Since the beginning of this year, the global manufacturing industry has recovered, which has a positive impact on boosting global economic growth expectations. According to the latest data released by the China Federation of Logistics and Purchasing, the global manufacturing purchasing managers' index (PMI) was 50.3% in March, up 1.2 percentage points from the previous month, ending the trend of running below 50% for 17 consecutive months and returning to the expansion range.
Since the beginning of this year, the global manufacturing industry has recovered, which has a positive impact on boosting global economic growth expectations. According to the latest data released by the China Federation of Logistics and Purchasing, the global manufacturing purchasing managers' index (PMI) was 50.3% in March, up 1.2 percentage points from the previous month, ending the trend of running below 50% for 17 consecutive months and returning to the expansion range.
This development momentum is generally consistent with the recent rebound trend of global trade predicted by international institutions. The United Nations Conference on Trade and Development says global trade is expected to rebound in 2024 after several quarters of decline. The International Monetary Fund recently raised its forecast for global economic growth in 2024 to 3.1%, 0.2 percentage points higher than its forecast in October last year. On April 10, the WTO released its latest report predicting that global trade in goods will grow by 2.6% and 3.3% in 2024 and 2025, respectively. The continuous improvement of global trade is reflected in the significant recovery of the new orders index and the production index of the manufacturing industry, reflecting that the total demand of the world economy has begun to pick up.
The analysis believes that the manufacturing industry in China and the United States accelerated in March, contributing to the main force of the global economic recovery. By region, the Asian manufacturing industry continued to rise steadily, and the manufacturing PMI rose to more than 51%; The manufacturing recovery in the Americas strengthened from the previous month, and the manufacturing PMI rose to more than 50%. The recovery of the European manufacturing industry is stable, but the strength is weak, and the manufacturing PMI rose slightly from the previous month, but it is still below 50%; Africa's manufacturing sector has fluctuated, with the manufacturing PMI falling from February and below 50%.
Specifically, in Europe, the weak recovery of the German economy is still the main factor troubling the recovery of the European economy. Recently, Germany's leading economic research institutes have lowered their forecasts for German economic growth in 2024 to about 0.1%. Similar to Germany, the Bank of France cut its growth forecast for France to 0.8 per cent, down from a previous forecast of 0.9 per cent. In Africa, the volatility of South Africa's manufacturing industry is more obvious, and the manufacturing PMI fell from more than 50% in February to less than 50%.
The change in data shows that Asian manufacturing growth continues to outpace other regions. China, India and the major ASEAN countries still play an important leading role in Asia's economic growth. According to the Asian Economic Prospects and Integration Process 2024 Annual Report released by the Boao Forum for Asia, Asia's economic growth rate is expected to reach 4.5% in 2024, and Asian economies account for 49% of the global GDP. Compared with other regions, Asian countries pay more attention to regional cooperation, have a more inclusive and open development environment, and are more resilient to development.
From the supply side, some emerging market countries have cut interest rates ahead of schedule, boosting manufacturing production. By the end of 2023, the proportion of central banks raising interest rates has peaked and fallen, and the proportion of central banks cutting interest rates has risen. Due to the easing of inflationary pressure, Brazil, Mexico, Chile, Peru and other emerging market countries took the lead in cutting interest rates, and Brazil started to cut interest rates in August 2023, lowering the benchmark interest rate by 50 basis points to 13.25%; Mexico started cutting interest rates in March 2024, lowering its benchmark interest rate by 25 basis points to 11%.
However, it remains to be seen whether the global manufacturing sector can sustain its recovery. At present, the US job market is strong, commodity prices are rising, and there is pressure for inflation to rebound. According to the data released by the US Department of Labor on April 10, the US consumer price index (CPI) rose 3.5% in March, an increase of 0.3 percentage points from February, exceeding market expectations; On a month-on-month basis, it was up 0.4 per cent, unchanged from February. Based on changes in the CPI data, the Federal Reserve has recently been more cautious about cutting interest rates, saying that it will decide to cut interest rates when it is more confident that inflation will continue to fall back to its 2% target. The Fed's choice to keep interest rates high will further dampen manufacturing demand.
Looking ahead to the second quarter, whether the global economy can continue to recover depends on the following aspects. The first is the strength of the recovery of global market demand, which is the endogenous basis of the global economic recovery, and we need to continue to observe the subsequent trend of the new orders index of the manufacturing industry in various countries.
The second is the degree of improvement in the policy environment. Europe's weak economic recovery and easing inflationary pressures are expected to push the ECB to cut interest rates faster. Euro-area harmonized CPI fell to 2.4 percent in March from 2.6 percent in February, Eurostat data showed. The data came after European Central Bank President Christine Lagarde said the bank would cut its key interest rate in June if upcoming inflation and wage data were in line with its forecasts. The release of the data increases the likelihood that the European Central Bank will accelerate the pace of interest rate cuts. As more advanced economies begin to cut interest rates, it will have a positive impact on the global economic recovery.
Finally, there is the extent to which the headwinds affecting global trade have eased. From the current situation, geopolitical conflicts and trade restrictions are all adverse factors that interfere with the global economic recovery.
The WTO has warned that geopolitical tensions and policy uncertainty could limit the extent of a trade rebound. Food and energy prices could again be affected by geopolitical events. According to the report, geopolitical conflicts could reduce the real value of global trade in goods and services by 1.8% and global GDP by 1%.
Wto Director-General Joaquin Iweala said: "We are making progress in the recovery of global trade, thanks to resilient supply chains and a solid multilateral trade framework. "We must reduce risks such as geopolitical disputes and trade fragmentation to maintain economic growth and stability."
Overall, the overall recovery trend of the global manufacturing industry in the first quarter of this year is better than that in the fourth quarter of 2023, and the global economy continues to rise steadily. Driven by the positive signs in the global economy, countries should uphold and practice multilateralism, strengthen macroeconomic policy coordination and economic and trade cooperation, reduce trade frictions, promote unimpeded logistics and industrial chain coordination, and seek new ways of trade cooperation to better promote sustained global economic recovery.
