Daily News Brief

January 31, 2023

Top of the Agenda

The International Monetary Fund (IMF) said global gross domestic product (GDP) will likely expand 2.9 percent (Bloomberg) this year, a 0.2 percentage point increase from its October forecast. China’s recent exit from pandemic lockdown and resilient U.S. consumer spending boosted the projection. China and India will account for around half of global growth this year, IMF chief economist Pierre-Olivier Gourinchas said.

Gourinchas downplayed concerns of a global recession, though the IMF said that global interest rate hikes and the war in Ukraine will continue to strain the world economy. Yesterday, Germany announced that its economy shrank (FT) in the fourth quarter of 2022, prompting fears of a shallow recession. The IMF projects (FT) the United Kingdom (UK) will be the only advanced economy to shrink this year, and that there is a “narrow path” for avoiding a U.S. recession. 

Analysis

“The scale of the downturn in Germany and elsewhere in Europe is far better than economists had anticipated during much of the latter half of 2022, when soaring gas prices stoked concerns of a severe recession,” the Financial Times’ Valentina Romei and Guy Chazan write.

“While [Chinese] households have been saving big, household income has also taken a significant hit due to repeated lockdowns. This, as well as fears of possible future COVID waves, means people won’t be so quick to empty their bank accounts,” Al Jazeera’s Katrina Yu says. 

Pacific Rim

The Joe Biden administration told some U.S. tech companies it will stop granting licenses to export to Chinese tech firm Huawei and is reportedly weighing an official ban, the Financial Times reported. The company has stoked fears of Chinese espionage in Washington.

Japan: Prime Minister Kishida Fumio and North Atlantic Treaty Organization (NATO) chief Jens Stoltenberg announced that Japan and NATO plan to strengthen their partnership (Japan Times).

For the Asia Unbound blog, CFR’s Sheila A. Smith looks at Japan’s diplomatic heft under Kishida.

South and Central Asia

Bangladesh is the first Asian country to be approved (Business Standard) for a new line of funding that the IMF has allocated for lower-income, climate-vulnerable countries.

Pakistan: Tehrik-e-Taliban Pakistan claimed responsibility (Dawn) for yesterday’s suicide bombing of a Peshawar mosque. The attack’s death toll has risen to one hundred people, a hospital official said.

Middle East and North Africa

Speaking alongside Israeli Prime Minister Benjamin Netanyahu, U.S. Secretary of State Antony Blinken stressed the importance (Times of Israel) of democratic institutions and consensus-building. His comments came as Netanyahu’s coalition tries to extend government control over Israel’s judiciary.

Russia/Saudi Arabia: Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman discussed cooperation (Bloomberg) on oil production and other economic and political affairs during a call yesterday, the Kremlin said. Tomorrow, the Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing states, including Russia, will meet to review production policy.

This Backgrounder looks at OPEC in a changing world.

Sub-Saharan Africa

Pope Francis is expected to call for peace (AP) in both conflict-stricken countries and highlight a “colonialist mentality” among foreign powers that seek to exploit African countries.

South Africa: Power shortages prompted water-supply cuts (Bloomberg) in the economic hub of Johannesburg, leading to increased risks of sewage spills.

Europe

While U.S. President Biden told reporters (RFE/RL) he is against sending the aircraft, French President Emmanuel Macron said he will not rule out the possibility of providing them. 

For Foreign Affairs, Michael McFaul writes that incrementally increasing military aid will not yield a breakthrough in Ukraine.

UK: Brexit is costing the economy $124 billion per year in lost output, Bloomberg Economics calculated on the third anniversary of the split.

Americas

It will no longer be a crime (CBC) to carry small amounts of cocaine, methamphetamines, and opioids in British Columbia. Advocates for the pilot program, which will run for three years, say it will help treat the country’s drug overdose crisis as a health issue instead of a criminal one.

Brazil/Germany/Ukraine: Faced with a request from German Chancellor Olaf Scholz, Brazilian President Luiz Inácio Lula da Silva said Brazil will not send ammunition (Reuters) to Ukraine.

United States

The shift could affect funding and coverage policies (NPR) for COVID-19 vaccines, tests, and treatments. 

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