Summary: Economic and Financial Developments (18-22 December 2023)

Global Overview

- Inflation and Recession: Global inflation expected to decrease to 6.6% from 8.8% in 2022. Recession risks heightened by central banks' rate hikes and geopolitical uncertainties.

- Oil Prices: Decreased oil prices reflect concerns about slowing economies, especially in China and Europe.

(1) United States

- Federal Reserve Policy: Fed officials caution against early rate cuts in 2024. Speculation of recession increases among bond traders.

- Economic Growth: J.P. Morgan predicts slower growth (0.7%) in 2024 following a 2.8% rise in 2023.

- Stock Market Outlook: Positive prospects, particularly in big cap tech and large cap growth sectors.

(2) China

- Economic Activity: Growth in 2023 driven by service sector demand, manufacturing, and infrastructure. However, hampered by volatility and deflationary pressures.

- GDP Growth Forecasts: IMF forecasts 5.4% growth, World Bank 5.6% in 2023.

- Debt Concerns: Local government debt at 92 trillion yuan, raising alarms about sustainability.

(3) United Kingdom

- Economic Growth: OECD forecasts no growth in 2023, making it one of the weakest among member countries.

- Inflation and Fiscal Policy: Inflation concerns persist, with hopes of a decrease.

- Employment and Wage Growth: Unemployment stable at 4.2%, but wage growth slows.

(4) Eurozone

- Inflation and Growth: Inflation revised down to 5.2%, with growth forecasts reduced.

- Manufacturing and Services Sector: Manufacturing sector contracts, while services sector shows a slower decline.

- Mortgage and Lending Growth: Predicted to hit decade lows in 2023 and 2024.

(5) Japan

- Economic Performance: Stock market showing significant gains. Exports slightly declined by 0.2%.

- Monetary Policy: BOJ maintains negative interest rates amid cautious monetary normalization.

(6) Australia

- Economic Outlook: CEOs optimistic about a soft landing in 2024 despite expected slowdown.

- Inflation and Monetary Policy: Inflation concerns continue, influencing RBA's policy decisions.

- Housing Market: High rent inflation due to supply-demand imbalances.

(7) Artificial Intelligence (AI)

- EU Regulation: Political agreement on the AI Act, balancing innovation and risk.

- US Policy Discussions: Emphasis on developing AI rules without hindering adoption.

- National AI Privacy Standard: Advocacy in the US for a cohesive data law.

(8) Environmental, Social, and Governance (ESG)

- EU Regulatory Activity: Adoption of European Sustainability Reporting Standards for 2024.

- California's Climate Disclosures: New laws for businesses to report climate-related financial risks.

- Greenwashing" Cases and Litigation Trends: Rise in misleading environmental claims and shareholder lawsuits.