Gita Gopinath, the International Monetary Fund’s No. 2 official, said the global economy has shown “signs of resilience,” and European Central Bank Governing Council member Francois Villeroy de Galhau predicted that the euro region should avoid a recession this year.
(Bloomberg) — Gita Gopinath, the International Monetary Fund’s No. 2 official, said the global economy has shown “signs of resilience,” and European Central Bank Governing Council member Francois Villeroy de Galhau predicted that the euro region should avoid a recession this year.
The comments Wednesday to Bloomberg Television were in line with the general tone of cautious optimism at the World Economic Forum in Davos. Chinese Vice Premier Liu He projected Tuesday on the opening day that the world’s second-largest economy will normalize as Covid-19 restrictions ease.
A speech by German Chancellor Olaf Scholz, the only Group of Seven leader due to attend the event, is one of Wednesday’s highlights. Scholz spoke with Bloomberg Editor-in-Chief John Micklethwait in Berlin on Tuesday and said he’s convinced Germany will avoid recession this year and that he is in talks with allies about sending battle tanks to Ukraine.
Ukrainian President Volodymyr Zelenskiy and United Nations Secretary General Antonio Guterres are also due to address the forum. Tune in to Bloomberg Television for interviews with Standard Chartered CEO Bill Winters, Blackstone CEO Stephen Schwarzman and Bain Capital Co-Chairman Steve Pagliuca, among many others.
Key Developments
- Aramco Sees Oil Demand Picking Up on China and Aviation Recovery
- Villeroy Says Lagarde’s Half-Point ECB Guidance Still Valid
- US Debt Standoff Is Risk World Doesn’t Need, IMF’s Gopinath Says
- Abu Dhabi’s Mubadala to Focus on Asia With Eye on China Recovery
- Bridgewater’s Bob Prince Says the Boom-Bust Cycle Is Back
(All times CET)
Aramco Sees Oil Demand Picking Up (10:30 a.m.)
The world’s biggest oil company is confident demand will pick up strongly this year as China reopens its economy and the aviation market recovers.
“We are very optimistic in terms of demand coming back to the market,” Saudi Aramco’s chief executive officer, Amin Nasser, said in an interview at Davos. “We are starting to see good signs coming out of China. Hopefully, in the next couple of months, we’ll see more of a pickup in the economy there.”
Europe Still Exposed High Energy Costs: BASF (10:30 a.m.)
A drop in European gas prices won’t provide immediate relief to Europe’s energy-intensive industries, Martin Brudermueller, CEO of chemicals giant BASF, said in an interview.
“We think the volatility will go out of gas prices this year, but we are in a structural environment of higher energy costs in Europe,” Brudermueller said. The company buys “most” of the gas it needs on the spot market and has been exposed to “distortions” in the value chain, he said.
Norway Fund Chief Highlights China Risk (10:20 a.m.)
Nicolai Tangen, the head of Norway’s $1.3 trillion sovereign wealth fund, said the big risk for markets is how China’s emergence from pandemic restrictions will pressure prices.
“The big, big uncertainty this year is what will happen with global inflation when China kicks in,” Tangen told Bloomberg TV. “I think it will be inflationary and there is a risk that we could see an acceleration of inflation again on the back of that — that would be really bad for markets.”
Investors will be unable to diversify out of such a scenario and losses are likely to be seen in equities, bonds and real estate, he said, adding that there is “definitely” a risk inflation will persist. “Just the reversal of globalization could add 1 percentage point to inflation — it’s more expensive to produce close to home,” Tangen said.
Abu Dhabi’s Mubadala to Focus on Asia (10:10 a.m.)
The head of Abu Dhabi’s sovereign wealth fund said Asia will be an area of focus this year as China recovers from the pandemic and India continues to grow.
“Asia is very promising, particularly if you see whats happening in the post-Covid era,” Mubadala CEO Khaldoon Khalifa Al Mubarak told Bloomberg TV. “We are seeing very exciting opportunities in Indonesia, South East Asia and even Japan and Korea.”
The $284 billion Abu Dhabi wealth fund will continue to invest in semiconductors, technology, energy transition, digital infrastructure and credit in the short-to-medium term, Al Mubarak said, and is also looking potential investments in technology and venture capital globally.
