The global economy in 5 points, what is happening in the world?

12 December 2023 - 15:00

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5 points to explain what significant happened this week to the global economy. Crisis or recovery? Data and events have given some relevant indications.

The global economy in 5 points, what is happening in the world?

The global economic situation summarized in 5 key points: what is happening around the world?

Some various data and events have characterized the world economy in recent days. In a context in which growth is slowing, inflation remains under special observation with risks of increasing, wars and geopolitical tensions create a very uncertain immediate scenario, and events of economic importance are carefully observed.

From the USA to Japan, up to Europe and emerging markets, macro data continues to portray a global economic situation poised between recovery and crisis.

1. Where is the USA going?

The US job market is under the lens. Payrolls increased by 199,000 last month. The strong data shifts focus to next week’s inflation data as Fed officials consider how long to keep interest rates at 5.5%.

Meanwhile, consumer sentiment recorded a clear recovery in early December, exceeding all forecasts, as families scaled back their inflation expectations for the following year as never before in 22 years.

Consumers see prices rise at a 3.1% annual rate through 2024, the lowest level since March 2021. The 1.4 percentage point decline from the previous month was the largest since October 2001.

2. Europe in crisis

The week’s data did not bode well for Europe.

Industrial production in Germany and Italy fell at the start of the last quarter of the year, after France and Spain reported similar results, indicating a possible recession in the region.

3. Japan in the balance

Japan’s economy has contracted at the sharpest pace since the height of the pandemic, an outcome that complicates the Bank of Japan’s policy path amid growing speculation that it is moving closer to the abolition of the world’s last negative rate regime.

Gross domestic product contracted at a pace of 2.9% in the three months to September compared with the previous quarter.

Japanese investors are in the sights of global economists. In the last twenty years, they have purchased properties abroad, amid the global real estate crisis and the decline of the yen to its lowest level in the last 50 years.

Flush with cash and in the only developed economy with access to ultra-low borrowing rates, their purchases are providing some relief to the market as rising office vacancies and interest rates keep other buyers away.

4. Trade at risk?

The Panama Canal, which revolutionized global trade, is blocked by drought. The simultaneous disruption of Suez, the two vital corridors for the passage of goods, is threatening global supply chains in the run-up to Christmas.

Shippers around the world must now find alternatives. Each option carries additional costs, at a time when governments around the world are struggling to tame inflation.

As highlighted by the Financial Times, more than half of the volume of container shipments expected to connect Asia and North America were expected to pass through the Panama or Suez canals during the third quarter of this year, according to trade analysis group MDS Transmodal. ’year.

5. Good news for inflation

Price increases in OECD countries slowed in October to the weakest level in two years, a sign that advanced economies are overcoming the worst inflation crisis in decades.

The headline figure for the 38-member club, which includes all Group of Seven economies, fell to 5.6% from 6.2% as food cost pressures eased rapidly and food prices energy have declined in most countries.

Original article published on Italy 2023-12-09 13:27:04. Original title: L’economia globale in 5 punti, cosa sta succedendo nel mondo?

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