Foreign direct investment (FDI) in mainland China’s economy in January-April fell 27.9% year-on-year to 360.2 billion yuan ($49.7 billion), according to the country’s Ministry of Commerce.
That included 58.5 billion yuan in FDI last month, the lowest since November. The figure fell 36% year-over-year and 32% month-over-month.
In January-April, about 12.7% of total investment was in the PRC’s high-tech sector.
As reported, FDI in 2023 fell 8% to 1.13 trillion yuan.
Experts Club Analytical Center and Maxim Urakin released a video analysis of how the GDP of the world’s countries has changed in recent years, more video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3.
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CHINA, EXPERTS CLUB, GDP, INVESTMENT, MACROECONOMICS, URAKIN
Germany’s central bank expects the country’s economy to grow in April-June for the second consecutive quarter after falling at the end of 2023.
According to preliminary calculations of the statutory office of the Federal Republic of Germany, in January-March GDP increased by 0.2% compared to the previous three months. It fell 0.5% in October-December 2023.
“The economy is likely to expand slightly again in the second quarter,” the Bundesbank said in a statement on Wednesday.
Activity in the services sector was likely to have continued to strengthen on the back of rising household income and consumer spending.
“Growth in household disposable income is likely to take the upper hand from consumer uncertainty,” Central Bank analysts suggested.
However, they noted that the construction sector remains very weak.
The German labor market is expected to remain resilient and wages look set to continue to rise rapidly. This could be a risk to cooling inflation, which the Bundesbank estimates will accelerate slightly again in May.
The final data on Germany’s first-quarter GDP dynamics will be released on May 24, while preliminary information for the second quarter will be presented on July 30.
Earlier Experts Club analytical center and Maxim Urakin released a video analysis of how the GDP of the world’s countries has changed over the past years, more detailed video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3.
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CENTRAL BANK, ECONOMY, EXPERTS CLUB, GDP, GERMANY, MACROECONOMICS, URAKIN
The growth of Ukraine’s real gross domestic product (GDP) in April 2024 slowed to 4.1% y-o-y due to Russian attacks on the Ukrainian energy system, compared to 4.8% in March, 5% in February and 5.2% in January, according to the Monthly Economic Monitor of the Institute for Economic Research and Policy Consulting (IER).
“Due to the intensification of shelling, a significant part of the maneuvering generation was damaged, which caused power outages for businesses and households. Restrictions on electricity supply will lead to a further decline in GDP growth,” commented Oleksandra Betliy, a leading researcher at the IER, quoted in the statement.
Earlier, the Experts Club and Maksim Urakin released a video analysis of how the GDP of the world’s countries has changed in recent years, more detailed video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3
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Among the positive news, she highlighted the growth of exports and imports due to better logistics through both the Ukrainian sea corridor and road transport, although in April rail transportation decreased by 5% compared to March this year and by 29% by April 2023 to 15.2 million tons.
The IER clarified that the growth of real gross value added (GVA) in the manufacturing industry in April was 10%, while in the mining industry it was about 3%. Better logistics contributed to the revival of the performance of metallurgy and iron ore mining, it said.
According to the Institute, the growth rate of GVA in construction was high, partly due to the construction of fortifications, while the growth rate of trade slowed to 3% against the background of a higher statistical base.
The IER also pointed out that in April, both the tax and customs services exceeded their revenue targets, while the NBU transferred twice as much revenue to the budget.
As reported, after Ukraine’s GDP growth of 5.3% in 2023, the National Bank expects it to slow down this year to 3%, while the government expects it to slow down to 4.6%. According to the Ministry of Economy, GDP growth in January-March this year was 4.5%, while the NBU estimated it at 3.1%.
Earlier, Experts Club and Maksim Urakin released a video analysis of how the GDP of the world’s countries has changed in recent years, more detailed video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3
You can subscribe to the Experts Club YouTube channel here – https://www.youtube.com/@ExpertsClub
Japan’s economy contracted 0.5% in the first quarter relative to the previous three months, according to preliminary government data. Analysts, whose average estimates are quoted by Trading Economics, had expected a 0.4% decline in GDP.
