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| LNG-2 liquefied natural gas project in Russia's Arctic. (Source: Novatek) |
World economy
Global gas market could be undersupplied until 2026
The global liquefied natural gas (LNG) market will tighten until 2026, while demand is expected to grow by 1.5% this year and up to 22% by 2050, the Gas Exporting Countries Forum (GECF) said.
The forecast was made by GECF Secretary General Mohamed Hamel on January 22 at a conference held in Trinidad & Tobago.
According to information on the official website of GECF, this organization represents natural gas exporters including Qatar, Russia, Trinidad & Tobago. Its members hold more than two-thirds of the world's gas supply.
In its annual report, GECF warned of record high and volatile spot gas prices in both Europe and Asia. It also noted that countries are prioritizing energy security concerns over climate change emissions reduction targets, with policymakers focused on meeting the energy needs of their populations.
Also at the conference on January 22, Oksana Dembitska, senior vice president of gas growth at energy giant BP, warned about high LNG prices. She said this was what caused the demand for gas to decline, especially after the outbreak of Russia-Ukraine tensions caused LNG prices to increase sevenfold.
Ms Dembitska also said BP expects Europe to remain a key LNG destination for at least the next 20 years, which is supporting supply deals to the region.
US economy
* The US Federal Reserve will wait until the second quarter of 2024 to cut interest rates , with a June move more likely than May, according to a majority of economists polled by Reuters . Economists also said the Fed's monetary policy easing this year will be less than market expectations.
The median forecast from economists shows the Fed's key interest rate at 4.25%-4.50% by the end of this year, similar to last month.
*The White House National Economic Council (NEC) Director Lael Brainard said on January 22 that China 's lackluster economic recovery (growth of 5.2% in 2023) will not have a significant impact on the US economy due to the diversification of supply chains in recent years.
Speaking at an event hosted by the Brookings Institution, Brainard said other countries in Asia and those closely linked to China's growth would feel the impact more strongly.
Chinese Economy
* At a meeting of the State Council earlier this week, China said it will further improve the capital market , pay more attention to maintaining a balance between investment and capital supply, strengthen the investment quality and value of listed companies, and increase medium- and long-term capital flows into the market.
The meeting stressed the need to strengthen market supervision to create a transparent environment. Authorities will strengthen monitoring of trading behaviors of key investors, eliminate abnormal trading behaviors, stock price manipulation and other violations, and develop plans to punish and prevent financial fraud.
*Amid a global economic slowdown, China has been boosting foreign trade in specific sectors . A roll-on/roll-off vessel carrying more than 5,000 new vehicles embarked on its maiden voyage last week from the port of Shenzhen in southern China's Guangdong province. The ship, chartered by Chinese electric carmaker BYD, sailed to the ports of Vlissingen in the Netherlands and Bremerhaven in Germany.
Auto exports have emerged as a bright spot in China’s foreign trade performance. With 4.91 million vehicles exported by 2023, the country is expected to become the world’s largest auto exporter.
European Economy
*On January 23, Vice President of the European Commission (EC) Valdis Dombrovskis, in charge of economic supervision of the European Union (EU), said that the bloc is facing the risk of rising consumer prices and slowing growth due to disruptions in the transport of goods through the Red Sea.
Shipping traffic through the Red Sea has dropped 22% in a month due to attacks by Yemen’s Houthis on ships passing through the shipping lane, but the decline is set to be even greater as shipping companies reroute vessels around Africa.
*Energy prices in Europe are expected to rise in the coming period , as more and more petroleum products and crude tankers are diverted away from the Red Sea and the Suez Canal.
At least six crude tankers are now taking the longer route around Africa's Cape of Good Hope instead of the Suez Canal, a diversion caused by Houthi rebel attacks that could add up to 45 days to transit times, according to global trade intelligence firm Kpler.
*On Rossya 24 TV channel on January 23, Plenipotentiary Representative of the Russian President in the Far East Yuri Trutnev said that Moscow is discussing with China to call on this country to participate in cargo insurance for Russia's Northern Sea Route (NSR) .
He assessed that NSR will become the world's new transportation artery and can completely compete with the Suez Canal. However, many shipping companies do not use NSR because the goods passing through here are not insured.
* Russia has surpassed Saudi Arabia to become China's largest crude oil supplier in 2023.
The world’s largest oil importer bought a record 107 million tonnes of Russian crude in 2023, nearly 25% more than a year earlier and equivalent to about 2.15 million barrels per day, customs data showed on Jan. 22. That compared with just under 86 million tonnes from Saudi Arabia. It was the first time Russia had been China’s largest supplier since 2018.
