London: The UK & Japan both fell into recession at the end of 2023, marked by two consecutive quarters of contraction. While the euro area is expected to avoid downturn, the European Commission still sees the bloc growing slower than initially forecast this year.
In Australia, the unemployment rate climbed to the highest level in two years, consistent with expectations for its economy to soften. Meantime, US consumer prices jumped at the start of the year, though economists said that inflation is still broadly on a downward trend.
Europe
The UK slipped into a mild recession in the second half of 2023, showing Prime Minister Rishi Sunak has so far failed to meet his pledge to grow the economy. While the economy still grew 0.1 per cent across the year as a whole, it was the slowest annual expansion the UK had seen since 2009, excluding the first year of the pandemic.
The euro-area economy is entering 2024 on a weaker footing than previously expected, according to new European Union forecasts that anticipate another year of subdued growth. GDP in the currency bloc will accelerate only slightly to 0.8 per cent this year after 0.5 per cent in 2023, the European Commission said. Manufacturing output in Europe’s biggest economy has been trending downward since 2017, and the decline is accelerating as competitiveness erodes.
The energy crisis in the summer of 2022 was a major catalyst. While worst-case scenarios like freezing homes and rationing were avoided, prices remain higher than in other economies, which adds to costs from higher wages and regulatory complexity, Bloomberg reported.
Asia
Japan’s economy unexpectedly slipped into recession after shrinking for a second quarter due to anemic domestic demand, prompting some central bank watchers to push back bets on when the nation’s negative interest rate policy will end. Households and businesses cut spending for a third straight quarter as Japan’s economy slipped to fourth-largest in the world in dollar terms last year. The weaker-than-expected result will complicate the Bank of Japan’s case to conduct the first rate hike in Japan since 2007. Australian unemployment climbed to a two-year high at the start of the year, highlighting the nation’s cooling labor market and bringing forward bets on an interest-rate cut.
US
Consumer prices jumped at the start of the year, stalling recent disinflation progress and likely delaying any Federal Reserve interest-rate cuts. Prices of food, car insurance and medical care advanced, while shelter costs contributed to more than two-thirds of the overall increase.