Global Economics Intelligence executive summary, February 2024

| Article

Consumers remain upbeat as retail sales in the main economies show steady growth, despite elevated prices (Exhibit 1). Growing sentiment in the US saw the Consumer Confidence Index (Conference Board) rise to 114.8 in January, up from a revised 108.0 in December. By contrast, consumer confidence in Brazil dropped to its lowest level since May 2023 but is still 5.0 points higher than in January 2023.

US retail and food service sales decreased to $700.3 billion in January, a 0.8% decline from December’s $706.2 billion. Automobile sales in India (which are a proxy for consumer sales) grew by 37.3% to 393,074 units (286,390 in December). Passenger vehicles saw their highest-ever sales in January, posting a growth of around 14% compared with the previous year. Meanwhile, official news from China was that consumption during the 2024 Spring Festival holiday underwent a notable increase.

Consumers remain upbeat as retail sales in main economies have experienced steady growth, despite elevated prices.

Inflation’s downward trend is stalling in some advanced economies but continues in the eurozone. The US Consumer Price Index was up 0.3% in January on a seasonally adjusted basis after rising 0.2% in December. Core inflation remained unchanged at 3.9% (annualized) in January. The UK’s Consumer Price Index was also unchanged at 4% in January 2024. Similarly, core inflation was steady at 5.1%; however, services inflation rose from 6.4% to 6.5%. Meanwhile, in the eurozone, headline inflation fell slightly to 2.8% year-over-year in January (down from December’s 2.9%), while core inflation remained elevated at 3.3% but also declined (3.4% in December); producer-price inflation was down –7.3% in December (–6.5% in November).

The situation across emerging economies is more varied: at one extreme, China seeks to tackle deflation; at the other, Russia is battling accelerating inflation, with consumer prices rising in December 2023 and January 2024 by 7.4% year-over-year. In China, consumer prices deflated by –0.8% in January (–0.3% in December), dragged down by declining food prices (–5.9%). Producer prices deflated at –2.5% (−2.7% in December). It’s a more benign situation elsewhere: in India, headline inflation moderated slightly to 5.1% in January from 5.7% in December, while Brazil saw inflation fall for the fourth consecutive month, down to 4.51% (4.62% in December).

February commentary from the International Monetary Fund (IMF) warns that, with China’s real estate downturn now in its third year, housing starts have fallen more than 60% relative to prepandemic levels.1  The pace of decline has unfolded at a “historically rapid pace” seen only in the largest housing busts across countries over the last three decades, according to the IMF. Homebuyers are wary that future prices will decline and that developers lack sufficient funds to complete projects. At the same time, the country’s housing market faces further pressure as demographic change unfolds and urbanization slows. The IMF indicates that housing investment is poised to fall further and will likely remain subdued. Its analysis shows that real estate investment could fall 30–60% below its 2022 level over the medium term, rebounding only very gradually.

Most commodity prices are continuing to ease, though they are at high levels compared with the prepandemic era. Gold appreciated steadily in February, while energy prices continue to rebound.

Expectations regarding inflation have been in the 2.0–2.5% range for a year (Exhibit 2).

Central banks continue to garner the confidence of market participants as inflation expectations stabilize within the range of 2.0 to 2.5 percent.

Interest rates were again held across the developed economies and also in India. However, Brazil’s Monetary Policy Committee (Copom) decided to reduce the Selic rate by 0.50 percentage points (for a fifth time), cutting the rate from 11.75% to 11.25% per annum.

In terms of growth, Europe continues to be lackluster, while Russia presents a surprising picture. GDP in the eurozone was stagnant in the final quarter of 2023, up marginally (by 0.1%) on both the previous quarter and the prior-year period, according to Eurostat flash estimates. This brings growth for 2023 as a whole to 0.6%. However, the situation varies both by country and industry: manufacturing-intensive Germany, which was in recession in 2023, is performing worse than countries with a greater focus on services, such as Spain, which grew 2.5% in 2023. The UK entered a technical recession: UK quarterly GDP is estimated to have been down by –0.3% in the fourth quarter of 2023. Across 2023, GDP is estimated to have risen by 0.1% compared with 2022. By contrast, preliminary data for Russia shows a surprisingly robust GDP growth of 3.6% in 2023, somewhat higher than forecasters had expected, though there is significant inconsistency among sources. Recent forecasts see Russia’s GDP growth slowing in 2024. The February forecast from the Central Bank of the Russian Federation expects GDP to grow 1.0–2.0%; the IMF anticipates 2.6% and the OECD 1.8%.

