The global economy is proving to be more robust than many had expected. Main reasons for this are the unexpectedly severe decline in energy prices, which have resulted in falling inflation rates, as well as a labor market that has stayed resilient despite a slowdown. China has ratcheted up renewed economic momentum by lifting its Zero-Covid strategy and taking measures to support its property market. With its growth forecast now raised to 5%, China is expected to contribute about a quarter of global growth, at about 2-3%. The Kiel Institute for the World Economy has noted a considerable surge in trade. Greater optimism in economic outlooks has led to a rally in equities. However, due to the still present economic and geopolitical risks, it can’t be said for certain if this is a long-term trend.
Read more in the Macroeconomic Comment by Peter von Elten.