Summary
The week ahead will see the release of manufacturing PMIs. In Germany, the index is expected to rise to 44 in May, still historically low, indicating a slower decline in output and job cuts. The eurozone index is also expected to rise to 46, reflecting a slowdown in the rate of deterioration. The UK's PMI is close to expansion, while India's slows slightly to a robust 58.4. Singapore's GDP grew by 2.7% in Q1, with industrial production falling slightly in April. Mexico's GDP growth slowed to 1.6% in Q1, while Argentina's activity contracted sharply. UK inflation eased to 2.3% in April, with mixed trends in producer prices. Singapore's inflation is 2.7% and Japan's 2.3%. Korea and Indonesia are likely to keep interest rates on hold, and Japan's trade balance is expected to turn negative on rising imports.
The Baker Hughes oil rig count rose by one, with WTI averaging $79 per barrel. Natural gas prices at the Henry Hub rose to $2.45/mmbtu. The International Energy Agency (IEA) cut its 2024 global oil demand growth forecast due to weak OECD data, particularly in Europe. Asian demand, especially from China, is expected to grow significantly. Non-OPEC+ supply growth is hampered by maintenance and logistics, while OPEC+ maintains cuts, with the IEA forecasting higher demand for OPEC+ oil in the second half of the year.
The European Commission's Spring Economic Forecasts for 2024 predict improved growth for the euro area, at 0.8% in 2024 and 1.8% in 2025, with falling inflation. Wage growth is expected to restore purchasing power by 2025. Southern EU countries are outperforming northern ones and trade is expected to rebalance slowly. The report also highlights the challenges posed by China's structural slowdown and its impact on the global and EU economies, emphasising the need for China to shift to a consumer-driven economy to mitigate these effects.
