According to a preliminary estimate from Mexico’s  Instituto Nacional de Estadística y Geografía (INEGI), the country’s GDP increased by 1% from the previous quarter in the three months that ended September 2024, faster than the 0.2% increase in the previous period and beyond market estimates of 0.8%.

It was the third straight quarter of growth, the largest since the second quarter of 2023, giving the Bank of Mexico more headroom to decrease interest rates at a modest pace to combat inflation.

Growth was driven by a substantial increase in primary activity (4.6% versus -0.2% in Q2).

Furthermore, output increased in both secondary (0.9% vs 0.3%) and tertiary (0.9% vs 0.1%) activities.

Mexico’s GDP increased by 1.5% over the previous year.

As the economic landscape shifts, the global economy is still proving its strength and growth potential.

One of the most important indicators of a country’s economic health is its Gross Domestic Product (GDP), a key measure of overall economic performance.

A country’s GDP reflects the total value of all goods and services produced within its borders over a certain period.

This metric is essential for gauging a nation’s economic output and productivity.

Generally, a high GDP indicates a robust economy, while a lower GDP can hint at economic difficulties.

Current global GDP trends

Recent statistics and forecasts indicate that the global economy is on an upward path, with numerous countries seeing notable GDP growth.

Emerging markets are playing a significant role in this rise, fueled by increased trade, advancements in technology, and strategic government investments.

Strong GDP growth can significantly impact various social aspects.

It often results in job creation, higher wages, improved living standards, and enhanced consumer spending.

Furthermore, a thriving GDP can attract foreign investment and improve a country’s standing on the global stage.

Mexico’s GDP in Q2 2024

The Mexican economy grew by 0.2% from the previous quarter in the three months ending in June 2024, mirroring the preliminary estimate and following a downwardly revised 0.1% increase in the prior period.

This was the second consecutive quarter of slow growth, with contributions from the service sector (0.1% vs 0.5% in Q1) and the industrial sector (0.3% vs -0.5%).

In contrast, output for primary activities continued to fall (-0.2% vs -0.4%).

In annual terms, GDP increased by 2.1% in Q2, just below the initial reading of 2.2% and accelerating from a downwardly revised 1.5% increase in the preceding period.

Regional disparities on GDP

While global GDP growth is positive, there are significant disparities between regions.

Some areas are seeing fast economic growth, while others are dealing with inflation, political upheaval, and natural calamities.

Addressing these discrepancies is critical to maintaining global economic stability and inclusion.

Governments are pivotal in fostering GDP growth through targeted policies and initiatives.

Investments in infrastructure, education, healthcare, and innovation can boost economic activity and create an environment where businesses can succeed.

In addition, fiscal and monetary strategies can help maintain a balance between growth and stability.

Challenges ahead for global GDP’s

Despite the optimistic outlook, the global economy still faces several challenges that could hinder GDP growth.

Trade tensions, geopolitical uncertainties, climate change, and technological disruptions pose significant threats to economic stability.

Tackling these issues will require cooperation and thoughtful planning on an international scale.

As the global economy continues to change, it’s crucial for policymakers, businesses, and individuals to adapt and embrace innovation.

By focusing on sustainable growth, inclusivity, and resilience, countries can unlock the full potential of their economies and secure a prosperous future for everyone.

The optimistic trend of global GDP growth creates countless prospects for advancement and prosperity worldwide.

Nations may collaborate to establish a resilient and vibrant economic environment for future generations by leveraging on current momentum while effectively addressing significant issues.

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VinFast Auto Ltd (NASDAQ: VFS) is in focus today following a report that it has signed an agreement with a group of Emirati investors led by Emirates Driving Co.

The news is significant for shares of the electric vehicles company as the deal entails it receiving a whopping $1.0 billion in funding from that consortium.

Emirates Driving has also committed to helping VFS with driver training, road safety, and setting up an EV ecosystem, as per people that talked to Bloomberg on condition of anonymity on Wednesday.

VinFast stock is now up more than 60% versus its year-to-date low in late April.

VinFast stock remains a risky investment

VinFast is celebrating the sizable funding it reportedly secured on Wednesday – but there’s reason to remain cautious in investing in this EV company.

