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Summary of July 2023 International Macro Activities

Overview

This week's digest covers a range of economic updates, including inflation trends, monetary policy changes, fiscal developments, and geopolitical shifts. Notable events span multiple regions, reflecting broader global challenges like inflation, debt pressures, and energy transitions. Key themes include the easing of inflation in some emerging markets, continued monetary tightening in Europe and North America, and heightened vulnerabilities in countries affected by sanctions and economic shocks.

Key Developments by Region

Latin America and Europe

• Brazil: Inflation moderated for the first time in nine months, with June CPI环比下降0.08% and annual inflation at 3.16%, down from 3.94% in May. The central bank may begin a rate cut cycle in August if inflation continues declining, potentially to around 12.25% by year-end. This follows months of high通胀 due to supply chain issues and currency weakness.
• Pakistan: International support, including $3 billion from Saudi Arabia and $18 billion in potential IMF loans, aims to boost external liquidity and alleviate debt risks. Inflation dropped to 29% from a record 38%, supporting economic stability amid political uncertainties.
• Europe: Germany's SMEs show high pessimism (26% considering business exit), exacerbated by high taxes and skill shortages. Finland's inflation slowed to 4.1%. The EU's "Chip Bill" passed, aiming to raise chip production to 20% of global output by 2030. Turkey and Greece agreed to resume relations, and Russia extended oil price limit sanctions.

North America and Asia-Pacific

• United States: June CPI rose 3% YoY, but core inflation persisted above 4.8%, driven mainly by housing costs. The Fed may still hike rates amid economic uncertainty. With lower global debt and growth projection revisions, Canada's implementation, and others.
• Canada: Inflation slowed to 3.4% YoY in May; the central bank cut rates to 5% and reduced asset holdings to curb economic slowdown, with a 1.8% GDP growth forecast for 2024.
• Singapore: Q2 growth was 0.7% YoY, avoiding a technical recession, though manufacturing remains weak. Emissions targets will influence future policies.
• Russia: GDP expected to grow over 2% in 2023, attributed to sanctions recovery and industrial focus. Oil exports shed 46.9% revenue in first six months, but non-oil revenues may offset losses, supporting surplus oil ration estimates.
• Turkey: Fiscal stimulus worsening inflation; fuel taxes increased nearly 200%, raising household costs and currency risks amid a budget deficit.
• South Africa: Q1 manufacturing output surged as electricity supply improved, with PMI indicating economic optimism. Non-oil revenue boosts fiscal balance.
• Malaysia: Currency devaluation sparks potential central bank intervention to stabilize markets.
• Thailand: Prime Minister selection stalled due to political deadlock, with debates on electoral reforms impacting policy stability.

Middle East and Others

• Saudi Arabia (South Africa): Emissions plans in South Africa target cleaner vehicles, supported by US funding. Technology grants aid grid upgrades for renewable integration.
• Qatar: Global hunger rose by 1.2 billion due to conflicts and economic slowdowns, per UN reports, warning of severe food insecurity. Volunteered in ecosytem restoration, with fusion projects like the "Chip Act" gaining support. Exports and Investments exceeded expectations in UAE, with renewable investments reaching trillions.

Analyst Commentary and Risks

• Brazil and Pakistan: Emerging market risks, with Brazil set for interest rate tweaks based on inflation data, and Pakistan benefiting from funding but facing political uncertainties. Global debt soars to $92 trillion, straining resources in developing nations, while climate threats heighten food insecurity.