- The US economy experienced a slight slowdown in Q3 2024, with GDP growth at 2.8% QoQ (down from 3.0% in Q2), driven by robust consumer and government spending despite declining private investment and higher import growth. Manufacturing remained in contraction with the PMI at 48.5 in October, as industrial production and durable goods orders continued to face negative growth. Inflation rose to 2.6% YoY in October due to energy price hikes, rising housing costs, and supply chain disruptions affecting vehicle prices. The Federal Reserve implemented a 25-bps rate cut in November to support economic growth and employment, while Donald Trump’s re-election as President is expected to focus on protectionist policies and deregulation, potentially impacting trade relations and global markets
- The Eurozone’s GDP grew by 0.9% YoY in Q3 2024, surpassing expectations, with strong contributions from the Netherlands and Austria, though household consumption showed minimal growth amid economic uncertainties. Inflation eased to 1.7% in September, down from 2.2% in August, driven by a 6.0% drop in energy prices, while core inflation declined slightly to 2.7%, allowing room for ECB’s accommodative policies. The Manufacturing PMI rose to 45.9 in October, indicating a slower contraction, while the Composite PMI remained stagnant at 50.0, highlighting persistent challenges in Germany and France despite a modest improvement in manufacturing. The ECB cut its deposit facility rate by 25 bps to 3.25% in October, its third cut this year, as inflation pressures eased, though elevated services inflation complicates its efforts to balance economic growth and price stability.
- China’s economy grew by 4.6% YoY in Q3 2024, slightly down from 4.7% in Q2, with strong retail sales (+4.8% in October) and steady industrial production (+5.3%) offset by a struggling property market, where home prices fell 0.5% MoM and 5.9% YoY. Inflation remained subdued in October, with CPI at 0.3% YoY and PPI contracting by 1.3% YoY, reflecting weak demand and pricing challenges. Manufacturing PMI improved to 50.1 in October, signaling slight expansion after six months of contraction, driven by domestic demand, while export orders stayed weak. Government measures, including rate cuts and infrastructure spending, are stabilizing activity but face uncertainty in sustaining recovery amid structural challenges.
- Indonesia’s economy grew by 4.95% YoY in Q3 2024, driven by strong performances in services and construction sectors, with Java contributing 56.84% of GDP. Inflation remained low at 1.71% YoY in October, supported by stable food and energy prices, while Bank Indonesia held the BI Rate at 6.00% to balance inflation control and economic growth. External debt reached $427.8 billion (31.1% of GDP), with government borrowing focused on long-term financing for key sectors. The State Budget showed a deficit of 1.37% of GDP, with strong revenue performance supporting infrastructure and social programs. Manufacturing PMI stayed in contraction at 49.2 in October due to subdued demand, while foreign exchange reserves remained robust at $149.9 billion, providing ample import cover amidst global uncertainties. Bank Indonesia maintained liquidity and exchange rate stability through proactive monetary operations, leveraging SRBI and FX interventions to attract foreign inflows and support macroeconomic stability.
- In November 2024, macroeconomic changes such as inflation and exchange rate movements potentially impact IFG Holding’s subsidiaries. A 1% rise in inflation increases technical reserves for Askrindo and Jasindo while improving RBC for IFG Life and reducing claims for Jasa Raharja. Jamkrindo faces lower gross reserves, and Jasindo sees a decline in RBC. A 1% depreciation of the IDR raises claims for Jamkrindo and premiums for IFG Life and Jasa Raharja, with RBC improving for IFG Life. No changes on BI rate which is why no measurable impact across subsidiaries, highlighting stability in this area. These dynamics emphasize the need for targeted strategies to manage rising claims and reserve challenges
Toward Stronger Financial Industry in Indonesia