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Global Economic Scenario: Activity declines in the US and Europe

Global Economic Scenario: Activity declines in the US and Europe


This month saw a decline in business activity in both Europe and the US as rising borrowing rates, persistent supply restrictions, and high inflation took a greater toll. While a key indicator of inflation in Singapore reached an almost 14-year high, retail and wholesale prices in the UK surged. In the meanwhile, other central banks throughout the globe were raising interest rates.


Here are some of latest developments in the global economy:


Europe: The recovery from pandemic limitations was severely held down by rising prices, and companies continued to have supply problems. S&P Global's economic activity indicator hit a 16-month low in June as a result of escalating inflation, worries about the cost of energy, and rising borrowing prices. After significant hikes in the price of everything from gasoline and energy to food and drinks, UK inflation climbed to a new four-decade high in May. Meanwhile, the cost of goods leaving factories increased by 15.7% from a year earlier, which was a full percentage point higher than anticipated and the highest level since 1977.


US: In June, business activity took a significant step back as fast inflation lowered consumer demand for services and directly impacted industrial orders and production. US single-family rentals broke another record in April, rising by 14% year over year, marking the 13th consecutive month of record-breaking annual rises. According to CoreLogic, a source of real estate statistics, supply constraints and a robust employment market are raising prices.


Asia: Even as the government's zero tolerance policy on COVID outbreaks and a poor property market made the growth objective even more improbable, Chinese President Xi Jinping promised to achieve the country's economic goals for the year. The majority of experts predict Beijing will fall short of its 5.5 percent target for this year's growth of the gross domestic product. The central bank of Indonesia maintained its benchmark interest rate at a record low once more, claiming that inflation is still under control, solidifying its position as an outlier in terms of monetary policy. The action puts Indonesia's central bank apart from most others. Singapore's main inflation indicator increased for a third month to the highest level in nearly 14 years, supporting the need for further tightening of monetary policy and more aggressive measures to protect consumers from the impact of rising prices.


Mexico's economy has been growing at its quickest rate in almost a year, indicating that the recovery that began at the start of 2022 is gaining momentum. The second-largest economy in Latin America expanded by 1.1 percent in April compared to March 2021, which was a record high growth rate.