BUENOS AIRES (AP) — Argentina got a new economy minister late Sunday, a day after the abrupt resignation of her predecessor shook the governing coalition at a time it was already facinga crisis of unity.
Gabriela Cerruti, the presidency’s spokesperson, wrote on Twitter late Sunday that Silvina Batakis will now head the Economy Ministry, replacing Martin Guzman.
The pick could be crucial for the administration of President Alberto Fernandez as it faces sharp internal divisions while Argentina is undergoing economic turmoil.
Batakis will be responsible for managing an economy burdened with inflation running at an annual rate above 60% and will play a key role in determining the future of the country’s recent deal with the International Monetary Fund to restructure $44 billion in debt. Many left-leaning members of the governing coalition oppose the IMF agreement.
Batakis was the economy minister of Buenos Aires province, the country’s most populous district, from 2011 to 2015 under then-Gov. Daniel Scioli, who was recently named the federal production minister.
Guzman quit unexpectedly Saturday, posting his seven-page resignation letter on Twitter, and apponting a successor before the markets opened Monday was seen as particularly important to avoid a further slide by Argentina’s peso, which recently hit an all-time low against the dollar.
The economy also has been disrupted by trucker strikes over shortage of diesel.
Guzman was largely unknown when he became minister and was seen as a moderate in the governing coalition, which includes more left-leaning elements allied with Vice President Cristina Fernandez, a former president who still has a strong base of support.
Batakis, on the other hand, has a long history of public service and is seen as close to the vice president and her allies.
The vice president, who is not related to the president, has recently taken to publicly criticizing the administration’s economic policies in high-profile speeches that have put a spotlight on the rifts within the governing coalition.
Guzman’s resignation letter, which was released as the vice president was giving a speech in which she again criticized economic policy, suggested he stepped down at least in part due to a lack of political support.
Euro-Zone Economy Grew Less Than Estimated in Second Quarter – BNN Bloomberg
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The euro-area economy grew slightly less than initially estimated in the second quarter as signs continue to emerge that momentum is unraveling.
Output rose 0.6% from the previous three months between April and June, compared with a preliminary reading of 0.7%, Eurostat said Wednesday. Employment, meanwhile, climbed 0.3% during that period.
While the data still suggest Europe’s economy was on a relatively firm footing coming into the summer, analysts worry that energy shortages will drive record inflation higher still, tipping the continent into a recession. A downturn lasting two quarters is now more likely than not, according to a Bloomberg survey, which puts the probability at 60%.
Inflation is expected to average almost 8% in 2022 — about four times the European Central Bank’s goal. Officials have stressed the importance of reacting forcefully to prevent expectations of higher inflation from becoming entrenched, though some economists question how far interest rates can be lifted if there’s a recession.
©2022 Bloomberg L.P.
B.C.’s export economy continues to cash in on its Cascadian connections – Business in Vancouver
It is well known that the United States is British Columbia’s largest export market and number one international commercial partner.
Even if the specific details of export magnitudes are not widely known, most people recognize that being physically adjacent to the world’s largest economy means B.C.’s trade will invariably be tilted to the south. A common language, similar business and legal environments, and previous trade agreements further augment this powerful cross-border trade orientation.
In a typical year, B.C. sends about half of its merchandise exports stateside. In 2021, the share was even higher: 55 per cent. China, a distant second, accounts for 15 to 16 per cent of the province’s international merchandise exports, followed by Japan at around 10 per cent.
Less well known is that the distribution of B.C.’s exports within the U.S. is similarly shaped by geography and the size of the various state economies. In particular, the three West Coast states – Washington, Oregon, and California – collectively absorb 45 to 46 per cent of the province’s U.S.-bound merchandise exports. We estimate that, if services are included, these three states buy more than half of everything the province sells to the giant American market.
When it comes to cross-border trade, geography and size matter – a lot. The I-5 highway, connecting coastal cities from San Diego through California to Portland, Seattle and Vancouver, with arteries extending into northern B.C., has long supported economic activity along the west coast of North America. It has also enabled steady trade growth. The built-up networks of railways, pipelines, electricity transmission lines and seaports and airports – and the sharing of a common time zone – all serve to reinforce the pattern and depth of commerce along the west coast.
Underscoring the point that geography matters, last year B.C. exported $9 billion in goods to next-door Washington state, equal to 30 per cent of U.S.-bound merchandise exports. In fact, exports to Washington state match the value of B.C.’s exports to China, the world’s second largest economy.
The size of the individual state economies is also a key factor shaping cross-border trade. California is the largest economy in the U.S., and one of the biggest in the world. So, it’s not surprising that California ranks as B.C.’s second largest individual state export market, taking nearly 12 per cent of our U.S.-bound goods.
Broadening the picture to include services, California stands out even more, given that it boasts world-class advanced technology and film and entertainment industries. California is also important as a source of international visitors to B.C. When service exports are included, our research suggests that California accounts for about one-fifth of the value of British Columbia’s U.S.- bound exports.
