“The head of the World Bank has warned that Russia’s invasion of Ukraine could cause a global recession as the price of food, energy and fertiliser jump.
“David Malpass told a US business event on Wednesday that it is difficult to “see how we avoid a recession”. He also said a series of coronavirus lockdowns in China are adding to concerns about a slowdown.
“His comments are the latest warning over the rising risk that the world economy may be set to contract.”
https://www.bbc.co.uk/news/business-61575387
“Another Month Closer To Global Recession…
“The whole range of global data indicates exactly what markets have been pricing the entire year, since the beginning of Euro$ #5. The more time passes, the more most everything continues in this – not the inflationary – direction. That direction is firmly toward recession…”
https://seekingalpha.com/article/4514299-another-month-closer-global-recession
“Global Price Shock ‘Magnitudes’ Worse Than ’70s, Says Stiglitz.
“Two leading US economists have sounded warnings over the size of the current inflation shock as they attended the World Economic Forum’s annual meeting in Davos. The runup in prices is “an order of magnitude worse” than the 1970s, Nobel laureate Joseph Stiglitz told Bloomberg in the Swiss ski resort.”
“[Bellwether] Copper drops for the third consecutive day as recession fears escalate…
“Copper remains on the back foot around weekly low, prints three-day downtrend. China’s covid conditions, geopolitical headlines raise concerns over global economic downturn.”
“The Next Crisis to Hit Markets May Be About Liquidity.
“…liquidity has been slowly draining from various markets to the point where the Federal Reserve this month warned that it threatens financial stability. Investors who ignore this warning do so at their own peril.”
“Central banks hiking everywhere…
“Being late as a central bank means raising rates more aggressively and higher than would otherwise have needed to be the case. Often just as as the nation is entering a slow-down created by the runaway inflation the bank allowed in the first place.”
https://www.fxstreet.com/analysis/central-banks-hiking-everywhere-202205260456
“Davos elites fear ‘Volcker Moment’ as central banks draw their swords… Experts warn the Fed is ready to raise rates as high as 5pc – even if it results in a recession…
“There are mounting worries that the Fed will ultimately be forced to dish out the ‘Volcker’ medicine of the late 1970s. It has already begun to engineer a deliberate and (hopefully) controlled crash in equity and asset prices.”
“Rising Rates Are Battering Mortgage Lenders [US].
“Mortgage lenders are scrambling to survive a sharp drop-off in the number of homeowners refinancing their loans, with demand drying up as interest rates rise… the drop-off in refinancing activity is a giant blow because refinancings made up the bulk of U.S. mortgage originations throughout the pandemic.”
https://www.wsj.com/articles/rising-rates-are-battering-mortgage-lenders-11653471002
“Natural Gas Tops $9 in US as Supply Crunch Concerns Mount.
“Natural gas briefly surged above $9 per million British thermal units in the US for the first time since 2008, extending a breakneck rally as fears of a supply crunch intensified, before paring gains into close.”
“UK homeowners are spending more to live in their house than at any point in the last 15 years, with mortgage repayments equalling almost 33 per cent of monthly income.
“The cost of living crisis and increase in interest rates has put renewed pressure on property-owners, with house prices soaring and the cost of repayments nearing the 2008 financial crash levels.”
“The UK economy is “grinding to a halt” as a tightening cost of living squeeze sends a chill through private sector activity, reveals a closely watched survey.
“Households are cutting spending in response to rampant inflation eroding their budgets, weighing heavily on the UK’s services sector, the country’s economic engine.”
https://www.cityam.com/uk-economy-is-grinding-to-a-halt-amid-cost-of-living-crisis/
“Britain Faces Another Energy Shock as Bills Set to Surge 42%…
“British consumers will face another sharp jump in their power and gas bills in October, just as the price of about everything else is surging too… The sharp jump will pile even more pressure on Chancellor of the Exchequer Rishi Sunak to help consumers…”
“ECB warns a house price correction is looming as interest rates rise…
“A reversal in the region’s housing markets was one of the main risks identified by the ECB’s twice-yearly financial stability review(opens a new window), which also warned that Russia’s invasion of Ukraine meant more companies were likely to default due to lower growth, higher inflation and rising borrowing costs.”
https://www.ft.com/content/4ca7ff91-35bc-428e-8690-e3617afab47c
“Harsh winter may compel Europe to ration gas, warns International Energy Agency…
“”I’m afraid that I cannot exclude the risk this winter that we are facing a rationing of gas,” Mr Birol said during an interview at the World Economic Forum, the annual gathering of global business leaders in Davos, Switzerland. “I’m advising several European governments to prepare a contingency plan.””
“Europe’s primary aluminium smelters are continuing to curtail production in the face of soaring energy costs.
“The region’s output of the light metal has fallen by an annualised 550,000 tonnes over the last year with the slide still accelerating. Aluminium smelting is an energy-intensive business and Europe’s smelters were struggling with elevated power pricing even before Russia launched what it calls a “special military operation” in Ukraine.”
“China’s Economic Slump Shows No Signs of Bottoming Out in May…
“China’s economy remained deep in a slump in May as lockdowns continued to weigh on activity, and as the threat of omicron and expanded restrictions dampened sentiment… Bloomberg’s aggregate index of eight early indicators for this month… stayed below the mark that separates improving from deteriorating conditions for a second straight month.”
“100,000 Chinese officials attend emergency meeting to revive Covid-hit economy.
