Aurelia Butler

The Danish economy was set for a rapid recovery after the pandemic this year but the boom will now be dented as the uncertainty stemming from Russia’s invasion of Ukraine takes it toll. “Denmark’s direct trade with Russia is limited. However, the Danish economy is also indirectly affected by countries such as Germany and Finland which trade more with Russia,” the ministry said in a statement Denmark’s economy this year is now seen as growing 2.2% in a mild scenario, 1.6% in a medium scenario and 0.0% in the toughest scenario, the ministry said, underlining that the projections are still uncertain. The ministry in December forecast economic growth of 2.8% this year. Inflation is expected to increase to 4.5% in the medium scenario up from the 2.2% seen in the December forecast. The Danish central bank last week said it expects the economy to grow 2.1% this year, down from an earlier prediction of 3.1% growth. More

Europe’s largest economy was seen paying a high price for its reliance on Russian gas, whose price has soared since Russia attacked Ukraine last month in what it calls a “special military operation”.”This should dampen household consumption and production in energy-intensive industries,” the German central bank said in its monthly report. It estimated the German economy likely stagnated in the first three months of the year and the rebound it had pencilled in for the second quarter would now be weaker than expected due to “foreseeable impairments in foreign trade and increased uncertainty”.Inflation, which hit its highest rate in almost 30 years at 5.1% last month even before the latest surge in fuel prices, was now set to rise further.”The price of food and industrial goods should get a further boost from the fall in wheat exports from Ukraine and Russia and new disruptions to supply chain,” the Bundesbank added. More

Late last week, President Joe Biden and Chinese president Xi Jinping had a high stakes call about the future of Russia’s war in Ukraine. Biden made it clear that if China were to help Russia with economic or military aid, the US would “not hesitate to impose costs,” likely in the form of secondary sanctions, tariffs and the like. It’s a warning well worth making — what China does right now will absolutely set the stage for geopolitics over the next few years.While China hasn’t explicitly helped Russian president Vladimir Putin (aside from doing new gas deals and taking a grain export ban off Russia at the beginning of the war), it also hasn’t condemned Russia. It says it wants a quick end to the “conflict.” But it’s also not using any behind-the-scenes leverage with Russia to end the war, at least not that anyone can see. Indeed, last week I received one of those rather ham-fisted calls from a policy person in the Beijing embassy in London. The person tried to convince me that China really had no influence over Russia, that this wasn’t at all China’s fight, and that only the west could solve things. Maybe, but the whole “we aren’t important enough to exert power on the world stage” thing is not only outdated, but farcical. If any state is a vassal state to China, it’s Russia. Beijing is also pushing a line (via translated documents that are making the rounds among western press and public intellectuals) that the US will be the biggest winner from this conflict. Maybe, but only if Biden is strong enough to call Putin’s bluff, and keep Europe on the same page. That could mean leaning into the idea that Nato aircraft and other forces could be used in Ukraine. I don’t want world war three, for sure. But I also think that every autocrat in the world — especially Xi — is watching what’s happening quite closely. It may be better to call Putin’s bluff sooner rather than later.China has much at stake here. I had a conversation last Friday with China expert Diana Choyleva, the chief economist and founder of Enodo Economics and a respected reader of Beijing’s tea leaves. Her take was that the Chinese and Russians aren’t natural allies, and that Putin had perhaps played Xi with the whole “friendship without limits” deal prior to the war, which now puts Beijing in a bit of a pinch. She also noted that while Americans love underdogs, the Chinese traditionally don’t. Xi might in fact be more willing to support a stronger Russia than the weak one on display now.What’s more, the Chinese perceive Democrats as generally being weaker than Republicans, and America as being in inexorable decline (neither are necessarily true). While Ukraine might present an opportunity for the Chinese to annex Taiwan if there is a sense that the US and Europe are wishy-washy and lack a united front, perhaps Beijing will decide this is the moment to make a move on Taiwan. Better now, that line of thinking goes, than in 2024 when you might have Donald Trump or Mike Pompeo in office.But if President Biden and Europeans together double down, call Putin’s bluff and make it clear to Beijing that there is a new line in the sand, perhaps China leaves the Taiwan issue alone for now, and everyone (except Putin, of course) ends up in a better place. This is, needless to say, an unbelievably high stakes poker game.Richard, do you agree with this analysis? And is it time to take a stronger stand against Russia? Recommended ReadingUniversity of Chicago professor John J. Mearsheimer is gaining steam with his view that the west is itself responsible for Russia’s aggression in Ukraine. I don’t agree, but his views are worth understanding, since his video on the topic has gone viral. FT’s own Martin Wolf summed up the dismal state of the world quite well in last week’s column. China expert Arthur Kroeber also wrote in the FT that we shouldn’t worry that sanctions will somehow allow Russia to circumvent weaponised dollar networks. Fingers crossed that he’s right.Jude Blanchette argues in Foreign Affairs that Xi has bungled foreign policy badly. I would definitely agree — China with a security state in control is both scarier, but less effective, than China with competent technocrats in control. Richard Waters responds I’d love to think you’re right, Rana, and that there’s a way out of this that leaves everyone in a better place. But unfortunately I just can’t see it. I should stress that I’m no expert on China, but I generally think Beijing has two long-term objectives that come into play at times like this: Try to accelerate the decline of the United States’ global influence, and work towards taking back Taiwan.I think both goals are helped by China sitting back and letting things take their course in Ukraine (so maybe your embassy friend was right about leaving this to the west to sort out — though they were being more than a little bit disingenuous to suggest that China has no interest in the outcome).The US can certainly take credit for its coalition building ahead of the Russian invasion and in its early days. But things can (and probably will) get a lot uglier from here as Putin presses ahead with his brutal bombardment. If the US fails to respond (particularly in the face of increasingly desperate pleas from Ukraine), then its moral leadership suffers. But any military intervention is fraught with problems. I don’t see any reason for China to step in to save the US from this dilemma in any way, and every reason for it to give Putin as much behind-the-scenes support as possible, short of risking US sanctions.Also, watching the US wrestle with this problem only helps China as it games out its position in Taiwan. I’ve got no idea how quickly China would act on any perceived weakness on the US’s part to move on Taiwan. But it seems a complex calculation where many other factors will come into play. Maybe a second Trump presidency would be a better opportunity than you suggest — after all, the man is highly susceptible to flattery and loves a deal, so President Xi might think there is a way to win him around. Or maybe, as he embarks on a third term after this autumn’s Communist Party Congress, we will see a newly confident Xi move quickly to make his mark?As for Putin: Like you, I’m all for calling his bluff sooner rather than later. The problem is, what does it mean to call his bluff? I suspect the united front with Europe wouldn’t survive military intervention by Nato — and anyway, I think the risk of escalation towards a nuclear incident of some sort would be too high.It would be nice to think that the pain from the western economic and financial blockade, along with the awareness that he’s in a military quagmire, would be enough to persuade Putin to seek a compromise. I’ve got no idea — but I find it scary that so much is riding on one man’s psychology. More

