GDP

• * *The latest indicators suggest growth will continue in the short run but at rates lower than expected in the June 2024 Eurosystem staff projections.
• However, the impulse from consumption is somewhat weaker than foreseen in the June projections, with incoming data and recent surveys pointing to still subdued consumer confidence and elevated household saving intentions.
• In addition, a projected rise in foreign demand supports the outlook for euro area exports.
• Compared with the June projections, the outlook for GDP growth has been revised marginally down for each year of the projection horizon.
• Compared with the June 2024 staff projections, the outlook for HICP inflation remains unchanged.
• HICPX inflation surprised slightly on the upside in recent months, leading to small upward revisions in 2024 and 2025.

Table 1

• Historical data may differ from the latest Eurostat publications owing to data releases after the cut-off date for the projections.
• Data are available for downloading, also at quarterly frequency, from the Macroeconomic Projection Database on the ECB’s website.
• = 2 The international environment = Near-term global growth momentum remains positive on the whole, but headwinds to growth have intensified.
• While growth is projected to remain stable in the third quarter, incoming data suggest a slowing in the manufacturing cycle amid still restrictive monetary policies.
• Over the medium term, global growth is projected to expand at a moderate pace, broadly unchanged compared with the June projections.
• It has been revised up slightly in all three years compared with the June projections ( Table 2).

Table 2

• 3) Calculated as a weighted average of the export deflators of euro area trading partners.
• Global trade is projected to recover this year and to grow more in line with global activity over the rest of the projection horizon.
• Following a period of weak growth dynamics, global trade rebounded at the turn of the year.
• In the second quarter the frontloading of imports in advanced economies added to this recovery.
• [3] Euro area foreign demand is projected to increase by 2.5% in 2024, 3.4% in 2025 and 3.3% in 2026.
• This means competitors’ export price growth should remain stable over the projection horizon, broadly in line with its historical average.
• The market expectations for short-term interest rates have been revised down by around 30 basis points for 2025 and 2026.
• The market expectations for long-term bond yields have also been revised down, albeit to a lesser extent.

Table

• Revisions for growth rates and interest rates are calculated using figures rounded to one decimal place, while revisions reported as percentage changes are calculated on unrounded figures.
• The technical assumptions about commodity prices and euro area interest rates are based on market expectations, with a cut-off date of 16 August 2024.
• Oil prices refer to Brent crude oil spot and futures prices.
• Gas prices refer to the Dutch TTF gas spot and futures prices.
• Electricity prices refer to the average wholesale spot and futures price for the five largest euro area countries.
• The path of commodity prices is implied by futures markets in the ten working days ending on the cut-off date.
• The assumptions for euro area ten-year nominal government bond yields are based on the average of countries’ ten-year bond yields, weighted by annual GDP figures.
• This was because of lower than expected private consumption growth and investment, as well as weaker inventories, despite a stronger than expected contribution from net trade.
• Across sectors, industrial value added likely contracted in the second quarter of 2024, while services value added continued to expand.

Chart 1

• The ranges shown around the central projections provide a measure of the degree of uncertainty and are symmetric by construction.
• The bands, from darkest to lightest, depict the 30%, 60% and 90% probabilities that the outcome of real GDP growth will fall within the respective intervals.
• For more information, see the box entitled “Illustrating the uncertainty surrounding the projections” in the March 2023 ECB staff macroeconomic projections for the euro area.
• Real GDP growth is expected to slow in the second half of 2024 to rates below those foreseen in the June projections.
• *Compared with the June 2024 projections, real GDP growth has been revised down by 0.1 percentage points in each year of the projection horizon (Table 3 and Chart 2).
• The downward revision for 2025 is solely a result of carry-over effects from the revisions in the second half of 2024.

Chart 2

• Historical data may differ from the latest Eurostat publications owing to data releases after the cut-off date for the projections.
• In rounded terns, real GDP growth is revised by −0.1 percentage points in each year of the projection horizon.

Table 3

• Historical data may differ from the latest Eurostat publications owing to data releases after the cut-off date for the projections.
• Data are available for downloading, also at quarterly frequency, from the Macroeconomic Projection Database on the ECB’s website.
• Household spending growth should strengthen, however, from an annual rate of around 0.8% in 2023-24 to around 1.5% in 2025-26, markedly above the pre-pandemic average of 1.2%.
• In the medium term real income growth is projected to moderate as the catch-up in real wages dissipates.
• Compared with the June 2024 projections, private consumption growth has been revised down by 0.4 percentage points for 2024.
• This reflects lower than expected dynamics for the first two quarters and a slower rebound thereafter, which also carries over into 2025.
• Overall, a further significant fall is expected in 2024, with a negative carry-over to annual growth in 2025.
• Subsequently, housing investment is projected to increase on an annual basis in 2026 – for the first time since 2022.
• The rebound in the first quarter was largely driven by services exports, partly on account of volatile Irish data.
• The labour market is set to remain resilient, although employment growth should slow down in comparison with recent years.
• In annual terms, employment growth is expected to decline from 1.4% in 2023 to 0.8% in 2024 and to stabilise at 0.4% in 2025 and 2026.
• This includes a slight downward revision of 0.1 percentage points for 2026, compared with the previous projections.

