Executive Summary

The latest Q3 2024 GDP numbers present a mixed picture of the global economy. China is facing an economic slowdown but is responding with new stimulus measures, while the US is experiencing growth acceleration. The situation in the Eurozone remains stable. This aligns with the latest IMF World Economic Outlook report, which forecasts stable but mediocre global economic performance in 2024 and 2025, with increasing threats to growth.

Global growth is expected to remain stable yet underwhelming—that’s the view of the IMF as set out in October’s World Economic Outlook report. The UN financial agency predicts annual real GDP growth globally to be 3.2% in both 2024 and 2025, rising to 3.1% in five years’ time, performance it describes as mediocre compared with the pre-pandemic average.

Unsurprisingly, forecasts for 2024 and 2025 see emerging markets and developing economies growing fastest at 4.2% across both years, while the advanced economies collectively are expected to grow 1.8% annually. The US is anticipated to grow at an above-average rate of 2.8% this year and 2.8% in 2025. The UK is expected to outshine the Eurozone, with growth of 1.1% and 1.5% versus 0.8% and 1.2% over the two years.

It's no surprise that India (7.0% in 2024 and 6.5% in 2025) and China (4.8% in 2024 and 4.5% in 2025) are expected to continue to grow much faster, with the “emerging and developing Asia” collectively expanding at 5.3% in 2024 and 5.0% in 2025.

Subtitled “Policy Pivot, Rising Threats”, the report points to persistent structural headwinds such as population aging and weak productivity as holding back growth in many economies. It also highlights sudden eruptions in financial market volatility, spikes in commodity prices amid persistent geopolitical tensions, concerns over China’s real estate sector, and intensification of protectionist trade policies as potential pitfalls for the global economy.

The IMF is calling for a policy pivot amid the various threats to the global economy, with a shift from monetary to fiscal tightening as inflation approaches central banks’ target levels. “With monetary policy easing, shifting gears on fiscal policy to ensure sustainable debt dynamics and rebuilding of buffers is appropriate. Advancing structural reforms to boost long-term growth and accelerating the green transition remains as necessary as ever.”

In recent weeks, China has announced multiple stimulus policies as it seeks to combat deflationary tendencies within the economy and meet annual growth targets. These measures address various dimensions such as macroeconomic policy (enhancing counter-cyclical measures and mitigating financial risks), real estate (halting decline and promoting market stabilization), capital markets (establishing a swap facility for institutional investors to purchase stocks), and industry and corporate sectors (creating a more favorable environment for the non-public economy and continuing to attract FDI). Key actions include reducing the reserve requirement ratio by 0.5 percentage points, cutting the average mortgage rate by 0.5 percentage points, lowering the down payment ratio for second homes to 15%, and implementing a RMB 500 billion swap facility to boost the capital market.

Simultaneously, recent rate cuts by the US Fed and the ECB have been motivating other central banks to follow, although the cadence among different countries varies. The exception is Russia where wartime pressures have been stoking inflation: in October the Central Bank of Russia (CBR) raised its key rate to 21%, bringing cumulative tightening since June to 500 basis points. By contrast, the European Central Bank (ECB) cut interest rates by 25 basis points to 3.4% on October 17. ECB president Christine Lagarde announced that, with inflation aligned with expectations, it was appropriate to make a further move toward loosening monetary policy. The US and UK maintained the status quo in terms of their interest rates in September, but the Federal Open Market Committee (FOMC) is expected to lower US interest rates further on November 7, with markets currently expecting a 0.25% reduction.

Among the advanced economies, the growth story continues to be significantly different either side of the Atlantic. In the US, real GDP increased at an annual rate of 2.8% in Q3 2024, according to the “advance” estimate released by the U.S. Bureau of Economic Analysis on October 30. In the second quarter, real GDP rose 3.0%.

Growth was much weaker in Europe. In Q3 2024, seasonally adjusted GDP in the Eurozone rose 0.4% in the euro area and 0.3% in the EU (versus the previous quarter), according to a Eurostat preliminary flash estimate. In Q2, GDP had grown by 0.2% in the euro area and by 0.3% in the EU. Across the EU, GDP was up 0.9% versus Q3 2023. UK growth has been even more lackluster: monthly real GDP is estimated to have grown by 0.2% in August 2024, after showing no growth in July. Services, production, and construction output all grew. Real GDP is estimated to have grown by 0.2% in the three months to August 2024 compared with the three months to May.

