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Charting the Global Economy: Weak Trade Shows China Struggling

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(Bloomberg) — Fresh trade data out of China added to evidence that the world’s second-largest economy is struggling for traction.

In Germany, another decline in orders placed with manufacturers suggested a lack of momentum in Europe’s largest economy. Meanwhile, consumers in the euro zone became much more sanguine about the inflation outlook, a development that feeds into the debate about how long interest rates must rise.
After US lawmakers agreed to suspend the debt limit, the Treasury said it expects a significant rebuilding of its cash balance by month’s end.Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

Asia

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China’s economic recovery showed further signs of weakening in May, clouding the outlook for the rest of the year and fueling calls for more central bank stimulus. Trade figures this week were the latest to show the economy’s weakening outlook. Both exports and imports contracted in May from a year ago, a sign of subdued global and domestic demand.

Foreign tourists packing flights to Japan are helping the economy climb out of a recession with spending power that is also fueling upward pressure on hospitality-sector pay and prices.In the over three decades since the collapse of the Soviet Union, Russia held on to its spot as the biggest trading partner for Kazakhstan even as China made inroads across much of the region. But financial and economic sanctions that have sidelined Russia and diverted trade flows are creating an opening for China.

Europe

Consumer expectations for euro-zone inflation eased significantly in April, adding to the case for the European Central Bank’s historic ramp-up in interest rates to conclude this summer.

German factory orders unexpectedly fell in April, further dimming prospects for Europe’s largest economy after it endured the first recession since the pandemic over the winter.

US & CanadaThe Bank of Canada defied expectations by restarting its interest-rate tightening campaign, saying the economy is running too hot. Policymakers raised the overnight lending rate to 4.75%, the highest since 2001.

The US service sector nearly stagnated in May as business activity and orders downshifted, while a measure of prices paid slid to a three-year low.

The Treasury expects its cash pile — already showing signs of recouping lost ground after the deal to suspend the statutory debt limit — will reach around $425 billion at the end of June.

The biggest shipping gateways on the US West Coast are enduring the longest labor-related disruptions since 2015 as talks between port employers and dockworkers close in on one year without a contract. The two sides are clashing over how to divide carriers’ pandemic-era profits in a market that’s returned to rock-bottom freight rates.

Emerging MarketsBrazil’s annual inflation slowed much more than expected in May, hitting the lowest level in two and a half years and piling pressure on the central bank to ease monetary policy in coming months.

Saudi Arabia’s plan to slash oil production by around 10% may hit its finances hard. The decision by the kingdom to lower crude output to 9 million barrels a day next month and perhaps beyond, has failed to boost prices much. Energy Minister Prince Abdulaziz bin Salman, who announced the unilateral cut after an OPEC+ meeting, described it as a “lollipop” for other members of the producers’ cartel.

World

The global economy is in a precarious situation and heading for a substantial growth slowdown as sharp interest-rate increases hit activity and stir vulnerabilities in lower-income countries, according to the World Bank.

Australia’s central bank unexpectedly raised its key interest rate and kept the door open to further hikes. The Bank of Canada also surprised by boosting rates. Poland, India, Peru and Russia stood pat.

—With assistance from Laura Curtis, Toru Fujioka, Nariman Gizitdinov, Alexandra Harris, Erik Hertzberg, William Horobin, John Liu, Abeer Abu Omar, Jana Randow, Andrew Rosati, Augusta Saraiva, Zoe Schneeweiss, Randy Thanthong-Knight, Emi Urabe, Fran Wang and Alexander Weber.

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How petro-nations are approaching the shift to net zero and the future of oil – CBC.ca

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Sudan’s vital date industry struggles in war-decimated economy

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Prices have collapsed in the vital date industry, the latest economic sector to become a casualty of war in the northeast African country.

Every autumn, until this September, date farmers in northern Sudan pulled their harvests down from palm trees, securing a living for months to come.

But five months into the war between Sudan’s rival generals, the country’s economic infrastructure has been destroyed and “buyers are scared”, farmer Al-Fatih al-Badawi, 54, told AFP.

Sudan is the world's seventh-largest producer of dates, growing more than 460,000 tonnes per year, according to the United Nations
Sudan is the world’s seventh-largest producer of dates, growing more than 460,000 tonnes per year, according to the United Nations © ASHRAF SHAZLY / AFP

Sudan is the world’s seventh-largest producer of dates, growing more than 460,000 tonnes per year, according to the United Nations Food and Agriculture Organisation.

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How much of that figure will be available this year remains to be seen, but farmers in northern Sudan are lucky they could manage a harvest at all.

In Karima — a town on the Nile River about 340 kilometres (210 miles) north of the capital Khartoum — the groves bustle with young men climbing date palms, dropping bunches of the brown fruit, beloved by Sudanese, onto white sheets below.

Farmers who depend on the date industry face colossal challenges moving their products across the country, as do those in other agricultural sectors.