According to the revised data, the economy was unchanged in the fourth quarter of 2023, while previously reported growth of 0.1%.
On an annualized basis, Japanese GDP contracted 2% last quarter after a revised zero change a quarter earlier. The consensus forecast called for a 1.5% drop in January-March.
Consumer spending in the first quarter decreased by 0.7% relative to the previous three months, business investment – by 0.8%. Government spending rose by 0.2%.
Exports decreased by 5% after growth of 2.8% quarter earlier, imports – by 3.4% (+1.8% in October-December).
Earlier Experts Club analytical center and Maxim Urakin released a video analysis of how the GDP of the world’s countries has changed in recent years, more detailed video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3.
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Ukraine’s gross domestic product growth will slow to 3% this year from 5.3% last year, but will accelerate to 6% next year, according to the EBRD’s updated regional economic report released on Wednesday.
“Despite Ukraine’s GDP growth in 2023, supported by a record harvest, damage to electricity infrastructure from recent shelling is one of the factors likely to limit further growth in 2024,” the bank said, also highlighting the risks of damage to port infrastructure.
He noted that the forecast for Ukraine coincides with the overall forecast for 2024 for the regions in which the EBRD operates (Central and Eastern Europe, Central Asia, and the Southern and Eastern Mediterranean).
“Regional growth accelerated this year, up from 2.5% in 2023, despite challenges posed by global geopolitical tensions, including increased trade restrictions. In 2025, the EBRD regions are projected to grow further at 3.6%,” the report says.
The Bank notes that the growth of the Ukrainian economy in 2023 was driven not only by record harvests, but also by increased defense spending, which supported domestic demand, but net exports continued to decline. Among other positive factors, he pointed to the successful restoration of electricity supply after Russian shelling of civilian infrastructure last winter, as well as the resilience and adaptability of Ukrainian business.
As stated in the document, an additional stabilizing factor in 2023 was the timely receipt of external financing, which made it possible to keep inflation at the target level of about 5%. Thanks to these inflows, the country’s official international reserves increased to a record level, but the level of public debt also rose to almost 90% of GDP.
“However, in 2024, new challenges emerged, in particular, due to the prospect of a protracted war of attrition and uncertainty in obtaining external financing, which lasted for several months. Limited domestic demand, labor shortages and insufficient investment are also factors that negatively affect the growth rate,” the EBRD stated.
At the same time, it points out that a significant positive factor was the opening of a new coastal Black Sea export corridor. This has partially reduced uncertainty about the security of using the Black Sea for exports of not only grain, but also metals and mining products, which have suffered the most over the past two years.
The report also highlights a sharp increase in foreign direct investment (FDI) from Ukraine to emerging Europe in 2022 from low levels before, driven by the arrival of skilled workers from Ukraine to neighboring countries, with software and IT services driving FDI.
In general, the EBRD report, subtitled “Taming Inflation,” says that inflationary pressures in the bank’s regions of operation have eased compared to last year, which saw an economic downturn due to higher energy prices as a result of the war in Ukraine and the post-war recovery.
The report describes how geopolitical tensions are affecting the EBRD’s countries of operation, leading to rapid trade fragmentation and increased defense spending, and thus a reduction in the so-called “peace dividend” – the economic benefits of reduced defense spending and reinvestment of the resulting savings in the civilian economy. Although growth is projected to continue in the bank’s regions, the updated forecast is 0.2 percentage points (p.p.) lower than last year’s September forecast.
Due to lower energy and food prices after a sharp rise in 2022, inflation in the EBRD regions fell to an average of 6.3% in March 2024 from a peak of 17.5% in October 2022. Although this fall was faster than expected a year ago, inflation is still 2 percentage points above pre-crisis levels. This is in line with trends in developed economies, where inflation has also declined but still exceeds central bank targets. The forecast also emphasizes the slower pace of inflation decline in EBRD countries with higher budget deficits and weaker macroeconomic frameworks.
