Category Archives: Global economy

G20’s dysfunctional family show little sign of working together in a crisis

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Communique unlikely to stretch beyond usual platitudes despite the need for a global plan for recovery

The Cambodian prime minister, Hun Sen, was struck down by Covid, the Argentinian prime minister, Alberto Fernández, had gastroenteritis and the Russian foreign minister, Sergei Lavrov, either did or did not have chest pains that sent him to hospital. Given that Indonesia’s G20 slogan plastered all around Bali says: “Recover Together, Recover Stronger”, it was not an auspicious performance by the world’s leaders.

Unfortunately, there is precious little sign of recovery at the G20, either at a political or economic level.

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Climate-focused reform of World Bank could be done in a year, says Al Gore

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Former US vice-president says bank should refocus its spending and end its role in ‘fossil fuel colonialism’

Fundamental reform of the World Bank could be completed within a year, to refocus its spending on the climate crisis and end its contribution to “fossil fuel colonialism”, according to the former US vice-president Al Gore.

“I don’t know why it need take longer than a year,” said Gore, a longtime campaigner on the climate crisis since leaving politics, in an interview with the Guardian at the Cop27 UN climate summit. “We have an emergency on our hands.”

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We need to talk about Xi Jinping: G7’s discord over powerful trading partner

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Disagreements have opened up about strategy when China is also seen as an existential threat

Western powers in the G7 group of nations are failing to coordinate their China strategies, senior western officials admit, adding that the need to do so has been given sharp impetus by Xi Jinping’s consolidation of power at this month’s Communist party congress.

The G7’s poor coordination reflects a deep disagreement, also reflected within the EU, about whether dialogue and trade with China have a future if Beijing is seen as an existential threat that requires strict strategic controls on economic ties.

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Hong Kong launches $3.8bn fund to attract foreign businesses back

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Chief executive says territory will ‘trawl world for talent’ after lockdowns and political unrest cause brain drain

Hong Kong has unveiled a HK$30bn ($3.8bn) co-investment fund to attract overseas businesses back to the city after an exodus of talent prompted by strict lockdowns and a tumultuous political climate.

A raft of measures to address the brain drain were announced by Hong Kong’s chief executive, John Lee, in his first policy address on Wednesday – although his plans have largely failed to reassure investors.

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Cutting oil output risks global economy, warns US Treasury secretary

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Janet Yellen’s comments come as figures show business activity declining across most UK regions

The world’s biggest oil-producing nations cutting production at a time of soaring energy costs is “unhelpful and unwise” for global economic growth, the US Treasury secretary has warned, amid intense pressure from sky-high inflation.

Ahead of meetings hosted by the International Monetary Fund in Washington this week, Janet Yellen said the move by Opec+ – the oil production cartel led by Saudi Arabia, plus Russia – risked undermining the world economy.

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Fears grow over oil price as Opec+ agrees to bigger than expected output cuts

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Cartel curbs production by 2m barrels a day despite strong US pressure, further squeezing supplies

The Opec oil cartel and its allies have agreed to a bigger than expected cut in oil production targets despite significant pressure from the US.

The Opec+ group of oil-producing nations signed up to a cut in output of 2m barrels a day, surpassing predictions earlier in the week of cuts of 1m to 1.5m barrels, squeezing supplies in a tight market.

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Ukrainian economy will shrink at rate eight times that of Russia, World Bank forecasts

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Kyiv economy will contract by 35% in 2022, compared with a 4.5% fall in Russian GDP

Ukraine’s economy will shrink at a rate eight times that of Russia this year as a result of the war triggered by Moscow’s invasion in February, the World Bank has estimated.

In its latest report on Europe and central Asia, the Washington-based institution said the Ukrainian economy would contract by 35% in 2022, compared with a 4.5% fall in Russian GDP.

