Allianz Trade analyzes global economic risks and future outlook

Allianz Trade published an analysis on September 27, 2024, aiming to clarify global economic risks and provide future outlooks.

The report delves into four key themes. Firstly, Chinese authorities are attempting to boost economic confidence ahead of the nation's 75th anniversary. While central bank measures and property sector support may help, clear fiscal policy actions are also needed to ensure sustained growth. Achieving the annual growth target of five percent is possible, but downside risks remain.

Secondly, the quarterly country and sector risk assessment indicates normalization as economies recover. Fourteen countries have received improved risk ratings, yet protectionism and geopolitical tensions continue to create uncertainty. Sector-wise, risk improvement has been limited, with risks even increasing in certain areas, such as the automotive industry and China's retail sector.

Thirdly, demand for durable goods is expected to rebound in 2025. Following a prolonged slowdown, several factors, including decreasing financing costs and a consumer shift back towards goods rather than services, support the projected recovery. Technological innovation and easing supply chains also contribute to this development.

Fourthly, the report discusses the challenging task facing central banks to balance exchange rates, inflation, and economic growth during the 'great loosening cycle'. The priorities vary among different countries, and some nations, like Switzerland and Japan, may need to intervene in markets to manage currency appreciation.