Elections will test Indonesia’s economic progress 16 Oct 2023 President Joko Widodo’s second and final term ends next year. His administration has brought stability and fostered investment in everything from EV metals to infrastructure. A domestic and global slowdown and a potential China backlash could taint matters for his successor.
Europe’s rising bond vigilantes are necessary evil 11 Oct 2023 Debt costs for weaker states like Italy are jumping. Europe’s delay in agreeing new fiscal rules means hostile markets are the only credible check on government spending. Slowing growth and a hamstrung ECB means the backdrop may well get choppier.
IMF’s bond vigilante script is ripe for a rewrite 10 Oct 2023 The International Monetary Fund wants politicians to close the fiscal taps. Yet it’s also warning about a sharp slowdown in global growth. Markets are worried about debt levels but without spending and investment the world will stagnate.
Next EU chief will need cash more than trade wars 10 Oct 2023 Ursula von der Leyen kicked off her campaign to stay European Commission president by attacking China’s car subsidies. But what the bloc craves is a plan to grow its economy and enlarge eastwards, including finding $411 bln for Ukraine. A bigger, better Europe won’t come cheap.
Israel highlights fragility of new trade corridors 10 Oct 2023 The bloody conflict undermines Washington’s vision to use the country’s Haifa port to link India via Saudi Arabia to Europe. It also makes China’s pivot to the Middle East look less of a bright idea. The spoils are huge but reconfiguring trade and financial flows is hard work.
The EU is stuck with its one-trick refugee policy 9 Oct 2023 Africans and Asians fleeing persecution could boost the European Union’s ageing workforce. But its leaders are so scared of nationalism at home they prefer to pay North African regimes to stop asylum-seekers crossing the Mediterranean. It’s a short-term fix, says Hugo Dixon.
Polish cereal showdown goes against the EU grain 4 Oct 2023 A spat over Ukraine’s grain exports is the latest blemish on the European Union’s fraught relationship with Poland, the bloc’s sixth largest economy and biggest net recipient of EU funds. If upcoming elections push Warsaw further from Brussels, both sides have much to lose.
Wanted: House Speaker willing to do impossible job 4 Oct 2023 US leader Kevin McCarthy was kicked out of his job for brokering a deal to keep the government open with a stopgap bill. The task of agreeing to a budget – which includes a dispute over $120 bln in 12 different measures – remains. Only now it has hurdles that favor Democrats.
Germany risks letting a good crisis go to waste 3 Oct 2023 Europe’s largest economy is on track to shrink this year. The immediate causes are lower exports to China and higher energy prices. But decades of under-investment will continue to crimp growth unless Berlin ditches its hostility to fiscal stimulus and comprehensive reforms.
Peak China may pose peak danger 2 Oct 2023 A glance through history suggests great powers are a threat whether they are rising or falling. China may be especially dangerous as its economic growth slows. It is riling its neighbours. Investors would be wise to assign a greater weight to this fat tail risk, says Hugo Dixon.
To fix Britain, Labour will need new debt rules 29 Sep 2023 Tight fiscal curbs leave PM Rishi Sunak with no room for tax cuts or investments in the likes of rail link HS2. If Labour wins an election likely in 2024, it could hike spending via a broader metric based on the UK balance sheet. That could spur growth without spooking markets.
A Putin friend in Slovakia could disrupt the EU 28 Sep 2023 Former PM Robert Fico is leading in the polls ahead of Saturday’s election. He wants to stop support for Ukraine and opposes sanctions on Moscow. Even with only 0.7% of the European Union’s GDP, a member state governed by a Russian ally could seriously mess up the bloc’s work.
Meloni’s Italian job is a lesson for EU’s right 26 Sep 2023 In her first year, the PM pledged Rome’s commitment to NATO and fiscal discipline. That may be a template for nationalist parties trying to copy her success. Yet she also wasted time on culture wars. As growth stalls and immigration soars, the rest of her term will be tougher.
Nomura is merely first in line for new China risk 25 Sep 2023 Charles Wang Zhonghe, the firm’s Hong Kong-based chair of investment banking for the People’s Republic, is barred from leaving the mainland. Overseas banks committing to bulk up in the country may no longer be able to avoid the effects of President Xi Jinping’s crackdowns.
Western rival to Belt and Road has much to prove 25 Sep 2023 The G7’s $600 bln plan to compete with China’s flagging investment push has launched splashy railway and energy schemes in Africa and Asia. But governments and private investors haven’t put up much cash. It’s also unclear how poor countries will avoid debt traps, says Hugo Dixon.
M&A spillover in India-Canada fight hurts everyone 22 Sep 2023 As bilateral relations sour over a murder, tycoon Sajjan Jindal is going slow on his planned $8 bln consortium bid led by JSW Steel for Vancouver-based Teck’s coal assets. The stalling hurts the buyer and the seller, and India’s diversification ambitions a bit more.
Green energy’s tailwinds blow the other way 22 Sep 2023 Falling costs, cheap capital, and supportive politicians spurred a $7 trln global rush into renewable power. Now fractured supply chains and higher interest rates mean the transition is more expensive. These new headwinds will test the resolve of consumers - and of governments.
Oil spike offers only a brief boon for Fed and MbS 21 Sep 2023 Crude prices are up 25% since July, swelling the Saudi crown prince’s budget. Fed boss Jay Powell wins too: he can use it to justify inflation-busting high rates. Yet long-term, a surfeit of energy demand over supply will complicate life for both central bankers and oil tsars.
Britain is tossing aside its last green trump card 20 Sep 2023 PM Rishi Sunak may defer UK targets for electric vehicles and eco-friendly houses. Juicy US subsidies had already dented Britain’s claims to net-zero leadership, but political backing was a clear signal for green investment. Watering that down is an act of financial self-harm.
Sunak and Bailey agree on higher UK rates, for now 19 Sep 2023 The PM and the Bank of England chief both favour raising borrowing costs in the short run to curb price growth. But their paths may soon diverge. Downing Street would love easier monetary policy before an election in late 2024. The BoE cannot relent until inflation hits 2%.