Among emerging economies, the situation is more positive but there are mixed signals. China’s Q3 GDP grew at a slower rate of 4.6% year-on-year, slightly down from Q2’s 4.7%; year-to-date GDP growth for the first three quarters stands at 4.8%. Trade accounted for 43% of GDP growth in Q3, consumption contributed 29%, and investment 28%. India saw industrial production decline for the first time in almost two years, with all sectors contributing to the downturn.

Persistently high consumer prices continue to affect households, which has led to a decline in overall consumer confidence; a deceleration in consumer spending continued across most main economies in September. US retail and food services sales for September (adjusted for seasonal variation and holiday and trading-day differences) were $714.4 billion—a 0.4% increase from the previous month. The consumer confidence index (Conference Board) fell to 98.7 from an upwardly revised 105.6 in August.

However, consumer activity in India rebounded in September. Increasing real wages played a significant role, but there was another driving force: rural population consumption continues its upward trajectory, estimated to be 35% higher than a year ago. The festive season also added a boost. Consumer confidence in Brazil remains below the neutral 100 mark but rose to 93.7 in September (93.2 in August), increasing for a fourth consecutive month. Business confidence dropped slightly to 96.9 in September (97.7 in August), falling for the first time in seven months. In Mexico, consumer confidence was stable at 98.9 in September.

Central banks continue to anchor inflation expectations at around 2.0 to 2.3%. In the US, the consumer price index (CPI) rose 2.4% for the 12 months ending September, the smallest 12-month increase since February 2021. Core inflation slightly increased to 3.3% (annualized). Looking ahead, US consumers’ inflation expectations at the one-year horizon remain unchanged at 3.0%, while at the five-year horizon they rose to 2.9% from 2.8%, according to the September Survey of Consumer Expectations.

Eurozone headline inflation was down to 1.7% in September, mainly due to a decline in energy prices (–6.1%), Core inflation stood at 2.7%, while services inflation was 3.9%, which points to lingering strong domestic price pressures, with wages growth still elevated (4.7% in 2024 Q2). The UK CPI declined to 1.7% in September, with lower transport prices partially offset by higher prices for food and non-alcoholic beverages. Core inflation (which excludes energy, food, alcohol, and tobacco) fell to 3.2%, from 3.6% in August.

Among emerging economies, inflation in India picked up to 5.5% in September, approaching the upper limit of the Reserve Bank of India’s (RBI) target of 6%. The increase was primarily the result of rising food prices, which grew by 8.4%, mainly due to the increasing cost of fruit and vegetables. At the same time, core inflation also rose but remains close to its lowest level historically. Brazil saw inflation rise to 4.42% in September (4.24% in August), rising again after a one-month decrease but remaining inside the Central Bank’s target upper limit (4.50%). In Mexico, September’s inflation rate dropped to 4.6% (5.0% in August), decreasing for the second consecutive month following an upward trend since February. However, it sits outside the Central Bank’s target range of 2–4%.

Most commodity prices appeared stable in October, but they are all significantly higher than pre-pandemic levels. However, the price of gold has continued to forge ahead, reflecting its status as a safe haven during uncertain times.

Manufacturing growth has been continuing across several economies, with the big exceptions being the US and Eurozone. August saw the industrial production index rise 1.8% month on month in the Eurozone, although on a year-over-year basis it registered –0.2%. The composite purchasing managers’ index (PMI) reached 49.7 in October (49.6 in September) with the manufacturing PMI rising to 45.5, though both readings were still well within the contraction zone. It was a brighter picture in the UK where the manufacturing sector recorded a further solid increase in production volumes at the end of Q3. Output and new orders both continued to rise, with the domestic market remaining the main driver of growth. The seasonally adjusted S&P Global UK Manufacturing PMI posted 51.5 in September, down from August’s 26-month high of 52.5—the PMI has now remained above the neutral 50.0 mark for five successive months.

Among emerging economies, Brazil’s manufacturing PMI climbed to 53.2 in September (50.4 in August), staying above the neutral 50 mark for a ninth consecutive month. The increase indicates a stronger improvement in the health of the sector after a notable slowdown in August. September data showed an eighth increase in factory production in nine months, following a brief decline in August. In sharp contrast, Mexico’s manufacturing PMI reading in September signaled the fastest deterioration in the health of the sector for 32 months, falling from 48.5 in August to 47.3 in September and further into the contraction zone.