In the report, the bank improved its estimate of Russia’s GDP growth in 2024 from 1% to 2.5%, but expects it to slow to 1.5% next year.
For Poland, the forecast for this year has been improved by 0.2 percentage points to 2.9% with an acceleration to 3.5% next year, while for Turkey it has been lowered by 0.3 percentage points this year to 2.7% with an acceleration to 3% next year.
The National Bank of Ukraine has estimated Ukraine’s real gross domestic product (GDP) growth in the first quarter of 2024 by the same period last year at 3.1%, while in January it forecast it at 7.1%.
“Real GDP growth in the first quarter of 2024, according to NBU estimates, was weaker than expected, primarily due to restrained budget expenditures amid uncertainty about the receipt of external financing. An additional factor was the blockade of the western border, which restrained the activity of certain types of activities,” the National Bank explained in the Inflation Report published on its website.
At the same time, as the NBU pointed out, stable operation of the sea corridor, favorable weather and increased domestic demand supported economic growth. The central bank added that fiscal policy remained accommodative and, together with the effect of a significant increase in fiscal spending at the end of 2023, significantly fueled aggregate demand.
Earlier, in late April, the Economy Ministry estimated Ukraine’s GDP growth at 4.5% in the first quarter of this year.
As the National Bank notes, moderate GDP growth rates will remain until the end of 2024. “The main factors of growth will remain the preservation of soft fiscal policy, revitalization of external demand, as well as further adjustment of business and population to the conditions of significant security threats. However, the pace of economic growth will slow given the impact of the war and the depletion of growth momentum from the low base of 2022,” the NBI pointed out.
It added that the recovery will also be constrained by the impact of the destruction of energy infrastructure.
According to the updated forecasts, GDP growth will accelerate to 3.7% in the second quarter (the NBU expected it at 4.8% in January) before slowing to 1.3% (1.7%) in the third quarter and accelerating again to 4.1% (2.0%) in the fourth quarter.
Overall, for 2024, the NBU worsened its growth forecast for the Ukrainian economy to 3% from 3.6% in its January report, and for 2025 to 5.3% from 5.8%.
“The negative contribution of revised estimates of the e/e deficit to the change in real GDP in 2024 is estimated at 0.6 percentage points (pp), and 0.5 pp in 2025. Instead, the impact on GDP of a smaller grain harvest in 2024 will be insignificant due to the reorientation of agricultural producers to more marginal crops, particularly oilseeds,” the central bank said.
According to the regulator, the balance of risks of the baseline forecast is shifted towards deterioration of Ukraine’s economic growth rates and increased price pressure.
The National Bank in the updated Inflation Report increased the number of key risks of the forecast (with a strong impact and probability of 25-50%) to three: to the risk of a longer period and intensity of the war added the risk of large budgetary needs (a quarter earlier the NBU estimated its probability at 15-25%) and large damage to energy and port infrastructure (a quarter earlier the impact of this risk the central bank considered moderate).
At the same time, the probability of the risk of reduction of volumes and loss of rhythm of international aid receipts and continuation of partial blocking of cargo traffic across the border by some EU countries was reduced from 25-50% to 15-25%, but the degree of impact of the latter risk was increased from weak to moderate.
In addition, the NBU added a new risk – aggravation of the situation in the Red Sea, but estimated its probability at 15-25% and the degree of influence as low, as well as excluded the risk of increasing the capacity of maritime export routes, which is positive for the forecast.
Earlier Experts Club analytical center and Maxim Urakin released a video analysis of how the GDP of the world’s countries has changed in recent years, more detailed video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3 Subscribe to Experts Club YouTube channel here – https://www.youtube.com/@ExpertsClub.
EXPERTS CLUB, GDP, MACROECONOMICS, NATIONAL BANK, UKRAINE, URAKIN
