一口气了解2024年的全球经济

Hi Dear viewers here comes our our annual blockbuster video 2024 Global Economic Overview I put together a big framework How has the global development been this year? What challenges has China's economy faced? How is the U.S. economy really doing? Japan Germany Argentina India what's the situation with all of them? I will also include a little bit of my own analysis. Today's overview may be different from the global economic overviews you usually see Most will give you a rundown of the major events and headlines that happened every month in 2024. What happened in January, February You

get excited after watching it but they may lack some key points or logic There are some professional analysis analysing data table by table Well this will make you sleepy I want to try my best to find a middle ground Logically, we'll look at the data we'll do professional analysis, and get the full picture and framework at the same time explain it in simple terms We'll ditch all the tiny details or overly technical data Doesn't it feel like there's some real value in this? I've worked hard on this Let's cut to the chase Let’s start the

2024 Global Economic Overview (sound effect) Before 2024, the global economy wouldn't exactly be called a recession but it's definitely been in a pretty turbulent state You see, there was pandemic, the Russia-Ukraine war, inflation, and countries had been raising interest rates urgently. This has led to a series of crises, including the global supply chain crisis energy crisis in Europe U.S. banking crisis Japan's yen crisis Britain's debt crisis China's real estate crisis Africa's food crisis, etc Can you imagine that so many crises have occurred in the past two years? Before the pandemic any one of these might

have been a nuclear bomb-level crisis. Now slowly and steadily we made it through Today I won’t go into details about what happened before if you are interested you can watch previous videos. In 2024, if you think about it some of the major political and economic events in 2024, they are just event, not crisis For example, the US election, China's large-scale stimulus Japan's interest rate hike, and the Fed lowering interest rate they are just events Compared to the previous two years it's actually not as dramatic. You could say it's been pretty stable GDP growth rate at

3.2%. inflation has further declined but the unemployment rate has increased. So I will sum up the 2024 global economy in one word: resilient Many analysts like to use this word Sounds pretty sophisticated, right? Resilient instead of mediocre, ordinary, we call it Resilient Yeah, it has that self-motivating vibe, right? The 2024 global economy has two key themes. One is the General Election and the other is the Policy Shift General Election - easy to understand 2024 is global election year at least 70 countries, covering 49% of the world’s population, have held elections. We certainly can’t talk about

them one by one Generally speaking, there are some trends. There's been a growing divide within governments around the world Populism has generally gained strength the overall movement has moved further right. However, the United Kingdom is an exception and then the initial ruling party generally do not perform very well in elections For example in US, we won't talk about it The UK Conservative Party has ended its 14 years in power. The Labour Party won by a landslide It is actually more left-leaning and has a larger government. This is quite a rare case globally So that's general

election Another major theme in 2024 we mentioned Shift the Shift is mainly on Policy Shift You see, starting from the second half of 2023 global inflation was starting to ease, especially inflation on core goods Which has pretty much returned to normal Oil prices have also dropped. It’s just that the inflation of services is relatively high. Services mean when you go for haircut, After all, it's more lagging and tends to be stickier. Against the backdrop of this overall cooling most economies have slowly begun to release their brakes. In 2024, among the 37 major central banks globally

27 have begun an interest rate cut cycle. Originally, everyone was focused on the US Fed, you're the biggest, you go ahead and cut first We'll follow suit But the Fed was taking its time At first they though the Fed will cut the rate in Spring but by autumn, they still hadn't cut rates Other countries could no longer wait UK, Canada, Eurozone, Switzerland etc had all begun to cut rate It was only in September that the Fed discovered they are late for the train, and tried to follow up They cut rates by 50 basis points in

the first run Japan, on the other hand, did not lower interest rates. It was their first rate hike after eight years of negative interest rates This is also a major shift Although China has not shift its direction has been cutting interest rates. However, since September, they have been making bold moves on monetary and fiscal policies begun to strengthen stimulus. The central narrative has also undergone a clear shift This can also be said to be a shift On the whole everyone's shift is only the first step they are relatively cautious and there are no unexpected results.

We are done with the framework Now we'll start to focus on the performance of each economy. First, let's take a look at United States The GDP growth of the United States in 2024 is 2.8% In 2023 and 2024, it has exceeded market expectations for two consecutive years. It has the most outstanding performance among all developed economies. It is so outstanding that everyone think it's a bit unreasonable. It shouldn't be, right? The interest rates have been raised so high How can domestic consumption be so strong? This is why during previous Global Economy Overview I used the

word "inexplicable" for US it is still applicable. The reason might be excess savings During the pandemic, everyone ended up saving a lot of money. It could also be that many people took on more leverage before the rate hikes borrowing to buy house It may be due to the influx of illegal immigrants. It may be the wealth effect brought about by stock growth It may also be the superposition of all these factors. In short, it is the domestic consumption is relatively strong What did everyone worry about before? JPMorgan Chase especially likes to use a phrase Boiling

