Morning Market Brief: February 27, 2024

Global growth still muted in fourth quarter?

The Organisation for Economic Co-operation and Development (OECD) reported that global economic growth remained relatively muted in the fourth quarter of 2023. Tighter financial conditions have weighed on households and businesses, weighing on demand, which has dragged down economic activity. Despite muted growth, the global economy has been able to avoid a deep recession even though central banks have aggressively lifted interest rates in response to decades-high inflation.?

• The OECD says the economy of its members rose by 0.4% in the fourth quarter of 2023, unchanged from the third quarter. Economic growth was relatively weak over the past two years as demand was weighed down by the rapid increase in interest rates from global central banks.
• Among G7 countries, economic growth was also 0.4%. G7 growth was buoyed by the world’s largest economy, the US, which advanced by 0.8%. US growth helped offset gross domestic product (GDP) contractions in Germany, the UK and Japan.
• The OECD says Canada’s economy grew by 0.3% in the fourth quarter. This is based in part on provisional estimates. Statistics Canada will be releasing Canada’s fourth-quarter GDP growth this Thursday. Canada’s economy slipped in the third quarter of 2023, shrinking by 1.1%, annualized.
• Fourth-quarter trade among G20 countries was also relatively lacklustre. The total value of merchandise trade was largely unchanged compared to the third quarter. The US saw a decline in exports, while exports from China rose over the month. Meanwhile, services trade volume edged higher over the quarter.

Global economic activity remains relatively muted amid the sharp rise in interest rates over the past few years. Still, signs are pointing to the global economy potentially avoiding a recession. And with inflation coming down, central banks might have the opportunity to pivot this year and begin lowering interest rates.

At?CIBC Private Wealth, we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor any time.