The services sector remains the brightest spot on the global economic map. In the Eurozone, the services PMI declined to 51.2 in October (September: 51.4) but stayed within the expansion zone. Similarly, business activity across the UK services sector lost some momentum in September, but the services PMI stayed positive at 52.4 (53.7 in August). The headline index has remained within positive territory every month since November 2023.

The latest readings from Brazil signal a moderate expansion of service sector output, with the September the services PMI climbing to 55.8 (54.2 in August). This helped the composite PMI rise from 52.9 to 55.2 in September, to sit within the expansion zone for a 12th consecutive month.

In September, unemployment rates remained stable across most surveyed economies. The US unemployment rate was little changed at 4.1% in September, down from August’s 4.2% (3.5% in January 2020). UK unemployment was estimated at 4.%.

China saw the overall surveyed urban unemployment rate drop to 5.1% in September, down from 5.3% in August. The youth unemployment rate decreased to 17.6% in September, slightly down from 18.8% in August. India saw a 0.7 percentage point decrease in its unemployment rate in September. In Brazil, the three-month moving average unemployment rate dropped to 6.6% in August (6.8% in July), down for the fifth time this year, and lower than the same period last year (7.8%). Mexico saw a slight rise in total unemployment, which was up 0.08 points in August to 2.76%. Employment in the formal economy experienced a decrease of some 91,000 employees.

On the markets, government bond yields in most economies appear to have slowed slightly over recent months, while equity markets showed stable growth across most indexes in September and October. The US saw the S&P 500 gain 2.0% in September, bringing the one-year return to 34.4%. The Dow Jones increased by 1.8% for the month, registering 26.3% in terms of its one-year growth. During September, the CBOE Volatility Index averaged 19.2 (15.0 in August).

Total port trade experienced a strong decline in September 2024 compared to the same period in 2023, primarily driven by decreases in activity globally. Meanwhile, global supply-chain pressure fell slightly in September, to a level close to the historical average. Freight rates remain stable but are positioned at significantly higher levels than they have been historically.

The US recorded exports of $271.8 billion in August, $5.3 billion more than July’s total. August imports were $342.2 billion, $3.2 billion less than in July. The deficit in August was down 10.8% on the previous month at $70.4 billion. Meanwhile, the Eurozone remained in surplus, but this shrank to €4.6 billion in August (€19.7 billion in July). The decline was mainly driven by a fall in exports to China (–9.3% year on year) and a jump in imports (+15.6% year on year) for miscellaneous manufactured articles. China saw cross-border trade growth pick up to 4.2% in Q3 (3.3% in Q2). Export growth accelerated to 5.4% in Q3 (4.4% in Q2), and import growth increased to 2.6% in Q3 (1.7% in Q2).

* * *

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Regional and Country Summary

In the advanced economies, US Q3 GDP rose 2.8% year on year, with CPI down to 2.4% in September; ECB cuts rates by 25 basis points with inflation below target.

United States

Q3 GDP rose 2.8% year on year; annual inflation was up 2.4%, the smallest 12-month increase since February 2021; consumer confidence deteriorated to 98.7, the largest decline since August 2021.

Real GDP increased at an annual rate of 2.8% in Q3 2024, according to the “advance” estimate released by the U.S. Bureau of Economic Analysis on October 30. In the second quarter, real GDP rose 3.0%.

At September’s meeting considering progress on inflation and the balance of risks, the Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate by 0.5 percentage points to 4.75–5%. On November 7, the FOMC is expected to lower interest rates further, with markets currently expecting a 0.25% reduction in rates.

The consumer price index rose 2.4% for the 12 months ending September, the smallest 12-month increase since February 2021. Core inflation slightly increased to 3.3% (annualized) in September. Consumers’ inflation expectations at the one-year horizon remain unchanged at 3.0%, while at the five-year horizon they rose to 2.9% from 2.8%, according to the September Survey of Consumer Expectations.

Retail and food services sales for September (adjusted for seasonal variation and holiday and trading-day differences) were $714.4 billion—a 0.4% increase from the previous month. The consumer confidence index (Conference Board) fell in September to 98.7 from an upwardly revised 105.6 in August.

The unemployment rate remained largely unchanged in September, decreasing slightly to 4.1% from 4.2% in August (compared to 3.5% in January 2020). Total nonfarm payroll employment increased by 254,000. However, the most recent labour market report from October indicated that employment was essentially flat compared to the previous month, with the economy adding only 12,000 jobs. This figure is significantly below market expectations of 100,000 jobs and represents the slowest growth since 2020. The industrial production index fell slightly to 102.6 in September (102.9 in August). October’s purchasing managers’ index (PMI) for manufacturing edged up to 47.8 from a 15-month low of 47.3 in September, while the services PMI rose slightly to 55.3 (55.2 in September).