Frog What does it mean? You put a frog in warm water that is being slowly heated. Initially it may feel really warm and comfortable not realising that the environment is slowly and irreversibly deteriorating When it feels hot It may be too late The warm water refers to a high interest rate environment. In this environment, Originally, we thought there might be some issues in 2024 either in commercial real estate or in the economy, there may be a significant decline. Frog will feel that it's hot but turned out nothing happened That's why the Fed held it back

until September to cut the rate Among all the data about the U.S. economy There's one that is very eye-catching that is corporate profits Growth reached 7.7% in 2024. Profit margins of U.S. companies have reached the highest level in 70 years To put it bluntly, after pandemic it’s the most profitable period for U.S. companies since World War II look This is BlackRock's comparison of profit margins for U.S. European, and Asian (excluding Japan) companies over the past 20 years Since 2008, there has been a clear differentiation. Before, American companies were able to make so much money in

fact, to a large extent, was due to the explosion of the Internet industry But this is not the main point The main point is that after the epidemic, corporate profit margins in U.S and Europe have all increased and gotten higher Why is that? One of the main reasons here is due to inflation. See, during the period of ultra-low interest rates in Europe and the U.S. Inflation was pretty much around zero. If a cup of milk tea is $20 then it'll forever be $20 Consumers will know in their hearts that this thing is $20 It is

difficult for merchants to raise prices, so they are often forced to compress their profits But in the past two years, once prices started to rise, it became the question of whether to increase more or to increase less means that the price measurement system in consumers’ minds is a bit out of whack. The acceptance of different prices will be relatively higher. You don’t know how much this thing should costs companies can raise prices to increase its profit margin So there is actually a big psychological aspect here. You can also say that companies have taken advantage of

some consumers' psychology. But from the perspective of the overall economy, these companies will also put the extra money they earn back into the economy to speed up the operation of the entire economy This is also one of the reasons why everyone now generally believes That the economy needs a certain amount of inflation. This is not over yet. You need to know what the consequences will be if a company's profit margin increases It will increase the wealth gap in the United States and the profits of these companies are not evenly distributed among various companies but are

increasingly concentrated on the top large companies. So much so that now, the U.S. economy can be said to be increasingly tied to these giant companies Ten years ago the top 10 companies by market cap Accounted for 18% of the S&P 500 index It has now doubled to 36%. In other words, These 10 companies account for 36% of the world's major stock index. This is an incredibly high level of concentration Among them, Apple, Nvidia, and Microsoft accounted for 20% , in the past five years the wealth gap between entrepreneurs and workers has widened The wealth gap

between big and small businesses is also widening. This is why the data on U.S. economy are very good, but not obvious to the Americans Actually, it feels like these past two years have been tougher than before for some After all, Silicon Valley, Wall Street, and Hollywood are all starting to lay off people on a large scale. The wealth is becoming more and more concentrated in the hands of the top 0.01% of people. Let’s talk about monetary policy. We know that the Fed’s policy affects the U.S. dollar and the U.S. dollar affects global financial markets. So

everyone is watching the Fed closely And watching Powell’s every move. So what does Powell look at? The main thing is the current situation of inflation and unemployment in the U.S. Inflation has settled into a more stable range and it's gradually being forgotten by most people so the Fed is paying attention to the unemployment rate, which was 4.2% in November. Generally if it is below 4.5%, It’s unlikely to affect the pace of rate cuts by the Fed Actually, the Fed's interest rate cuts this time Will most likely not be the same as the rate hikes two

years ago. setting off a huge wave of global capital Why is that? On the one hand, the interest rate increase was so sudden that the market did not expect it Secondly, the magnitude of the interest rate increase was also very large. It increased from 0 all the way to 5.5% increased by more than 500 basis points And now, this rate-cutting cycle has dropped to 4.5%. Everyone expects that there is a high probability that it will drop to around 3.5%, and it is unlikely to return to The era of less than 2% or even 0. So,

it only has about a hundred basis points left Let’s talk about some of the possible policies in the Trump 2.0 era Basically, there are just a few key directions Tax Cut Deregulation Trade Protection Tighten Immigration The overall impact of these policies on the U.S. economy On positive note For example, it will stimulate the overall economy, stimulate overall demand and help capital flow back to the United States. In addition, it is relatively bullish for the U.S. dollar and the stock market, especially traditional energy and the financial industry as well as Bitcoin. You see, once Trump was

elected, Bitcoin soared from 70,000 to 100,000. Many people speculate that one key reason is market expectations Trump’s regulatory policies might be more favourable for Bitcoin Some of the potential negative impacts are first is the risk of re-inflation his trade and immigration policies all of which may trigger a resurgence of inflation. Of course, Trump also gave his own solution. He said that he would stabilise prices by increasing oil supply. However, judging from the market reaction, it seems that everyone is still worried about this. After Trump was elected, the futures prices for federal interest rates are declining

