In its July 2024 World Economic Outlook (WEO) Update: The Global Economy in a Sticky Spot, the International Monetary Fund (IMF) has stuck with its global growth estimates as forecast in April’s WEO: Steady but Slow: Resilience Amid Divergence, with GDP predicted to gain 3.2% in 2024 and 3.3% in 2025. Activity varied across economies at the beginning of 2024, with many countries experiencing higher growth than had been expected, owing in part to increased world trade, attributable to strong technology exports from Asia. Domestic consumption ramped up in China, and the services sector improved in Europe. In contrast, curbed consumption and negative net trade slowed US growth, which had been outperforming expectations. In Japan, a New Year’s Day earthquake caused a short period of supply disruption and the shutdown of automobile production.
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Disinflation has slowed worldwide, with the price of services reflecting higher-than-average inflation. In some countries, nominal wage growth has exceeded inflation. In the US, sequential inflation rose in Q1, while the central banks of many emerging market economies have been conservative about cutting rates to avoid the risks from changes in interest rate differentials and depreciation of their currencies relative to the US dollar.
The IMF expects nonfuel commodity prices to rise 5% and energy commodity prices to drop a similar amount in 2024. Across advanced economies, growth is predicted to converge, slowing down in the US and increasing in much of the euro area—a result of gains in momentum in services, higher net imports, and real wage growth leading to increased consumption. However, as manufacturing remains weak, Germany’s recovery will occur at a slower pace. One possible indication of a growth slowdown in the US is the Bureau of Labor Statistics’ report that the unemployment rate rose 0.2 percentage points in July to 4.3%.
Although increased wages will prompt higher consumption in Japan, these gains will be offset by weak private investment and the supply disruptions early in the year. Increased activity in Asia, and especially in China and India, is projected to fuel higher growth in emerging market and developing economies, with rises in private consumption in both countries and strong Chinese exports.
In addition, the IMF anticipates recovery in world trade growth of about 3.25% annually in 2024–2025 and for global inflation to keep falling. Some threats to the outlook include the exacerbation of trade tensions, persistent appreciation of the US dollar, and policy changes in the wake of elections.
The analytical instruments industry has largely experienced declines so far this year, particularly in life sciences (compared with higher revenues resulting from the COVID-19 pandemic). Inflation continues to be a consideration in laboratories’ budgets, likely limiting their ability to purchase instruments. In fact, in a recent survey, TDA learned that the top negative factor economic factor among respondents was customer budget constraints, followed by recession concerns, and pricing/inflation. However, other signs are more promising, suggesting the possibility of some improvement. For example, the general outlook for the pharmaceutical industry is positive, and the American Chemical Council, in its June mid-year outlook has predicted chemical output to grow 2.2% this year.
The TDA Growth Index for Q2 shows positive mid-single-digit growth in both lab and process analytical instruments, with life science flat. Prior to the pandemic, industry growth typically reflected general economic dynamics, albeit with a lag of about six months. A return to this pattern would suggest that, despite some continuing ups and downs in various industrial and regional markets, some bright spots lie ahead toward year end.
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