Global economy braced for US election result, and other economic stories to read this week

One story dominates the financial pages: the United States will choose its next president in a closely watched election on Tuesday, 4 November, featuring a tight race between Republican Donald Trump and Democrat Kamala Harris.

The election outcome will have far-reaching consequences for global markets, economic policy and central bank strategies, with investors hoping for a decisive result to mitigate prolonged uncertainty.

Reuters highlights the key events that underscore the stakes next week, including Federal Reserve interest rate decisions and China’s trade data release.

Japan's government has lowered its GDP growth forecast for the current fiscal year to 0.7%, down from 0.9%, as weakening exports weigh on the economy, Reuters reports.

“High prices are hitting low-income earners, and we need to launch measures to support their lives,” the Cabinet Office stated, highlighting the need for action.

While the growth outlook for the next fiscal year remains at 1.2%, this latest downgrade signals mounting pressure from slowing global demand and lacklustre domestic consumption.

In response, Prime Minister Shigeru Ishiba's administration is set to unveil a significant spending package aimed at easing the burden of rising living costs and revitalizing the economy.

Japan's central bank said on Friday it expects rising minimum wages to drive inflation, particularly in the services sector. The average minimum wage is set to increase by a record 5.1% for the fiscal year ending March 2025.

This wage growth is vital for sustainably reaching the 2% inflation target, with a 1% rise in the minimum wage predicted to increase services prices by 0.07 percentage points, according to the Bank of Japan's quarterly outlook.

Colombia's central bank has taken a cautious approach to interest rate cuts amid fiscal risks impacting the peso, which has fallen to its weakest level in over a year, reports Bloomberg. The board voted 4-3 to lower the benchmark rate by 0.5 percentage points to 9.75%, with some members advocating for a larger cut to 9.5%.

US job growth slowed in October with a 12,000 increase in non-farm payrolls last month - much lower than the 113,000 economists had forecast - and fewer than any month since December 2020, Reuters reported. The unemployment rate remained at 4.1%, suggesting the labour market remains strong.

Eurozone inflation surged to 2% in October, exceeding forecasts of 1.9% and rising from September's 1.7%, driven by higher services and food prices, reports Euronews. Germany saw unexpected price increases, contributing to a stronger euro. Meanwhile, the unemployment rate in the euro area remained steady at a record-low 6.3%.

New home prices in China rose faster in October, hinting at the positive impact of recent support measures. A survey by China Index Academy revealed that average prices across 100 cities climbed by 0.29% month-on-month, up from 0.14% in September, with year-on-year growth rising to 2.08% from 1.85%.

Meanwhile, the UK's house prices inched up by just 0.1% in October, a notable slowdown from September's 0.6% increase and below economists' forecast of 0.3%. Despite this, the market remains resilient and is expected to gain momentum as borrowing costs decline, mortgage lender Nationwide said.

Australian household spending fell in September as consumers cut back on clothing and cars, suggesting recent tax cuts are being saved rather than spent. This could lead the Reserve Bank of Australia to adopt a more dovish stance at its upcoming policy meeting, economists predict.

The Swiss National Bank reported a profit of 5.67 billion Swiss francs ($6.55 billion) for the third quarter, largely due to the increasing value of gold. The central bank made 4.41 billion francs from its gold holdings, according to Reuters. Gold prices have risen over 31% this year, reaching record highs following the US Fed's recent interest rate cut.

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