This is actually because the market is worried that the risk of secondary inflation will increase, And the Fed will cut interest rates at a slower pace. expected interest rates are likely to rise so, the futures prices are falling as a result Moreover, trade and immigration policies will actually increase the uncertainty of the U.S. economy. After Trump launches the tariff policy, other countries will not be able to just sit there they will definitely fight back. As for the policy and how to fight back, isn’t it uncertain? However, when it comes to the U.S. imposing additional tariffs

on China the uncertainties will not increase At the same time, the expected impact on the market is not likely to be significant because businesses in China, including the U.S., are actually mentally prepared not only mentally prepared, They have also made ample preparations This is completely different from when Trump first took office and the trade war started at that time, China accounted for 20% of the total imports of the US Now this number has dropped to 13%. Both parties are actually ready to break up. Of course, it may not be accurate for us to say breakup.

Global supply chains are now so finely tuned It is actually impossible to break up completely For example, if you look at this paper from Harvard Business School, After a lot of flow analysis and correlation analysis it reached a simple conclusion Many goods that used to enter the U.S. from China after the trade war have to go around in a circle from Mexico, Vietnam and other countries before entering the United States. So it’s not really a full-on deglobalization but part of it is called Great Reallocation a major restructuring So, who are the direct beneficiaries of this

major restructuring? may be Mexico and Vietnam For upcoming 2025 most analysts think that the U.S. economy will not be as strong as the previous two years. The IMF predicts that the GDP growth rate will fall back to 2.2%. However, one point is that a risk that was highly speculated on in the past two years It was also the biggest risk the market worried about in the U.S. but has been gradually weakening or disappearing in the past two years. What is it ? Commercial Real Estate Just because the risk is weakening doesn't mean we won't talk

about it It's still necessary to explain a little bit What does the commercial real estate crisis mean? Let me give you an example. For example, there is a building 1407 Broadway in New York It is an office building. These types of buildings typically issue bonds to raise funds and then leverage them to take on even more debt In 2019, it issued $350 million in bonds because it is located In a very central area of ​​Manhattan. Didn’t have to worry about renting it out before, so the rating of this bond is AAA, which is the highest

grade and is higher than the U.S. Treasury bond rating. After the pandemic, it can’t be rented out. In June 2024 sorry, everyone I can’t pay the interest, defaulted Keep in mind that the default probability of AAA-rated bonds is less than 0.1%. The investors of 1407 Broadway caught up in this This building is not an isolated case. Most commercial real estate bonds have this risk to some extent, which has caused the entire CMBS market to fall into chaos Who has suffered the heaviest losses? The small and medium-sized banks in US Over $1 trillion in commercial real

estate bonds or loans are held by small and medium-sized banks in the U.S If small and medium-sized banks fail it could lead to something similar to the Silicon Valley Bank crisis This was one of the major potential risks the market was concerned about in the U.S. earlier Now, as time goes by although this risk has not been eliminated but these losses are indeed real The probability of triggering a chain reaction in the entire economy is greatly reduced. Why? Because they managed to hold on until the Fed cut interest rates. the investment market will heat up

little by little. It seems unlikely that a large-scale banking crisis will occur during this rate-cutting cycle by the Federal Reserve I would say that The biggest potential crisis in the US right now is the national debt. Increasing it bit by bit that's the real 'boiling frog' effect Congress, with both parties, seems to be arguing every other day. There are always more urgent things that need to expand the fiscal budget need to increase spending and raise the debt ceiling The water is heated little by little heating the frog inside feeling warm and comfortable To be honest,

it’s unlikely to have any major blowups in the short term But we have to mention it. Alright, so those are some points I extracted about the U.S. economy. Next, let’s take a look at Japan. The IMF estimates that Japan’s GDP growth will be 0.3% in 2024. From the perspective of various data points the economy can be said to be very mediocre. Things are fluctuating a little above or below zero all within that ±1% range However, although from the data point of view, its growth can be said to be almost non-existent their economy is actually improving.

How to say? In fact, Japan's economy is a bit deformed Looking at the past 20 to 30 years, due to continued deflation resulting from insufficient domestic consumption corporate profit margins have declined, the central bank is forcefully injecting massive liquidity and the government is aggressively taking on huge debt It's essentially forcing the entire economy to stay afloat Look at its monetary policy negative interest rates and the central bank bought 760 trillion yen in assets which is more than $5 trillion Look at the Fed – as much as they buy it’s still under $7 trillion But what

is the size of Japan’s economy? Its GDP is less than one-sixth of that of the United States, and the amount purchased by its central bank is similar to that of the US Think about it basically half of Japan’s market is forcibly supported by its central bank’s printing of money. Maybe many people have gotten used to the peculiarities and deformities of Japan’s economy Japan must be excluded From any number. Excluding Japan However, has finally seen a change in this situation in 2024. You can see that corporate profit margins are also rising, and the stock market is