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China growth lags Asia-Pacific for first time in decades as World Bank cuts outlook

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East Asia and Pacific annual growth forecasts downgraded from 5% to 3.2% as China’s economy cools, largely due to zero-Covid policy

Covid-zero policies and the housing market crisis have put China’s economic growth behind the rest of the Asia-Pacific region for the first time in more than 30 years, according to World Bank forecasts.

In a biannual report released on Tuesday, the US-based institution said the annual growth outlook for East Asia and the Pacific region had been downgraded from 5% to 3.2%. However much of that decline was down to economic woes in China, which constitute’s 86% of the region’s economic output.

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World Bank warns higher interest rates could trigger global recession

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Study says global economy is in steepest slowdown after a post-recession recovery since 1970

The world may be edging toward a global recession as central banks simultaneously raise interest rates to combat persistent inflation, the World Bank has warned.

The three largest economies, – the US, China and the eurozone – have been slowing sharply, and even a “moderate hit to the global economy over the next year could tip it into recession”, the bank said in a study.

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Huawei founder sparks alarm in China with warning of ‘painful’ next decade

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Ren Zhengfei writes in leaked memo that ‘chill will be felt by everyone’ and company must focus on survival

The founder of Huawei has delivered a stark warning for the tech company’s future, sparking alarm with the frankness of his assessment and what it signals for smaller businesses amid China’s economic troubles and a global downturn.

In a leaked internal memo, Ren Zhengfei told Huawei staff “the chill will be felt by everyone” and the company must focus on profit over cashflow and expansion if it is to survive the next three years, indicating further job cuts and divestments.

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Oil prices hit lowest level since Ukraine invasion on China growth fears

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Chinese recovery from lockdowns shows signs of fizzling out as central bank cuts interest rates

Global oil prices have dropped amid concerns over weaker growth in the Chinese economy caused by repeated Covid lockdowns and a downturn in the property sector.

A barrel of Brent crude fell by about 5% to below $94 (£78) on Monday, hitting the joint lowest levels since the Russian invasion of Ukraine as traders reacted to weaker figures from the world’s second-largest economy.

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China’s export sector posts stronger than expected figures for July

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Outbound shipments grew 18% after struggle with shortages of raw materials and lockdowns in first half of year

China’s export industries performed strongly last month after spending the first half of the year hampered by shortages of raw materials and pandemic-related lockdowns at major ports.

Offering an encouraging boost to the economy, outbound shipments grew 18% in July from a year earlier, the fastest pace this year, official customs data showed on Sunday, beating analysts’ expectations for a 15% gain, though imports remained sluggish.

Analysts had expected exports to fade amid growing signs that Europe, the US, UK and Australia are heading for recession, dampening the outlook for global consumption.

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China’s factory activity shrinks amid Covid disruption

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Sharpest contraction is in energy-intensive industries, such as petrol, coking coal and ferrous metals

China’s factory activity unexpectedly shrank in July as sporadic Covid outbreaks disrupted the sector and the slowing global economy weighed on demand.

The official manufacturing purchasing managers’ index (PMI) fell to 49.0 in July from 50.2 in June, China’s National Bureau of Statistics said on Sunday. That was weaker than forecast, below the 50-point mark separating expansion from contraction.

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IMF slashes global growth forecast as top three economies ‘stall’

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Problems in the US, China and eurozone will result in first contraction since start of pandemic, report says

The International Monetary Fund has slashed its growth forecasts for the next 18 months after warning that the world’s three biggest economies are all stalling and inflation is higher than previously forecast.

In a downbeat update to its April world economic outlook (WEO), the IMF said problems in the US, China and the eurozone had resulted in global output falling in the second quarter of this year – the first contraction since the start of the Covid-19 pandemic.

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Sunak ruse aims to outmanoeuvre Truss over China

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Analysis: claims by ex-chancellor about Foreign Office weakness towards Beijing look like an attempt to head off a similar attack on him

Rishi Sunak’s pre-emptive strike attacking Liz Truss over alleged Foreign Office pusillanimity towards China looks to have been a daring attempt to fend off an imminent assault from his Tory leadership rival.