Countries ‘Must Stay the Course’ Against Covid (10:05 a.m.)
Governments must keep investing in health care in order to fight the Covid-19 pandemic as well as prepare to do better against future outbreaks, said Stephane Bancel, chief executive officer of vaccine maker Moderna Inc.
“A lot of people are dying every day, but a lot of governments have moved to other things,” Bancel said during a panel discussion. “That’s a problem, because we need investment in public health infrastructure, in health-care workers, in genomic surveillance. Industry can do so much, but we need the governments to really keep at it, because we all know that there’s going to be other outbreaks.”
WTO Chief Upbeat on E-Commerce Rules (10 a.m.)
The head of the World Trade Organization said she’s hopeful nations will reach an agreement to set global e-commerce rules by next year.
“E-commerce is booming but we don’t have rules that underpin it like we have for merchandise trade,” WTO Director-General Ngozi Okonjo-Iweala said during a panel discussion. Over the past three years, WTO members have been negotiating rules to cover the $26.7 trillion e-commerce market. If successful, a digital-trade accord would establish a baseline regime for 21st century trade and reduce cross-border hurdles.
Climate Reporting Standards Due This Summer (10 a.m.)
Long-awaited standards for companies to report their climate impact are expected in June, according to Erkki Liikanen, who chairs the International Financial Reporting Standards Foundation Trustees. He said on a panel that he’s “broadly optimistic” that a “global baseline” can be adopted “everywhere.”
State Street ‘Not Pursuing M&A’ (9:20 a.m.)
State Street Corp.’s chief executive officer said the US lender isn’t actively looking at M&A opportunities, a couple of months after the firm decided not to pursue an acquisition of Brown Brothers Harriman & Co.’s investor-services business.
“We are not actively looking,” Ronald O’Hanley told Bloomberg TV, while stressing the bank would still consider opportunities as they arise. He said he was surprised at the optimism expressed at Davos, saying he expected inflation to persist thanks to tight labor markets and continuing geopolitical risks. “It’s still early to say that it is all over,” he said.
Villeroy Sees Recession Avoided This Year (8:45 a.m.)
Villeroy said the euro region should avoid a recession this year and that both headline and core inflation “will probably peak in this semester.”
“But we must stay the course in our battle against inflation, I am very clear about that,” Villeroy, who is also the governor of the Bank of France, told Bloomberg TV. “We will win this battle, let me be extremely straightforward. We will bring inflation back towards 2% by the end of 2024/25.”
IMF Says Japan Risks Missing Price Target (8:25 a.m.)
Japan’s central bank faces a different challenge from global peers because of the high risk that inflation there will end up below target, according to the International Monetary Fund’s No. 2 official.
“The Bank of Japan has a pretty complex decision to deal with,” Gita Gopinath, the IMF’s first deputy managing director, said an interview with Bloomberg TV. “Unlike the major economies of the world, they have inflation going up, but the risk of inflation sliding back well below their target remains high.”
IMF’s Gopinath Sees Inflation Peak (8:20 a.m.)
Headline inflation has probably peaked but some of “the more sticky components” such as the services sector are still trending up in some countries, the IMF’s Gopinath, adding that 2023 will be a “tough year.”
The new IMF forecasts for the global economy, due at the end of the month, will be “in the ballpark of what we put out in October,” she said. “After going through about three rounds of downgrades at least we don’t have a worse outcome we’re looking at this time around.”
“While we have global growth bottoming out this year, it improves towards the second half of this year and then into 2024,” Gopinath added. “That’s because we’re seeing signs of resilience.”
Crytpo Tracker Is Hiring for Expansion (8:10 a.m.)
Chainalysis Inc., a company that specializes in tracking crypto transactions and the entities behind them, is seeking to boost staff by about 11% as part of a global expansion plan that could include new acquisitions.
The startup, whose backers include Singaporean sovereign wealth fund GIC, is looking for data scientists, technology analysts and intelligence experts under a push to grow its workforce by 100 to as many as 1,000 employees this year, according to co-founder and Chief Executive Officer Michael Gronager.
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