Investing.com — Oil prices surge as the EU eyes expanding its sanctions on Russia to include energy. Hopes for peace fade as the Kremlin rules out a meeting between Presidents Putin and Zelenskyy. A Boeing (NYSE:BA) 737 crashes in China – but it’s not a 737 MAX. Aluminum and steel prices surge. Nike (NYSE:NKE) reports earnings and the emerging world’s economic problems start to mount. Here’s what you need to know in financial markets on Monday, 21st March.1. Oil surges as EU eyes expanding sanctions  Crude oil prices surged again after the European Union’s top diplomat, Josep Borrell said that the bloc is ready to discuss including energy in a new round of sanctions against Russia.Energy purchases from Russia had been exempted from previous rounds of EU sanctions due to the lack of short-term alternatives, but the growing horror at Russia’s actions in Ukraine – Borrell accused Russia of “massive war crimes” – and the ease with which Russia avoided default last week appear to be pushing Europe to raise the pressure on the Kremlin, even if that increases the short-term damage to its economy. EU leaders are due to discuss other measures to avert an energy crisis at a two-day meeting that starts on Thursday.Over the weekend, Germany’s vice-chancellor Robert Habeck signed a deal with Qatar to expedite shipments of liquefied natural gas (there were few further details available).By 6:15 AM ET (1015 GMT), U.S. crude futures were up 4.3% at $107.56 a barrel, while Brent futures were up 4.1% at $112.31 a barrel.2. Kremlin says not enough progress for peace talks; China still ambivalentSentiment toward risk assets globally soured after a Kremlin spokesman said that peace talks have not progressed enough for a meeting between the Russian and Ukrainian presidents to take place.The comments come as Russia claimed to have deployed new ‘hypersonic’ missiles in combat for the first time. Reports suggest that Russia has all but secured complete control of the port city of Mariupol, after two weeks of heavy bombardment.The UN High Commission for Refugees now estimates that over 13 million people in Ukraine are in need of humanitarian assistance, with over 3 million having fled to other countries.  Hopes that China may broker a peace, or at least not give Russia the support that it needs to sustain its offensive, live on after China said it will do “everything possible” to de-escalate the situation. Beijing still refuses to join international condemnation of the invasion, however.3. U.S. stocks set to open lower; Boeing eyed after 737 crashU.S. stock markets are set to open lower, as the weekend’s news flow failed to give enough reason to make further advances after the best week in several months for risk assets. The three main cash indices had gained by between 5.5% and 10.5% last week.By 6:15 AM ET, Dow Jones futures were down 142 points, or 0.4%, while S&P 500 futures were down 0.2% and Nasdaq 100 futures were down 0.4%.Stocks likely to be in focus later include Boeing, after a 737 airliner – not one of the 737 MAX range – operated by China Eastern Airlines (NYSE:CEA) crashed, killing 132 people. Boeing stock was down 6% in premarket.After the closing bell, Nike will report earnings.Fed Chairman Jerome Powell will address a conference of economists at 12 PM ET, while Atlanta Fed President Raphael Bostic speaks at 8 AM ET.4. Metals volatility continuesAluminum prices rose another 3.6% after Australia said it will ban the export of alumina to smelters in Russia. The move threatens to curtail the output of a metal that is widely used in packaging and other industries. Smelting capacity is concentrated in Russia due to the relatively low cost of electricity there.Other metals’ prices, however, were in risk-off mode, with Nickel Futures again catching the eye as the London Metals Exchange was once more forced to suspend trading of its futures contract after it hit a 15% circuit breaker.Platinum group metals also rose on fresh fears for Russian supplies to world markets and hot-rolled steel prices in Europe hit a record 1,400 euros ($1,550) a ton, but copper prices eased, reflecting concerns about global growth.5. Emerging markets problems mount as Egyptian currency devalues, Sri Lanka seeks bailoutThe strains of war and a global monetary tightening cycle are taking an increasing toll on emerging markets.Egypt’s central bank allowed its currency to devalue by 13% against the dollar while raising interest rates by a full percentage point. The country of 105 million people faces a sharp deterioration in its terms of trade due to its dependence on foreign oil and wheat (it sources 80% of the latter from Russia and Ukraine).Egypt was reported last week to be eyeing a fresh support package from the International Monetary Fund.Also in trouble is Sri Lanka, which has asked the Chinese government for $2.5 billion in credit support, according to Chinese officials, in addition to seeking funds from India and the IMF.(CORRECTION: The original version of this article stated the estimated number of refugees from Ukraine wrongly. The article has now been corrected) More

