Good morning. It is Wednesday, January 18th.
China’s population fell officially in 2022 for the first time since 1961. The country's National Bureau of Statistics reported a drop of roughly 850,000 people for a population of 1.41175 billion, possibly making India the world’s most populous country. Demographer Yi Fuxian said China will "get older before it gets rich," slowing down the country’s —and possibly the world’s— economy.
- Kick back and relax with these chill tunes before you head down for your daily dose of news. Enjoy.
—Özlem, with Tanem and Can
• German investor morale shot up to positive territory in January for the first time since Russia’s invasion of Ukraine began as signs point to a milder recession over the winter than initially feared, the ZEW economic research institute said on Tuesday. The institute's economic sentiment index rose to 16.9 from -23.3 in December, well above expectations of a reading of -15.0.
- Other perspectives: Economy Minister Robert Habeck said on Tuesday he expects Germany to avoid a recession —which is commonly defined as two successive quarters of contraction— while the BDI industry association forecast a 0.3% contraction this year.
- Inflation: German consumer prices, harmonized to compare with the rest of the EU, rose by 9.6% year-on-year in December, Destatis said on Tuesday, confirming preliminary figures. This is compared with an annual harmonized inflation rate of 11.3% in November and 11.6% in October. For the whole of 2022, harmonized inflation came in at 8.7%.
• Italy’s annual consumer price inflation fell to 11.6% in December from 11.8% in November and October, according to the Italian National Institute of Statistics on Tuesday, confirming preliminary data and tracking the broad slowdown in eurozone consumer prices. Europe’s third-largest economy’s average inflation for 2022 was recorded at 8.1%, its highest level since 1985.
• Wages in the UK grew by 6.4% in the three months to November compared with the same period in 2021, the Office for National Statistics said on Tuesday. The growth rate is the fastest in more than 20 years but when adjusted for rising prices, wages fell in real terms by 2.6%. The gauge is closely watched by the Bank of England as it determines how much higher to raise interest rates.
- The sector divide: The gap between public and private sector pay is also near a record high. Private sector wages grew 7.2% annually in the three months to November, which was more than double that of the 3.3% increase in the public sector, according to the ONS.
- Unemployment: Britain's jobless rate held at 3.7% in the three months to November, the Office for National Statistics said on Tuesday, matching expectations and close to its lowest level in almost 50 years.
• The New York Empire State Manufacturing Index, A key gauge of US manufacturing activity, plummeted in January to the lowest level since May 2020 as new orders and shipments collapsed, highlighting a growing divergence between a relatively strong labor market and a stuttering real economy.
- Zoom in: The Federal Reserve Bank of New York’s general business conditions index decreased nearly 22 points to -32.9, well below the 50-line separating growth from contraction and much lower than even the most pessimistic analyst estimates. The gauge has shown contraction in five of the last six months.
• China’s economy grew by 3% in 2022, the National Bureau of Statistics said Tuesday, missing an official target of around 5.5% set in March but beating market expectations. The GDP growth follows an 8.4% rebound in 2021 from just a 2.2% expansion in 2020. GDP rose by 2.9% in Q4-2022, beating expectations of 1.8% growth.
- Furthermore: China’s retail sales declined by 1.8% from a year ago in December, much less than the expected 8.6% plunge predicted by analysts. For 2022, retail sales fell by 0.2%. Meanwhile, industrial production rose by 1.3% in December, well above the 0.2% forecast. For the whole year, factory output rose by 3.6%.
- Demographics: China's population fell in 2022 for the first time in six decades, declining by roughly 850,000 people for a population of 1.41175 billion. That possibly makes India the world's most populous nation as the UN predicted last year India would have a population of 1.412 billion in 2022.
• Luxury goods group LVMH’s shares rose to a record high on Tuesday, bringing the company’s value to €400 billion and establishing it as Europe’s most valuable company. LVMH has benefited this year from the fast reopening of China, as it is heavily dependent on the country. However, analysts say further gains in the share price could be harder to achieve.
• Nissan and Renault are in final talks to rebalance their 23-year-old alliance and pave the way for the French car maker’s own revamp, Bloomberg reported, as Nissan’s independent directors endorsed proposals from the French automaker.
- The details: Renault will reduce its stake in the Japanese car maker to 15%, while Nissan is negotiating an investment in Renault’s planned electric vehicle company Ampere. Meanwhile, Renault is undergoing an overhaul to raise funds for EV development.