Manufacturing and services continue their divergent paths, with manufacturing muted in many surveyed economies, while services are seeing a resurgence. Among surveyed economies, manufacturing is most buoyant in India, Brazil, and the US, while services sentiment is most positive in India, the UK, Brazil, and the US.

India’s purchasing managers’ index (PMI) for manufacturing stood at a four-month high of 56.5 in January 2024, up from 54.9 in December, supported by new orders and output. Brazil’s manufacturing PMI climbed past the neutral 50.0 mark for the first time since August 2023 to reach 52.8 in January (48.4 in December). In the US, January’s manufacturing PMI was revised higher to 50.7, from a preliminary of 50.3 (47.9 in December). It was a less positive picture elsewhere: China’s PMI for manufacturing rose slightly in January 2024 but remained in the contraction zone at 49.2 (49.0 in December); the UK’s seasonally adjusted manufacturing PMI edged up to post 47.0 in January (up from 46.2 in December), while the eurozone manufacturing PMI fell further to 46.1 (from 46.6).

Services PMIs are recording much more positive numbers, with India again leading the way. In India, where services account for more than 50% of GDP, the services PMI continued its upward trend to reach 61.8 (revised upward), a six-month high. Sentiment in the UK services sector was also buoyant, with the PMI registering 54.3 in January, up from 53.4 in December. Brazil’s services PMI climbed to 53.1 in January (up from 50.5 in December), while the US services PMI rose to 52.5. The eurozone also saw a glimmer of improvement as the services PMI touched the neutral 50 mark (up from 48.4)—a seven-month high. Similarly, China’s official services PMI rose to reach the expansion zone, hitting 50.1 in January (49.3 in December).

Across most surveyed economies, unemployment was steady or trending downward. In the US, January’s unemployment rate was unchanged at 3.7%, with total nonfarm payroll employment rising by 353,000 net new jobs. The UK saw the unemployment rate for the fourth quarter of 2023 decline to 3.8%, returning to the year-ago rate. India’s unemployment rate fell to a 16-month low of 6.8% in January (from 8.7% in December), and Brazil saw the three-month moving average unemployment rate decline slightly to 7.4% in December (7.5% in November)—its lowest level since 2015. Meanwhile, China’s surveyed urban employment rate was steady at 5.2% in January (5.1% in December). The youth unemployment rate fell slightly to 14.6% in January (14.9% in December).

The US and India were the top performers on the equity markets, while Europe’s STOXX 600 also hit an all-time high on February 23, following positive earnings reports. In January, the S&P 500 climbed 1.6%, bringing its one-year return to 18.9%; the Dow Jones rose by 1.2% for the month and was up 11.9% in 2023. India’s stock markets continued to trend up, with both the Nifty and Sensex adding some 2–3% in value over the previous month. The Nifty had risen 2.6% and the Sensex 1.9% as of February 26 (compared with January 22, 2024). By contrast, Brazil’s Bovespa equities index fell in January, losing 2.2% in value.

Various factors are having a dampening effect on global trade, with concerns about ongoing conflicts in Europe and the Middle East and the reemergence of supply chain disruption. However, world trade volume increased by 1.0% in December, with increases across all flows and economies. For 2023 as a whole, China’s trade growth slowed: exports were down –4.6% (+6.9% in 2022), and imports were down –5.5% (+1.0% in 2022). For different reasons, Russia’s exports declined significantly in 2023—due to the country’s international economic isolation and the effect of sanctions. Exports represented just 23% of GDP last year, the lowest share on record. In the US, December’s exports reached $258.2 billion, $3.9 billion up on November, while imports were also up at $320.4 billion ($4.2 billion more than November)—consequently, the total deficit increased to $62.2 billion, up 0.5%. India’s merchandise exports reached US $36.9 billion in January 2024, registering a 3.1% year-over-year growth. Merchandise imports also expanded, after contracting for the past two months, to register US $54.4 billion, with year-over-year growth of 3.1%. The merchandise trade deficit narrowed to a nine-month low of US $17.5 billion in January 2024. Brazil posted a surplus of US $6.5 billion in January, with exports totaling US $27.0 billion (US $28.8 billion in December) and imports reaching US $20.5 billion (US $19.5 billion in December).

McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the world economy. Each monthly release includes an executive summary on global critical trends and risks, as well as focused insights on the latest national and regional developments. View the full report for February 2024 here. Detailed visualized data for the global economy, with focused reports on selected individual economies, are also provided as PDF downloads on The reports are available free to email subscribers and through the McKinsey Insights app. To add a name to our subscriber list, click here. GEI is a joint project of McKinsey’s Strategy & Corporate Finance Practice and the McKinsey Global Institute.

Explore a career with us