Summary
In the coming week, updates on trade positions from China, France, and Germany are anticipated. China’s trade balance is expected to decline slightly to $90 billion in July from nearly $100 billion in June, with exports rising by almost 8% and imports by 2.5% following a June decrease. Germany’s trade surplus remains substantial at €24 billion, though it has decreased by about €1 billion. France's trade deficit is projected to improve by €0.5 billion to €7.5 billion, largely driven by energy imports, which amounted to a €5.5 billion shortfall in May. In terms of industrial production, Germany's output in June is expected to rise by 1.5% after a 2.5% drop in May, while Turkey's industrial production is anticipated to fall marginally by 0.4%, marking the third consecutive annual decline. Argentina's industrial production has declined by 16%, worsening from May’s nearly 15% drop. Meanwhile, India's industrial production is predicted to grow by 5.4%, a slight deceleration from May's 6%, with significant contributions from pharmaceuticals, metals, mining, and electricity sectors.
In the oil market, OPEC decided to maintain current output levels but noted potential changes depending on market conditions. A plan to phase out voluntary production cuts until September 2025 could be paused or reversed. Iraq, Kazakhstan, and Russia have overproduced nearly 2.3 million barrels per day and are now implementing plans to compensate by further reducing production. This situation may tighten or loosen market balances depending on differing assessments from OPEC, the EIA, and the IEA. Oil companies’ profits are normalizing after high 2022 windfalls, with a focus on increasing capital expenditures, though ExxonMobil and Chevron still prioritize shareholder payouts over investment.
Central banks worldwide are adjusting rates with a cautious outlook on inflation and growth. The Bank of Japan raised its rate to 0.25% as inflation hit 2.6%, boosting the yen. Meanwhile, the Bank of England cut its rate to 5% but did not commit to further reductions, predicting a rise in inflation to 2.75% by late 2024. The US Federal Reserve held its rate steady, focusing on balancing inflation and employment, and indicating readiness to respond to economic changes. In contrast, the ECB is concerned about weak growth possibly driving inflation below its 2% target, with ECB policymakers suggesting rate cuts if disinflation persists. This environment highlights a shift from years of low rates aimed at stimulating growth to managing recent hikes intended to cool demand and curb inflation. The challenge remains in navigating these dynamics without overshooting policy measures that could further strain economic recovery.