In September, the S&P 500 gained 2.0%, bringing the one-year return to 34.4%. The Dow Jones increased by 1.8% for the month, registering 26.3% in terms of its one-year growth. During September, the CBOE Volatility Index averaged 19.2 (15.0 in August).

August exports were $271.8 billion, $5.3 billion more than July’s exports. August imports were $342.2 billion, $3.2 billion less than in July. The deficit in August was down 10.8% on the previous month at $70.4 billion.

On the housing market, the 30-year fixed-rate mortgage had increased to 6.4% by October 17 (6.2% in September). Existing home sales dropped 1% in September. During September, housing residential starts declined to 1,354,000 (down from a revised figure of 1,361,000 in August). Completions are down to 1,680,000 this month (from 1,781,000 in August).

As the 2024 election race comes to an end, the vice-presidential debate between Ohio Senator JD Vance and Minnesota Governor Tim Walz was characterized by a more policy-driven discussion than that of their running mates. The majority of polls predict a tight fight for the White House on November 5.

US president Joe Biden mentioned in a White House briefing that experts estimate the damage bill from Hurricane Milton to be around $50 billion. The Biden-Harris Administration has already approved more than $1.8 billion in assistance for hurricane recovery efforts.

Eurozone

EU Q3 GDP up 0.9% on year-ago quarter; IMF lowers real GDP outlook; ECB cuts rates by 25bps; inflation below target for first time since Q2 2021.

In Q3 2024, seasonally adjusted GDP rose 0.4% in the euro area and 0.3% in the EU versus the previous quarter, according to a Eurostat preliminary flash estimate. In Q2, GDP had grown by 0.2% in the euro area and by 0.3% in the EU. Across the EU, GDP was up 0.9% versus Q3 2023.

Real GDP growth is expected to be 0.8% in 2024 and 1.2% in 2025, according to the IMF’s October projections. Compared with July’s projections, the GDP growth outlook has been revised down: –0.1pp for 2024 and –0.3pp for 2025. Uncertainty around persistent core inflation and geopolitical conflicts is weighing down the short-term outlook. For the longer term, perennially weak productivity growth coupled with an investment shortfall are dragging down the outlook.

The Eurozone surplus shrank to €4.6 billion in August 2024 from €19.7 billion in July, although the drop from the year-ago period was smaller (22%). Goods exports in August 2024 reached €216.7 billion, down by 2.4% year on year; imports were €212.2 billion, down by 2.3% year on year. This was mainly driven by a fall in exports to China (–9.3% year on year) and a jump in imports (+15.6% year on year) for miscellaneous manufactured articles.

With headline inflation below target, the ECB cut interest rates by 25bps to 3.4% on October 17. ECB president Christine Lagarde announced that, with inflation aligned with expectations, it was appropriate to make a further move toward loosening monetary policy.

In September, headline inflation was down to 1.7%, mainly due to a decline in energy prices (–6.1%), Core inflation stood at 2.7%, while services inflation was 3.9%, which points to lingering strong domestic price pressures, with wages growth still elevated (4.7% in 2024 Q2). Producer prices have been in positive territory since December, posting +0.6% month on month but –2.3% year on year in August 2024.The ECB’s September projections show inflation is expected to be 2.5% in 2024 (unchanged), 2.2% in 2025 (unchanged), and 1.9% in 2026 (unchanged). For core inflation, ECB staff projections are: 2.9% in 2024 (up by 0.1pp), 2.3% in 2025 (up by 0.1pp), and 2% in 2026.

Forward-looking indicator, Eurocoin was down to 0.14 in September from 0.29 in August. The industrial production index rose 1.8% month on month and –0.2% year on year in August. The composite PMI reached 49.7 in October (49.6 in September). The services PMI declined to 51.2 in October (September: 51.4); the manufacturing PMI rose to 45.5.

Initial discussions on France’s 2025 budget were held on October 10. The budget must be passed by December 21, but there is no clear consensus so far. The aim is to reduce the public deficit to 5% of GDP by the end of 2025 (from 6.1% in 2024), and 3% in 2029, with €60 billion of “budgetary efforts”. Meanwhile, Danish dairy farmers are facing the world’s first-ever cow tax, which would amount to approximately $100 per cow to offset carbon emissions produced by the animals.