According to Bloomberg calculations based on customs data, China's imports of Russian oil in 2023 will reach $60.6 billion, equivalent to an average price of about $77 per barrel, higher than the price ceiling imposed by the West on Russian oil of $60 per barrel.
* Germany's offshore wind development in 2023 has made new strides , with the number of newly installed wind turbines increasing by nearly 50% compared to 2022. Accordingly, Germany installed a total of 745 new wind turbines with a total capacity of about 3.57 gigawatts that came into operation in 2023.
By 2024, industry associations forecast that Germany's offshore wind capacity will continue to increase by another 4 gigawatts.
* UK economic activity grew at its fastest pace in seven months in January 2024, despite the Red Sea situation adding to pressure on production costs, according to a survey released by credit risk analysis firm S&P Global on January 24.
The S&P Global Flash UK Composite Output Index rose to 52.5 in January 2024 from 52.1 in December 2023, above the 52.2 forecast by economists polled by Reuters. The figure was the highest since June 2023 and well above the 50 mark, indicating that most businesses reported an increase in activity.
Economy of Japan and South Korea
* Japan's exports rose to a fresh record in December 2023, the biggest monthly gain on record, as shipments to China rose for the first time in more than a year and sales to the United States hit record levels.
Exports from the world's third-largest economy rose 9.8% in December from a year earlier to 9.65 trillion yen ($65.13 billion), the finance ministry said, compared with a 9.1% increase forecast by economists in a Reuters poll and after a 0.2% decline in November.
Overall, in December 2023, Japan's trade balance reached a surplus of 62.1 billion yen, compared to the previous expected deficit of 122.1 billion yen.
* At the end of a two-day meeting on January 22-23, the Bank of Japan (BoJ) kept interest rates at super low levels , aiming to promote strong wage growth, aiming for stable inflation at 2%, while continuing to implement a yield curve control policy.
The BoJ kept its short-term interest rate at minus 0.1%, while allowing the yield on 10-year government bonds to fluctuate between minus 1% and 1%. The bank did not adjust its asset purchase program.
* Data released on January 21 showed that in 2023, the amount of kimchi exported from South Korea recorded a new record high , in the context of Korean entertainment content becoming increasingly popular globally.
According to data from the Korea Customs Service, kimchi exports rose 7.1% to 44,041 tons in 2023, surpassing the previous record of 42,544 tons set in 2021. In terms of value, South Korea's kimchi exports last year rose 10.5% from 2022 to $155.6 million. Kimchi is a traditional Korean side dish made from fermented cabbage.
* The Korea Price Information agency announced on January 24 the results of a market price survey showing that the cost of preparing traditional offerings this year in Korea has increased significantly .
Based on the standard of a family of four, the cost of preparing a meal when shopping at a traditional market is 281,500 won (about 220 USD). If shopping at a large supermarket, the cost will be 380,580 won, 35.2% higher than at a traditional market. This year's shopping costs at traditional markets and large supermarkets also increased by 8.9% and 5.8%, respectively, compared to last year.
ASEAN Economy and Emerging Economies
* In 2024, the Indonesian government will allocate 114.3 trillion Rupiah (equivalent to 7.6 billion USD) from the budget for food security, an increase of 13.4 trillion Rupiah compared to 2023. This expenditure is to ensure essential needs for 278.8 million people (as of 2023).
In the 2024 state budget plan (APBN), this budget is included in the year's priority spending, along with the budget for education, social protection, health, law and defense.
* Imports into Malaysia are being delayed by up to two weeks as international shipping lines reroute cargo to avoid possible attacks in the Red Sea, potentially forcing Malaysians to pay more for imported luxury goods, such as wine and food, shipped from Europe.
Container shipping rates on the Asia-Europe route have surged more than 600 percent since the Gaza conflict began, leaving importers in Malaysia with little room to cut costs, according to data from Maybank Malaysia Investment Banking Group (MIBG). Economists say the higher shipping costs, as well as the logistical delays and disruptions caused by the Red Sea crisis, are inevitable.
*Official data released by the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) on January 23 showed that Singapore's core inflation in December 2023 increased slightly to 3.3% year-on-year (YoY), higher than the 3.2% recorded a month earlier.
Meanwhile, the country's headline consumer price index or overall inflation was 3.7% in December 2023, higher than the 3.6% in November of the same year.
For the whole of 2023, Singapore's core inflation (excluding accommodation and personal transport costs) is expected to average 4.2%, higher than 4.1% in 2022.
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