also continuing to rise. The most important thing is that finally, they've got the long-awaited inflation So the Bank of Japan will finally start to exit this abnormality in 2024. In recent years, much of Japan's economy has been propped up by the government's and the central bank's 'stimulus' efforts but in 2024 it finally is able to rely on itself. This is why I said that although its data may not look so eye-catching but the market is generally optimistic about it. The IMF predicts that Japan's GDP growth rate will reach 1.1% in 2025 which is not low

for Japan. The most different thing between Japan and other economies is that its monetary policy is contrary to others. You see, when the world is cutting interest rates only Bank of Japan is raising interest rate It’s not that they’re deliberately going against others they are just lagging behind By about two years. You see, global inflation has risen in the past two years. A storm was coming. Even Powell was frightened Almost everyone started raising interest rates aggressively, avoiding it like the plague. Only Japan is truly experiencing a much-needed relief after a long drought How comfortable and

incredible While everyone is raising interest rates only Japan is enjoying it, hoping the inflation will become more intense Of course, the Bank of Japan cannot let inflation go out of control And continue to rise It just needs to see wages start to rise . once they saw the wage-price spiral taking hold only then will they raise interest rates So the Bank of Japan's current focus is wages. We've talked about this before In Japan, wages don't just rise whenever you want them to There is a process called Shunto, which means that every spring, large companies will

have a national negotiation with labour unions. They have a fight in Spring The result of this spring fight will determine the salary increase of employees in major companies this year. The result of the negotiations in 2024 is the largest wage increase in Japan in 33 years. This is also one of the main reasons why the Bank of Japan raised interest rates very decisively. The pace of the Bank of Japan's interest rate hikes will depend on Shunto in 2025. Now the Bank of Japan has raised interest rates from negative to 0.25% The 10-year interest rate has

exceeded 1%, And the interest rate curve is normalising. Of course, its balance sheet is still massive They're expected to start unwinding their balance sheet in 2025 While everyone else is cutting, I’m the only one raising What will this situation lead to? Japan's overseas assets will flow back, On the flip side, we might need to worry about the impact of a rapidly appreciating yen on exports Alright, that's all for Japan. Now let’s talk about Europe. Europe can be said to be a relatively weak part of the global economic growth. In 2024, it is about 0.9%. It

is estimated to be similar in 2025, especially Germany, which has always been the strongest link in Europe but it shrank by 0.1% in 2024 and this is not the first year it has shrunk. It has already shrunk by 0.3% in 2023, from the end of 2019 before the pandemic till now cumulative real GDP growth in Germany is now zero It’s at the bottom among all developed countries but what is very interesting is that If you want to be technical about it German economy has not actually fallen into recession, because the general definition of economic recession

is that your GDP must have negative growth for two consecutive quarters. And if you look at Germany’s GDP growth in each quarter in the past two years, it has ups and downs it's just that the rise is less than the fall but there's no drop for two consecutive quarters right so it's not exactly a recession Just kidding. In fact, no one denies that Germany is in a recession and is in a quagmire. Let’s take a look at its problems. Let's start with the most basic point first Germany is indeed the most affected by the energy

crisis. This was the most direct blow two years ago and then there is its fiscal policy. This is also a key point. It is very conservative in fiscal terms. Look at the various economic difficulties it is facing now. If this were the U.S., they’d be handing out money already. But the Germans are very by-the-book We have principle If the government says no spending, then no spending They've tightened the fiscal belt In 2009, it passed a bill commonly known as the Debt Brake Act which stipulates that the federal government's structural deficit cannot exceed 0.35% of GDP.

You see 0.35, is actually a very harsh requirement It means the government can't have a budget deficit And the Germans are really very rule-abiding in their approach and the bill is directly included in the constitution. Now, it doesn’t mean that all Germans are against stimulus There are some differences within the ruling party. The current ruling party is an alliance composing three parties and started fighting within itself. Economy Minister Habeck is from the Green Party who felt that we the Constitution should be amended to allow spending on finances. However, the Ministry of Finance is the Liberal

Party. They believe that not wasting money is just common sense is sacred and inviolable. Their differences of opinion became more and more serious. As a result, in November, the talks broke down Chancellor Scholz then dismissed the finance minister the one who opposes reckless spending This has also become the first time in German history that the three-party alliance has lost control. They will hold an early election in February 2025. It seems that Germany will start a fiscal deficit in 2025 to stimulate the economy. Actually, I think Germany's conservative fiscal policy might not be a bad thing

in the long run In the short term, it will make Germany's economic data Look weak In addition to finance, another very important factor hindering Germany's economic growth is population. I guess many people might get a bit triggered when they hear about the population issue Recently, whenever any economy faces problems it's always 'the population issue' China has a population problem, Japan has a population problem, and South Korea has a population problem. India also has a population problem. Now when it comes to Germany, also population problem Germany’s population problem does have its particularities. It can indeed explain