United Kingdom

CPI inflation declined to 1.7% in September; monthly GDP grew by 0.2% in August 2024, after no growth in July; the BoE left the policy rate unchanged in September. OECD and IMF project modest growth in 2024 and 2025.

The OECD’s September Interim Economic Outlook suggests UK GDP is expected to rise by 1.1% in 2024 and 1.2% in 2025. It expects inflation to rise to slightly above the 2% target in 2025. Similarly, the IMF’s October World Economic Outlook projects 1.1% growth in 2024 and 1.5% in 2025. According to the Bank of England, consumer price index (CPI) inflation is expected to rise to around 2.5% towards the end of 2024, as last year’s declines in energy prices fall out of the equation. Headline GDP growth is expected to return to its underlying pace of around 0.3% per quarter in the second half of the year.

Monthly real GDP is estimated to have grown by 0.2% in August 2024, after showing no growth in July 2024. Services, production, and construction output all grew. Real GDP is estimated to have grown by 0.2% in the three months to August 2024 compared with the three months to May 2024.

The UK CPI declined to 1.7% in September, with lower transport prices partially offset by higher prices for food and non-alcoholic beverages. Core inflation (which excludes energy, food, alcohol, and tobacco) fell to 3.2%, from 3.6% in August. On September 19, the BoE Monetary Policy Committee (MPC) voted to leave the policy rate at 5%.

The UK manufacturing sector saw a further solid increase in production volumes at the end of Q3. Output and new orders both continued to rise, as the domestic market remained the main propeller of growth. The seasonally adjusted S&P Global UK Manufacturing PMI posted 51.5 in September, down from August’s 26-month high of 52.5 and unchanged from the earlier flash estimate. The PMI has remained above the neutral 50.0 mark for five successive months.

Meanwhile, business activity expansion lost momentum across the UK service sector, easing to a three-month low. At 52.4 in September, the UK Services PMI Index was down from 53.7 in August but still well above the 50.0 no-change threshold. The headline index has remained within positive territory every month since November 2023; the latest reading signals a moderate expansion of service sector output.

September data indicates that business activity growth across the UK construction sector accelerated to its fastest for nearly two-and-a-half years, with output growth led by the steepest rise in civil engineering activity since June 2021. The UK Construction PMI posted 57.2 in September, up from 53.6 in August and above the neutral 50.0 threshold for the seventh successive month. The latest reading signalled a strong upturn in total construction activity and the steepest rate of growth for 29 months.

In the three months to August 2024, growth in average total pay was 3.8%, as real total pay rose 0.9%. UK unemployment was estimated at 4.%. The UK economic inactivity rate (for people aged 16 to 64 years) was estimated at 21.8% in June to August 2024 (below estimates of a year ago) and decreased in the latest quarter. The estimated number of vacancies in July to September 2024 was 841,000, a drop of 34,000 (3.8%) from April to June 2024. Vacancies declined for a record 26th consecutive period, falling in 15 of 18 industry sectors.

On October 30, the UK’s first female Chancellor of the Exchequer (finance minister) Rachel Reeves delivered the first Budget from a Labour government since 2010. Reeves, whose first job after leaving university was with the Bank of England, set out ambitions to permanently increase the supply capacity of the economy, boost investment and growth, and end “short-termism”. However, politicians and employers’ organizations have questioned whether increased taxes on employing staff, such as raising employers’ National Insurance contributions to 15% (from 13.8%) and lowering the level at which employers become liable to pay NI on each employee’s salary, might be counterproductive, hitting SMEs in particular.

In emerging economies, China announces additional stimulus measures as growth slows in Q3; industrial production declines in India while consumer activity rebounds; Russia hikes interest rates to 21% in October.

China

Economic growth slowed further in Q3, with GDP increasing by 4.6% year on year and around half the growth coming from trade. Fixed-asset investment grew more slowly, the decline in the real estate market was less steep. China has unveiled a range of new stimulus measures since late September.

In the third quarter of 2024, China’s GDP grew at a slower rate of 4.6% year-on-year, slightly down from 4.7% in Q2; year-to-date GDP growth for the first three quarters stood at 4.8%. Trade accounted for 43% of GDP growth in Q3, consumption contributed 29%, and investment 28%. By sector, GDP growth in the industrial sector slowed to 4.6% in Q3 (versus 5.6% in Q2) while the agriculture sector saw a deceleration to 3.2%, down from 3.6% in Q2; GDP growth in the service sector accelerated to 4.8% in Q3, up from 4.2% in Q2.