Chart 3

• With the cyclical adjustment of the economy over the projection horizon and a slowdown in the previously strong employment growth, productivity is expected to pick up.
• Nevertheless, productivity growth (per person employed) surprised on the downside in the second quarter of 2024.
• However, this should be seen against the stagnant annual average productivity growth of 0.3% between 2020 and 2023, leading to a significant negative gap between the trend and actual level of productivity ( Chart 4).
• The cyclical factors that, in the recent past, have supported employment growth, are projected to fade gradually, leading to a cyclical rebound in productivity growth.

Chart 4

• Labour productivity per person employed a) Labour productivity level (index, 2022 = 100) b) Labour productivity growth rate (annual percentage changes) Notes: The vertical lines indicate the start of the projection horizon.
• The unemployment rate is expected to remain relatively stable *( *Chart 5).

Chart 5

• = 4 Fiscal outlook = The euro area fiscal stance is estimated to tighten over the projection horizon, particularly in 2024, but less than in the June 2024 projections (Table 4).
• Although at a much slower pace, the fiscal stance is projected to continue tightening in 2025 and 2026.
• Compared with the June 2024 projections, the euro area fiscal stance and discretionary fiscal policy measures entail less tightening over the period 2024-25.

Table 4

• The figures shown are also adjusted for expected grants under the Next Generation EU (NGEU) programme on the revenue side.
• A negative (positive) figure implies a loosening (tightening) of the fiscal stance.
• 2) Calculated as the government balance net of transitory effects of the economic cycle and measures classified under the European System of Central Banks definition as temporary.
• While the euro area budget balance is set to improve over the projection horizon, albeit less than in June, the debt ratio is projected to increase.
• *The euro area deficit is projected to decline, falling to the reference value of 3% of GDP in 2026.
• These effects relate to downward revisions in tax-rich bases, such as compensation of employees and nominal private consumption.
• It is still expected to reach the 2% inflation target in the fourth quarter of 2025, in line with the June 2024 projections.

Chart 6

• The ranges shown around the central projections provide a measure of the degree of uncertainty and are symmetric by construction.
• The bands, from darkest to lightest, depict the 30%, 60% and 90% probabilities that the outcome of HICP inflation will fall within the respective intervals.
• Overall, energy inflation is expected to be muted and make virtually no contribution to headline HICP in 2025 and 2026 ( *Chart 7, panel a and Chart 8).
• *Food inflation is expected to remain broadly unchanged in the near term and subsequently decline moderately on account of moderate developments in input costs (Chart 7, panel b).

Table 5

• Price and cost developments for the euro area (annual percentage changes, revisions in percentage points) September 2024 Revisions vs June 2024 2023 2024 2025 2026 2023 2024 2025 2026 HICP 5.4 2.5 2.2 1.9 0.0 0.0 0.0 0.0 HICP excluding energy 6.3 2.9 2.4 2.0 0.0 0.1 0.1 -0.1 HICP excluding energy and food 4.9 2.9 2.3 2.0 0.0 0.1 0.1 0.0 HICP excluding energy, food and changes in indirect taxes 5.0 2.8 2.3 2.0 0.0 0.1 0.1 0.0 HICP energy -2.0 -1.4 1.1 0.6 0.0 -0.6 0.1 0.3 HICP food 10.9 2.9 2.4 2.1 0.0 -0.1 -0.3 -0.1 GDP deflator 5.8 3.1 2.4 2.0 -0.2 -0.2 0.0 0.0 Import deflator -2.8 -0.4 1.7 1.8 0.1 -0.2 -0.3 -0.1 Compensation per employee 5.3 4.5 3.6 3.2 0.1 -0.3 0.1 0.0 Productivity per employee -0.9 0.0 0.9 1.1 0.0 -0.1 -0.1 0.0 Unit labour costs 6.2 4.5 2.6 2.1 0.1 -0.2 0.1 0.0 Unit profits 5.7 0.2 1.6 1.6 -0.5 0.1 -0.3 0.0 Notes: Revisions are calculated using rounded figures.
• The figures for the GDP and import deflators, unit labour costs, compensation per employee and labour productivity refer to seasonally and working day-adjusted data.
• Historical data may differ from the latest Eurostat publications owing to data releases after the cut-off date for the projections.
• Data are available for downloading, also at quarterly frequency, from the Macroeconomic Projection Database on the ECB’s website.
• 1) Unit profits are defined as gross operating surplus and mixed income (adjusted for the income of the self-employed) per unit of real GDP.