To begin with, it has rallied rather sharply over the past six months.

So, much of the good news may already be priced into VFS. But a bigger concern is: can we expect good news from VinFast in the first place?

VinFast stock was a big disappointment when it reported its financial results for the second quarter in September – and while its outlook for full-year deliveries was upbeat, I’m not fully convinced that it will be able to meet much less beat it in 2024.

The Vietnamese firm expects to deliver a total of 80,000 vehicles this year.

But its deliveries were capped at 22,000 only in the first half, which means VinFast has to deliver 58,000 vehicles in the back half to meet its guidance.

And yes, VFS has been seeing rapid growth, but hitting that number in H2 would still be challenging, to say the least.

VFS may fail to meet its deliveries guidance

It may be wise to remain cautious on VinFast stock also because it’s losing money.

In fact, the Nasdaq-listed firm lost 33 cents a share in its fiscal Q2 – up from 24 cents a year ago and 21 cents that experts had forecast.

Shares of this automaker are somewhat unattractive because its management continues to talk about the ability to successfully expand into Europe and the United States but is yet to meaningfully deliver on that commitment yet.

Our market analyst Crispus Nyaga also recommends avoiding VFS stock that doesn’t pay a dividend at writing.

Still, Wall Street currently has a consensus “buy” rating on VinFast shares. Analysts see upside in them to $8.0 on average that signals potential for a 100% gain from here.

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Asian markets experienced declines on Thursday as concerns over Federal Reserve rate cut prospects loomed, following positive US economic data.

Asian stocks showed varied performances, with markets in Japan, Australia, and South Korea down, while mainland China and Hong Kong saw slight gains, supported by new manufacturing data from China.

The Bank of Japan’s decision to keep interest rates unchanged affected the yen, which remained volatile, maintaining its position at roughly 153 to the US dollar.

Meanwhile, US futures declined amid post-market losses from tech giants Microsoft and Meta, whose quarterly earnings underperformed.

Rate cuts in question as robust US data reshapes expectations

Data showing strong US economic growth has added a layer of uncertainty regarding the Federal Reserve’s direction on rate cuts.

The US economy posted solid expansion in the third quarter, with gains driven by consumer spending and defense investments.

Additionally, core inflation stood at 2.2%, aligning with the Fed’s long-term goals and suggesting stability, which could slow the pace of any potential rate easing.

Amidst the economic strength, the dollar showed resilience, on track for its best monthly performance in two years.

A surge in implied volatility of the Bloomberg Dollar Spot Index suggests traders are preparing for larger fluctuations in major currency pairs, including the euro, yen, yuan, and Mexican peso.

Market volatility hits bonds and fuels rate cut doubts

Government bonds globally saw mixed results on Thursday.

US Treasury yields were down slightly, while Australian and New Zealand bond yields edged higher, reflecting a market on edge over policy uncertainties.

A key index tracking global bond performance reached its lowest point in nearly three months on Wednesday.

“Strong economic indicators are dampening the likelihood of a Fed rate cut,” said Daniel Yoo, head of global asset allocation at Yuanta Securities, noting that high inflation and economic growth could delay rate adjustments.

Yoo also highlighted the impact of the upcoming US presidential election on inflation, with potential policy shifts under Donald Trump or Kamala Harris.

Investor focus shifts to corporate earnings and commodity prices

Corporate earnings in Asia played a central role, with Samsung’s chip operations failing to meet profit expectations and BYD’s shares falling despite surpassing Tesla in quarterly revenue.

Investors focused more on BYD’s revenue per vehicle, which did not match forecasts.

In commodities, oil prices rose slightly, continuing an upward trend from the previous session.

Gold steadied at $2,787 per ounce after hitting a record high earlier, driven by demand amid market uncertainties and the upcoming US elections.

Key upcoming economic events

Market watchers are gearing up for a range of high-impact data releases this week:

• Eurozone CPI and unemployment figures on Thursday
• US personal income and inflation data on Thursday
• Amazon and Apple earnings reports on Thursday
• China’s Caixin manufacturing PMI on Friday
• US employment and ISM manufacturing data on Friday

Elsewhere, Taiwan temporarily halted stock trading on Thursday as Typhoon Tai-Kong approached the island, bringing safety precautions and causing temporary market disruption.

