Economy

Russia’s relationship with the world is continuing to evolve rapidly. To assess the global shifts, The Times analyzed years of country-level trade data compiled by the Observatory of Economic Complexity, an online data platform. Because the data is published with a lag, the picture it provides is inherently backward looking. Russia’s ability to trade with […] More

TOKYO (Reuters) -Japan’s factory output fell in September for the first time in four months as manufacturers took a hit from rising costs for raw materials and the global economic slowdown.But in a brighter sign for the world’s third-largest economy, retail sales grew for a seventh straight month, raising hopes for a sustainable boost in consumption after the easing of COVID-19-related border controls for foreign tourists earlier this month.Factory output fell a seasonally adjusted 1.6% in September from a month earlier, government data showed on Monday, larger than economists’ median forecast for a 1.0% decline.It marked the first month-on-month fall in four months in industrial production and followed a 2.7% rise in August.A 12.4% decline in auto sector production, its biggest fall in eight months, drove down the overall index. Output in the chemical and production machinery sectors also decreased in September.Manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) expected output to fall another 0.4% in October and rise 0.8% in November. While coronavirus-induced supply bottlenecks are easing, demand-side risks from the global economic slowdown could further drag on firms’ output, a METI official told a media briefing, adding manufacturers’ confidence remains weak.A Reuters corporate survey also showed souring sentiment among Japanese factories earlier this month, with inflation among major concerns for businesses.While Japan’s annual consumer inflation rate was at 3.0% in September, the prices firms charged each other rose 9.7% in the same month.Inflationary pressures in import-reliant Japan have been exacerbated by a prolonged slide in the yen, which hit a fresh 32-year-low against the U.S. dollar this month.”We haven’t heard much from manufacturers that the weak yen is positive per se for their production,” the METI official said based on its factory output survey. “Rather, with rising procurement costs on the weak yen, coupled with (higher) energy prices, some firms have voiced concerns for their business conditions.” On Friday, the government announced a 39 trillion yen ($264 billion) package as an inflation countermeasure funded by an extra budget of 29.6 trillion yen, while the Bank of Japan decided to keep its ultra-loose monetary easing policy unchanged to support the fragile economy, even with the risk of fuelling the yen’s further weakness.Retail sales rose 4.5% year-on-year in September, extending a rebound since March when the government ended domestic coronavirus curbs. Analysts had expected 4.1% growth.On a seasonally adjusted month-on-month basis, retail sales grew 1.1% in September.A further bounce is expected in coming months after Japan eased border controls on Oct. 11 for foreign tourists.Economists polled by Reuters last week expected the Japanese economy to expand an annualised 2.0% in October-December, slightly better than their previous estimate, while pointing out the biggest risk to Japan’s economy over the next year is a prolonged period of U.S. monetary tightening.($1 = 147.6500 yen) More

ACCRA (Reuters) -Ghanaian President Nana Akufo-Addo on Sunday said talks with the International Monetary Fund were going well and sought to reassure investors that the negotiations would not lead to a reduction in the face value of government bonds.The president’s speech to the nation sought to reassure Ghanaians and the markets that the government can curb an economic crisis that has forced it to turn to the Fund for financial support.The talks are “are at advanced stages, and are going well,” Akufo-Addo said.”No individual or institutional investor … will lose their money as a result of our ongoing IMF negotiations. There will be no haircuts,” he said, denouncing as “false rumours” recent reports of a possible such restructuring.Ghana launched talks with the IMF in July as foreign investors dumped its debt and street protests broke out over economic turmoil that has seen inflation and currency depreciation hit record levels despite repeated and severe lending rate hikes.”I cannot find an example in history when so many malevolent forces have come together at the same time,” Akufo-Addo said.The Ghanaian cedi has plummeted more than 40% this year, straining importers of both raw and processed materials, while consumer inflation hit a new 21-year high of 37.2% in September on the back of soaring import costs.The president said the government aimed to restore macroeconomic stability within the next three to six years and to cut the debt-to-GDP ratio to 55% by 2028.”I believe we can and we will find the means to achieve these goals, even if the immediate measures we have to take are painful,” he said. The IMF estimates Ghana’s debt-to-GDP hitting over 90% by year-end. More

