For now, low inventories impede growth and lift inflation
Inventories – normally a strong predictor of the business cycle – are uncharacteristically low, even though global growth is at record highs. This is yet another consequence of the post-pandemic recovery and all its bottlenecks and signal transitory nature of inflation rather than the state of the cycle.
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- Monthly survey indicators on new orders – another marker closely related to inventories – point to a stable recovery in most advanced economies (AEs), with Germany doing especially well. This is consistent with the state of the business cycle globally.
- A detailed breakdown for the US and Germany points to a particularly severe drawdown of inventories in the retail sector – consistent with a recent mini boom in consumption as well as bottlenecks in supply chains and shipping.
- Escalating global shipping costs have yet to abate, with the Harpex global shipping cost index standing at almost twice its historic record.
Latin America Key Themes 2024 – Slower growth, but it’s not all bad news
Growth in most LatAm economies will be below consensus. Economic momentum has surprised to the upside through most of 2023, but the full effects of record global and domestic monetary tightening are yet to be seen.Find Out More
Easing financial conditions offer CRE some respite
Our measure of financial conditions has become less restrictive in the US and started to loosen in the eurozone and the UK, reflecting investors' expectations that interest rates have peaked. This should aid the outlook for commercial real estate (CRE) on the margins, although the scale of past rate hikes, sluggish economies, and structural headwinds mean the sector still confronts challenging fundamentals.Find Out More