Charts of the Week: China reopens, Nasdaq soars again and Russia’s demographic challenge
This week’s charts cover the following data:
The Chinese reopening effect
China is reopening, and the International Monetary Fund is adjusting its global growth estimates accordingly.
The chart plots nations based on the IMF’s estimates for real GDP growth this year and the degree of its most recent estimate revision. Put another way. one axis shows whether a country is in recession or expansion; the other shows whether things have improved or deteriorated since the last IMF assessment in October.
China is making the biggest move on the chart, dragging the world economy with it, as it reverses the zero-Covid policy; the IMF’s estimate for world GDP growth was revised upwards to 2.9 percent for 2023.
The UK also stands out; as trade frictions from Brexit and higher interest rates bite, it’s now projected to be the only G7 economy in recession.
It’s also notable that emerging markets as a whole are expected to outpace their developed peers, whose growth rate the IMF projects at an anemic 1.2 percent.
The Russian demographic pyramid
As Russia reportedly considers adding hundreds of thousands of men to the 300,000 mobilised to fight in Ukraine, it’s worth examining the demographic challenge the nation already faces.
This chart breaks down the Russian population by age and sex. The lingering effects of the post-Soviet transition are readily visible: fertility rates – which remain among the lowest in the world – plunged in the 1990s, as seen by the dearth of people in their 20s today.
And the nation has long experienced high mortality rates from preventable causes, i.e. alcoholism: the male half of the pyramid shrinks rapidly after age 60. The nation is suffering a historic population decline.
Will the Ukraine war have a similar effect on future demographic pyramids? Between combat deaths, emigration to avoid conscription, and delays to family formation, it seems likely, depending on how long the war lasts.
Tip: this chart allows for the?change region?function.
A renewal of positive growth surprises in Europe
There has finally been a run of good news for European economies and markets. This week, eurozone GDP beat analysts’ estimates, and the International Monetary Fund said Europe had adapted to higher energy costs more quickly than expected. (Those energy costs also turned out to be less catastrophic?than feared last summer.)
This chart is a “surprise clock” for the euro zone using data from Citigroup; economic surprises are on the x axis, and inflation surprises on the y axis. A surprise is defined as the divergence between published data and expectations.
The more unwelcome surprises – higher-than-expected inflation – have been steadily trending down for the past 12 months. (Analysts had constantly underestimated inflation in recent years.)
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But with economic growth surprises turning around strongly recently, we are in a bit of a sweet spot for investors as inflation recedes to more standard levels.
Tip: this chart allows for the?change region?function.
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Macrobond News
Other headlines you may have missed this week
Blog: The Kuroda Code – seeking a virtuous wage-price spiral in Japan
Guest blogger Harry Ishihara writes about Bank of Japan Governor Haruhiko Kuroda, who oversees one of the most accommodative central banks in the world.
Kuroda focuses on services inflation, not goods, and doesn’t believe his inflation target has been reached on a sustainable basis. With unions unlikely to get the wage hikes they want this year, the governor’s viewpoint is unlikely to change.
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