Good morning. President Vladimir Putin’s decision to pull the plug on the wartime deal that unblocked the passage of millions of tonnes of grain via southern Ukraine will lead to a fresh jump in price, experts warned, with “catastrophic consequences” for poorer nations already facing acute food shortages. The US called Moscow’s suspension on Saturday of its participation in the UN-backed deal with Kyiv an “outrageous” action that risked fuelling starvation. Moscow linked its decision to a weekend attack on ships in the port of Sevastopol, part of the territory Russia annexed from Ukraine in 2014, which Ukraine called a “false pretext”. The Kremlin’s announcement surprised grain traders and analysts who, while doubtful that the deal would have endured beyond its mid-November deadline, had not expected a sudden termination. “We’ll see a substantial spike in prices” as a result, said Andrey Sizov, managing director of Black Sea grain consultancy SovEcon, adding that Russia’s move was its “worst-case scenario”. Arif Husain, chief economist at the UN World Food Programme, said “dozens of countries” would be affected by new disruption to supply from Ukraine, a leading global exporter of grain and other food products. “In the good times [this] would be bad, but in the current state of the world, it’s something that needs to be resolved as soon as possible,” he said.Five more stories in the news1. Workers flee China’s Covid restrictions at huge iPhone factory A coronavirus outbreak at the Foxconn plant in central China, the world’s largest iPhone factory, has sparked an exodus of hundreds of workers fleeing on foot to escape the “chaos” of being locked in dormitories to quarantine amid dwindling food and medical supplies.2. More than 150 dead in crush at Seoul Halloween celebration South Korea president Yoon Suk Yeol has declared a period of national mourning after at least 151 people died and scores more were injured after a crowd surge caused a panic on Saturday night in the narrow streets of Itaewon, a popular nightlife district. Yoon has vowed to conduct an investigation into the cause.3. Brazilians vote after long and bitter presidential battle In a defining moment for the political course of the country, a tight result is expected from yesterday’s run-off vote to decide between two polarising politicians: rightwing populist Jair Bolsonaro, the current president, and leftist former leader Luiz Inácio Lula da Silva.4. Germany rejects push for fresh EU borrowing to battle energy crisis Christian Lindner, Germany’s finance minister, has rejected common borrowing by the EU as a way to address the bloc’s energy crisis, saying it was cheaper for individual states to raise debt by themselves given the higher interest rates faced by the European Commission.5. Sunak reconsiders attending UN climate summit Rishi Sunak, UK prime minister, cited “pressing domestic commitments” in his initial decision not to attend next month’s UN COP27 climate summit in Egypt. His choice was met with a chorus of criticism, leading Sunak to open the door to a possible U-turn.The day aheadSpace launch China’s National Space Administration will launch the last of three modules today that comprise the Tiangong Space Station.Military drills Starting today, South Korea and the US will conduct military drills for the next five days.US Supreme Court The highest court in the US will hear from “anti-affirmative action activists” seeking to bar Howard University and the University of North Carolina from considering race in undergraduate admissions.European Daylight Saving Time ended last night. Clocks in the UK turn back one hour, returning to Greenwich Mean Time (GMT) today. What else we’re readingHow Russia secretly takes grain from occupied Ukraine An investigation by the Financial Times into the illicit grain trade out of occupied Ukraine reveals a complex shadow operation managed by private companies and arms of the Russian state itself. Russia’s invasion of Ukraine, one of the world’s biggest grain exporters, has caused global food shortages and sent prices for grain soaring.

‘Mischief and delay’: How Musk and Twitter finally sealed the deal The purchase of the influential social media platform by the world’s richest man has been among the most colourful and chaotic dramas in corporate history. The acquisition, which ended hastily before the October 28 deadline, drew in a cast of Wall Street powerhouses, Silicon Valley elite, and a few ‘meme-splainers’.Xi blindsides investors with no ‘adults in the room’ When China’s president Xi Jinping moved to tighten his grip on power earlier this month, analysts expected him to include at least a couple of moderates in his leadership team. The absence of even one such figure, combined with the late release of disappointing economic data, sparked record selling of Chinese stocks by foreign investors.Benjamin Netanyahu plots return to power as Israel heads for polls With tomorrow’s election on a knife edge, the former prime minister’s chances are likely to depend on the far right. This will be Israel’s fifth election in three and a half years of political gridlock and is widely seen as a referendum on Netanyahu, a polarising figure who has been Israel’s leader for 15 of the past 26 years.European consumers cut back on discretionary spending In the latest evidence of the mounting strain on the region’s economy, European consumers have begun cutting costs as rising energy bills and interest rates push up the cost of living. Consumer sentiment has dropped sharply and car sales, box office revenues and hotel bookings are all falling.TechnologyIs it worth the upgrade? Here’s everything you need to know about the new iPhone 14 and how to make the most of its new functions.

