Russia wins big in grain crop, US grows higher than expected, European locomotive welcomes good news

The great impact of climate change, Russia will have the second largest grain harvest in history, the US grows higher than expected, China's market share in the global economy decreases... are the outstanding world economic news of the past week.

A combine harvester harvests wheat in the Novosibirsk region of Siberia, Russia. (Source: AFP)

World economy

Climate change to reduce global GDP by 6.5% in 2022

Climate change is set to cost the world economy billions of dollars by 2022, with developing economies hit hardest.

This is the result of a new report released ahead of the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) scheduled to take place in the United Arab Emirates (UAE) this week.

In a new report, the University of Delaware estimates that the impact of human-caused climate change will reduce global GDP by 6.5% by 2022, with impacts adjusted for population size. The figures reflect both the direct consequences of climate change, such as disruptions to agriculture and manufacturing and reduced output due to heat, as well as indirect impacts through global trade and investment.

The report’s lead author, James Rising, a researcher at the University of Delaware, said the world is losing trillions of dollars due to climate change, with poor countries bearing the brunt of the losses. He hopes the information will help shed light on the challenges many countries face and the need for urgent support to help them cope with climate change.

If we calculate the damage in general, not specifically the average number of people, global GDP will decrease by 1.8%, equivalent to 1,500 billion USD, in 2022.

US economy

* Deutsche Bank recently predicted that the US Federal Reserve (Fed) will cut interest rates more strongly than the market currently estimates , as the US economy is expected to enter a mild recession in the first half of next year.

According to Deutsche Bank, the Fed will cut interest rates by 1.75 percentage points in 2024. With interest rates currently at 5.25%-5.5%, the said reduction will bring interest rates to 3.5%-3.75% by the end of next year.

Meanwhile, according to data from the London Stock Exchange Group (LSEG), traders are currently calculating the possibility that by the end of next year, interest rates will be at 4.48%.

* According to a report released by the US Department of Commerce on November 29, the world's largest economy grew more than expected in the third quarter of 2023 , due to higher investment and government spending than initially expected.

Compared to the same period last year, US Gross Domestic Product (GDP) grew 5.2% in the third quarter, the highest since the fourth quarter of 2021 and significantly higher than the estimated growth of 4.9% announced in October 2023.

Some economists said the strong third-quarter GDP growth mainly reflected increases in consumer spending and private inventory investment.

Chinese Economy

* China's share of the global economy has increased tenfold, from less than 2% in 1990 to 18.4% in 2021. This is the first and only time the world has witnessed such rapid and continuous growth.

But the reversal has begun. China’s share of the world economy fell slightly in 2022, and so far this year the decline has accelerated, to 17%. The 1.4 percentage point gap over the past two years marks China’s biggest drop in share since the 1960s.

* Data showed that profits at Chinese industrial manufacturing companies rose 2.7% in October , but this was significantly lower than the 11.9% increase in September 2023 and the 17.2% increase in August 2023.

According to data from the National Bureau of Statistics (NBS), in the January-October 2023 period, the profits of industrial manufacturing companies fell 7.8% year-on-year, slower than the 9% decline in the January-September 2023 period.

European Economy

* The European Council on November 27 approved the trade agreement between the European Union (EU) and New Zealand and this agreement could come into effect "in early 2024" after Wellington ratifies.

The deal will see tariffs on New Zealand imports of lamb, beef, wine and fruit phased out in stages. In return, EU exports including machinery and vehicles, as well as chocolate, wine and biscuits, will also benefit.

With a population of 450 million, the EU is now New Zealand's third largest export market.

* The “Merchant” newspaper quoted informed sources from the Russian Ministry of Energy on November 28 as saying that the volume of gas production in the country in October increased by about 11.8% to 60.13 billion m3 . In the period from January to October 2023, Russia's gas output reached 534.5 billion m3, down 4% compared to the same period in 2022.

Russian gas monopoly Gazprom increased its production in October 2023 by 14.6% to 38.6 billion cubic meters, but in 10 months, Gazprom's production fell by 11% to 327.8 billion cubic meters. Analysts noted that the production recovery trend was supported by exports to China and growing domestic consumption.

* On November 28, Russian Agriculture Minister Dmitry Patrushev predicted that the country will have the second largest grain harvest in history by the end of this year, with more than 151 million tons of grain, including 99 million tons of wheat.

According to Minister Patrushev, the above amount of grain is not only enough to meet domestic demand but also creates opportunities for record grain exports to foreign partners. In 2022, Russia recorded the largest grain harvest in history with 157.676 million tons, an increase of 29.9% compared to 2021.