its short-term phenomenon. Look at its demographic chart. you'll just get it Look at this part a very obvious population peak around the age of 60 Note that this is the census in 2020 so it should be moved up four years. In the 1960s, Germany Had a very large baby boom that was stronger than most other countries and these people are retiring in large numbers mass withdrawal from the labour market. Of course, the retirement age in Germany is relatively late between 66 and 67 years old So theoretically the retirement peak should be around 2030. Even though

these workers haven’t retired yet they’re already in their 60s and have just experienced the pandemic you can't be expecting high productivity from them Meanwhile, the number of young people entering or just entering the workforce s continuously declining. In other words, the labour force in Germany has not only been reduced but also accelerated in the past two years. This actually explains two phenomena in Germany. One is that wages in Germany have accelerated in the past two years. On the other hand, it is also due to the general environment inflation. But at the same time, It also

comes from the fact that Germany itself is very short of labour. Another phenomenon is Germany’s productivity in the past two years. You see that it has declined significantly. You see, this is the productivity of the United States and Germany looks like this Now the global economy is facing transformation, and the German industry is already highly mature and well-established Meanwhile, the labour market is rapidly aging internally These workers in their 50s and 60s were the ones who helped build Germany's economy but it also means that its current transformation is actually more difficult and laborious For example,

Volkswagen, Bosch and Deutsche Bahn are now laying off These highly skilled workers who were laid off now have to find new jobs Compared to other countries, it's not that easy In short, Germany is really in trouble now. They're facing more fundamental, structural issues Structural energy shortage, Structural labour shortage, and A structural decline in demand for petrol-powered cars The government can also be seen as structurally rigid Everything is structural, right? Then when you encounter difficulties, natural recovery speed will be relatively slow Alright Next, let’s take a look at China’s economy. China’s GDP growth rate in the

first three quarters was 5.3%, 4.7%, and 4.6%. If they push a little in the fourth quarter, it is still possible to achieve the annual economic growth target of 5%. However, let’s not get too hung up on this number. It is more important to look at the logic and response policies. Exports are the most eye-catching part this year, especially in the third quarter of 2024, Nearly half of the GDP growth is driven by net exports. For many companies The buzzword for 2024 is 'going overseas' On the one hand, it is the rebound in overseas demand. On

the other hand, many other countries have entered a new round of inventory restocking cycle. What does it mean? In 2023, they basically used up their inventory, so China’s exports was average in 2023 a new round of restocking has begun in 2024 China’s import and export is following suit the aspect with average performance is investment. The investment growth in infrastructure and manufacturing is still quite strong, mainly dragged down by real estate investment So overall, investment can be said to have leveled off. The weaker performance is consumption. In fact, one of the main problems of China's economy

in 2024 is the lack of domestic consumption and lack of confidence, which has also caused prices to fall. The PPI has been below 0 for more than two consecutive years and the job market is also shrinking. Many companies are focusing on reducing costs and increasing efficiency. This is also why, as the year draws to a close A series of fiscal and monetary policies are being rolled out We'll talk about this in a bit The effect, as I see it, is a short-term improvement but the overall impact remains to be seen The long-term growth drivers still

need to be explored I Recently, I've been brushing up on the language used to describe China's economy so I can speak about it flawlessly Now, consumption is the key driver for revving up China's economic engine again Let’s take a look at how this policy stimulates consumption. In fact, as early as the end of 2022, The State Council has released the 'Strategic Outline for Expanding Domestic Consumption' However, some policies in 2023 were mainly focused on for example, the transformation of green energy consumption. There are few policies that actually spend money to stimulate. But by 2024, it

will goes further There are two main policies that stimulate consumption One is issuing ultra-long-term special government bonds Second is to lower existing mortgage interest rates. Doesn’t it sound Like this has nothing to do with consumption? How does issuing government bond stimulates consumption? The lowering of existing mortgage interest rates is supposed to stimulate the real estate market what does it have to do with consumption? Don’t worry, let me explain one by one What is existing mortgage interest rates Those who have already taken out loans to buy houses and have already started to repay their mortgages if

you have already signed the contract I will lower the interest rate for you. The domestic mortgage interest rate Is generally in the form of LPR plus a spread, such as LPR plus 30 basis points. Well, if you lower it, it will become LPR, for example, reduced by 30 basis points From now on, whether you have a 10-year loan or a 30-year loan, The annual mortgage rate drops by 60 basis points. annually the interest is effectively 0.6% less So you see, the loan originally has a floating interest rate. Based on the floating rate I lower the

interest rate to reduce the pressure for repaying loan This is really like taking the money out of the bank to subsidise the lender. It is estimated that the average reduction of existing mortgage loans by this policy is about 50 basis points This has saved the citizens about RMB 150 billion annually which allows some people who may have been restricted by mortgage loans to release part of their liquidity to resume consumption. So, lowering the existing mortgage interest rate and releasing the 150 billion each year Will directly stimulate not the real estate market, because these people have