The growth in fixed-asset investment further slowed to 2.6% in Q3, down from 3.6% in Q2. By sector, manufacturing investment grew by 8.8% in Q3, slightly lower than the 9.3% growth in Q2. Infrastructure investment expanded by 1.9%, significantly down from 4.8% in Q2. The real estate investment contraction was −10.7% in Q3, compared to −10.6% in Q2.

In Q3, the decline in the real estate market eased somewhat. Demand-side indicators revealed a shallower decline in sales revenue, which was down −16.3%, compared to a −21.5% drop in Q2. New homes floor space sold also showed a less severe decline, dropping −11.8% following the −16.5% decrease in Q2. On the supply side, floor space started fell −19.6% in Q3, compared to −18.3% in Q2.

New social financing amounted to RMB 7.6 trillion in Q3, up from RMB 5.3 trillion in Q2. However, there was a year-on-year decline of 3.0%, primarily attributable to a reduction in new bank loan financing.

The overall surveyed urban unemployment rate dropped to 5.1% in September, down from 5.3% in August. The youth unemployment rate decreased to 17.6% in September, slightly down from 18.8% in August.

Cross-border trade growth picked up to 4.2% in Q3, up from 3.3% in Q2. Export growth accelerated to 5.4% in Q3 (from 4.4% in Q2), and import growth accelerated to 2.6% in Q3, up from 1.7% in Q2.

China has announced multiple stimulus policies since late September. These address various dimensions such as macroeconomic policy (enhancing counter-cyclical measures and mitigating financial risks), real estate (halting decline and promoting market stabilization), capital markets (establishing a swap facility for institutional investors to purchase stocks), and industry and corporate sectors (creating a more favorable environment for the non-public economy and continuing to attract FDI). Key actions include reducing the reserve requirement ratio by 0.5 percentage points, cutting the average mortgage rate by 0.5 percentage points, lowering the down payment ratio for second homes to 15%, and implementing a RMB 500 billion swap facility to boost the capital market.

India

Consumers remain one of the cornerstones of growth in India, despite some slowdown on the business side. Financial market volatility increased as equities experienced mostly declines in October.

Inflation picked up to 5.5% in September, approaching the upper limit of the Reserve Bank of India’s (RBI) target of 6%. The increase was primarily the result of rising food prices, which grew by 8.4%, mainly due to the increasing cost of fruits and vegetables. At the same time, core inflation also increased but remains close to its lowest historical level.

India’s central bank, the RBI continues to closely monitor inflation developments. However, as of now, the board has refrained from adjusting interest rates, which remain stable. Moreover, market rates also continue to be relatively stable for consumers, businesses, and in the interbank markets.

Industrial production declined for the first time in almost two years, with all sectors contributing to the downturn. Mining and electricity declined by 4.3% and 3.7%, respectively, compared to the same period last year. Production in manufacturing companies also slowed significantly, dropping from 4.4% last month to 1% in August.

Consumer activity, in contrast, rebounded in September. Increasing real wages played a significant role, but there was another driving force: rural population consumption continues its upward trajectory, estimated to be 35% higher than a year ago. The festive season also added a boost.

International trade improved from a $15 billion deficit in August to a $5 billion deficit in September, mainly attributable to lower imports of agricultural and jewelry products. Trade in services remained broadly stable.

The financial side of the economy was more volatile than usual. The exchange rate has been stable at 83 rupees per US dollar. However, the equity market mostly experienced declines in October due to slowing corporate earnings and persistent foreign selling. The public finance deficit improved slightly in September as revenue growth outpaced expenditures.

India’s Minister of Petroleum and Natural Gas urged major global oil players to explore before the energy transition undermines the carbon market. Estimates of India’s unexplored oil reserves vary widely, from eight billion to 22 billion barrels. To accelerate exploration, the government has adjusted some regulations and opened more than a million square kilometers that were previously “no-go areas”.

Speaking at the BRICS summit in Kazan, Russia, on October 23, India’s Prime Minister Narendra Modi welcomed efforts to increase financial integration among BRICS countries. He suggested that trade in local currencies, together with smooth cross-border payments, would strengthen economic cooperation among member states. While talking up India’s Unified Payments Interface, he also warned BRICS delegates against seeking to replace global institutions, calling for reform instead.

