It's official: with an average of 15 degrees Celsius, 2023 will have been the hottest year ever experienced on Earth, not only since temperature readings began, but perhaps also for the entire Holocene, which is the planet's current interglacial period, which began approximately 10,000 years ago.
The Bank of Japan’s latest Tankan survey, published in December, highlights the country’s significant labour shortages and recruitment challenges. These are affecting all sectors and are even reaching record levels in almost a quarter of them. In order to facilitate the interpretation, the data in this table are converted in Z-score, which measures the number of standard deviations separating each index from its long-term average (1974-2023 period).
According to the World Bank’s report published last week, the external debt stock of all low- and middle-income countries (LMICs) contracted in 2022, for the first time since 2015. However, this observation does not apply to sub-Saharan Africa (consisting exclusively of LMICs with the exception of the Seychelles): the region’s external debt continued to rise in 2022, reaching USD 832.8 bn, a figure up 2.1% compared to 2021.
The net short position of hedge funds in the US Treasury futures market has expanded considerably over the course of the year. At the end of November, it stood at an unprecedented level of almost USD 800 billion. Asset managers, eager to hedge against interest-rate risk, increased their net long positions.
Business insolvencies continued to rise in October and are now 10% higher than their pre-COVID level (2019 figures) in cumulative terms over the last three months, according to data from Banque de France.
Whether one likes it or not, China has a key role in the “green” industrial revolution that will take economy to climate neutrality. In the transition to all-electric, particularly as it is happening in Europe, it is even strengthening its positions. The planned ban on the sale of new petrol and diesel cars will bring the end of a technological barrier that has thus far allowed European manufacturers to excel, whilst keeping Chinese-made vehicles away from their markets.
In 2023, for the second consecutive year, Malaysia’s external accounts have deteriorated slightly, but are still strong. Over the first nine months of the year, the current account surplus decreased by 18.3% compared to the same period last year. The strong rebound in tourism has not been enough to offset the decline in the trade surplus caused by the global economic slowdown and the sharp contraction in demand for semiconductors and electronic products, which account for 36.3% of the country’s exports.
Last October, an average of over USD 1,500 bn was traded daily on the Treasuries repo markets through the Fixed Income Clearing Corporation (FICC), USD 500 bn more than in October 2022. While transactions between FICC clearing members remained relatively stable, sponsored repo loans rose sharply.
The significant rise in American households’ mortgage rates prompted a depletion of housing inventories on the existing real estate market. This “freezing” situation on the existing home segment enabled some demand redirection towards newly built houses.
Faced with the urgency of climate change, many countries have begun their ecological transition, with the war in Ukraine only accelerating the movement. After soaring in 2022, investment in “clean” energies is set to reach a new record in 2023: around USD 1,800 billion worldwide, or 1.7 points of GDP, according to estimates by the International Energy Agency (IEA). Although the search for new fossil fuels has not yet come to a halt, it is now mobilizing less capital (around USD 1,200 billion).
In Central Europe, capital flows (foreign direct investments, portfolio flows and bank lending flows) have resisted rather well despite geopolitical uncertainties. Similarly, they do not seem to be affected, for the time being, by the weakening of economic activity in the region.
The impact on financial expenses of rising interest rates - the result of the European Central Bank tightening its monetary policy - is very mixed, depending on the euro zone country. The impact depends on the proportion of variable-rate loans in outstanding amounts, and also on levels and changes in the amounts borrowed.
German exports of goods increased by 2.6% y/y in the first 7 months of 2023 compared with the same period in 2022, but one usual destination is missing: China (-8%).
Since its publication last May by France Stratégie, the "Pisani-Mahfouz" report on the cost of ecological transition in France has been the subject of numerous, sometimes imprecise comments. For example, the main quoted figure of EUR 66 billion does not refer to the investment required for decarbonization, but to a net additional financing requirement. Explanation.
In recent months, the African continent has been hit hard by inflationary pressures. In Eastern and Southern Africa, inflation peaked at 19.4% year-on-year in November 2022. It has since begun a slow and difficult deceleration: in July 2023, regional inflation fell to 15.5%, after peaking again at 20.6% in June. Nevertheless, this average masks major national disparities.
Italian commercial banks have drawn heavily on their reserves with the Eurosystem in order to repay the pending portion of the 28 June 2023 TLTRO III maturity.
The COVID-19 pandemic and the war in Ukraine have prompted many advanced countries to rethink and relocate their supply chains in order to secure strategic production and to create a framework that will help to promote the energy and environmental transition.
Whether it comes from the European agency Copernicus or the American NOAA, the conclusion is the same: in July 2023, average temperatures measured on the surface of the globe broke an absolute record, both on land and at sea. Scientific data confirm, if confirmation were still needed, that climate change is here, that its effects are becoming more pronounced, and that it is sparing no one.
Climate-related migration (internal displacements and cross-border flows) have increased significantly in recent years across Central America. Natural disasters and environmental changes (increasing temperatures, changing precipitation patterns, increasing intensity of storms) affect human mobility through their impact on agriculture (soil degradation, crop failure, declining agricultural yields), access to water resources, destruction of infrastructure and land losses (coastal erosion / flooding, landslides).
On average, over the past year, US money market funds (MMFs) have “deposited” almost USD 2,200bn in cash with the Federal Reserve (Fed) every day in exchange for the overnight reverse repurchase of Treasury securities held on the Fed’s balance sheet (Overnight Reverse Repo Facility, ON RRP). In recent months, these “deposits” have fallen sharply. On 17 July, they stood at «only» USD 1,730 bn.
It's summertime, so, with mass departures coming during the holiday season, a good opportunity to look at ongoing transformations in transport. In France, this sector is by far the biggest source of greenhouse gases (GHGs) emissions: 126 million tons of CO2 equivalent or 30% of the total in 2021, i.e. three times as much as the housing sector
The labour market report published by the Spanish Employment Agency (SEPE) on July 4th surprised favourably again. The number of unemployed workers dropped by 1.8% m/m (-50,268) to its lowest level since September 2008.
On 22 June, the Mexican Central Bank maintained its main policy rate at 11.25% for the second time in a row. The Governing Board’s decision was unanimous and largely anticipated. In its press release, the Board stated that the pause should continue over the coming months: the downward trend in inflation seems to be confirmed, but the outlook remains «complex and uncertain».
The transmission of higher interbank rates to bank deposit rates is still limited in Spain.
The most comprehensive and well-documented assessment to date of the cost of France's ecological transition has just been published by the France Stratégie institute, in a widely commented report. By 2030, meeting our climate commitments - which involve a 55% reduction in greenhouse gas (GHG) emissions compared to 1990 levels - will require almost EUR 70 billion or 2.5 points of GDP in additional annual expenditure.
Weekly charts highlighting points of interest in the world economy