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(Reuters) -The Reserve Bank of New Zealand said on Monday its annual stress test on the banking sector showed banks were “well placed” to overcome stagflation. The RBNZ’s Deputy Governor Christian Hawkesby said while banks’ capital buffers would take a hit in a stagflation scenario, where high inflation is paired with negative economic growth, they would remain well above the regulatory minimums. Hawkesby said that this was thanks in part to the build-up of capital since the 2008 global financial crisis.Inflation in New Zealand is tracking just below three-decade highs at 7.2% and the central bank has been aggressively hiking the cash rate to try to dampen it.Gross domestic product rose 1.7% in the June quarter, but increases in the cash rate raise the risk of a contraction.The Central Bank is due to release its twice yearly Financial Stability Report on Nov. 2. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeeverIf world markets on Monday take their cue from Friday’s melt up on Wall Street it will round off what has, in many ways, been a truly remarkable month. Investors face another (likely) bumper U.S. rate hike from the Fed later this week, and profit-taking and re-positioning as the new month begins could also burst the revival bubble. But it’s worth noting the resilience markets showed in October.The implied Fed terminal rate rose around 50 bps to 5% (also Goldman’s new forecast), bond yields rose, global inflation remained sticky, 2023 recession risks increased, and the Q3 U.S. earnings season has been patchy at best, or a disaster at worst. Looking at you Big Tech.Yet world stocks are poised for their best month in almost two years, Wall Street volatility (the VIX index) fell, and according to Ryan Detrick at Carson Group, the Dow is about to seal its best month since January 1976. (Dow Jones Industrials vs tech wreck: https://fingfx.thomsonreuters.com/gfx/mkt/lgpdkmxjevo/Dow.jpg)Granted, this followed a particularly dire September, so some sort of bounce was perhaps on the cards. And not all equity markets are smiling – MSCI’s Asia ex-Japan index is almost certain to close in the red for an unprecedented 10th month in a row. The divergence between U.S. and Asian markets is also reflected in the historic levels of dollar/Asia exchange rates, the widening gap between the U.S. and Chinese economic outlooks, and general investor confidence in the Fed versus Asian central banks’ policy path.The Bank of Japan may come under pressure to intervene in the FX support the yen again, with the currency resuming its slide after the BOJ stuck to its ultra-loose policy guns on Friday. The PBOC is also struggling to keep its exchange rate depreciation in check. Monday will confirm the yuan’s eighth monthly decline in a row, a record. Three key developments that could provide more direction to markets on Monday:China PMIs (October)Japan retail sales (September)South Korea retail sales (September) More

Central bank governor Godwin Emefiele said last week that of 3.3 trillion naira ($7.54 billion) cash in circulation, 2.7 trillion was held outside the banking sector, which undermined the bank’s monetary policy. The most frequently-used notes are 200, 500 and 1,000 naira, which are to be replaced by Jan. 31, though officials have not made clear exactly how the plan will work.”People with illicit money buried under the soil will have a challenge with this, but workers, businesses with legitimate incomes will face no difficulties at all,” Buhari told an interview with a local TV channel.Some economic analysts say the transition period to the new notes is too short and could increase demand for dollars as a safer currency, which would put more pressure on the exchange rate. The finance minister was quoted by local media as saying she had not been consulted and feared there could be “serious consequences” for the naira.Inflation in Nigeria rose for the eighth straight month to 20.77% in September from 20.52% in August despite the central bank’s sharp rate hikes to try to tame price increases.Analysts say inflation is driven by excess liquidity, dollar scarcity and the high cost of diesel.($1 = 437.50) More

The Bank of Canada (BoC) has hiked interest rates by 350-basis points in just seven months, one of its sharpest tightening campaigns ever, to try to force inflation back down to its 2% target from 6.9% in September.The combination of high interest rates and inflation has squeezed Canadian consumers and small businesses, prompting politicians, unions and even some economists to implore the central bank to slow its pace of tightening.”I do not have any concerns about the bank’s independence being under threat,” Macklem was quoted saying in an interview with The Canadian Press. The remarks were published online on Sunday but the interview was conducted on Wednesday, The Canadian Press said.”Yes, we’re getting lots of tough questions. People should be asking those tough questions. But I have felt no threat to our independence.”The bank this week signaled its tightening campaign was nearing its peak, but made clear it was not done yet, as it hiked rates by 50-bps to a fresh 14-year high.Macklem has argued restoring price stability was not easy, but rampant inflation would be worse.Canada, with its pricey homes and top of the G7 household debt levels, is particularly sensitive to higher interest rates, with fears mounting the BoC’s aggressive hikes will trigger a recession.In his interview with The Canadian Press, Macklem acknowledged: “Lots of people are giving us advice on what we should do.” But he said central banks are independent for a reason.”The reason is that there are tough decisions to take, and you do have to look longer term. And it’s at times like this, that when it’s difficult, that you see the value of the independence of central banks,” he told The Canadian Press. More