“China’s cabinet held an emergency meeting with more than 100,000 participants on Wednesday, according to state media, as top leaders urged new measures to stabilize an economy battered by the country’s stringent Covid-19 restrictions.”
https://edition.cnn.com/2022/05/26/business/china-state-council-economic-meeting-intl-hnk/index.html
“China Protesters Demand Back Billions Invested in Suspected Scam…
“Hundreds of people took to the streets of the largest city in China’s Henan province this week, calling on authorities to ensure the return of tens of billions of yuan invested in what could be one of the nation’s largest financial scams.”
“Food protectionism is on the rise in the developing world as governments try to safeguard local supplies, and the effects are threatening to spill over into richer economies.
“Countries are restricting exports to cope with high prices that have been exacerbated by the war in Ukraine. Malaysia just announced a ban on chicken exports, causing consternation in Singapore, which gets a third of its supplies from there. India has moved to curb wheat and sugar shipments…”
“Fuel Shortage in Laos Sees People Asked Not to Travel.
“The Laos government has called on residents to avoid unnecessary travel amid fuel shortages, citing the need to prioritize agriculture and other essential industries, according to local reports. Local farmers have complained that they are unable to plow their fields or irrigate their crops…”
https://www.theepochtimes.com/fuel-shortage-in-laos-sees-people-asked-not-to-travel_4485747.html
“They could not save their baby’: the human cost of Sri Lanka’s fuel crisis…
““The depressing memory for the parents that they could not save their baby just because they could not find a litre of petrol will haunt them for ever,” Pathirana said in a social media post, which accused the government of failing to protect the lives of vulnerable people.”
“Several major cities in Pakistan have become battlegrounds as supporters of ousted prime minister Imran Khan march toward Islamabad.
“Police resorted to firing tear gas and baton charges on Wednesday in the northern state of Punjab, the country’s largest province and a stronghold of the ruling Pakistan Muslim League-Nawaz (PML-N), after protesters tried to forcefully remove barricades to stop them from moving towards the capital.”
https://www.independent.co.uk/asia/south-asia/pakistan-imran-khan-march-islamabad-b2086855.html
“Investors start to worry as Pakistan’s IMF bailout not final yet.
“Investors are getting nervous. Without a bailout from the International Monetary Fund, Pakistan may default for the second time in its history. As talks with the IMF conclude Wednesday in Doha, officials acknowledge that winning a loan from the multilateral lender might involve trade-offs, including the politically tough decision of raising fuel prices.”
“Iraq’s political stalemate raising chances of Shia on Shia clashes.
“After months of frustration and impasse, relations between Muqtada al-Sadr and his Iran-backed Shia rivals have deteriorated so badly that Iraqi Shia leaders are predicting armed clashes could even be on the cards.”
https://www.middleeasteye.net/news/iraq-political-stalemate-raising-chances-shia-clashes
“Turkey’s default insurance costs jump to highest since global financial crisis.
“The cost of insuring Turkey’s debt against default shot to its highest since the 2008 global financial crisis on Tuesday as the country veered towards what looked like another serious bout of financial trouble.”
“Africa: Fuel Shortage Crisis – Who is Responsible?
“…Governments must be held accountable when a woman dies because she could not get to the health facility in good time due to a lack of transport caused by fuel shortages. Farmers must hold governments accountable if they are not able to cultivate their lands in readiness for rains due to fuel shortage.”
https://allafrica.com/stories/202205250222.html
“Currency Slump, 132% Inflation No Cause for ‘Panic’ in Zimbabwe.
““We are instituting measures that every other country in the world is instituting,” Ncube said in an interview with Bloomberg Television’s Manus Cranny and Yousef Gamal El-Din from Davos on Thursday. “We are not in panic mode.””
“Ugandan security forces re-arrested a veteran opposition politician on Tuesday and broke up a protest in the capital that he was leading against soaring consumer prices…
“”We are holding him on charges of inciting violence,” police spokesperson Luke Owoyesigyire said…”
“The South Africa Reserve Bank on Wednesday said that the rising cost of living could lead to episodes of social unrest as food and fuel prices, as well as the level of household debt remain high.
“In its latest Financial Stability Review, the Reserve Bank said rising interest rates would lead to higher debt servicing costs and add pressure to household balance sheets…”
“Bolsonaro fires Petrobras CEO who warned of diesel crisis.
“Brazil’s right-wing president Jair Bolsonaro fired the chief executive of oil producer Petrobras — the second in two months — after the company refused to sell fuels at a discount to consumers warning it would lead to diesel shortages.”
https://edition.cnn.com/2022/05/24/energy/bolsonaro-petrobras/index.html
“Economic Collapse Has Venezuela’s Cars Looking a Lot Like Cuba’s…
“Visiting the Venezuelan capital of Caracas this month, The Associated Press spoke to car owners and mechanics to understand the plights of locals who struggle to maintain their cars—never mind replacing them.”
https://www.thedrive.com/news/economic-collapse-has-venezuelas-cars-looking-a-lot-like-cubas
“Crisis, migration and unrest: is Cuba going through a new special period?
“The serious economic crisis that Cuba is experiencing, the strong increase in migration and social unrest have led many in recent times to draw comparisons between the current moment and the so-called Special Period that the country went through in the 1990s.”
“Global energy and funding shocks test climate commitments.
“Six months after the world agreed in Glasgow to a U.N. climate pact with bold, new targets, political and business leaders facing an energy crisis, volatile markets and an economic downturn are grappling with how to cut carbon emissions.”
You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a ‘Climate’ thread.
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