Early Morning Call: IMF raises 2023 global growth forecast, but cuts UK outlook
Overnight, the IMF raised its 2023 global growth outlook to 2.9%, from a previous estimate of 2.7% in October.
Equity markets open lower in Europe, following the path of US and APAC indices.
Overnight, the IMF raised its 2023 global growth outlook to 2.9%, from a previous estimate of 2.7% in October. It remains below the 3.4% global growth recorded in 2022. The IMF revised its expectations after observing "surprisingly resilient" demand in the United States and Europe, an easing of energy costs and the reopening of China's economy.
For 2024, the IMF said global growth would accelerate slightly to 3.1%, a touch lower than the 3.2% October forecast. In detail, the IMF now expects US GDP growth of 1.4%, up from 1.0% predicted in October and following 2.0% growth in 2022.
Also upwardly revised, eurozone GDP growth is now forecast at 0.7% for 2023, versus a previous estimate of 0.5%, and following 3.5% growth in 2022. The UK is the only major advanced economy the IMF predicts to be in recession this year, with a 0.6% fall in GDP.
As for China, the IMF revised its growth outlook higher for 2023, to 5.2% from 4.4% in the October forecast. Economic activity in China bounced back in January according to the NBS survey. The official manufacturing PMI rose to 50.1, from 47.0 in December. The 50-point mark separates contraction from growth. Economists anticipated a rise, but only to 49.7.
Non-manufacturing increased to 54.4, a substantial jump from 41.6 recorded in December. This marks an end to contraction that started in September 2022.
After 11 straight months of gains, Australia retail sales dropped by 3.9% in December month-on-month (MoM), the index's largest drop in more than two years. Economists had forecast a drop of 0.3%. November's result, driven by Black Friday sales, was revised up to a 1.7% increase, from an initially reported gain of 1.4%.
Retail sales in Japan rose 3.8% in December 2022 from a year earlier, exceeding forecasts for a 3% growth and following a 2.5% gain in November. This was also the tenth straight month of growth in retail trade.
Industrial production in Japan edged down 0.1 percent month-over-month in December 2022, compared with market forecasts of a 1.2 percent fall and after a 0.2 percent rise a month earlier, and consumer confidence rose to 31 in January, from 30.3 the previous month, beating expectations of 30.5.
In Germany, retail sales fell by 5.3% in December MoM, versus a consensus of a 0.2% rise. Later this morning at 08.55, Germany's unemployment rate is expected to remain at 5.5%. And at 1pm, we await consumer price index for the month of January. Forecasts are for a 9.2% rise year-on-year (YoY). France’s economy grew 0.1% in Q4 quarter-on-quarter (QoQ) versus expectations of 0%.
At 10am, the eurozone Q4 GDP growth rate is forecast to contract by 0.1% QoQ.
Over in the US, S&P/Case Shiller home price is expected to increase by 6.8% in November YoY. Chicago PMI is forecast to rise to 45.1 in January, from 44.9 the previous month. And CB consumer confidence is expected to rise to 109 in January from 108.4 in December.
The US dollar is set for a fourth straight monthly loss in January and it's down to central banks expectations. EUR/USD is up 1.3% this month, and near a nine-month peak. The market expects rates hikes to slow in the US, while there is a longer way to go the the eurozone.
The Japanese yen is poised for a third monthly gain against the greenback as markets anticipate shifts in monetary policy.
Elsewhere on the equity market, Pets at Home raised its full-year (FY) pretax profit guidance after record Q3 consumer revenues. The group says that robust trading momentum has continued into Q4, and with eight weeks of the year left to trade, it expects FY23 profit before tax towards the upper end of the current consensus range of £126-136 million, ahead of previous guidance of £131m.
UBS reported a 23% increase in fourth quarter profit, beating analyst estimates. The Swiss bank reported net profit attributable to shareholders of $1.7 billion, versus the $1.3bn expected by analysts surveyed by UBS. Full-year net profit reached $7.6bn, compared with the consensus estimate of $7.3bn.
US earnings season continues with reports from Pfizer, Exxon Mobil, General Motors, Caterpillar, Advanced Micro Devices, McDonald’s, Snap, and UPS among others.
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