Global economic indicators: European cities expected to outperform in 2024
Discover key economic and financial metrics, and what to look out for in the week ahead.
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Here we look at the leading indicators commodities, trade, equities and more. in the world of economics. Download the dashboard for in-depth analysis into commodities, trade, equities and more.
Inflation set to moderate
Tomorrow’s inflation data for the UK should point to a faster contraction compared to the previous few months due to the decline in global agricultural commodity and energy prices.
The cost of UK natural gas has also moderated back to its normal trading range, with futures reaching the lowest level since June 2021, currently at 68p per therm, down from a peak of 640p in August 2022. Additionally, last year’s rapid rise in energy costs, which saw a 54% increase in the energy price cap for gas and electricity tariffs, will fall out of the data in April.
Meanwhile, the recent slowing of agricultural commodity and food producer output prices is expected to ease pressures on food inflation from its 46-year high of 19.1% in March. As a result, economists expect inflation to be less pronounced in April, with the Bank of England forecasting a drop of 2 percentage points to 8.4%, while consensus forecasts place inflation at 8.2%. Either way, this remains elevated compared to the 2.0% inflation target, which the BoE projects will be reached in 2025.
Cities to outperform
European cities are expected to outperform in 2024, with many growing at a faster rate than their national economy.
In 2024, 72% of the 100 major cities in Europe are forecast to outpace their national average GDP growth, according to Oxford Economics. This is up from an anticipated 47% in 2023. 11 out of the 12 major cities in the UK are projected to outpace the 0.97% forecast UK GDP growth in 2024.
Meanwhile, 70% of the major cities in France and 53% in Germany are forecast to outperform their national growth projections next year. In particular, Amsterdam, Berlin, Dublin, London, Madrid, Manchester and Munich are all expected to exceed GDP growth in Europe and the OECD.
In these European locations, office occupancy rates are rising at a quicker pace than in the US. This is likely to continue, as our latest global Corporate Real Estate Sentiment Index, saw sentiment towards the future of the office lift by 0.46 points in Q1 2023, which may translate to a rise in office take-up.
Th geopolitics of everything
Recent news cycles have outlined the increased politicisation of everything from climate change, to AI, to economics, and, well, politics. Later this week we will be able to asses the extent of the impact of this on global trade, with the CPB’s World Trade Monitor data due on Thursday.
The wider implications for commercial real estate are many – from the need to restructure supply chains towards friendly countries, to a stronger case for overseas investment as economies diverge.
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