Chart 7

Outlook for HICP energy and food inflation a) HICP energy b) HICP food (annual percentage changes) (annual percentage changes) Note: The vertical line indicates the start of the current projection horizon.

Chart 8

• *HICPX inflation is expected to moderate over the projection horizon, averaging 2.0% in 2026 (Chart 9).
• *The decline in HICPX inflation to the middle of 2024 was mainly driven by moderating growth in the prices of non-energy industrial goods (NEIG).
• Services inflation has been more persistent, moving essentially sideways at rates of around 4% in the first half of 2024.

Chart 9

• The ranges shown around the central projections provide a measure of the degree of uncertainty and are symmetric by construction.
• Compared with the June 2024 projections, the outlook for headline HICP inflation is unrevised (Chart 10).
• *For 2024 the upward revision to HICPX inflation is offset by a downward revision for energy and food.

Chart 10

• In rounded terms, HICP inflation is unrevised in each year of the projection horizon.
• Nominal wage growth is projected to decline gradually but remain elevated, allowing real wages to return quickly to the levels prevailing before the inflation surge *( *Chart 11).
• Nevertheless, it is expected to remain elevated compared with historical levels because of still tight labour markets and remaining inflation compensation.
• Negotiated wages are expected to increase slightly over the rest of 2024 before a gradual easing thereafter in line with lower inflation.

Chart 11

• *Unit labour cost growth has already come down from its 2023 historical highs to an estimated 4.7% in the second quarter of 2024.
• This reflects the projected rise in productivity growth coupled with the decline in wage growth.
• *Domestic price pressures, as measured by the growth in the GDP deflator, are projected to continue to decrease, with profit growth first providing a buffer for high labour cost pressures and subsequently recovering *( *Chart 12).
• [11] It is projected to continue to decline throughout 2024, averaging 3.1% in 2024 and declining more gradually thereafter to an average of 2.0% in 2026.
• Unit profit growth peaked at the end of 2022 and turned negative in the second quarter of 2024.

Chart 12

• After a negative annual rate in 2024, import price inflation is expected to remain below 2% in the later years of the projection horizon.
• Growth in the import deflator is expected to increase from -2.8% in 2023 to -0.4% in 2024, 1.7% in 2025 and 1.8% in 2026.
• It has been revised down across the horizon in line with revisions to competitors’ export prices and the slight appreciation of the euro implied by the technical assumptions ( Box 1).

Alternative energy price paths

• Future energy commodity price developments remain very uncertain and alternative paths for oil and gas commodity prices would have a significant impact on the economic outlook, especially for inflation.
• [13] Alternative paths for oil prices are symmetrically distributed around the baseline, reflecting broadly balanced risks.
• In each case, a synthetic energy price index (a weighted average of the oil and gas price paths) is computed and the macroeconomic impacts are assessed using ECB and Eurosystem models.

Chart 13

Alternative paths for energy price assumptions a) Oil price assumption (USD/barrel) b) Gas price assumption (EUR/MWh) Sources: Morningstar and ECB calculations. Note: The option-implied densities of gas and oil prices are extracted from 16 August 2024 market quotes for options on ICE Brent crude oil and Dutch TTF natural gas futures with fixed quarterly expiry dates.

Table 6

• The 25th and 75th percentiles refer to the option-implied neutral densities for the oil and gas prices on 16 August 2024.
• The constant oil and gas prices take the respective value as at the same date.
• The macroeconomic impacts are reported as averages of a number of ECB and Eurosystem staff macroeconomic models.
• Box 2 Alternative scenarios for consumer confidence and the implications for the economy This scenario analysis explores risks to the September 2024 baseline projection stemming from potential shocks to consumer confidence.
• The analysis reviews recent developments and assesses, using an empirical model, how unexpected changes in consumer confidence affect households’ decisions on consumption, housing investment and saving.
• *Consumer confidence fell sharply at the onset of Russia’s war against Ukraine and has remained subdued ever since, despite some recovery.
• Following this initial sharp decline, consumer confidence has recovered in recent quarters but has remained below its pre-war level.

Chart A

• The dashed blue line refers to a projection of consumer confidence consistent with the baseline projections through the lens of the empirical model described in Chart B.
• The alternative paths for consumer confidence as depicted in the chart are described below.
• *An empirical model indicates that unexpected changes in consumer confidence have significant implications for private consumption, housing investment and the saving ratio.
• It incorporates consumer confidence, private consumption, housing investment, the interest rate, real disposable income and the private consumption deflator.

