经济月报（2024年3月）

MONTHLYECONOMICBULLETIN March 2024 Krungsri Research Global: Slowing growth and only mild uptick in sentiment China Economic activity has been improving amid easingdeflation, but the economy is facing greater threatsfrom trade protectionism; 2024 economic goals focuson addressing structural issues. EuropeThe economy hasgone through theworst in 4Q23 but will remain stagnantin 1H24; the ECB has signaled apossible rate cut in June as inflationfalls. JapanNarrowly avoided a recession as Q4 growth data was revised.Combined with encouragingsigns of a wage hike, the BOJ isnudged closer to hiking rates. GlobalPMIrosetoan8-monthhigh,reboundinmanufacturingactivityledbyEMs,newordersexpandedforthefirsttimesinceJune2022,RedSeatensionhaslimitedimpact US:Despite signs of slowdown, the strong labor market and sticky inflation supportexpectations the Fed would start to cut rates in mid-2024; risks could rise after election KrungsriResearch’sview USeconomyshowedsignsofslowingdownasunemploymentraterosetoa2-yearhighandinflationhaseased.However,economicconditionsremainhealthy.WeexpecttheFedtostarttocutbenchmarkratesinthemiddleofthisyear,premisedonthefollowing: Data-dependentapproach:FedChairPowellsaidratecutswereappropriate“atsomepointthisyear”.HeaddedtheFedstillwants“greaterconfidence”thatinflationwoulddroptoandbesustainableat2%beforetheywouldfeelcomfortableeasepolicy. Strengthofeconomicgrowth:(i)FurtherexpansioninservicessectorwithNewOrdersIndexrisingtoa6-monthhighinFebruary;(ii)reboundinretailsales(+1.5%YoYinFebvs+0.04%inJan);(iii)Labormarketremainstightwitha275kincreaseinnon-farmpayrollsinFebruary,vsmonthlyaverageof+251kin2023. Stickinessofinflation:Headlineinflationroseslightlyto3.2%YoYinFebruaryfrom3.1%inJanuary.Coreinflation,whichexcludesenergyandfoodprices,remainedhighat3.8%YoYvs3.9%inJanuary.Averagehourlywagegrowthslowedfrom4.3%YoYto4.2%butisstillabovethe3.0-3.5%rangethatmostpolicymakersviewasconsistentwiththeFed’s2%inflationtarget.Inaddition,Medianinflationexpectationsremainunchangedat3.0%ona1-yearhorizonbutincreasedto2.7%from2.4%ona3-yearhorizonandto2.9%from2.5%ona5-yearhorizon. ThereareconcernsovertheresultofthepresidentialelectioninNovember.DonaldTrump’splansforauniversal10%tariffonallimportsandtariffsofupto60%onimportsfromChinawouldnotonlyincreasetradetensionsworldwide.ItisestimatedtoreduceUSGDPbyupto1.5%andcouldcauseinflationtoriseagainandpressurepolicyrates. Eurozone:Economy has gone through the worst in 4Q23 but will stagnate in 1H24; ECBhas signaled June rate cut as inflation falls KrungsriResearch’sview Latestdatapointtoaslightlybetterenvironmentwithimprovingbusinesssentiment,higherfactoryorders,still-tightlabormarket,andnosevereenergycrisis.ThesewouldreduceriskofarecessioninEurozonein2024.However,theeconomywillremainstagnantin1H24given:(i)still-sluggisheconomicconditionsandhighborrowingratesdraggingprivateconsumption;(ii)continuedweakdemandforcreditfrombothhouseholdsandNFCs*asaresultoftightermonetarypolicy;and(iii)unwindingoffiscalstimulus(fiscaldeficitat2.4%in2024Fvs2.7%in2023)asgovernmentsscalebackthemajorityofmeasurestoaddresstheenergycrisis.Unlikelytoseeastrongrecoveryinprivateconsumptioninthenear-termdespitestill-highwage growthandsharpdropininflation,ashouseholdscontinuetosavemoreunderweakeconomicconditionsandhighinterestratesarepressuringhouseholdswhichareservicingdebt.Nevertheless,theEurozoneeconomyhaspassedthroughtheworstin4Q23andwouldseeagradualrecoveryin2H24,given:(i)coolinginflationarypressure;(ii)easingsupplychaindisruptions;and(iii)thelowbaseeffectlastyear.AtitsMarchmeeting,theEuropeanCentralBank(ECB)votedtoleavepolicyrateat4%.Thebank alsocut2024GDPgrowthandinflationforecastsfrom0.8%to0.6%and2.7%to2.3%,respectively.Bringingallofthistogether,astagnantEurozoneeconomywithinflationslowingtowardsthe2%target,weexpecttheECBtodeliverthefirstratecutinJune,whenthereshouldbemorevisiblesignsofmoderatingwagegrowthandcoolingunderlyinginflation. Japan:Narrowly avoids recession as Q4 growth was revised; combined with encouragingsign of wage hike, the BOJ is nudged closer to hiking rate KrungsriResearch’sview Supportedbyrobustspendingbybusinesses,Japan'seconomygrewby0.4%YoYand0.1%QoQin4Q23,reversingfrom0.4%and0.1%contractionsininitialreadings.ThathelpedJapantoavoidarecession.However,privateconsumptionremainedweakashighinflationispressuringhouseholdspendingpowerinrealterms. 4Q23capitalspendingwasrevisedhigherto2%growth.However,privateconsumptionwasreviseddowntoalargerdropof-0.3%. Thoughlatesteconomicdata-exportsandcapitalspending-showedsomeimprovementin4Q23,Japan'seconomyremainedsluggishbecauseofweakhouseholdpurchasing,whichpointstosubduedeconomicgrowthin1H24.However,wearelookingforwardtomodestgrowthinthelatterhalfofthisyearbackedbyarecoveryinexports(risingdemandforelectronicproductsandchip-making),andanimprovementinrealincomeandconsumptionfollowingthe2024Shunto(springwagenegotiations).Thatissettodelivera5.85%payhike,muchlargerthanthe5%requestreportedlastyear,andupfrom4.4