• Norges Bank Investment Management entered Spain’s renewable energy market by acquiring a 49% interest in a package of assets from Iberdrola. The €600 million deal reflects a gradual shift by Norway’s wealth fund, built from North Sea oil and gas riches, toward renewables, and a move by Iberdrola to focus more on energy networks abroad after a boom year for solar power in Spain.
• UK battery startup Britishvolt filed for administration, with the majority of its 232 employees laid off. The firm had planned to build a major electric vehicle battery factory in northern England but failed to raise funds for the £3.8 billion (€4.3bn) project. The project was championed by government ministers as an opportunity to boost the region's economy and support the future of UK car making.
• Goldman Sachs reported a 69% drop in Q4 profits, even worse than the "awful" estimates of analysts. The bank struggled with a fall in dealmaking activity and weakness in its wealth management business. Goldman is also limiting its consumer banking ambitions as it refocuses on its core businesses such as investment banking and trading.
- On the other hand: Morgan Stanley reported a smaller-than-expected 41% drop in Q4 profit, causing its shares to rise by over 7%. The results were due to higher revenue at the company’s wealth management division and a boost from its trading business, countering the slump in dealmaking.
• The final death toll from Russia’s missile strike on an apartment building reached 44, including 5 children, Ukrainian officials said. Saturday’s strike on the southeastern city of Dnipro, one of the deadliest attacks of the war, also left 79 people injured, the presidential office said.
- Meanwhile: A former commander of Russia’s mercenary Wagner Group, Andrei Medvedev, fled to Norway to seek asylum, and said that he feared for his life after refusing to renew his service with Wagner.
• Germany named its new Defense Minister to be Boris Pistorius, a long-serving interior minister of Lower Saxony, replacing Christine Lambrecht who quit after mounting criticisms. The appointment came a day after Lambrecht's resignation and amid increasing pressure over Berlin's response to the war in Ukraine.
- Zoom in: Pistorius, who is from the center-left Social Democrat party, is to receive his mandate on Thursday, a day before a major conference where all defense ministers from Ukraine allies will gather in Germany and are expected to pressure Berlin into providing battle tanks to Ukraine.
• European Commission President Ursula von der Leyen outlined the "Green Deal Industrial Plan", a major tech industrial plan that aims to keep the block focused on a greener future and also guarantees its economic survival as it faces challenges from China and the US. Speaking at the World Economic Forum in Davos, von der Leyen said the new law will boost funding green industries as the EU pursues the goal of being climate neutral by 2050.
• 13 people accused of plotting to assassinate French President Emmanuel Macron in 2018 went to trial Tuesday, who were members of a French far-right group called Les Barjols. Over the four-year-long investigation, prosecutors have downgraded some of the initial charges as none of the plots prepared by the members ever came to anything.
• The UK government blocked Scotland's new gender recognition law that would allow people to change their gender without a medical diagnosis, citing concerns about its impact on the UK-wide equality laws — a justification that trans rights groups dismissed. The law would also cut the waiting time from two years to six months, and lower the age limit from 18 to 16.
- Current system: In the UK, trans people must have a medical diagnosis of gender dysphoria and prove that they have been living in their chosen gender for two years, and also need to be at least 18 years old.
• Microsoft announced that it is now making the Azure OpenAI Service available to the public after giving a limited number of enterprise customers access to it when it debuted in November 2021. Customers can use various OpenAI tools for their own cloud applications, including the Dall-E AI art generator and the GPT-3.5 language system.
- A step further: Microsoft said it will soon add access to ChatGPT, a program that has the ability to return long, coherent answers that aren't immediately recognizable as machine-generated responses.
• Elon Musk and Tesla are set to go on trial on Tuesday in a case where the company's shareholders claim they were defrauded by Musk's tweets from Aug. 7, 2018, which stated he "secured" funding to buy out the electric car maker. The lawsuit seeks damages for shareholders who bought and sold Tesla shares in the days following the tweets, as they rose and fell back again in ten days.
• China's video games regulator granted publishing licenses to 88 online games including a mobile game from Tencent, the world’s largest gaming company, and a shooting game by NetEase, China’s second largest.
- Some background: Video games need approval from regulators before releasing in China, the world's largest gaming market. During a crack-down on the gaming industry last August, Beijing suspended the license approval process for nine months.
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