The Malaysian Semiconductor Industry Association on Monday said it was deeply concerned with the raising of the monthly minimum wage to 1,500 ringgit ($356.89) from May 1 from the current 1,200 ringgit.President Wong Siew Hai in a statement said the increase was “too much too soon” and companies had insufficient time to adjust wage structures and make productivity improvements to stay competitive.Malaysia is a key manufacturer of chips, accounting for more than a tenth of a global trade worth over $20 billion.The industry associations also warned the increase comes amid surging raw material and commodity prices, as well as labour shortages that were already adding to cost pressure.They urged the government to consider a gradual wage increase over three years instead.The Federation of Malaysian Manufacturers (FMM), which represents over 11,300 companies, said on Sunday the wage hike would affect manufacturers’ payroll cost, business costs and potentially derail business and economic recovery.”Such a steep increase would have an undesirable impact on their business recovery,” FMM President Soh Thian Lai said in statement.FMM said foreign workers would also have to be paid the new minimum wage.Malaysia, a key manufacturing hub that relies heavily on migrant workers in factories and plantations, has seen its companies come under scrutiny from allegations of forced labour practices that include unpaid wages.Officials have acknowledged excessive overtime hours, unpaid wages, lack of rest days and unhygienic dormitories which analysts and consultants have said needed to be addressed or the country risked losses in its export-reliant economy.($1 = 4.2030 ringgit) More