Global Economic Overview: Europe and China at a Crossroads

Global Economic Overview: Europe and China at a Crossroads

Today's data from the world's second-largest economy, China, and the eurozone, often regarded as the third-largest global economy if it were a single state, have been disappointing. December's PMI figures from Europe and new statistics from China have fallen short of optimistic expectations. Of particular concern is that the economic situation in France is even weaker than in Germany.

Europe: PMI Highlights Persistent Industrial Challenges

In Europe, the industrial sector continues its decline, which historically has been a key export driver.

• Eurozone:

  • Industry: 45.2 (unchanged from the previous month but below expectations of 45.4).

  • Services: 51.4 (above expectations of 49.5 but stagnant from November).

  • Composite Index: 49.5 (above expectations of 48.2 but still below the growth threshold).

• Germany:

  • Industry: 42.5 (down from expectations of 43.0 and the previous 43.1).

  • Services: 51.0 (slightly above expectations of 49.3).

  • Composite Index: 47.8 (slightly above expectations of 47.5).

• France:

  • Industry: 41.9 (significant drop from expectations of 43.0).

  • Services: 48.2 (above expectations of 46.9 but unchanged from November).

  • Composite Index: 46.7 (slightly above expectations of 46.0).

• United Kingdom:

  • Industry: 47.3 (below expectations of 48.5).

  • Services: 51.4 (slightly above expectations of 51.2).

  • Composite Index: 50.5 (in line with expectations).

Germany and France, the eurozone's two largest economies, raise particular concerns. For Poland, where industry remains a significant economic driver, this could spell trouble for workers in industrial zones. European companies such as steelmakers, suppliers like Valeo, and the German automotive sector face challenges in this environment.

China: Declining Consumption and Ineffective Stimulus Measures

November data from China indicates a continued slowdown:

• Retail Sales: Annual growth of 3%, below expectations of 5%.

• Unemployment: 5%, in line with forecasts.

• Property Prices: A decline of -5.7% year-on-year (after a -5.9% drop in October).

• Investments: Annual growth of 3.3%, slightly below expectations of 3.5%.

• Industrial Production: Annual growth of 5.4%, in line with forecasts.

The Hang Seng index experienced strain following disappointing retail sales data. The Chinese government has announced further monetary policy easing, although the effectiveness of these measures remains questionable.

Global Implications

ECB President Christine Lagarde confirmed continued rate cuts as the inflation target comes closer to being achieved. In contrast, Poland faces an extended period of high interest rates.

Additionally, German Chancellor Olaf Scholz has called for increased investment in Europe, while China's central bank has pledged closer financial ties with the US and Europe. However, global trade tensions still impact supply chains and port operations.

The Polish economy faces significant challenges in this uncertain global environment. Progress will depend on the policy decisions and strategies adopted by the major economies.