already bought their houses but on consumption. Another policy related to stimulating consumption is ultra-long-term special government bonds. What is ultra-long-term special government bonds? These are long-term bonds, typically with a term of over 10 years, issued for specific purposes They are not included in the government's fiscal deficit. These government bonds are only issued in special circumstances and for specific purposes For example, last time in 2020, 1 trillion was issued to fight the pandemic. In 2024, a total of 1 trillion of ultra-long-term special government bonds was issued So what is the special purpose this time? 700 billion

is allocated for the 'two priorities mainly infrastructure construction. The other 300 billion is called "two new", which is to promote a new round of large-scale equipment upgrades and the trade-in of consumer goods A very important part of the 300 billion is to stimulate consumption For example, if you click on Taobao or JD.com A very important column will mention state subsidies. Or if you click on some large items, it will say "trade in old for new." These are all included in the 300 billion. At present, it seems that the biggest driver of this part is consumption

of home appliances Why does the country choose to trade in old ones for new ones instead of directly subsidising consumption? First of all, it plays the role of subsidising consumption what I’m incentivising is to replace the old Most basic needs are met so what's being stimulated now is upgrading demand And at the same time, it will also drive recycling and reuse industry chain which has also driven investment. However, generally speaking, the market generally believes that the size of this consumption stimulus policy can only be said to be a small test. China's annual consumption is about

50 trillion Many analysts are looking forward to greater consumption-related stimulus. This should be a direction that can directly boost GDP. Let’s talk about real estate This part, there is a consensus that It is still in a deep adjustment period real estate investment in 2022, 2023, 2024 fall by about 10% be it the sale of new house or second-hand house including housing prices, continues to decline and the decline in housing prices will affect the balance sheets of local governments, the balance sheets of banks, and the balance sheets of home buyers, which will jointly affect the entire

economy. It is not difficult to understand that The recovery of the real estate market will take a very long time. Everyone should be clear about this. We will not explain too much. Let’s take a look at some of the stimulus policies for the real estate market The big one in the first half of 2024 is the 517 Policies which is a series of stimulus policies released on May 17. The most direct policies are those stimulating consumptions such as lowering mortgage interest rates, Lowering down payment ratios, and lowering purchase restrictions standards reducing taxes and fees related

to home purchases, etc. These are relatively normal policies to stimulate the consumptions At the same time, there is also a n interesting stimulus policy It has launched a 300 billion affordable housing refinancing program. When you hear the words re-lending, re-discounts, re-mortgages, re- whatever it is usually related to the central bank. When the central bank works through banks, it's called 're-something' policies this affordable housing refinancing what does it mean? Simply put, it means that the central bank lends this money to banks, and then the banks lend it to state-owned enterprises in various places. to buy houses

directly and then state-owned enterprises rent out these houses or convert them into affordable housing. To put it bluntly, the central bank takes the lead in providing money to buy houses and directly supports the real estate market to see if real estate developers can revitalise the bank's capital chain. Can you see this stimulation method is very direct and many analysts Will be optimistic about the operation of the entire chain. But in the implementation process, can it actually achieve this effect? There are many operational issues that need to be solved because now the consumption stimulus lowering various

interest rates, ratio and the policies to stimulate people to buy houses have actually been released and their marginal effects are diminishing People's willingness to take out loans and buy houses is still very weak. So, where will the next round of stimulus come from? The government or the central bank will directly lead the market to buy and solve this problem from the supply side. It's just that the volume of 300 billion is really not that big, right? It's almost the same as the 300 billion we just talked about replacing old ones with new ones. This volume

can only be regarded as a small trial. If the process goes smoothly after the trial the money flows to its rightful place revitalise whatever that needs be then it is very likely that in 2025 the scale of this re-lending will be enlarged Alright Next, let’s sort out the stimulus policies launched by the central bank and the government since September and its general logic. Otherwise, you read the news a big news today, a headline tomorrow it’s easy to be confused by these news if you don't understand the framework. I’ll divide it into several directions Fiscal policy,

