The world’s advanced economies are heading into a deepening slowdown as markedly higher interest rates take a hefty toll on activity that could still become more acute, the OECD warned.

Growth is losing momentum in many countries and won’t edge up until 2025, when real incomes recover from the inflation shock and central banks will have begun cutting borrowing costs, according to the organization.

Inflation eased in Europe, Brazil and Australia in recent readings but remains too high for central bankers’ comfort. Meantime, price pressures accelerated in Japan’s service sector, as well as in Zimbabwe, where officials recently adopted a new inflation metric.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

World
The Organization for Economic Cooperation and Development forecasts global gross domestic product to expand only 2.7% next year after an already weak 2.9% in 2023. The pace will only pick up to 3% in 2025, according to the assessment.

Europe
Euro-zone inflation cooled more than expected, putting the 2% target in sight as investors step up bets that the European Central Bank will cut interest rates sooner than officials suggest. ECB officials are adamant, however, that monetary policy must remain tight to ensure inflation makes it all the way back to 2%.

Sweden’s economy fell into a recession in the third quarter as inventories declined and households cut back spending amid increasing borrowing costs and rising prices. Most forecasters now expect the largest Nordic country to see its output contract for two consecutive years, and the European Commission forecasts that Sweden will be the only member state that will see its output decline next year.

Asia

Japan’s business service prices increased by the most in over three decades when ignoring sales tax hikes over the years, throwing some doubt over the Bank of Japan’s assertions that inflation will decelerate in the short term. Such gains in prices put the central bank in a difficult position, as the country is still struggling to speed up wage growth.

Soft Inflation Makes Bond Traders Doubt RBA Will Hike | Three-year yields drop to well below the cash rate
Australia’s monthly inflation gauge snapped two months of acceleration in October, bolstering the case for the Reserve Bank to resume pausing interest rates next week.Emerging Markets

Brazil Mid-Month Inflation Decelerates Toward Target | IPCA-15 CPI hits 4.84%, above central bank’s 3.25% target
Brazil’s annual inflation slowed roughly in line with expectations in early November, approaching the target range as central bankers forge ahead with plans for more monetary easing.

Zimbabwe’s annual inflation rate climbed for the first time since the recent adoption of a new price measure that reflects the widespread use of US dollars for transactions in the economy. A 2 US cents per kilowatt hour increase in power tariffs likely contributed.

World Relies on West Africa for Much of Its Cocoa | Ivory Coast and Ghana are responsible for about 60% of output
There’s a climate crisis playing out across Ivory Coast and Ghana, the heavyweights of cocoa, with consequences for global food inflation and the cost-of-living squeeze. Too much rain is lowering output and delaying harvests, with the resulting shortfall catapulting wholesale prices in New York to their highest in 46 years.

US
US consumer spending, inflation and the labor market all cooled in recent weeks, adding to evidence that the economy is slowing. The figures are consistent with expectations that the economy will moderate in the fourth quarter following the strongest growth pace in nearly two years.

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The world’s advanced economies are heading into a deepening slowdown as markedly higher interest rates take a hefty toll on activity that could still become more acute, the OECD warned.

Growth is losing momentum in many countries and won’t edge up until 2025, when real incomes recover from the inflation shock and central banks will have begun cutting borrowing costs, according to the organization.

Inflation eased in Europe, Brazil and Australia in recent readings but remains too high for central bankers’ comfort. Meantime, price pressures accelerated in Japan’s service sector, as well as in Zimbabwe, where officials recently adopted a new inflation metric.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

World
The Organization for Economic Cooperation and Development forecasts global gross domestic product to expand only 2.7% next year after an already weak 2.9% in 2023. The pace will only pick up to 3% in 2025, according to the assessment.

Europe
Euro-zone inflation cooled more than expected, putting the 2% target in sight as investors step up bets that the European Central Bank will cut interest rates sooner than officials suggest. ECB officials are adamant, however, that monetary policy must remain tight to ensure inflation makes it all the way back to 2%.

Sweden’s economy fell into a recession in the third quarter as inventories declined and households cut back spending amid increasing borrowing costs and rising prices. Most forecasters now expect the largest Nordic country to see its output contract for two consecutive years, and the European Commission forecasts that Sweden will be the only member state that will see its output decline next year.