Brazil

Inflation continued its upward trend after decreasing for a month, the composite PMI rose; unemployment rate fell slightly.

Inflation rose to 4.42% in September (4.24% in August), increasing after a one-month decrease and remaining inside the Central Bank’s target upper limit (4.50%).

Consumer confidence remains below the neutral 100 mark but rose to 93.7 in September (93.2 in August), increasing for a fourth consecutive month. Business confidence dropped slightly to 96.9 in September (97.7 in August), falling for the first time in seven months.

The purchasing managers’ index (PMI) for manufacturing rose to 53.2 in September (50.4 in August), staying above the neutral 50 mark for a ninth month running, indicating modest expansion. The increase indicates a stronger improvement in the health of the sector after a notable slowdown in August. However, the average reading for the third quarter was the lowest in 2024 so far. September data showed an eighth increase in factory production in nine months, following a brief decline in August. International demand supported the rise in total sales, as new export orders rose marginally at the end of the third quarter. Survey members noted gains from Africa, Asia, Latin America, and Europe.

September saw the services PMI climb to 55.8 (from 54.2 in August). Positive demand trends and a sustained increase in new business intakes are the main drivers of this month’s increase. Input prices across Brazil’s service economy continued to increase at the end of the third quarter, reportedly owing to higher food, fuel, and utility (electricity, internet, subscriptions, and water) costs. The composite PMI rose from 52.9 to 55.2 in September, staying within the expansion zone for a 12th consecutive month.

On the financial markets, the monthly average exchange rate was BRL 5.54 per US dollar in September (5.55 in August). In September, the Bovespa equities index decreased, losing 3.1% in value. The balance of trade registered a September surplus of US $5.4 billion, versus US $4.8 billion in August, driven by a fall in imports (US $23.4 in September compared to US $24.3 in August) and a slight decrease in exports (US $28.8 in September compared to US $29.0 in August).

Meanwhile, the three-month moving average unemployment rate dropped to 6.6% in August (6.8% in July), down for the fifth time this year, and lower than the same period last year (7.8%).

This year’s BRICS summit was held in Kazan, Russia on October 22–24. Presidents Lula and Putin were expected to talk about bilateral relations between Brasilia and Moscow. However, the topic was not discussed. Unlike the 2023 summit, Chinese, Russian, and Indian leaders attended this year.

Russia

Russia’s Q2 growth revised slightly upwards; however, growth slowed in August with slowdown forecast for the years ahead; strong budget performance in September; new expansionary budget framework submitted.

The official estimate of Russia’s Q2 GDP growth has been raised to 4.1% from 4%. The industry-level data show that growth was broad-based. However, the total output indicator for August declined by 2% monthly and shows 12-month GDP growth slowed to its weakest level since the recession immediately after Russia’s 2022 invasion of Ukraine. This slowdown had been anticipated as businesses face labor shortages and stretched levels of capacity utilization, while costs have risen in the face of wage pressure and higher prices for production inputs. On the consumer side, increasing prices are eroding purchasing power. Development has weakened in nearly all the main sectors of the economy, with agriculture a key drag on growth. Slowdowns in 12-month growth occurred in retail sales, industrial production, and construction.

BOFIT’s new “Forecast for Russia 2024-2026” sees GDP growth on a slowing trend as the country can no longer overcome capacity constraints. Although overall GDP growth is still expected to be 3.5 % this year, it may slow to around 1% both in 2025 and 2026. Oxford Economics forecasts are moderately higher, at 3.9% this year and 1.7% in 2025. Russia’s economy continues to be boosted by increasing public spending still supporting household consumption, which is expected to slow next year, however. Nevertheless, the economy has started to cool because of tighter monetary conditions.

Federal budget performance in September remained strong, with year-to-date revenues 33% above 2023’s level and expenditures 23% up on the year-ago level. The year-to-date balance reached a marginal surplus and there is very little risk of the annual deficit target of 1.1% of GDP not being met.

The 2025–27 budget framework was submitted at the end of September, assuming expansion particularly in 2025. For the next year, revenues are expected to rise by 14%, driven by tax hikes coming into force at the start of next year. Revenues from oil and gas earnings are expected to decrease slightly. Consolidated budget spending is set to increase by 10% in 2025. As in recent years, defense has garnered the heftiest spending growth, while other major spending categories will see only modest nominal increases or no growth (accounting for inflation). The budget framework assumes a moderate deficit: 2% of GDP for this year and 1% of GDP for the 2025–27 period. The main risks to the budget include lower growth, higher inflation, and a drop in oil-related revenues.

