US Gross Domestic Product (GDP) in the fourth quarter of 2023 grew by 3.4%, higher than the 3.2% previously forecast; meanwhile, the Purchasing Managers' Index (PMI) of China's manufacturing industry in March returned to over 50 points for the first time, after five consecutive months of decline. These are positive signals from leading economies that light up hope that the world economy will step out of the risk of recession.
In the first months of 2024, major world economies have continuously received positive information. The US Department of Commerce has just released a report showing that the US Gross Domestic Product (GDP) in the fourth quarter of 2023 grew by 3.4%, higher than the 3.2% previously forecast. The core inflation in the fourth quarter of 2023 was also adjusted by the US Department of Commerce to 2%, from the previously estimated 2.1%. However, this has not changed expectations that the Federal Reserve (FED) will begin cutting interest rates in June 2024.
Analysts said that the US economic growth is improving thanks to consumer spending (accounting for more than 66% of economic activity) growing at 3.3%, higher than experts' estimate of 3%. In the US Department of Commerce's report, business spending was also adjusted upward, reflecting higher investment in production structures as well as trade and health care.
Analysts also noted that almost all industries contributed to the US economic growth in the final quarter of 2023, with non-durable goods production leading the way, followed by retail trade, durable goods, health care and social assistance. Along with improved production and business, profits of businesses in the US also increased highly in the fourth quarter of 2023, which was boosted by non-financial corporations. Accordingly, corporate profits in the fourth quarter of 2023 increased by 133.5 billion USD after increasing by 108.7 billion USD in the previous quarter.
Meanwhile, the world's No. 2 economy, China, also recorded positive signs when the PMI increased, showing that the "health" of the economy has been improved and its production has been recovering well.
On March 31, the National Bureau of Statistics of China said the manufacturing sector’s PMI reached 50.8 points in March, up from 49.1 in February. A PMI of over 50 points shows that the economy is growing well, and an index below 50 reflects a decline in production activities. The above signal is the result of the Chinese Government's efforts and determination to restore economic growth towards achieving the economic growth target of 5% for 2024.
In recent months, the country has announced a series of targeted measures and issued government bonds to increase budget spending on infrastructure and revive economic activities. Its consumption index increased again in February for the first time since August 2023. Citibank has just raised China's economic growth forecast from 4.6 % to 5% this year. A report by China Beige Book, an economic consulting firm, noted that the Chinese economy is ready for strong growth in the first quarter of 2024.
In India, another major economy in Asia, high growth rates continue to be maintained. The recent official report by the Central Statistical Office of India showed that in the fourth quarter of 2023, the Indian economy grew by 8.4%, far exceeding the forecast of 7% by the Central Bank of India. In the fourth quarter of 2023, India's manufacturing sector led the growth group with a double-digit increase, followed by the construction sector. These two sectors have contributed to promoting the economic growth of this South Asian country.
Although European economies have not prospered like other leading economies, they have recorded improvements in growth and inflation. The European Central Bank (ECB) has recently forecast that the GDP of the Eurozone will increase by 0.6% this year while reducing its inflation forecast from 2.7% to 2.3%. This means the ECB can achieve its 2% inflation target this year, instead of 2025 as previously expected.
The above positive signals from the world's largest economies are making the global economic picture gradually brighter and lighting up the prospect of the economies soon coming out of the dark period after the crisis due to COVID-19.
To help the global economy truly "bloom" in 2024, countries worldwide need to prevent the "headwinds" from the ongoing armed conflicts in the Middle East and Europe, towards ensuring no disruption to the supply chain and creating a favourable environment for cooperation and development.
NDO