Asia

Japan’s business service prices increased by the most in over three decades when ignoring sales tax hikes over the years, throwing some doubt over the Bank of Japan’s assertions that inflation will decelerate in the short term. Such gains in prices put the central bank in a difficult position, as the country is still struggling to speed up wage growth.

Soft Inflation Makes Bond Traders Doubt RBA Will Hike | Three-year yields drop to well below the cash rate
Australia’s monthly inflation gauge snapped two months of acceleration in October, bolstering the case for the Reserve Bank to resume pausing interest rates next week.Emerging Markets

Brazil Mid-Month Inflation Decelerates Toward Target | IPCA-15 CPI hits 4.84%, above central bank’s 3.25% target
Brazil’s annual inflation slowed roughly in line with expectations in early November, approaching the target range as central bankers forge ahead with plans for more monetary easing.

Zimbabwe’s annual inflation rate climbed for the first time since the recent adoption of a new price measure that reflects the widespread use of US dollars for transactions in the economy. A 2 US cents per kilowatt hour increase in power tariffs likely contributed.

World Relies on West Africa for Much of Its Cocoa | Ivory Coast and Ghana are responsible for about 60% of output
There’s a climate crisis playing out across Ivory Coast and Ghana, the heavyweights of cocoa, with consequences for global food inflation and the cost-of-living squeeze. Too much rain is lowering output and delaying harvests, with the resulting shortfall catapulting wholesale prices in New York to their highest in 46 years.

US
US consumer spending, inflation and the labor market all cooled in recent weeks, adding to evidence that the economy is slowing. The figures are consistent with expectations that the economy will moderate in the fourth quarter following the strongest growth pace in nearly two years.

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETCFO App

• Get Realtime updates
• Save your favourite articles

Scan to download App

PROCUREMENT of equipment that will be used in the construction of Zimbabwe’s second petroleum pipeline project valued at over US$1 billion is on course, the deal maker of the lucrative project told the Zimbabwe Independent.

Over the past 13 years, the implementation of the strategic project, which is expected to put Zimbabwe into the region’s petroleum hub, hung in the balance as the government worked on modalities to tie up the deal with a suitable suitor.

Eddie Cross, President Emmerson Mnangagwa’s former adviser, shared with this publication that orders for equipment that will be used to construct the second fuel pipeline had already been placed with manufacturers.

Cross, who wrote Mnangagwa’s biography titled A Lifetime of Struggle in 2021, said Mozambican authorities were supportive of the project.

This week, Zimbabwe and Mozambique jointly commissioned the US$200 million Beira-Machipanda railway line, that is expected to boost trade flows between the neighbouring countries.

The second fuel pipeline project will be implemented under a joint venture by the state-run National Oil Company (Noic) and South African-based firm Coven Energy.

The two parties will each control 50% shareholding of the pipeline.

“The joint venture between Noic and Coven Energy has been agreed by the cabinet on a 50-50 ownership basis. We are at the stage now where we are entering discussions with the Mozambican authorities on expanding the capacity of Beira port,” Cross said.

“We have already ordered some of the equipment required to implement the project, which is now being manufactured and assembled. Once we conclude our agreement with Mozambique to proceed, our consultant will start work. The Mozambican authorities are fully supportive of this project.”

Cross said Coven Energy will foot the cost of the project. “Coven Energy will finance the whole project pegged at over US$1 billion. It will be implemented in phases. Phase 1 is US$1,3 billion,” he said.

“Coven Energy will put up 30% liquidity, which is their own money and 70% will be borrowed during the project. There is no problem with financing.”

Noic corporate services director had not responded to questions posed by the Independent at the time of going to print.

Broadly, this publication wanted to gain an understanding of the projected carrying capacity, how Coven Energy would recoup its capital investment, and the profit-sharing ratio between the involved parties.

The only existing pipeline is wholly owned and managed by Pipeline Zimbabwe, a subsidiary of Noic.

Noic assumed total control over the Feruka-Harare pipeline when it snapped 50% equity then held by Lonmin, formerly known as Lonrho.

Mozambique owns the length of the pipeline that runs from Beira to Feruka. Private fuel trading firms pay Noic to use the infrastructure.

In 2021, Noic was charging US$0,07 to move a litre of fuel through the Feruka pipeline. Construction of the Coven Energy-Noic pipeline is expected to utilise Zimbabwe’s underutilised storage capacity, which stands at 500 million litres.

Source – newsday