Putnam Investments | The Macro Reportmarket
Putnam Global GDP Nowcast | May 2023

The Putnam Global GDP Nowcast index is a proprietary GDP-weighted quantitative model that tracks key growth factors across 25 economies. This index and individual country indexes are used as key signals in Putnam's interest-rate and foreign-exchange strategies.

China and euro area offer bright spots

SHORT-TERM TREND

Global growth remained steady in April, with some areas doing better than expected.

▲2.32%

The U.S. GDP report for Q1 was below market expectations, but the details showed strength, as personal consumption of goods and services increased over the previous quarter. In Europe, the euro area avoided a recession, as growth turned positive in Q1 after a negative Q4 2022. Italy, Spain, and France showed relative strength, while the German economy has been saddled by the energy transition and manufacturing weakness. U.K. activity remained flat. Japan continued to be driven by modest growth in services.

China's economy grew by 4.5% year over year in Q1. Domestic activity that had been constrained by zero-Covid policies, particularly services and retail sales, rose strongly. The property sector continued to show signs of improvement.

Oil prices started April strongly following the OPEC+ cut to production, but prices gradually gave back most of the gains as the physical markets remained in surplus. Oil demand has been holding up and rising in some regions, but supply has been surprising to the upside. Inventories have been increasing, pressuring prices down.

LONG-TERM CYCLE

This six-year illustration shows stable GDP up until the collapse from the coronavirus pandemic.

Feb '20–April '20

The Covid-19 pandemic causes a global economic downturn.

May '20–Dec '21

Global growth starts to surge and stays at elevated levels as life continues to normalize.

Jan '22–present

Central bank tightening, inflation, and Russia-Ukraine War increase volatility and uncertainty.

Source: Putnam. Data as of April 30, 2023. We base our Global GDP Nowcast on a tailored methodology that captures daily data releases for the most essential growth characteristics for each of 25 countries — including purchasing managers' index data, industrial production, retail sales data, labor market metrics, real estate price indexes, sentiment indicators, and numerous other factors. The mix of factors used for each market may change over time as new indicators become available from data sources or if certain factors become more, or less, predictive of economic growth.

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