Weak trade fairs China is struggling Ship’s crew

By Vince Golle and Molly Smith (Bloomberg) –

New trade data from China is further evidence that the world’s second largest economy is struggling to gain momentum.

In Germany, a renewed decline in orders received by manufacturers indicated a lack of momentum in Europe’s largest economy. Meanwhile, euro-zone consumers have become much more confident about the inflation outlook, a development that is affecting the debate over how long interest rates need to rise.

After US lawmakers approved a suspension of the debt limit, the Treasury Department said it expects its cash position to recover significantly by the end of the month.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

Asia

China’s economic recovery showed further signs of slowing in May, clouding the outlook for the rest of the year and raising calls for further central bank stimulus measures. This week’s trade figures recently showed the weakening outlook for the economy. Both exports and imports fell year-on-year in May, a sign of subdued global and domestic demand.

Foreign tourists packing their flights to Japan are helping the economy emerge from recession, and their spending power is also increasing upward pressure on hospitality wages and prices.

In the more than three decades since the collapse of the Soviet Union, Russia has maintained its place as Kazakhstan’s largest trading partner despite China’s encroachment into much of the region. But financial and economic sanctions that have sidelined Russia and diverted trade flows are creating an opportunity for China.

Europe

Consumer expectations for euro-zone inflation eased significantly in April, suggesting that the European Central Bank’s historic rate hike will be completed this summer.

German factory orders unexpectedly fell in April, further clouding the outlook for Europe’s largest economy after it experienced its first recession since the pandemic over the winter.

USA and Canada

The Bank of Canada defied expectations by resuming its rate-hike campaign on the grounds that the economy was overheating. Policymakers raised the overnight interest rate to 4.75%, the highest since 2001.

The US services sector was near flat in May as business activity and orders fell, while a measure of prices paid fell to a three-year low.

The Treasury expects its cash stockpile – which is already showing signs of catching up on lost ground following the statutory debt ceiling suspension agreement – to reach around $425 billion by the end of June.

The largest shipping gates on the US west coast are suffering the longest work-related disruptions since 2015 as negotiations between dock employers and dockers approach a year without a contract. The two sides are at odds over how to split carriers’ pandemic-era profits in a market where freight rates are back at all-time lows.

emerging markets

Brazil’s annual inflation rate slowed much more than expected in May, hitting its lowest level in two and a half years, increasing pressure on the central bank to ease monetary policy in the coming months.

Saudi Arabia’s plan to cut oil production by around 10% could hit its finances hard. The UK’s decision to cut crude oil production to 9 million barrels a day over the next month and maybe beyond hasn’t lifted prices significantly. Energy Minister Prince Abdulaziz bin Salman, announcing the unilateral cut after an OPEC+ meeting, described it as a “lollipop” for other members of the producer cartel.

World

According to the World Bank, the global economy is in a precarious position and is facing a significant slowdown in growth as sharp hikes in interest rates weigh on economic activity and increase vulnerability in lower-income countries.

Australia’s central bank unexpectedly raised interest rates, leaving the door open for further rate hikes. The Bank of Canada also surprised with a rate hike. Poland, India, Peru and Russia stood still.

–With support from Laura Curtis, Toru Fujioka, Nariman Gizitdinov, Alexandra Harris, Erik Hertzberg, William Horobin, John Liu, Abeer Abu Omar, Jana Randow, Andrew Rosati, Augusta Saraiva, Zoe Schneeweiss, Randy Thanthong-Knight, Emi Urabe, Fran Wang and Alexander Weber.

© 2023 Bloomberg LP

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