But it locks the contestants into a potentially uncontrollable dogfight as they seek to prove their credentials as the truer enemy of authoritarianism.

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Ukraine and Russia sign UN-backed deal to restart grain exports

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Shipping of millions of tonnes from blockaded Black Sea ports could avert global food crisis

Ukraine and Russia have signed a UN-backed deal to allow the export of millions of tonnes of grain from blockaded Black Sea ports, potentially averting the threat of a catastrophic global food crisis.

A signing ceremony at Dolmabahçe Palace in Istanbul was attended by the UN secretary general, António Guterres, and Recep Tayyip Erdoğan, Turkey’s president, who had played a key role during months of tense negotiations.

A coalition of Turkish, Ukrainian and UN staff will monitor the loading of grain on to vessels in Ukrainian ports before navigating a pre-planned route through the Black Sea, which remains heavily mined by Ukrainian and Russian forces.

Ukrainian pilot vessels will guide commercial vessels transporting the grain in order to navigate the mined areas around the coastline using a map of safe channels provided by the Ukrainian side.

The vessels will then cross the Black Sea towards Turkey’s Bosphorus strait while being closely monitored by a joint coordination centre in Istanbul, containing representatives from the UN, Ukraine, Russia and Turkey.

Ships entering Ukraine will be inspected under the supervision of the same joint coordination centre to ensure they are not carrying weapons or items that could be used to attack the Ukrainian side.

The Russian and Ukrainian sides have agreed to withhold attacks on any of the commercial vessels or ports engaged in the initiative to transport vital grain, while UN and Turkish monitors will be present in Ukrainian ports in order to demarcate areas protected by the accord.

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China’s economic growth slumps sharply after Covid lockdowns

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Shutdown of cities takes its toll, while property market remains in crisis and global outlook darkens

China’s economic growth has slowed sharply in the second quarter of the year, official data showed on Friday, highlighting the colossal toll from widespread Covid lockdowns and casting doubt over whether its pre-ordained growth target can be met.

Output contracted by 2.6% between April and June compared with the previous quarter, the statistics bureau said, prompting many economists to revise their predictions for the world’s second biggest economy.

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Russian war slowing growth and hiking inflation, European Commission warns

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Body revises economic forecast and says outlook for EU and eurozone heavily dependent on course of war

Europe’s economy faces the twin blows of slower growth and higher inflation as it struggles to deal with the fallout from Russia’s invasion of Ukraine, the European Commission has warned.

In its summer forecast, the governing body in Brussels said the “protracted war” was sending shockwaves through the eurozone and the wider EU, leading to a marked slowdown in activity next year.

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Europe could face energy rationing as ‘really tough winter’ looms, Shell boss warns

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Ben van Beurden says Ukraine war fallout means big rise in bills and possible need to ration supplies

European consumers could face the prospect of energy rationing this winter as costs continue to soar amid the risk of Russia cutting off gas supplies, Shell’s chief executive has said.

“It will be a really tough winter in Europe,” said Ben van Beurden, speaking at the Aurora spring conference in Oxford on Thursday. “We will all face very significant escalation in energy prices. In the worst case, Europe will need to ration its energy consumption.”

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Neglect Africa now and we will face labour shortages globally, IMF warns

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West’s response to effects of Covid and Ukraine war condemned as shortsighted ‘collective failure’ to invest in future human capital

The international community would be “playing with fire” if it failed to help Africa recover from Covid and the impact of the Ukraine war, the International Monetary Fund’s director for the continent has said.

Failure to invest and support the continent was shortsighted and detrimental to the global economy, as half of the new entrants into the global workforce over the next decade would come from sub-Saharan Africa, Abebe Aemro Selassie, director of the IMF’s Africa department, told the Guardian.

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