Dates and other agricultural products were a foundation of Sudan's pre-war economy
Dates and other agricultural products were a foundation of Sudan’s pre-war economy © ASHRAF SHAZLY / AFP

Along with insecurity, wartime fuel shortages have severely hindered the ability to transport goods.

Before the war, nearly all trade in highly centralised Sudan went through Khartoum.

But constant air strikes, artillery blasts and street battles have left the capital largely off-limits to traders, who fear for their safety or are turned back by fighters at checkpoints.

“Our main market was Khartoum”, Badawi said. Without it, trade is at a standstill and the price for his crop is in freefall.

Land left fallow

In Sudan, one of the world’s most underdeveloped countries, dates and other agricultural products were a foundation of the pre-war economy.

The agriculture sector employed more than 80 percent of the workforce and accounted for 35 to 40 percent of gross domestic product, according to the United Nations.

But now, in much of the country including southeastern Gedaref state, known as Sudan’s breadbasket, the land has been left fallow.

Processing factories have been razed or looted
Processing factories have been razed or looted © ASHRAF SHAZLY / AFP

Processing factories have been razed or looted.

Smallholder farmers have no access to financing, traders have no guarantees of viable markets and industry heavyweights have given up.

In May, Haggar Group — one of the agriculture sector’s largest employers — suspended operations and laid off thousands of labourers.

Even before the war began, one in three people were in need of humanitarian aid and the country’s farmers — unable to meet domestic food security needs — struggled to break even.

The date sector in Karima had been in urgent need of “guidance and agricultural policy”, as well as resources to reduce high rates of waste, said Al-Jarah Ahmed Ali, 45, another farmer.

Now the challenges have only worsened.

Since April 15, fighting between army chief Abdel Fattah al-Burhan and his former deputy, Mohamed Hamdan Daglo, commander of the paramilitary Rapid Support Forces, has torn Sudan apart.

Fighting has killed nearly 7,500 people, according to a conservative estimate from the Armed Conflict Location & Event Data Project.

More than 4.2 million people — most of them from the Khartoum area — have been displaced within Sudan, and another 1.1 million have fled the country, according to the International Organization for Migration.

Farmers are among those fleeing Sudan's deadly war and struggling economy
Farmers are among those fleeing Sudan’s deadly war and struggling economy © ASHRAF SHAZLY / AFP

Agricultural workers are among those joining the exodus, and while they may find relative safety in northern Sudan, whether they can earn enough to survive in a collapsing date market is questionable.

Among them is Hozaifa Youssef, a 26-year-old radiologist who left Khartoum to rejoin his family in Karima, where he is helping with the date harvest.

“I was going to India to get my master’s degree,” but that goal is now on hold, Youssef said.

The veteran farmer, Badawi, has not lost hope.

“We’re trying to find new markets, even though it’s going to be more expensive. Hopefully, the price will adjust and it will all work out.”

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China’s Global Travelers Pull Back as Economic Uncertainty Grows

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(Bloomberg) — More Chinese travelers are delaying outbound plans amid economic uncertainty, according to a new survey, potentially rough news for countries depending on one of the world’s biggest source of tourists.

A September survey by consultancy Oliver Wyman found that 54% of respondents — all experienced travelers who had been abroad before the pandemic shut Chinese borders — said they planned to travel in 2023, down from 62% polled in June.

Some 22% said they didn’t have plans to venture overseas for the next three years, up from just 6% in June.

Respondents needed to meet a minimal monthly household income of 30,000 yuan ($4,105), representing the country’s middle class — a key driver being counted on to help boost China’s post-Covid consumption recovery. While spending on experiential services like travel and eating out has been resilient this year, questions have risen about whether that’s sustainable.

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“While Chinese travelers are returning, it’s taking longer than we expected when the border reopened,” said Imke Wouters, an Oliver Wyman partner who led the research.

The survey also showed 32% of respondents saying their willingness to travel abroad had decreased amid the current economic downturn and political situation, while only 19% said they were more inclined to take international trips.

Enthusiasm for domestic travel remained strong, meanwhile, with 35% saying they were more disposed to journey within China, and just 14% decreasing.

China’s economy picked up steam in August as a summer travel boom and stimulus push boosted consumer spending and factory output, adding to nascent signs of stabilization. Still, the upcoming 8-day Golden Week holiday will be another test of whether Beijing’s recent efforts to bolster the economy are starting to bear fruit.

More than 21 million people are expected to fly during the holiday, starting from this Friday, sending airfares climbing. Domestic tourism spots — and short-haul Asian destinations such as Thailand, Japan and Korea — are among the top choices.

Read more: Millions to Take to Skies as China Gears Up for Long Golden Week

And it’s not just travel: the middle class’s worries about the economy may also be reflected in their luxury expenditures. Of the casual luxury shoppers polled by Oliver Wyman — those who spent less than 40,000 yuan this year — 16% expected to increase their luxury spending, while some 30% considered cutting back.

Big spenders — people who spent more than 40,000 yuan — remained more resilient and positive.

©2023 Bloomberg L.P.

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