global-economy5.255 min read
US sells euros to back the yen, catching the ECB by surprise
19 days ago•Source: Financial Times
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7.195 min•29 days ago
Japan’s comeback on a dangerous debt tightrope
Japan’s long deflationary era is fading as growth and pricing power return, but the country’s debt burden (over 200% of GDP) and ongoing fiscal support raise long‑term yields and put pressure on policy. The BoJ’s yield management, a plunging yen, and rising import costs complicate stability, and while Tokyo can likely weather pressures for now through domestic holders and reserves, higher rates abroad could spill over to other governments’ borrowing costs in a more synchronized global move.
4.695 min•2 months ago
OECD warns prolonged Gulf energy shock could trigger global slowdown
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Middle East conflict lifts mortgage costs worldwide despite steady policy rates
Financial Times•3 months ago
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China’s Housing Slump Echoes Japan, But Path Ahead Remains Unclear
Financial Times•3 months ago
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US fuel shock outpaces G7 as Iran conflict rattles pumps
The Iran crisis has triggered the sharpest fuel-price surge in the US among G7 economies, with petrol up about 42% since late February to an average of $4.39 a gallon and diesel up 48% to $5.57, even as major producers pause output increases. JPMorgan notes US prices are pressured by exports to Asia and thinning inventories, while higher taxes and subsidies abroad cushion pump-price swings elsewhere. The rise comes ahead of the summer driving season and poses inflation and political risks for President Trump, despite the US still generally paying less per litre than Canada or the UK.
Central banks warn US-stablecoins could deepen dollarisation in emerging markets
Senior central bankers warn that the rapid rise of USD-denominated stablecoins used in international payments could accelerate dollarisation in emerging markets, threaten monetary sovereignty, and facilitate illicit activity and capital-control evasion; while some officials see faster, cheaper cross-border payments as a benefit, regulators are racing to craft rules and a BIS-led effort to tokenize deposits aims to counter the threat; EM holdings of dollar stablecoins could reach about $1.22tn by 2028, up from roughly $173bn today.
Geopolitical shock tests the dollar’s haven status
Geopolitical strikes on Iran trigger a modest market wobble, but the bigger takeaway is that US Treasuries are weakening instead of acting as a safe haven, signaling that investor appetite for safe assets may be shifting amid inflation risk and policy uncertainty under Trump and the Fed. While stocks slide slightly and oil rises, gold is drawing bids as markets reassess the crisis, with policymakers’ paths still unclear ahead of the midterm elections.
"China's Bold Industrial Strategy: A Glimpse into the Future"
China has surged ahead in global manufacturing, particularly in clean energy, by leveraging government and banking power, and fostering competition among private companies. The U.S. and Europe are now trying to catch up by investing heavily in domestic industries and blocking Chinese products, but China's decades of experience and infrastructure investments give it a significant advantage.
G7 Unites Against China's Economic Threats
France's Finance Minister Bruno Le Maire warns that the global economy is at risk due to a surplus of cheap Chinese exports, a concern echoed by the Group of Seven. Le Maire emphasizes the need to address China's economic model, which he believes threatens not just the EU and the US, but the entire world economy.
"Global Economy's Resilience Masks Rising Debt and Inequality Amid Uneven Growth"
The global economy appears to be heading for a soft landing in 2024, with the US, UK, and Germany showing signs of resilience and growth. However, this positive outlook is overshadowed by increasing levels of debt, division, and inequality, posing significant risks to the world economy.
"Assessing Global Economic Recovery: Diverging Prospects and Uncertainty in 2024"
The US and India are generating optimism for global economic growth in 2024, with both countries expected to play significant roles in driving the recovery. As the world emerges from the pandemic, the collaboration and economic policies of these two nations are seen as key factors in boosting the global economy.
IMF Chief Urges Caution Amidst Weak Global Economy
The head of the International Monetary Fund has warned that the global economy is facing a decade of weak growth, citing factors such as aging populations, low productivity, and the aftermath of the pandemic. She emphasized the need for policies to address these challenges and promote sustainable and inclusive growth.
"OECD Warns of Inflation Risk Amid Red Sea Tensions"
The OECD warns that ongoing tensions in the Red Sea could lead to significantly higher inflation due to a 100% rise in seaborne freight rates, potentially increasing import price inflation across its 38 member countries by nearly 5 percentage points. Major shipping firms began diverting vessels away from Egypt's Suez Canal in late 2023, leading to longer journey times and capacity reduction in the global market. While the shipping industry had excess capacity last year, the OECD is closely monitoring the situation and notes positive data showing inflation coming down among its members. The organization also adjusted its economic growth forecast for the U.S., euro zone, and U.K.
IMF Upgrades Global Growth Forecast, Anticipates Inflation Retreat
The International Monetary Fund (IMF) has raised its global economic growth outlook, expecting a 3.1% growth rate in 2024 and 3.2% in 2025, with inflation projected to decrease. The U.S. is anticipated to experience a soft landing with a slowdown in growth, while the euro area may struggle. Global trade is projected to grow at a slower rate, and concerns persist about the banking system's exposure to commercial real estate. The IMF foresees central banks maintaining current interest rates until the second half of 2024, and notes a trend of increasing protectionist measures impacting globalization.