Baseline Macroeconomic Scenarios for Rated Sovereigns September 2024 Update

This commentary provides an update to Morningstar DBRS' Baseline Macroeconomic Scenarios. These baseline scenarios provide our estimate of the current market consensus, and are drawn from the median forecasts of various external contributors.

Key Highlights include:
-- Revisions to consensus forecasts for covered economies have been mixed in recent months. The outlook for most major economies has been broadly stable.
-- The baseline continues to point to a soft landing in the US and China, and a gradual acceleration in growth in Canada, Europe and Japan. Inflation is receding while labor markets are holding strong.
-- We see continued risks of further geopolitical, election, or policy surprises, but these seem unlikely to derail the benign outlook.

"We expect the central banks in the Americas and Europe to continue reducing interest rates, moving policy rates toward neutral and helping avoid a deeper downturn in labor markets." notes Thomas Torgerson, Managing Director, Global Sovereign Ratings for Morningstar DBRS. "Nonetheless, we could see negative labor market surprises over coming quarters."