Global Economics Intelligence executive summary, November 2023

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During October, overall consumer confidence declined, primarily due to elevated interest rates. In the US, the Consumer Confidence Index (from The Conference Board) declined moderately in October to 102.6, down from an upwardly revised 104.3 in September. Negative retail sales figures for the eurozone suggest consumer spending likely contracted in the third quarter and imply a weak quarter for consumers in the fourth quarter, as well. Similarly, consumer confidence in Brazil dropped to 93.2 in October, from 97.0 in September, decreasing for the first time in six months to the lowest level since June of this year (Exhibit 1).

In October, overall consumer confidence declined, primarily because of elevated interest rates.

Inflation is increasingly declining in developed economies—but for how long? In the US, the consumer price index (CPI) rose 3.2% (annualized) in October (3.7% in September), with core inflation (which strips out food and energy prices) coming in at 4.0% (annualized), down from 4.1% in September. Headline inflation in the eurozone eased to 2.9% in October, the lowest rate in more than two years and down from 4.3% in September, primarily driven by a deflationary trend in energy and food but with core inflation also declining across goods and services. UK prices have been slower to come down, with UK CPI inflation falling substantially to 4.6% in October (6.7% in September) and core inflation (excluding the price of energy, food, alcohol, and tobacco) dropping to 5.7% from 6.1% in September (Exhibit 2).

Consumer inflation continued to decline in October after a high inflationary period.

It is a more diverse picture across the emerging economies. On the one hand, China continues to experience deflation, with consumer prices down –0.2% in October—largely due to a –4.0% fall in food prices—and with core CPI standing at 0.6%; meanwhile, producer prices deflated at –2.6%. On the other hand, in Russia, consumer prices were up by 6% year over year in September, with monthly rises reaching their highest level since the peak of spring 2022. In Brazil, inflation decreased for the first time since June, coming in at 4.82% (5.19% in September) and moving toward the 3.25% target.

October saw no interest rate changes across the monitored developed economies (the US, the eurozone, and the UK) nor in India, while the situation is less homogeneous across other developing economies. On November 1, Brazil’s central bank cut the Selic rate by 50 basis points from 12.75% to 12.25%—marking a third consecutive interest rate reduction. By contrast, the Central Bank of the Russian Federation raised its key rates to 15% in October.

In terms of growth, the eurozone economy continues to be subdued, contracting –0.1% quarter on quarter in the third quarter but showing a varied picture among its four largest economies: Germany was the only one to contract, while Italy’s GDP was flat, and Spain and France’s economies expanded, helped by a rebound in private consumption. Forward-looking indicators for November offer a glimmer of hope that the economic situation will start improving over the coming months, but any meaningful recovery would require a substantial improvement in Germany, Europe’s largest economy. The picture is hardly better in the UK, with the Bank of England anticipating GDP growth to remain modest over the medium term at 0.6% in the fourth quarter of 2023 and 0% in the fourth quarter 2024.

The situation is more diverse across the developing economies, with China continuing to grow, albeit at a less exuberant pace than in recent years: industrial output growth was stable at 4.6% year over year in October (4.5% in September). Even more positively, the Reserve Bank of India (RBI) projects GDP to be at 6% in the October–December quarter of 2023. Russia’s economy continues to deliver stable economic performance for now, supported by government expansion of defense and social spending. How long this can be maintained in the face of resurgent inflation, weaker growth prospects, a tight labor market, and a more fragile ruble remains to be seen.

In Europe, manufacturing and services are under pressure. In the eurozone, October’s composite purchasing managers’ index (PMI) registered 46.5, with most of the largest economies—except Spain—firmly below the neutral 50.0 mark. It’s a similar picture in the UK: the manufacturing PMI crept up to 44.8 in October but has now remained below the neutral 50.0 mark for 15 successive months. The services PMI also rose fractionally to 49.5 but was also below the 50.0 neutral value. Overall, the UK PMI Composite Output Index increased slightly to 48.6 in October.

