Monthly Economic Wrap

During February:

  • According to the International Monetary Fund, the risks to global growth are broadly balanced and a soft landing is a possibility.
  • Global growth is projected at 3.1% in 2024 and 3.2% in 2025, with the 2024 forecast 0.2% higher than that in the October 2023 World Economic Outlook (WEO) on account of greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China.
  • The forecast for 2024–25 is, however, below the historical (2000–19) average of 3.8%, with elevated central bank policy rates to fight inflation, a withdrawal of fiscal support amid high debt weighing on economic activity, and low underlying productivity growth. Inflation is falling faster than expected in most regions, in the midst of unwinding supply-side issues and restrictive monetary policy. Global headline inflation is expected to fall to 5.8% in 2024 and to 4.4% in 2025, with the 2025 forecast revised down.
  • Share market performance was reasonable for January. The S&P 500 rose by 1.59%, while the Australian S&P 200 gained 1.18% on a price basis.
  • Global shares ex-Australia performed very well during January, producing a return of 4.5% on an unhedged basis. The result wasn’t as good for hedged global shares, gaining a smaller, but still acceptable 1.8%.
  • In Australia, Low volatility and Growth were the best performing styles for the month, while globally, the best performing styles were Momentum and Quality.
  • Within Fixed income markets, both Australian government bonds and credit gained a small amount of ground for the month. The main Australian fixed interest index, the Bloomberg AusBond Composite 0+ Years Index was up 0.2%, while the Bloomberg AusBond Credit 0+ Years Index gained 0.4%.
  • Global High Yield bonds, as measured by the Bloomberg Barclays Global High Yield Total Return Index Hedged into AUD were flat for the month of January.

Read more in the Monthly Economic Wrap here.


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