MacroEconomic Bulletin- Economic highlights of March 2024

Eurozone Economic Update: The purchasing managers' index (PMI) for the Eurozone, which gives us early insight into economic health, indicated stability in February with a score of 50 (returning – just - to expansion territory). This stability comes from a better services sector performance. Although overall business activity shrank for the ninth month in a row, this decline is the smallest since mid-2023, suggesting a slow improvement. Notably, Ireland and Spain experienced growth, with scores of 54.4 and 53.9, respectively. In contrast, France and Germany, the Eurozone's biggest economies, saw their business activities continue to shrink, with France showing some relative improvement at 48.1, but Germany's decline worsening to 46.3.

United States Inflation Rate: Headline inflation rose slightly to 3.2% year-over-year in February, up from 3.1% in January. This rise presents a challenge for the Federal Reserve in its efforts to control inflation. However, the core inflation rate, which excludes the more volatile food and energy prices, decreased slightly from 3.9% to 3.8%. This is the lowest rate since May 2021. The Federal Reserve decided at its 20 March meeting to keep interest rates steady at between 5.25% and 5.50%.

UK Economic Growth: The economy contracted by 0.3% annually as of January, showing the impact of high interest rates and the cost-of-living crisis. However, there's a positive twist with 0.2% growth in January on a monthly basis, primarily due to the services sector's expansion. This indicates an end to the economic decline seen in the second half of 2023 and suggests the UK might be moving out of recession. The Bank of England’s MPC also maintained interest rates at 5.25% at its 21 March meeting.

Spain's Inflation and GDP Growth Outlook: The inflation rate slowed in February to 2.8% year-over-year, with food and electricity prices being major contributors to this decrease. Core inflation also dropped slightly to 3.5%. We now expect the Spanish economy to grow by 1.9% in 2024, up from our previous forecast of 1.7%, thanks to strong performance in the fourth quarter of 2023 and better investment conditions. The growth forecast for 2025 remains at 2%.

France and Germany Inflation Updates: In France, inflation eased to 3.0% in February, the lowest rate since January 2022, with a notable slowdown in food price increases. Germany's inflation rate fell to 2.5% in February, marking the lowest rate since June 2021, with both energy and food prices showing signs of easing.

Portugal Inflation Rate: Portugal saw a slight decrease in its inflation rate to 2.1% in February, from 2.3% in January. The figures showed an increase in energy prices and a decrease in unprocessed food prices, with core inflation also dropping to 2.1%.

ESG: Last Saturday, 23 March, we celebrated Earth Hour, a global initiative to raise awareness of the importance of reducing CO2 emissions. In this sense, The World Meteorological Organization issued a red alert on climate change, emphasizing the hottest decade on record with unprecedented high temperatures, sea levels, and hunger levels. The 2023 report noted the year as the warmest, with global temperatures 1.45°C above pre-industrial levels due to increased greenhouse gas emissions. The organization warns that 2024 might surpass this record, nearing the Paris Agreement's 1.5°C limit. Additionally, the World Bank's "Women, Business, and the Law" report exposed a wider gender gap in the workplace, showing women have less than two-thirds (64%) of the rights men do, emphasizing issues like safety from violence and childcare access. Despite some countries adopting laws for equal opportunities, the effective implementation of these laws is lacking, with countries establishing less than 40% of the needed systems for full application, highlighting significant challenges in gender equality.