Amid high inflation, the Central Bank of Russia (CBR) raised its key rate to 21% in October, bringing cumulative tightening since June to 500 bps. It also issued a hawkish message, warning that it will hike again soon if inflationary pressures fail to abate and will keep its policy very tight in 2024–25. September’s headline consumer price index (CPI) growth declined to 8.6%, thanks to a favorable base effect.

Mexico

Inflation dropped to 4.6%, while manufacturing saw its sharpest decline in 32 months. New president Claudia Sheinbaum faces early challenges as tensions with the judiciary escalate.

In September, the inflation rate dropped to 4.6% (from 5.0% in August), decreasing for the second consecutive month following an upward trend since February. However, it remains outside the Central Bank’s target range of 2–4%. September’s closing consumer price index (CPI) was down 8% from August, reaching its lowest level in the past six months, due to a significant decrease in the food and beverages sector.

Consumer confidence remained stable in September at 98.9, while remaining below the neutral 100-point mark. In September, Mexico’s purchasing managers’ index (PMI) for manufacturing signaled the fastest deterioration in the health of the sector for 32 months, falling from 48.5 in August to 47.3 in September and further into the contraction zone. After a nine-month sequence of growth through to June, operating conditions deteriorated across each month of the third quarter.

Total unemployment increased 0.08 points in August to 2.76%. Meanwhile, employment in the formal economy saw a decrease of some 91,000 employees during this period. The slowdown across Mexico’s economic sectors, especially in manufacturing, has resulted in fewer job opportunities in the formal economy.

On the markets, the monthly average exchange rate in September was MXN 19.6 per USD (up from MXN 19.2 in August), surpassing pre-pandemic levels.

August’s balance of trade registered a deficit of around US $4.9 billion (a significant increase from the $72 million trade deficit in July), driven largely by the strengthening of the Mexican peso against the US dollar, which has reduced demand for exports, including manufactured goods like vehicles, and boosted imports due to the reduced cost of foreign goods. Exports totaled US $51.9 billion (down from US $54.7 billion in July), against imports of US $56.8 billion (up from US $54.9 billion in July).

On October 1, Mexico’s new president Claudia Sheinbaum began her term, immediately facing tensions with the judiciary. Conflict arose after the Senate approved a judicial reform initiated by former President Andrés Manuel López Obrador. Judges and court officials, opposing the reform for months through protests, are now challenging it from within the courts.

Although Sheinbaum has expressed support for the reforms, the judiciary remains resistant, with several lawsuits challenging the changes on constitutional grounds. Observers note the president is trying to balance maintaining political continuity with mitigating economic and diplomatic fallout, particularly given concerns raised by the business community and foreign partners about Mexico’s political stability and judicial independence. This makes her handling of the judiciary one of the earliest and most critical tests of her leadership.

McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks, as well as focused insights on the latest national and regional developments. Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on McKinsey.com. The reports available free to email subscribers and through the McKinsey Insights App. To add a name to our subscriber list, click here. GEI is a joint project of McKinsey’s Strategy and Corporate Finance Practice and the McKinsey Global Institute.

The data and analysis in McKinsey’s Global Economics Intelligence are developed by Jeffrey Condon, a senior expert in McKinsey’s Atlanta office; Krzysztof Kwiatkowski is an expert in the Greater Boston office; and Sven Smit, a senior partner in the Amsterdam office.

The authors wish to thank Nick de Cent, as well as José Álvares, Cristina Barrantes, Darien Ghersinich, Yifei Liu, Marianthi Marouli, Tomasz Mataczynski, Frances Matamoros, Jose Maria Quiros, Erik Rong, Valeria Valverde, Nikol Vargas, and Sebastian Vargas for their contributions to this article.

The invasion of Ukraine continues to have deep human, as well as social and economic, impact across countries and sectors. The implications of the invasion are rapidly evolving and are inherently uncertain. As a result, this document, and the data and analysis it sets out, should be treated as a best-efforts perspective at a specific point of time, which seeks to help inform discussion and decisions taken by leaders of relevant organizations. The document does not set out economic or geopolitical forecasts and should not be treated as doing so. It also does not provide legal analysis, including but not limited to legal advice on sanctions or export control issues.