further falls in inflation will enable central banks to pivot to rate cuts by mid-2024, and financial conditions are already easing in anticipation of this. Still, monetary policy will remain relatively tight for some time yet, and this will keep a lid on the recovery.
ESG Economist - How big is the impact of extreme weather on GDP?
The fourth vintage NGFS scenarios incorporate four acute physical risk hazards: heatwaves, drought, flooding and tropical cyclones. The frequency of these hazards under different scenarios are combined with location characteristics to produce impacts. These are then translated to the broader economy using transmission mechanisms. Globally, GDP impact from drought is largest, while in Europe the impact from heatwaves is largest. The impacts are dependent on how the hazard is defined and on the transmission mechanisms. Acute physical risk damages are significantly more sizeable in the fourth vintage, with GDP losses at 8% by 2050 in Current Policies, against 1.4% in the previous version. Still, it is clear that this is still an underestimation of physical risk as not all hazards and impacts are taken into account.
Global Outlook 2024 - Back to not so normal
Advanced economies were resilient last year in the face of the steepest rate rises in decades. While we expect growth to be sluggish for much of 2024, we do not expect a major downturn. Inflation is expected to continue falling, enabling central banks to start the long process of bringing rates back down to normal. We expect the Fed and ECB to cut by 125bp in the second half of 2024. Falling rates should help drive a recovery later in 2024, with momentum picking up in 2025. But risks loom: From a possible Trump 2.0, to a potential EU-China trade spat, and more broadly, the tail-risk of a more disorderly decoupling between the west and China. Whether these risks crystalise or not, the response of central banks will – as always – be crucial in shaping the longer-term impact on the economy. Against this backdrop, climate policy is being increasingly challenged by a political shift to the right.
New Appointments and New Brighton Office Location
ABN AMRO UK announces senior appointments in the ABN AMRO Asset Based Finance arm of the business.
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Bank of England nears rate peak
BoE View: MPC reverts to gradual tightening pace, while maintaining inflation vigilance