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Eurozone avoids contraction but domestic demand falters

Despite the energy – and subsequent inflation – crisis, the eurozone economy once again defied recession in the fourth quarter, showing incredible resilience. But it was a narrow escape. Most economies are currently stagnating with near-zero growth. Germany and Italy, as big industrial economies, have seen slight contractions as they suffer more from the energy crisis while France and Spain have managed to eke out small growth rates. Ireland grew by a whopping 3.5% – the recent swings in Irish GDP are to a large degree driven by multinational accounting ...

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China’s impact on the fate of the global balance sheet

Just as a corporate balance sheet can provide insights into a company’s financial health, a “global balance sheet” (GBS), tallying the assets and liabilities of governments, corporations, households, and financial institutions, can do the same for the world economy. That logic drove the McKinsey Global Institute (MGI) to begin compiling, and regularly updating, a GBS covering 10 countries that together represent more than 60 percent of the world GDP. MGI’s first GBS, released in late 2021, showed that during the first 20 years of this century, global assets grew faster ...

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UBS flags uncertain year ahead after profit beats forecasts

UBS, Switzerland’s biggest bank, forecast an uncertain year ahead due to the war in Ukraine and sagging client confidence on Tuesday, despite trumping expectations for 2022 with a $7.6 billion net profit. The world’s largest wealth manager kicked off a round of business results for Europe’s banks, after Wall Street embarked on job cutting in the face of fading economic growth. Shares in UBS slipped close to 4% after it cautioned that inflation and the war in Ukraine were clouding the future, dampening the mood among its wealthy clients. It ...

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China: PMI positively surprises the market

Surprise from the non-manufacturing PMI The headline manufacturing PMI was 50.1 in January, the same as the consensus, but much better than the 47.0 reading for December. January in 2023 is a month of long holidays, so manufacturing activity was not strong. The bigger surprise (and good news) came from the non-manufacturing PMI, which came in at 54.4 in January, a lot better than the consensus of 52.0, and sharply up from the 41.6 reading in December. This suggests that the consumption recovery during the Chinese New Year holidays will ...

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For ASEAN countries, IMF sees slower global growth outweighing China reopening

International Monetary Fund economists said on Tuesday that Singapore and other Southeast Asian economies are seeing downgrades to their 2023 growth outlooks because slowing global growth will outweigh the positive impact from China’s economic reopening. Chief economist Pierre-Olivier Gourinchas told a news briefing on the IMF’s latest global growth forecasts these forces prompted the IMF to reduce Singapore’s GDP growth outlook for 2023 to 1.5% from a 2.3% forecast issued last October. IMF’s 2023 forecast for ASEAN-5 – Singapore, Malaysia, Vietnam, Indonesia and the Philippines – was cut to 4.3% ...

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IMF lifts 2023 growth forecast on China reopening, strength in U.S., Europe

The International Monetary Fund on Tuesday raised its 2023 global growth outlook slightly due to “surprisingly resilient” demand in the United States and Europe, an easing of energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions. The IMF said global growth would still fall to 2.9% in 2023 from 3.4% in 2022, but its latest World Economic Outlook forecasts mark an improvement over an October prediction of 2.7% growth this year with warnings that the world could easily tip into recession. For 2024, the ...

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Many European sectors will suffer from a weak economy in 2023

Energy prices still a drag but gas and power markets have eased Given the circumstances, European companies could not have hoped for a better situation during the first half of the heating season. Demand destruction, milder-than-usual weather and continued LNG supply have ensured that storage levels are still at record-high levels. Day-ahead TTF gas prices have fallen as much as 83% from the peak in August 2022 and APX power prices by 75%. This leaves Europe in a better-than-expected position for the remainder of this winter and the same is ...

