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2024 SEI ® Data as of 12/31/2023 unless otherwise indicated. 3 performer. The U.K. and Europe posted minimal gains in overall economic growth in the first three quarters of 2023, while Japan managed to register a notable year-to-date gain in gross domestic product (GDP), despite a contraction during the third quarter. Our more sanguine view on the U.S. contrasted with the consensus of economists, the majority of whom saw a better than 50/50 chance that the U.S. was or would soon be in recession. Exhibit 3: The U.S. still leads the way Source: FactSet, SEI. Our relative optimism on the U.S. at the beginning of the year notwithstanding, we did not expect economic activity to be as strong as it turned out to be. Not only did the U.S. avoid recession, gross domestic product (GDP) managed to advance at an above-average pace through the first three quarters of the year, highlighted by a blowout 4.9% annualized rate of gain in the July- September period. This continued a streak of superior performance relative to other major advanced economies. Inflation- adjusted GDP through the third quarter in the U.S. amounts to a cumulative 7.4% increase above the pre-COVID peak registered in the fourth quarter of 2019. By comparison, U.K. GDP was only 1.8% higher (about the same as France). The U.K. also reports GDP on a monthly basis; overall activity apparently declined 0.3% in October from September (not annualized). Germany was the notable laggard among developed countries for the first three quarters of 2023, posting a cumulative GDP gain of just 0.3% over the period. Although COVID disruptions hit Germany's overall economic activity less harshly than some other countries, its heavy manufacturing base and its extensive trading relationship with an underperforming China have taken a toll in recent years. Russia's early-2022 invasion of Ukraine, leading to the elimination of Russian natural gas imports, made a difficult economic situation worse. Elsewhere, China was a particular disappointment. Although it probably grew about 5% in 2023, its performance should have been far stronger because the country came out of COVID lockdown at the start of the year and faced easy comparisons against activity levels a year earlier. Household spending on restaurants and travel within the country rebounded, but property markets are moribund and, consequently, consumer confidence is low. Business confidence also is at an ebb, as more than a dozen business leaders from industries including technology, finance and real estate have gone missing, faced detention or are subject to corruption probes. This has cast a pall over the business community, as people in high places wonder who is next. Exhibit 4 shows that China got off to a fast start in 2023. The economy appeared to be moving in the right direction, and investors piled into the country's stock market with enthusiasm. By late January, the MSCI China Index (Net) was already up 17% on a year- to-date basis. However, the good times didn't last long. Even though the economic data continued to surprise on the upside, equity prices started sliding again. For 2023 overall, the MSCI China Index (total return) posted an 11% decline and a 24% drop from its peak in January. 75 80 85 90 95 100 105 110 115 2018 2019 2020 2021 2022 2023 Index, first quarter 2018 = 100 Inflation-adjusted GDP in local-currency terms, indexed levels U.S. Canada U.K. France Italy Germany Japan

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