* On social network X, the Austrian Foreign Ministry said that the country will provide an additional 3.8 million Euros to the Grain Initiative from Ukraine .

A year ago, Austria announced its support for the Initiative and contributed 3.8 million euros to distribute Ukrainian grain to people in need in Ethiopia and Sudan.

* German inflation slowed in November 2023, with consumer prices rising 3.2% year-on-year, down from 3.8% in October. This was the lowest inflation rate since August 2021.

The German Federal Statistical Office (Destatis) reported that the inflation rate fell more sharply than analysts had previously expected, at 3.4%. Meanwhile, core inflation, which excludes volatile food and energy prices, also fell from 4.3% in October 2023 to 3.8% in November.

Japanese and Korean Economy

* The Japanese government will require companies that receive subsidies related to semiconductors and other key items to take measures to prevent technology leaks to other countries .

At a semiconductor industry meeting on November 29, Japan’s Ministry of Economy, Trade and Industry (METI) made the request to companies that receive government subsidies to develop semiconductors and other critical items, a move that reflects Tokyo’s efforts to ensure that technology critical to economic security stays within its borders.

* According to the Japan Convenience Store Association , duty-free sales at these stores in October 2023 increased 2.8 times compared to the same period last year, reaching a record 38.3 billion yen ($258 million).

The figure exceeded 34.4 billion yen from April 2019, when foreign tourists poured into the country, increasing the number of customers at convenience stores.

Convenience store sales rose 6.1 percent to 453.1 billion yen, marking the 20th straight month of gains. Sales of personal goods such as luxury brands rose 12.7 percent. Convenience stores continued to post strong sales in November, with sales at large stores up about 7 percent as of Nov. 16.

* On November 29, sources said that the Organization for Economic Cooperation and Development (OECD) has lowered its economic growth outlook for South Korea in 2023 from 1.5% in its previous forecast released in September 2023 to 1.4%, while forecasting the country's inflation in 2023 to increase from 3.4% to 3.6%.

The OECD's revision reflects a moderate slowdown in the global economy, estimating a 0.1 percentage point reduction to 2.9%, from 3% in the outlook given two months earlier.

* South Korea's exports of dried seaweed and cooked rice hit an all-time high in the January-October period, driven by surging overseas demand as Korean culture and cuisine gain popularity.

According to the Korea Customs Service, the country's dried seaweed exports hit a record high of $670 million in the first 10 months of this year, up 20.4 percent from the same period a year earlier. In terms of volume, dried seaweed exports increased 17.3 percent year-on-year to 30,000 tons.

ASEAN Economy and Emerging Economies

* According to data released by the Australian Bureau of Statistics (ABS) on November 28, the country's retail sales in October 2023 decreased as consumers limited their purchases of all items, except food, in preparation for the Black Friday sales in November 2023.

ABS figures show that retail sales in Australia in October 2023 fell 0.2% compared to the previous month, to 35.77 billion AUD (23.68 billion USD).

ABS head of retail statistics Ben Dorber said retail sales had grown by 1.2 per cent over the year and it appeared consumers had put some discretionary spending on hold in October in anticipation of the Black Friday sales in November. This was a trend that had become increasingly common in Australia over the years, he said.

* Indonesian Finance Minister Sri Mulyani Indrawati said that the country is forecast to be one of the fastest growing economies in the Association of Southeast Asian Nations ( ASEAN ) and the Group of 20 leading developed and emerging economies (G20).

Ms. Indrawati affirmed that the Indonesian economy is forecast to grow 5% this year. This is one of the highest growth rates in ASEAN and the G20.

* On November 27, at a meeting between Thai Prime Minister Srettha Thavisin and his Malaysian counterpart Anwar Ibrahim at the Sadao border checkpoint customs headquarters in Songkhla province in southern Thailand, the two sides agreed to facilitate bilateral border trade and tourism through this new border checkpoint.

At the meeting, the two leaders agreed to speed up road access to the new Sadao checkpoint on the Thai side of the border to boost cross-border trade and tourism, replacing the old Sadao checkpoint which is smaller and cannot be expanded, a source from the Thai Government Office said.

On the Malaysian side, the new Sadao checkpoint will be connected by road to the Bukit Kayu Hitam checkpoint in the Malaysian state of Kedah.

The two sides also agreed to establish joint task forces to coordinate border trade, tourism, agriculture and security issues.

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