经济月报（2023年5月）

MONTHLYECONOMICBULLETIN May 2023 Global: Timing of monetary policy transition China Positive effects of reopening continue to boostservices sector.Economic growth is patchy with rising concerns overthe sustainability of post-covid recovery. EuropeDespite dodging an economic contraction in Q1, growth will remainsluggish, dented by stubborn inflationand almost 15-year high interest rates.To ensure price stability in themedium-term, ECB might hike ratesfurther and keep them high for longer. US Japan US economy sees divergencebetween gains in jobs data and aslowdown in other key economicdrivers.Fed is expected to halt rate-hikecycle and to keep interest rates highfor longer than expected. Consumption is likely to remainhealthy and mitigate the impactof weak exports on the economy.BOJ will be more open to theidea of a policy shift in second-half of the year . Sentiment towards global economic prospects is weaker than in early March; risingconcerns about market volatility In early March, respondents of a McKinsey survey on the global economy survey were more positive than in the past few quarters,with 45% expecting global conditions to improve in the months ahead andonly 28% predicting conditions would worsen. But by the end of March, that optimism had tempered and there was rising concerns over increasing volatility in financial markets. Respondents were twice aslikely (31%) to cite market volatility as a top global risk than in early-March (15%), and continued to cite inflation and geopolitical instability as the top threats to global growth. Diverging global demand trends as manufacturing activity continues to contract; globalfinancial conditions are tighter than during the Global Financial Crisis The global economy saw a divergence between manufacturing and services sectors. Manufacturing PMI remains in contraction zone, suggesting the current growth in manufacturing output might not besustainable. If the services sector starts to run out of steam, the global expansion may be at risk of reversing its course.Inaddition, conditions for raising new financing are much tighter than before. CapitalEconomics (CE)’s Broad Financial Conditions Index (FCI) for developed market were close to their highest since the Global Financial Crisis (GFC) in April. Tightening financial conditions over the past 18months has been mainly driven by a surge in borrowing costs (rather than normalization of stress measures such as spreads andbanks’ appetite to lend). US:Divergence between robust jobs data and signs of weaker growth; Fed might halt rate-hike cycle and keep interest rates high for longer than market expectations KrungsriResearch’sview USeconomyisseeingadivergencebetweengainsinjobsdataandaslowdowninotherkeyeconomicdrivers.Slowingeconomicgrowth,easinginflationandtighteningfinancialconditionssuggesttheFedshouldendtherate-hikecycle.However,record-lowunemploymentrateandwage-pricepressuremightprompttheFedtokeeprateshighforlongerthanmarketexpectations.Themarketisnowexpectingseveralratecutsthisyear. USFOMCraisedFedFundsrateby25bpsto5.00-5.25%at2-3Maymeeting.Lookingahead,theFedisexpectedtopauseratehikesforthefollowingreason:(i)ItisthefirsttimetheFOMCstatementhasomittedthemessage“theCommitteeanticipatesthatsomeadditionalpolicyfirmingmaybeappropriate”.(ii)Theeconomyislosingsteam..TheAprilConsumerConfidenceIndexisatitslowestsinceJuly2022.WeightedISMIndexremainsclosetoitslowestsincetheGlobalFinancialCrisis.(iii)Inflationarypressureiseasingwithheadlineinflationslippingtoanalmost2-yearlowof4.9%YoYinApril,servicessectorinflationroseattheslowestpaceinnearlyayear,andProducerPriceIndex(PPI)roseatthesmallestratesinceJanuary2021,at2.3%.(iv)Realinterestrateshaveturnedpositive,implyingtheseriesofrapidratehikeswillhavemoreimpactoneconomicgrowth.(iv)LendingstandardsarethetightestsincetheGFC.Ongoingconcernsaboutthehealthofregionalbankscouldraiserisktogrowthintheperiodsahead. However,weexpecttheUSFedtokeepinterestrateshighforlongerthanmarketexpectations,premisedon:(i)labormarketremainsrobust.Unemploymentratewasatahalf-centurylowof3.4%inAprilandnon-farmpayrollsbeatexpectationsat+253,000.(ii)InflationremainwellabovetheFed2%targetamidwage-pricepressurewithaveragehourlyearningsrisingby0.5%MoMand4.4%YoY.Despitestill-lowprobabilityofratecutsthisyear,wecannotignorethatiffinancialconditionstightenfurthergivenlingeringrisksofabankingcrisisand/orUSdebtdefault.Iftheseriskfactorsmaterialize,theywouldincreasetheprobabilityofratecutsthisyear. Euro-zone:DespitedodginganeconomiccontractioninQ1,growthwillremainsluggish,dentedbystubborninflationandalmost15-yearhighinterestrates KrungsriResearch’sview Theeuro-zoneeconomydodgedacontractioninQ1,withGDPexpandingatanannualrateof1.3%.However,itistheweakestgrowthsince1Q21asthemaindrivers–privateconsumptionandinvestment–continuedtodeterioratewithsurginginflationandhighinterestrateserodingrealhouseholddisposalincome,pushingupdebtservicecosts,andfurtherdentingconsumerandbusinessconfidence.Bank