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China’s industrial profits contract in 2022 on COVID woes

Profits at China’s industrial firms fell 4% in 2022 from a year earlier, official data showed on Tuesday, squeezed by the impact of strict COVID-19 curbs, but an expected economic recovery this year is likely to revive the sector’s sales and earnings. The percentage decline for the full year was deeper than the 3.6% fall recorded in the first 11 months, the National Bureau of Statistics (NBS) data showed, indicating a poor end to the year. The 8.4 trillion yuan ($1.24 trillion) decrease in profits in 2022 followed a 34.3% ...

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ECB Preview: Meeting-by-meeting forward guidance

Summary: Underlying price pressures remain firm, with Euro area core inflation hitting a new high of 5.2% in December. We believe the European Central Bank (ECB) will hike policy rates 50 basis points at its February meeting, and indicate that it plans to raise interest rates further. We expect some guidance towards another 50 basis point rate hike in March, before a potential pivot towards moving in more traditional 25 basis point increments in May. We think the Governing Council (GC) will make clear that a restrictive policy setting might ...

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EU commissioner: we don’t want a subsidy war with U.S

The European Union does not want to wage a subsidy war against the United States over its Inflation Reduction Act, EU Commissioner Paolo Gentiloni said in Berlin on Tuesday. The EU Commission plans to present a package to promote European industry on Wednesday in response to the U.S. government’s 370-billion-dollar subsidy package to promote climate-friendly technologies. The EU said in December it would adapt its state aid rules to prevent an exodus of investment triggered by the Inflation Reduction Act, fearing it might lure away EU businesses and disadvantage European ...

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China foreign minister seeks stronger economic ties with Saudi Arabia

China’s new foreign minister Qin Gang wants to build stronger ties with Saudi Arabia and set up a China-Gulf free trade zone “as soon as possible”, according to a ministry statement published late on Monday. Qin, who was just recently named to the position, made the suggestion in a telephone conversation with his Saudi Arabian counterpart, Prince Faisal bin Farhan Al Saud, adding that China highly appreciates Saudi Arabia’s consistent firm support on issues involving China’s core interests. He said the sides should further expand cooperation on economy, trade, energy, ...

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Disillusioned at home, super-rich Chinese set their sights on Singapore

Like many rich Chinese, graduate student Zayn Zhang thinks Singapore could be ideal to park his family’s wealth. He’s hoping that studying at a university in the Asian financial hub will lead to permanent residency and while the 26-year-old hits the books, his wife is out looking for a S$5-7 million ($4-5 million) penthouse. “Singapore is great. It is stable and offers a lot of investment opportunities,” Zhang told Reuters at a business and philanthropy forum here late last year. His family might establish a Singapore family office to manage ...

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EU tests banks’ ability to withstand ‘high-for-long’ interest rates

European Union banking regulators on Tuesday launched a stress test to check how banks could cope with a long period of high inflation and interest rates just as the European Central Bank is expected to raise borrowing costs further. The latest bi-annual stress test reflects the change in the macroeconomic environment, as Russia’s invasion of Ukraine has helped to push inflation in Europe to decades-highs and interest rates have risen rapidly to tackle it. The previous stress test in 2021 was set against a “low for long” interest rate backdrop. ...

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Veterans of 2011 U.S. debt-ceiling fight see tougher battle ahead

A Democratic president. A new Republican majority in the U.S. House of Representatives pushing for sharp spending cuts. A rapidly growing pile of debt – and a showdown that threatens to throw the global economy into turmoil. Sound familiar? Those elements driving the debate over raising the federal government’s $31.4 trillion debt ceiling were also in place back in 2011, taking the country to the brink of default and prompting a downgrade of the country’s top-notch credit rating. Veterans of that battle warn that this time around the politics and ...

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Euro zone banks tighten credit by most since debt crisis, ECB says

Euro zone banks have tightened companies’ access to credit by the most since the 2011 debt crisis and expect to continue doing so as they turn more pessimistic on the economy amid rising borrowing costs, a European Central Bank survey showed on Tuesday. But demand for loans from enterprises and households also fell for the same reasons, with the drop in demand for mortgages the biggest on record, the ECB’s quarterly Bank Lending Survey showed. The results showed the ECB’s steady diet of interest rate hikes, which began in the ...

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