The global economy is experiencing steady growth in the second half of 2024, driven by sustained private consumption and easing inflation. Monetary policies began to relax in key markets. Tight financial conditions and weak consumer and business confidence are expected to keep global economic growth modest in the short and medium term. Additionally, there are significant downside risks, including rising geopolitical tensions, policy uncertainty, potential debt distress in developing economies, and a worsening economic downturn in China.
The US economy continues to exceed expectations. However, momentum is expected to soften in 2025 due to persistently elevated costs, a cooling labour market, and slowing consumption. In the Eurozone, economic growth is projected to improve by 2025, but the region’s recovery remains the weakest among major economies. China’s growth outlook for 2025 is also improving, supported by a new stimulus initiative from the government in Q3 2024. China is still struggling to meet its official GDP growth target of 5% annually, faced with challenges from a struggling property sector, weak domestic demand, and sluggish exports.
Globally, commodity demand has been weaker than investors anticipated in 2024, especially in China, albeit broadly in line with our own more bearish expectations. Strong supply from commodities such as wheat, steel, and crude oil has also weighed heavily on prices and contributed to inventory build. The exception has been gold, with central banks driving its price higher and making it a bright spot for the whole sector.
Most recently, the US presidential election of Donald Trump brought further volatility to commodity markets. Commodities reacted with trepidation to his election to a second term as president, with most losing ground over fears a new tariff war would hit the global economy. Crude oil dipped when it became clear that Trump would prevail in Tuesday’s vote, as in theory, Trump’s energy policies should be somewhat bearish for global oil prices, as he is in favour of loosening regulation of the sector in the United States, and encouraging even higher output in the world’s biggest crude producer.