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In our Market Insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
China sets ambitious economic targets for 2024
China has set an ambitious growth target of around 5% for this year, as it outlined a series of measures aimed at boosting its flagging economy.
Amidst China's efforts to reignite its once-thriving economy, various initiatives have been introduced to address the nation's sluggish recovery from the pandemic.
These initiatives include targeted measures to tackle issues in the crisis-hit property sector, with plans to create 12 million urban jobs. Premier Li also announced plans to bolster regulation in financial markets and to intensify research in emerging technologies such as artificial intelligence (AI) and life sciences.
In addition to economic stimulation efforts, there will be a 7.2% increase in defence spending this year. Beijing's defence budget, closely monitored by neighbouring countries and the US, reflects concerns about its intentions, especially amidst heightened tensions regarding Taiwan.
For decades, China experienced remarkable economic growth, with official figures indicating an average annual gross domestic product (GDP) growth rate of nearly 10%.
However, China faces challenges, particularly in its housing market, which the International Monetary Fund (IMF) estimates constitutes about 20% of the economy.
Unlike many other major economies grappling with surging prices post-pandemic, China has encountered a different issue – persistent deflation.
Consumer prices in China saw their sharpest decline in almost 15 years in January, marking the fourth consecutive month of decrease.
This decline is reminiscent of the global financial crisis's aftermath in September 2009. All of these problems have now added up to mean China is lacking something vital to a strong economy, consumer confidence. And authorities have been scrambling to reassure investors and consumers as they look to make substantial economic improvements in the coming period.
India’s economy surpasses economic expectations with 8.4% growth
India has retained its title of the world's fastest growing major economy as it expanded 8.4% in the last three months of 2023.
India is poised to surpass Japan and Germany to become the world's third-largest economy in the coming years, according to forecasts. The country's robust growth, surpassing expectations, was primarily driven by a notable performance in the manufacturing sector, which expanded by 11.6% during the period under review.
Private consumption, a significant contributor to India's gross domestic product (GDP) at nearly two-thirds, also saw a rise of 3.5%. However, consumer spending was hindered last year due to high prices of essential foods like onions, prompting the government to implement various measures to curb food price inflation.
In recent years, Prime Minister Modi's administration has increased government spending on infrastructure and introduced incentives to bolster the manufacturing of items such as phones, electronics, drones, and semiconductors, aiming to enhance India's competitiveness in the global market. Recently, the government approved the construction of three semiconductor plants valued at 1.26 trillion rupees ($15.2 billion; £12 billion) by companies including Indian conglomerate Tata.
Nevertheless, the agricultural sector, which accounts for about 15% of India's $3.7 trillion (£2.93 trillion) economy, faced challenges due to weak monsoon rains. Some farmers have staged protests, demanding minimum crop prices.
The International Monetary Fund (IMF) anticipates India's economy to expand by 6.5% in 2024, compared to China's projected growth of 4.6%.
Turkish annual inflation soars to 67% in February
In February, Turkey witnessed a significant surge in annual consumer price inflation, reaching 67.07%, as reported by the Turkish Statistical Institute on Monday, surpassing market expectations.
Analysts surveyed by Reuters had predicted a climb to 65.7% for the same period. Among various sectors, the combined segment of hotels, cafes, and restaurants experienced the highest annual inflation increase at 94.78%, followed by education at 91.84%.
Health and transportation sectors also witnessed considerable inflation rates, standing at 81.25% and 77.98%, respectively.
Food and non-alcoholic beverage prices surged by 71.12% year-on-year in February, with an unexpectedly large monthly increase of 8.25%. The monthly inflation rate from January to February was recorded at 4.53%.
These robust inflation figures have raised concerns about the Turkish central bank's stance, particularly after signalling the end of its eight-month-long rate-hiking cycle last month. Some analysts now anticipate a return to tightening measures.
Despite expectations of a decline in inflation to around 35% by year-end, persistently high inflation is attributed to Turkey's severely weakened currency, the lira, which has plummeted to a record low against the dollar.
As of Monday noon local time, the lira was trading at 31.43 against the greenback, marking a staggering 40% depreciation over the past year and an alarming 82.6% decline over the last five years.