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China’s manufacturing sector showed signs of recovery in October, with the Purchasing Managers’ Index (PMI) edging up to 50.1, marking the first expansion in six months.

This uptick, combined with a slight rise in the non-manufacturing PMI to 50.2, suggests that Beijing’s recent stimulus measures are beginning to lift economic activity and boost confidence across sectors.

As China grapples with a sharp property market downturn and subdued consumer sentiment, this latest data signals potential early success for policymakers aiming to reach the year’s 5% growth target through renewed fiscal support.

The increase in October’s PMI, moving from September’s 49.8 and crossing the critical 50-point threshold that separates growth from contraction, indicates a gradual improvement in manufacturing.

Additionally, the non-manufacturing PMI, which covers both construction and services, crept up from 50.0 in September to 50.2 in October.

The positive momentum across sectors highlights the initial effects of Beijing’s strategic fiscal moves, especially the surge in government bond issuance over recent months.

A significant part of China’s renewed fiscal approach includes accelerating government spending, largely funded by a record government bond issuance seen in August and September.

These funds have reportedly bolstered infrastructure and other critical investments, infusing cash into sectors facing prolonged challenges, particularly construction and manufacturing.

According to Xu Tianchen, a senior economist at the Economist Intelligence Unit, the heightened issuance of bonds is a key driver of this initial recovery phase.

Xu noted that the extra liquidity provided by the bonds directly translates to fiscal spending, signaling the government’s determination to tackle both immediate economic concerns and long-term financial stability.

China’s bold stimulus package

In late September, China, led by President Xi Jinping, introduced a robust fiscal and monetary package aimed at stabilizing its economy amid signs of a downturn.

The stimulus plan features 2 trillion yuan (around $284 billion) in sovereign bonds, allocating half to ease the debt burdens of local governments and the other half toward consumer support initiatives.

The People’s Bank of China (PBOC) also cut key interest rates, reducing the 1-year medium-term lending facility rate to 2% and the main policy rate to 1.5%, aiming to lower borrowing costs and encourage lending across sectors.

To revive the struggling real estate market, the government lowered the minimum down payment for second-time homebuyers from 25% to 15%.

This reduction is intended to drive home purchases and bring stability to the property market, which has faced prolonged challenges.

In a move to uplift financial markets, Beijing has allocated 500 billion yuan in loans for investment funds and brokers, supplemented by 300 billion yuan to finance share buybacks for listed companies.

These measures are designed to bolster market confidence and counter the wealth erosion caused by the ongoing property crisis.

This comprehensive package marks a shift from earlier, more limited measures rolled out in May, underscoring Beijing’s commitment to a “whatever-it-takes” approach to economic stabilization as it pursues its 5% growth target for 2024.

Challenge lies in rebuilding consumer confidence

China’s economic challenges have been compounded by a struggling property market and tepid domestic demand.

However, early signs of recovery in manufacturing, alongside Beijing’s fiscal intervention, indicate that confidence might be gradually returning.

The proposed issuance of over 10 trillion yuan ($1.40 trillion) in additional debt in the coming years, primarily to address local government debts, could further shore up confidence and ensure a more stable fiscal outlook.

This large-scale debt issuance, anticipated to be approved soon, would provide crucial support for local governments managing significant off-the-books debt, allowing them to reinvest in local economies and stabilize financial conditions.

For China to sustain these early signs of recovery, it will need to manage key risks in both the domestic and international arenas.

Domestically, the challenge lies in rebuilding consumer confidence and addressing property market fragility, which remains a major drag on economic activity.

Externally, China’s manufacturing sector remains sensitive to global demand shifts, trade policies, and geopolitical tensions, particularly with major trading partners like the United States.

Overall, the October PMI expansion serves as an encouraging sign of China’s fiscal support making an impact, but sustained recovery will require continued policy adjustments and targeted support to navigate domestic and global uncertainties.

Policymakers are likely to maintain a fine balance between stimulating growth and managing debt risks to keep the world’s second-largest economy on course toward its growth goals.

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