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.

1X00416H01 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%.

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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%.

1X00416H01 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.