China’s economy shows fresh weakness in factories, housing and consumer spending. The latest data heaps further pressure on policy makers to revive country’s crumbling growth. (WSJ)

Corporate profits are way down, yet investors remain untroubled. Profits for all U.S. corporations—not just the large, publicly traded firms on the stock market—were down 6.5% from Q2 of 2022, the Commerce Department reported. (Axios)

UBS to cut 3,000 jobs in Switzerland after Credit Suisse takeover. The move comes as the financial giant targets nearly $10 billion in savings by 2026. (Insider)

The US, allies see opportunity and risk in China’s slowing economy. In China’s current economic travails, U.S. and other Group of Seven nations increasingly see evidence of deep-seated structural problems that ultimately will strengthen the West’s hand against a weakening geopolitical competitor. (Bloomberg)

Indonesia’s absence from bigger BRICS echoes decades of non-aligned policy. Indonesian President Joko ‘Jokowi’ Widodo has said he does not want to ‘rush’ membership of the economic grouping. (Al Jazeera)

Argentina: Economic malaise is intensifying as currency is trapped in a severe negative spiral amid political and economic uncertainty. Under huge pressure, the central bank of Argentina devalued its official currency by almost 20% in order to stem the jittery financial markets, though the currency still stands at less than half of the unofficial parallel market rate and continues to climb. (Credendo)

A huge traffic jam at the Panama Canal could take at least 10 months to clear up—and it'll likely screw up your holiday shopping. Holiday shopping will likely be impacted, with higher prices and out-of-stock items. (Insider)

China promised climate action. Its emissions topped US, EU, India combined. Beijing’s heavy reliance on coal plants has cast a shadow over the global efforts to tackle climate change. (Al Jazeera)

Vietnam lifts restrictions on grain exports from North America and Europe. The country removed creeping thistle as a pest of concern, allowing Canada to resume bulk wheat shipments for the first time since 2018. (Supply Chain Dive)

Flights scrapped, businesses shut as super typhoon Saola nears Hong Kong, Guangdong. The Asian financial hub of Hong Kong and the Chinese province of Guangdong cancelled hundreds of flights and evacuated nearly 800,000 people Friday as the imminent arrival of Typhoon Saola forced closures of businesses, schools and financial markets. (Reuters)

ILWU ratifies 6-year contract. The International Longshore and Warehouse Union voted to ratify a six-year contract agreement with the Pacific Maritime Association yesterday. (Supply Chain Dive)

Has Huawei overcome US sanctions by developing its own 5G chip? The surprise launch of the latest high-end smartphone from Chinese tech giant Huawei Technologies (HWT.UL) has triggered an international guessing game over what is inside it. (Reuters)

Huge theft rocks Europe’s largest copper producer. Aurubis, Europe’s largest copper producer, says it has been the target of a huge theft, with damages running into hundreds of millions of euros. (CNN)

 

 

The High Cost of Global Economic Fragmentation

wir 052923 01

IMF Blog

In a shock-prone world, economies must be more resilient—individually and collectively. Cooperation is critical, but greater protectionism could lead to fragmentation, and even split nations into rival blocs just as fresh shocks expose the global economy's fragility.

While estimates of the cost of fragmentation vary, greater international trade restrictions could reduce global economic output by as much as 7% over the long term, or about $7.4 trillion in today’s dollars. That’s equivalent to the combined size of the French and German economies, and three times sub-Saharan Africa’s annual output.

More deliberate global cooperation clearly is needed. International institutions can play a vital role, bringing countries together to help solve global challenges, as IMF Managing Director Kristalina Georgieva writes a new essay for Foreign Affairs.

There are signs cooperation is faltering. As the Chart of the Week shows, new trade barriers introduced annually have nearly tripled since 2019 to almost 3,000 last year.

Other forms of fragmentation—like technological decoupling, disrupted capital flows, and migration restrictions—will also raise costs. In addition, global flows of goods and capital have leveled off since the global financial crisis. IMF research shows geopolitical alignments increasingly influence both foreign direct investment and portfolio flows.

The IMF continues to underscore that the international community, supported by global institutions such as ours, should pursue targeted progress where common ground exists and maintain collaboration in areas where inaction would be devastating.

“Policymakers need to focus on the issues that matter most not only to the wealth of nations but also to the economic well-being of ordinary people,” Georgieva wrote in Foreign Affairs. “They must nurture the bonds of trust among countries wherever possible so they can quickly step up cooperation when the next major shock comes.”

This article originally appeared on IMF Blog.

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Week in Review Editorial Team:

Annacaroline Caruso, editor in chief

Jamilex Gotay, editorial associate

Kendall Payton, editorial associate