Global Economic Outlook

As the war in Ukraine drags on, the human cost of this tragedy gets ever higher. At the same time, increased commodity prices and the effects of sanctions are causing additional pain to the global economy. The global composite PMI index continued its downward trend since early 2021 in May and, excluding China, edged down further in June. However, an increase in activity in China raised the overall index to a four-month high of 53.5 in June, signalling continued, but subdued, output growth, with optimism about the year-ahead outlook for growth dropping to a 21-month low. The PMI index indicated that, after two months of falling activity, global manufacturing industry returned to growth in June and service sector business activity was at a four-month high. In China, as the disruptions to economic life in several localities eased with lower numbers of Covid-19 cases and fewer lockdowns, the manufacturing PMI increased from 48.1 in May to 51.7 in June showing a rebound in activity. The services business activity index showed a more marked improvement, rising from a low of 41.4 in May to return to expansion at 54.5 in June. The revival of activity in China remains fragile and still reflect the continuing incidence of the pandemic with recent lockdowns having resulted in difficulties for shipping items due to the reduction in port traffic which has contributed to the continued supply difficulties and influenced the rise in inflation.