Good morning. This article is an on-site version of our FirstFT newsletter. Sign up to our Asia, Europe/Africa or Americas edition to get it sent straight to your inbox every weekday morning
The eurozone will avoid a recession this year according to a widely-watched survey of economists that illustrates the sharp about-turn in global economic sentiment in the past couple of weeks.
As recently as last month, analysts surveyed by Consensus Economics were predicting that the bloc would plunge into recession this year. Economists had feared that Europe would be among the hardest-hit areas of the global economy this year because of its exposure to the economic consequences of Russia’s war with Ukraine. Just weeks ago IMF managing director Kristalina Georgieva said that “half of the European Union will be in a recession” during 2023.
But this month’s survey found that analysts now expected it to log growth of 0.1 per cent over the course of 2023. This is thanks to lower energy prices, bumper government support and the earlier-than-anticipated reopening of the Chinese economy, which is set to boost global demand.
The upgrade comes after officials and business leaders at this week’s annual World Economic Forum in Davos also embraced a more upbeat outlook, and the IMF signalled that it would soon upgrade its forecasts for global growth.
Carsten Brzeski, head of macro research at ING Bank, described the about-turn in economists’ forecasts as “a recession that never came”.
Susannah Streeter, analyst at Hargreaves Lansdown, said: “The threat of the feared energy crisis [is] retreating, and inflation [is] climbing down more rapidly than expected.”
Five more stories in the news
1. Sweden’s Nato application imperilled after Koran burning A provocateur was allowed to burn a copy of the Koran outside the Turkish embassy in Stockholm on Saturday afternoon, prompting a furious reaction in Turkey. The demonstration is the latest setback in Sweden’s attempts to convince Turkey to back its application for Nato membership.
2. LA mass shooting kills 10 with gunman still on loose A gunman opened fire on a dance studio on Saturday night in Monterey Park, a predominantly Asian-American neighbourhood in Los Angeles. Ten people were killed and at least 10 more injured. The attack took place on the same day as the lunar new year celebrations, which draw thousands, but police say it is too early to determine if it was racially motivated.
3. Brazil and Argentina to start preparations for a common currency In a move that could eventually create the world’s second-largest currency bloc, South America’s two biggest economies will announce this week that they are working towards a new common currency. The initial focus will be on how a new currency could boost regional trade and reduce reliance on the US dollar.
4. US warns overdose crisis will spread overseas Washington is increasing pressure on Beijing to crack down on illegal supplies of raw materials used to make the synthetic drug fentanyl, warning that the deadly overdose crisis could soon spread to Europe and Asia. Washington’s efforts to engage Beijing have being hampered by diplomatic tensions between the two countries — China suspended co-operation with the US against narcotics after Nancy Pelosi’s visit to Taiwan in August.
5. Japan’s inflation rises at record pace Japan’s core inflation rate rose to a new 41-year high of 4 per cent last month on the back of a weaker yen and heavy exposure to the increasing cost of imported commodities. The reading adds to mounting market pressure on the Bank of Japan to abandon its yield curve control policy which has helped maintain ultra-low interest rates.
The day ahead
UK growth CBI director-general Tony Dankers gives a speech, Is the UK Stuck in a Rut on Growth?, at the UCL campus in London
ECB meeting European Central Bank board member Fabio Panetta appears before the Committee on Economic and Monetary Affairs of the European parliament in Brussels today.
Ambulance worker strike More than 2,600 Unison ambulance workers are to begin another day of strike action in their dispute over pay. Separately, more than 1,000 Welsh Ambulance Service members of Unite the union begin a second 24-hour walk out over pay.
Nigerian legal trial Nigeria is due to mount a high-stakes legal trial at London’s High Court today. The case involves a long-running attempt to overturn an $11bn arbitration award that left the Nigerian government owing more than a quarter of its foreign reserves to an obscure oil and gas company.
European Space Agency annual address ESA director-general Josef Aschbacher gives the annual year ahead address, providing an overview of ESA’s achievements in 2022 and the opportunities ahead in 2023
What else we are reading
Can Big Tech make livestreams safe? Platforms such as Instagram and TikTok don’t allow content that promotes self-harm, but graphic videos still get broadcast to users in the form of livestreams. To better moderate dangerous videos, tech companies are looking to stricter requirements for age verification and the use of AI in moderation.
Forget the central business district Business districts, which are often dead in the evenings and on the weekends, have fallen quieter still with the rise of remote and hybrid work. Now, a push to create more vibrant central districts is taking off, centred around socialising rather than just going into the office.
All bets are off on Japan’s sports gambling craze The evolution of easy-to-use, low-stakes gambling apps and software has been a critical factor in the surge in popularity of gambling on horseracing, cycling, and boating. Now, as Japan is expected to lift its mask recommendation in the spring, the big gamble is whether the betting will continue.
Putin is losing the energy war After weaponising gas supplies, Russian president Vladimir Putin is now on the back foot as prices plummet while Europe remains well-stocked for this time of year, writes David Sheppard. But Europe cannot be complacent and should accelerate commitments to clean energy alternatives.
How Britain’s big battery bet ran out of charge After creditors blocked a last-ditch rescue deal this week, management finally called time on Britishvolt, the UK’s attempt to supply the electric-car industry with new batteries. Why did it go so spectacularly wrong? FT reporters explain.
Take a break from the news
Damien Chazelle’s Babylon and Tár, starring Cate Blanchett, are among the six films to watch this week.
Thank you for reading and remember you can add FirstFT to myFT. You can also elect to receive a FirstFT push notification every morning on the app. Send your recommendations and feedback to [email protected]
