David Rees | A snapshot of the world economy in October 2024

30-10-24 / David Rees

David Rees | A snapshot of the world economy in October 2024

Chinese clean energy capacity reached 1,206 gigawatts (GW) in August 2024, according to the National Energy Administration. In 2020, China set a target to reach 1,200GW of renewables power by 2030, which was more than double the renewables capacity of the country at the time.

The early achievement of this goal highlights the energy sector transformation of the world's largest emitter of greenhouse gasses.

Why we believe China's housing market may not yet have found a bottom

According to analysis from the Bank of International Settlements data, the average length of house price corrections in major economies is six years. Based on past experience, house price corrections in major economies result in peaf-to-trough nominal price falls of almost 30% over 6 years.

The current housing correction in China began in mid-2021, and has seen new home process fall about 6% and second hand prices decline approximately 13%.

Although we await to assess the impact of the recently announced stimulus measures, this data suggests the correction may have some way to go yet.

Is the US Federal Reserve playing with fire?

The US Federal Reserve reduced rates by 0.5% at their most recent rate-setting committee in September. A large initial reduction in US rates is typically a cause for concern, as we saw in January 2001 and September 2007 when 0.5 percentage points cuts were a precursor to US recessions – and again in March 2020 at the start of the global pandemic.

If an aggressive rate-cutting cycle comes to pass, and the US economy remains resilient, we fear US interest rates could end up to loose and reignite inflationary embers.

*David Rees is Senior Emerging Markets Economist at Schroders.