The UK's economy is expected to perform the worst among developed nations in 2024 due to sluggish growth. High interest rates and inflation have weighed on the UK economy, with GDP growth projected at just 0.4%, trailing other countries. Despite global economic recovery, the UK's economy lags behind due to government policies and external factors, leading to a weaker outlook compared to other advanced nations.
Inflation is still rising, making it difficult for consumers to afford everyday items. As a result, people are cutting back on spending, which is hurting companies that sell consumer products. McDonald's, 3M, and Newell Brands have reported lower sales because of this trend.
The Federal Reserve won't make any changes to interest rates this week, keeping them at the current high level. The only news expected from the Fed's meeting is an announcement that it will reduce the amount of money it's withdrawing from its holdings. Despite strong inflation, the Fed is holding back on rate cuts until it's sure inflation is under control. The market now expects only one small rate cut by the end of next year.
Private sector employment rose by 192,000 in April, beating expectations. Pay growth slowed to a 5% annual increase, the lowest since August 2021. Leisure and hospitality led job gains, with construction and other sectors also showing increases. Large companies hired the most new workers. This follows March's revised gain of 208,000. The official government jobs report is expected on Friday, which typically provides a different count.
Saudi Arabia's $1.5 trillion futuristic city project, NEOM, remains at its intended scale, contrary to reports of downsizing. The economy minister emphasizes that all projects are progressing as planned, including The Line glass-walled city, despite concerns about finances. Decisions are being made to optimize economic impact, but there is no change in the ultimate vision.
High U.S. interest rates generally impact emerging markets negatively. Their debts, often in U.S. dollars, become more costly, and investors seeking higher returns in the U.S. withdraw their funds. This creates tighter financial conditions. According to IMF's Kristalina Georgieva, this issue is more significant for emerging markets while Europe may face less impact from the difference in monetary policies.