Chart B

• A Cholesky identification scheme is assumed with the private consumption deflator ordered first, followed by real disposable income, private consumption, housing investment, interest rates and consumer confidence.
• The responses shown in the chart are normalised to a one-standard-deviation shock decline in consumer confidence.
• [16] [17] , The first (lower confidence) scenario assumes that consumer confidence deteriorates by one standard deviation in the fourth quarter of 2024 and then remains subdued (Chart A, panel b).
• Such a scenario could be driven by increasing geopolitical uncertainty and more persistent dampening effects of still elevated financing costs.
• This leads to the saving ratio initially increasing above the baseline before converging gradually with it following the favourable confidence shock in the second half of 2025 (Chart C).
• The temporarily lower confidence scenario implies cumulated deviations in real GDP growth of -0.1 percentage points from the baseline over 2024-26, with larger effects on private consumption, while for inflation the effects are marginal.The first (lower confidence) scenario assumes that consumer confidence deteriorates by one standard deviation in the fourth quarter of 2024 and then remains subdued (Chart A, panel b).
• This leads to the saving ratio initially increasing above the baseline before converging gradually with it following the favourable confidence shock in the second half of 2025 (Chart C).

Chart C

• Alternative paths for the saving ratio (percentage of disposable income) Notes: The alternative saving ratio paths are consistent with the implied paths based on the estimated impacts of confidence shocks on real disposable income and private consumption as depicted in Chart B.
• The light blue line in the chart represents the average saving ratio in 2019.

Table A

• Notes: ECB-BASE simulation using the “projection update modality” with exogenous exchange rate and monetary and fiscal policies.
• Additionally, other channels that could amplify the effects of consumer confidence shocks, such as a corresponding international environment scenario or direct effects through expectations, are excluded.
• The response of private consumption is consistent with the ECB-BASE-implied response.
• All numbers are reported in percentage point deviations from the baseline and are rounded to one decimal place.
• As regards HICP inflation, for 2024 and 2025, the ECB staff projection lies at the top of the range.
• For 2026, the ECB staff projection is in line with other forecasters at 1.9%.
• Regarding HICP inflation excluding energy and food, the ECB staff projections are slightly above the range of other forecasters for both 2024 and 2025.

Table

• SAN DIEGO, Sept. 13, 2024 /PRNewswire/ -- ALPFA unveils the 2024 Most Powerful Latinas, celebrating 50 visionary women leading the charge in a $3 trillion economic powerhouse.
• Now in its 8th year, the Most Powerful Latinas list continues to highlight the critical contributions of Latina leaders across multiple industries.
• Released at the Most Powerful Latina Summit during L'ATTITUDE, this year's list reflects the growing influence of Latinas in shaping the New Mainstream Economy.
• "Their leadership is directly tied to the Latino community's undeniable impact on the U.S. economy, as highlighted in the latest GDP report.

• Modest performance of metrics for completed events - especially in exhibition attendance – set back the Q2 2024 Index value to 87.7 after a record 92.3 in Q1 2024.
• The CEIR Total Index – a measure of overall exhibition performance – lost 2.3 percentage points compared to Q2 2023.
• The Q2 CEIR Total Index lost 5.0 percentage points compared to Q1 2024.
• The latest results for Q2 2024 show a slight downturn relative to the first quarter of 2024, despite an uptick in economic performance.

• Take the United Nations vote on Dec. 14, 2022, when the body’s General Assembly approved a resolution in favor of a New International Economic Order.
• Some 123 member states – largely the countries of Africa, Asia and Latin America – voted in favor; only 50 cast a ballot against.
• Turkey was the only abstention – emblematic of the foreign policy of a country that strides the divide between Europe and Asia, East and West, North and South.

Between two worlds?

• As far back as 2018, after being invited to attend that year’s BRICS annual summit meeting, Turkey had been toying with the idea of doing so.
• Looking back, it was only a question of time for full membership to happen.
• Yet, the EU has been adamant that it is not ready to accept it as a full member.
• But full membership that grants voting rights in the European Commission, the European Council and the European Parliament?

Looking beyond the West

• In addition to facing a cold shoulder from the EU, Turkey also seemingly feels hampered by the broader Western-dominated global order.
• Beyond the differences with Western entities of various kinds, Turkey also has grievances about the existing global order.
• “Turkey can become a strong, prosperous, prestigious and effective country if it improves its relations with the East and the West simultaneously,” Erdogan said in early September.
• “Any method other than this will not benefit Turkey but will harm it.”

The evolution of BRICS

• BRICS also has a Contingent Reserve Arrangement to provide member states with protection against global liquidity pressures.
• Egypt, Ethiopia, Iran and the United Arab Emirates joined in 2024, while Saudi Arabia has mulled accepting the invitation it was extended at the BRICS summit held in Johannesburg in August 2023.
• The BRICS economies clearly complement Turkey’s.

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