Monetary policy, Real estate stimulus policy Equity market stimulus policy The most aggressive fiscal policy was launched in November 10 trillion debt relief plan for local governments In simple terms, local governments are burdened with debt so the central government steps in to help ease the burden You can pay back slowly, but you can't default 10 trillion debt relief is still very large scale If you are interested, we can make one episode to talk about debt relief Monetary policy mainly involves rate cuts and reserve ratio reductions also launched some new tools, Bonds Outright Repo We won’t explain

this in detail. put it simply, it is to inject liquidity into the market a housing stimulus policy We've talked about it In the second half of the year, there will be further efforts to boost demand, going beyond the 517 policies As for the equity market, the central bank has also been thinking of ways to act They launched many policy tools with confusing names For example: Securities, Funds and Insurance companies Swap Facility in short SFISF It has a quota of 500 billion Which means that these financial companies can pledge their stocks to the central bank and

exchange them for more liquid government bonds. You can go to the market to sell these government bonds and the money you get can only go to equity market Simply put, it is to help some national capital to obtain more capital to support the equity market. There are also stock buybacks and targeted increase in lending It means that companies can directly borrow money from the central bank to buy back stocks. In short, these innovative ways are to transfer money from the central bank and Then flow to the equity market These are the main directions You can

see that in the past two years, although the government was also stimulating and the central bank was cutting interest rates but the overall attitude is still stable But this time the stimulus policies are different. Fiscal policy, monetary policy all joining hands The scale of this, as you can imagine, is massive. However, even with all these the market reaction is there but not that high. It hasn't reached the level of stimulus that many people were hoping for Because to be honest, the government has not exhausted all its ammunition yet There is still plenty of room for

action For example, this round largest scale debt relief measure is actually a stabilising policy rather than a stimulating policy. Its greater purpose is to stabilise What does this mean? For example, if your credit card Payment is due next week the bank tell you that it's not in a hurry I will give you three more months to think of a solution first. This is a stabilising policy, right? It gives you more time to stabilise Meanwhile a stimulating policy means that banks start to find a way for you, contact people for you help you find a job

and help you earn money to pay off this credit card. This is obviously not something that should be done under normal circumstances, right? If you owe money, you should find a way to pay it back. But in this special situation, many people are out of options They can only look to the central bank hoping it will help Alright, the stimulus policies we just mentioned the government has already started to try in 2024 For example the trade-in real estate market re-lending, equity market re-lending swap facilities, etc. These are the most direct stimulus policies but they are

still at 300 - 500 billion in scale and volume And the economic work conference held in December has already set the policies for 2025 Although there are no specific policies for implementation but the basic tone is to open the floodgates and to fully stimulate The market expects the central bank to cut interest rates more quickly will buy more government bonds The fiscal deficit will also increase, at least from 3% in 2024 to 4% will also issue more ultra-long-term special government bonds. make the real estate market stop falling and stabilise boost consumption vigorously This is roughly

the overview of China's economy in 2024 and the general policy direction. There may be a lot of people will be more concerned about the trend of the RMB I've noticed that most brokers' predictions are fairly consistent on this. Facing Trump's trade war, with central bank of China cutting rates quickly The central bank may let go and allow the RMB to weaken appropriately. to stimulate exports, stimulate prices, and hedge against the consequences of the trade war. For other countries let’s pick a slightly more interesting one This is the ranking of countries' actual GDP growth rates for

2024 I screened out those slightly larger economies with a GDP of more than $300 billion The fastest growing among them is India. In terms of absolute growth, India can be said to be the best performer in the world in recent years. The GDP growth rate of in 2023 is 8.2% . It is very eye-catching. It fall to 7.0% in 2024 but it is also very good. Many people may think that the rise of India Must be due to the Sino-US trade war, right? That India has reaped from it It is really not India's attitude towards

foreign investment be it from US or China is not particularly good. Its main growth, including many Southeast Asian countries, is still due to their domestic consumption in recent years. However, what drives domestic demand in India is not consumption but investment including the government’s infrastructure investment. It is in a state where the government can Invest in infrastructure with a high return on investment. However, recently, India faces the risk of inflation rising again inflation suddenly start to rebound in the fourth quarter of 2024 is also a relatively big risk now. Russia's economy has been resilient in 2024.

Although it has been subject to comprehensive sanctions from the West but in 2023 and 2024, its GDP growth rate reached 3.6% Generally speaking on one hand, it depends on strong energy prices. On the other hand, the government is also trying its best to stimulate. However, the first three quarters of 2024 were very good. In the fourth quarter, Ruble suddenly began to decline at an accelerated pace. Russian inflation also began to rise again. Did you notice? It seems that almost all economies began to see changes in the fourth quarter. I don’t know why people all over

the world started to get excited in September and October. As soon as inflation started to rise Russia’s policies began to be a bit restrictive. On the one hand, the government’s fiscal policy including state-owned enterprises Vigorously stimulating and expanding investment. On the other hand, the central bank is also raising interest rates hard. Now the interest rate has been increased to 21%. It's like driving a car with the accelerator pressed all the way down while pulling the handbrake Isn't this awkward This seems like it has cast uncertainty over 2025. The IMF predicts that Russia's GDP growth in