Elsewhere, services remain more buoyant than manufacturing. In the US, the manufacturing PMI edged up to the neutral 50.0 mark (49.8 in September), while the services PMI rose to 50.6. India saw an unexpected decline in the manufacturing PMI, from 57.5 in September to 55.5 in October; the services PMI followed a similar trend, dropping to 58.4 in October from 61.0 in the previous month—but both were well in expansion territory. China’s official PMI for manufacturing fell to 49.5 in October, as did the Caixin manufacturing PMI. The official services PMI reported a softer reading of 50.1 in October, as the Caixin services PMI inched up to 50.4. Similarly, Brazil’s manufacturing PMI decreased slightly to 48.6 in October, in contrast to the services PMI, which rose to 51.0. Overall, Brazil’s composite PMI was up from 49.0 in September to 50.3 in October, marking the sixth time the index has been in expansion territory over the past eight months.

Unemployment edged up in the US to reach 3.9%, slightly higher than September’s 3.8% (3.5% in January 2020). In the UK, the unemployment rate for the third quarter of 2023 was largely unchanged on the quarter at 4.2%; however, the estimated number of vacancies in August–October 2023 was 957,000, a decrease of 58,000 on the quarter, with vacancies falling in 16 of 18 industry sectors. In China, the surveyed urban unemployment rate remained unchanged at 5.0% in October, while Brazil’s three-month moving average unemployment rate slightly declined to 7.7% in September (7.8% in August), its lowest since 2015.

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Equity markets have been showing mixed performance in November after widespread declines in October. In the US, S&P 500 and Dow Jones October returns were down to 9.23% (11.9% in September) and –0.9% (1.1% in September), respectively. However, Brazil’s Bovespa equities index rose in October, adding 2.0% in value.

September saw exports rise across all monitored economies, while imports dropped across most economies but increased in Brazil. In the US, September exports rose to $261.1 billion, $5.7 billion more than in August; September imports were $322.7 billion, $8.6 billion up from August. The total deficit increased by 4.9% to $61.5 billion. Exports growth in China was flat in October, down –6.4% (versus –6.2% in September), while imports rebounded from the previous month’s contraction, growing by 3.0% in October (–6.2% in September).

In September, the Container Throughput Index was up slightly at 128.0 points (124.0 points, revised, in August). However, the increase was focused on China, while European ports experienced another decline.

Asia, long considered a regional powerhouse of the global economy, is on the cusp of a new era, according to a new McKinsey Global Institute (MGI) report. The report suggests that, while Asia’s economies were the great beneficiaries of a globalizing world over the past 30 years, they will also likely define a new economic era even as they experience heightened versions of global challenges.

Researching five domains—world order, technology platforms, demographic forces, resource and energy systems, and capitalization—MGI poses a number of critical questions:

  • World order. As the world’s trade reaches a crossroads, how will Asia find a way to maintain the benefits of trade amid growing geopolitical tension?
  • Technology platforms. As tech’s value shifts beyond manufacturing, how can Asia reinvent itself as a technology creator, versus being largely a technology manufacturer and consumer, in a world in which crucial frontier technologies are more contestable?
  • Demographic forces. Can Asia deal with the demographic challenges of rapidly aging populations in its highest-productivity economies (on the Pacific Rim) by shifting its value chains and boosting productivity everywhere?
  • Resource and energy systems. With surging energy demands arising from being the world’s industrial base, how can Asia meet its substantial net-zero transition obligations and navigate the dual challenges of securing its rapidly growing energy needs while reducing the world’s largest sources of carbon emissions?
  • Capitalization. Will Asia be able to mobilize enough capital to power growth and deepen its financial markets to improve capital allocation while bolstering resilience amid balance sheet stress?

Exploring the views of Asia’s business community in response to these and other questions, the report found that 82% of respondents expressed optimism about a new era for Asia, which will be materially different from the past three decades. At the same time, business leaders are preparing to rethink their strategies, with some 16% of companies needing to renew strategy related to one or two of the above domains but with the vast majority (74% of companies) judging it necessary to drive fundamental transformations across three or more domains. Only 10% of companies anticipate taking a business-as-usual approach.

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 November 2023 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.

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