Monthly economic update: Mar 2024
Executive summary
Global Economy
- In February2024, global economic growth is stabilized with disinflation momentum being observed in most economies albeit still restrictive monetary policy. Central banks in major economies is managing the final descent of inflation to target while price pressures are clearly dissipating requiring for a less restrictive stance. Market participants have put more weights on interest rate cuts from major central banks over this year.
- US economic activity had been expanding at a modest pace with supports from labor market resilience and private consumption.
- China’s economic recovery at a slower pace than market expectations though its performance in 2023 being slightly higher than the official target.
Domestic Economy
- In January 2024, overall economic recovery remained slow. Domestic demand and private investment gradually improved, while private consumption and activities in the service sector continued to expand thanks to an improvement in tourism revenue. The number of foreign tourist arrivals slightly declined from the previous month in several nationalities, while tourists from China improved consecutively.
- The growth of merchandise exports in January stayed robust which was the sixth-consecutive month expansion, mainly from the low-base effect and trade rebound. On the other hand, imports value also expanded.
- Headline inflation in February 2024 was contracted in fifth-consecutive month, which was due mainly to energy prices including electricity and retail oil price, on the back of government measures, and fresh food prices also dropped while core inflation slightly dropped in this month.
Financial Market
- Major central banks end their hiking cycle. Market participants and futures market have pointed out possibilities that the Fed would start cutting interest rates as early as in 1H2024 though anticipation for early cut in March 2024 declined since US economic momentum remained robust.
- USDTHB largely depreciated in January 2024, ending 35.44 level. It could be around 35.50-36.00 in February 2024, as market participants the probabilities for Fed’s early interest cut in March 2024.