2025 will drop to 1.3%. We have talked about Russia's economic before If the opportunity comes, we can do it again The post-war Russian economy. Will you be interested? The UK's GDP growth in 2024 is 1.1%. Inflation has also dropped to below 3%. The unemployment rate is 4.3%. Basically it has returned to a normal development model. Anyway, the overall recovery is slightly faster than that of the EU Turkey has been suffering from inflation before. Under its continuous 50% interest rate, the inflation was finally suppressed in the second half of the year. But at the same time,

its GDP growth rate was also suppressed. South Korea's expected GDP growth in 2024 is 2.5% mainly driven by exports. Domestic consumption is still sluggish Internally, it's being supported by government spending Argentina's economic growth in 2024 is the lowest in the world Of course, I am talking about relatively large economies with a GDP of over $300 billion It is entirely supported by exports. All other economic indicators are negative growth nad it’s a particularly negative growth Overall domestic consumption has shrunk by 12% Export growth is largely driven by the depreciation of its currency. Sounds bad, right To

be honest, let me use one word to describe Argentina’s economy. Understandable Why? Because Argentina is undergoing a very bold and thorough reform. It can even be said to be an economic experiment Shock therapy. You see, for the past two years, Argentina Has been facing a very difficult economic situation soaring inflation, currency devaluation, serious government corruption, etc. At the end of 2023, Argentina elected a far-right president, Javier Milei who has a completely different style. His policy stance is for a smaller government Some even say he is an anarchist. Let the economy be completely free The previous

government was spending money indiscriminately. and was corrupted. So he cut off all the useless departments. In the past six months, he has cut the original 18 departments into 8. Stopping all subsidies and infrastructure projects Shrinking the goverment Stop messing with Argentina's economy You have to let the market develop freely and rejuvenate its vitality. Milei really achieved a government surplus in his first year and strictly controlled the money supply managed to reduce the inflation rate from 300% to 160% These are very aggressive austerity measures so it is inevitable that the economy will be affected. This is

why I said it's understandable Actually, Milei's shock therapy is far from over He plans to cut taxes by 90% in 2025 and gradually ease foreign exchange controls and etc. In fact, Argentina's economy has begun to slowly improve from the third quarter of 2024. Moreover, Milei has a very good relationship with Trump, so many people predicted that Argentina's economy will benefit after Trump comes to power. Market estimates that Argentina will rebound quickly in 2025. The IMF predicts that its GDP growth will reach 5%. There is also a small country whose GDP is not at the level

of $300 billion But I'd like to talk about it In recent years, it’s topped global GDP growth becoming a rapidly wealthy nation That is Guyana. It is in South America a small country with a population of only 750,000 right next to Venezuela Before, they could only watch as others drilled for oil However in 2015 they discovered a large number of oil fields. and began oil extraction in 2019 It's like turning 30 and suddenly discovering you're a rich heir. And that's when Guyana's extraordinary life began Look at others, their GDP growth is around 5% or 10%,

and that's already a big deal. but Guyana’s average GDP growth rate in the past five years is 40%. GDP per capita has increased from $6,000 to $30,000, which is already on the same level as Saudi Arabia. It’s hard to say whether it will lead the world in two years. So, everyone must remember this country, Guyana Is now a country of wealthy people. We have looked at the economies of so many countries and I have a very interesting idea. Looking at all these countries' economy is a bit like car racing In the past couple of years,

global inflation surged and everyone's engines were overheating, almost ready to catch fire Everyone was desperately hitting the brakes to cool things down US itself was driving relatively fast and was in a leading position. It was so fast that it was a bit inexplicable. Even with rate hikes and the emergency brake on the economy kept charging ahead At the same time, a new driver is coming in and wanted to drive far away from other drivers can't let other countries ride America's coattails and even had to set up obstacles, and block the way And this car, Japan

30 years it raced ahead, shining brightly and then it caught fire. It's slowly crawling for almost 30 years unable to start the engine Finally, it managed to start the engine recently And can start to speed up the engine might get a bit hot, but it's okay. In 2024 it started to step on the brake. China may have started off further behind but it’s been speeding ahead, overtaking all the way Recently, they’ve realised that the engine the old real estate model doesn’t work as well anymore but the engine has been upgraded but because its speed was

very fast so it can still move forward by relying on inertia. As it is sliding, quickly find a new engine Germany is like driving a solid steady vintage car, running smoothly for the past 30 or 40 years Recently this classic car has stalled and What's worse, the passengers are arguing some want to floor the gas step on the accelerator Others think we shouldn’t rush we need to fix the car first and see what's wrong. Anyway, every car has its own problem But overall the toughest times when most economies were collectively hitting the brakes seem to

be over. In 2024, the policy shift is in gear and overall, it remains fairly stable Now it has returned to the stage where most cars have started to step on the accelerator again, starting a new round of leveraging Therefore, in 2025 the forecast for the overall global economy is still relatively optimistic The biggest uncertainty In my opinion, is definitely Trump's trade policy and the chain reactions it will bring. The other is whether China’s consumption, lending can improve Alright, so these is summary of the global economy in 2024 Thank you very much for your patience in

watching this. If you have anything to add and want to discuss please leave a message in the comment section. Dear viewers, we'll see you again in 2025.