Germany’s economy is encountering some tough times, though there are glimmers of hope on the horizon. Economists cautiously suggest that the worst may soon be behind us, although they maintain a reserved outlook on economic growth for 2024. There’s discussion of a potential technical recession looming this year, attributed to factors such as the global trade slowdown, escalating energy costs, and international political uncertainty.
According to Erik-Jan van Harn, a macro strategist for global economics and markets at Rabobank, the level of activity in the German industry has yet to reach pre-pandemic levels. While van Harn anticipates a modest contraction in Q1, he believes it will be less severe than in Q4 of 2023. Looking ahead, he expects a slight pickup in growth but foresees full-year growth remaining flat.
Last Thursday, Turkey’s central bank opted to maintain its key interest rate at 45%, despite the backdrop of soaring inflation following eight consecutive months of hikes. This decision was largely anticipated, as the bank had signalled in January that its 250-basis-point hikes would conclude for the year, despite the current inflation rate hovering around 65%.
Turkey’s central bank has ramped up rates by a staggering 3,650 basis points since May 2023. Last month, inflation in the nation of 85 million soared by 6.7% compared to December, marking its sharpest monthly rise since August. Economists foresee the current interest rate holding steady for much of 2024, with some predicting inflation to nearly halve by year’s end.
On February 21, the Fed released the minutes of the FOMC meeting held back in January. The minutes revealed that officials require further evidence of inflation trending downwards before considering a reduction in interest rates. While policymakers do not anticipate an increase in rates during this economic cycle, they are also not prepared to implement cuts. Following this meeting, inflation data for January surpassed expectations, despite showing a deceleration for most of last year.
“Participants judged that the policy rate was likely at its peak for this tightening cycle,” the minutes read. “Participants generally noted that they did not expect it would be appropriate to reduce the target range for the federal funds rate until they had gained greater confidence that inflation was moving sustainably toward 2 percent.”
Finance Minister Enoch Godongwana shared that South Africa plans to evaluate the Gold and Foreign Exchange Contingency Reserve Account (GFECRA) held yearly at the central bank, tapping into it when funds are available. Godongwana outlined the government’s initiative to revamp the GFECRA account framework, allowing for a withdrawal of 150 billion rand ($8 billion) over the next three years to curb borrowing. South Africa grapples with economic woes and mounting debt as the nation prepares for the upcoming general election on May 29, potentially heralding a new political era after three decades under the African National Congress.
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