California is unique among the province’s trading partners in that service exports exceed merchandise exports in dollar terms. B.C.’s exports of film and television productions have increased sharply and are now close to $2.5 billion annually; the bulk of this involves business done with California. Also, California accounts for a disproportionate share of B.C.’s exports of scientific, technical and professional services and of technology-based services, and the state is also a leading supplier of international tourists to the province. In total, once tourism activity fully resumes, we project that B.C.’s service exports to California will soon exceed $6 billion, almost twice the value of our merchandise exports to the Golden State.
In sum, international goods exports to B.C.’s three neighbouring coastal states amounted to almost $14 billion in 2021. With some educated guesswork, and assuming tourism fully recovers, service exports to these three states should soon reach $12 billion annually. Thus, the combined value of goods and services sold to California, Oregon and Washington amounts to almost $26 billion, equal to 55 per cent of B.C.’s total goods and services exports to the United States.
An updated and more complete look at the direction of provincial exports and the role of the three coastal states in B.C.’s global trade underscores the significance of the “Cascadia” region in shaping the province’s economy. When services are counted, this dynamic U.S. region purchases an eye-popping 30 to 33 per cent of B.C.’s international exports. And these are not stagnant markets; all three states have diverse, growing economies. This means there is scope to further deepen B.C.’s already substantial commercial ties with our West Coast neighbours.
Jock Finlayson is the Business Council of British Columbia’s senior adviser; Ken Peacock is the council’s senior vice-president and chief economist.
Chipmakers Are Flashing More Warnings on the Global Economy – BNN Bloomberg
(Bloomberg) — Mounting concern over semiconductor demand is sending shudders through North Asia’s high-tech exporters, which historically serve as a bellwether for the international economy.
South Korean behemoths Samsung Electronics Co. and SK Hynix Inc. have signaled plans to dial back investment outlays, while across the East China Sea, the world’s biggest contract chipmaker Taiwan Semiconductor Manufacturing Co. indicated a similar expectation.
Fading tech demand highlights a darkening picture as Russia’s war on Ukraine and rising interest rates damp activity. The following charts look at the chip industry and its implications for the world economy.
In recent weeks, major chip manufacturers Micron Technology Inc. Nvidia Corp., Intel Corp. and Advanced Micro Devices Inc. have warned of weaker export orders.
Gartner Inc. predicts an abrupt end to one of the industry’s biggest boom cycles. The research firm slashed its outlook for revenue growth to just 7.4% in 2022, down from 14% seen three months earlier. Gartner then sees it falling 2.5% in 2023.
Memory chips are among the most vulnerable segments in the $500 billion semiconductor market to global economic performance, and Samsung and SK Hyinx’ sales of dynamic random access memory, or DRAM, a chip that holds bits of data, are central to Korean trade.
Next year, demand for DRAM is likely to rise 8.3%, the weakest bit growth on record, says tech researcher TrendForce Corp., which sees supply climbing 14.1%. Bit growth refers to the amount of memory produced and serves as a key barometer for global market demand.
South Korea’s exports are bolstered when demand outpaces supply in bit growth. But with supply likely to expand at almost twice the pace of demand next year, exports may be headed for a major downturn.
Signs are rising that trade is already starting to deteriorate. Korea’s technology exports slipped in July for the first time in more than two years, with memory chips leading the falls. Semiconductor inventories piled up in June at the fastest pace in more than six years.
Among potential victims will be Samsung, the world’s biggest memory-chip producer and a linchpin of Korea’s trade-reliant economy.
Samsung recorded rapid sales growth when demand was strong relative to supply. As the chip outlook turns gloomy, shares of Samsung have been declining this year, with occasional rebounds on better-than-expected profits.
Samsung and SK Hynix control roughly two thirds of the global memory market, meaning they have the power to narrow the gap between supply and demand.
Memory is loosely tied to other types of semiconductors, built by firms such as TSMC that produces chips in iPhones, and Nvidia, whose graphics cards are used in everything from games to crypto mining and artificial intelligence.
The Philadelphia Semiconductor Index, which includes these firms, has ebbed and flowed together with memory demand in recent years.
Korean exports have long correlated with global trade, meaning their decline will add to signs of trouble for a world economy facing headwinds from geopolitical risks to higher borrowing costs.
Micron Technology, the world’s third-largest memory maker, last week issued a warning about deteriorating demand, triggering a selloff in global chip stocks.
Korea’s stock market has been among leading indicators of the country’s trade performance, with investors dumping shares well before exports slump.
“The trend is important for Asia as its economic cycle is very dependent on tech exports,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis SA. “Fewer new orders and the large inventory pile-up mean Asia’s tech sector will see a long destocking cycle and a shrinking profit margin.”
The International Monetary Fund last month downgraded its global growth forecast and said 2023 may be tougher than this year.
Deutsche Bank AG sees a U.S. recession starting in mid-2023 and Wells Fargo & Co. expects one in early 2023. A Bloomberg Economics model sees a 100% probability of a US recession within the next 24 months.
©2022 Bloomberg L.P.
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