Plus: Pandamonium
IN TODAY’S EDITION
1️⃣ The world’s rich club is cautiously optimistic |
2️⃣ The world gets its first AI government spokesperson |
3️⃣ Diplomatic strategy of the week |
Hi Intriguer. Today’s briefing leads with the OECD’s relatively rosy outlook on the world around us. And we’ll get to that in a sec.
But in the meantime, a true story: while serving in Mexico City, I ended up winning the lucky-door prize at a gala ball: a business class return flight to Paris! But because I won the trip in my official capacity, I could only use it for official business.
That’s when the gods smiled down and scheduled a major meeting about Mexico at the world’s club of rich nations: the OECD. And yes, dear Intriguer, the OECD is headquartered in Paris. So I went.
Btw, if you ever tell a story that ends up falling flat, try finishing it with “and then I found ten bucks!”
Hamas sends delegation to discuss ceasefire-hostage proposal.
Hamas has announced it will send a delegation to Cairo to discuss the latest ceasefire and hostage release deal as soon as possible. Ismail Haniyeh, its political leader, has “stressed the positive spirit of the movement in studying the ceasefire proposal”.
Biden addresses campus protests.
President Joe Biden has addressed ongoing Gaza protests on US college campuses, saying: “It's a matter of what's right. There is the right to protest but not the right to cause chaos.” Over 2,000 people have now been arrested in connection with the nationwide demonstrations.
Apple sales fall across the globe.
The latest figures reveal Apple sales have fallen in every market except Europe. iPhone sales dropped by 10% in the first three months of the year while overall revenues fell by around 4% – still less than expected. The tech giant sweetened the news by announcing a record $110B share buyback program.
British Conservatives suffer local losses.
It’s not looking great for PM Rishi Sunak’s party: the Conservatives have lost nearly 100 seats in yesterday’s local elections, ahead of a general election that could return the Labour Party to power after 14 years. Other parties such as the Liberal Democrats and the Greens also recorded some wins.
Myanmar military junta blocks men from leaving country.
The ruling junta has announced it’s no longer allowing men of conscription age to travel outside the country for work, months after issuing a conscription order that prompted nearly 100,000 men to apply for overseas work permits. The military is engaged in a gruelling war against multiple armed ethnic groups.
Dam breaks in Brazil after heavy rain.
A hydroelectric dam has collapsed in Brazil, with floods killing at least 30 people and displacing thousands more. The incident was triggered by days of uninterrupted heavy rains.
TOP STORY
The OECD is cautiously optimistic
Today we’re doing what we do best: wading through 200-something pages of turgid prose and acronyms to get you what you need to know.
The latest Economic Outlook from the Organisation for Economic Co-operation and Development (OECD) just dropped. And maybe it’s all that fresh spring-time air, but the Paris-based club of rich nations sounds pretty cheery.
Despite the geopolitical and other risks at play, the OECD says:
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Inflation is easing faster than expected
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Private sector confidence is improving
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Global activity is more resilient than thought
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Unemployment remains low, and
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Growth in trade has finally turned positive
That’s why the OECD is revising up the growth estimate it just made in February, from 2.9% to 3.1%. But aggregate data only gets you so far, so let’s take a closer look:
🇺🇸 US – “The fiscal deficit is elevated as the US enters a period where spending on mandatory social programmes is rising due to population ageing”
The US economy beat everyone’s expectations last year, but the OECD is echoing the IMF’s recent concerns about high US debt. The organisation’s boffins remain bullish for now, but they warn that “efforts to narrow the deficit should be prioritised”, especially given the country’s ageing population.
🇦🇷 Argentina – “High inflation, a sizeable but necessary fiscal adjustment, and policy uncertainty will weigh on private consumption and investment for most of 2024.”
Translation: things in Argentina will get worse before they get better. The country’s economy contracted by 1.6% last year due in part to the massive (if unavoidable) currency devaluation by President Javier Milei. But the OECD believes Argentinians will see “a gradual recovery in late 2024 and in 2025”. Given the recent austerity protests, the words “gradual” and “late” might hit hard.
🇪🇺 EU – “The [EU’s] economy remains resilient amid elevated geopolitical uncertainty”
While the initial knock-on effects from Russia’s invasion of Ukraine are easing, underlying inflation remains stickier than a kouign-amann. It’s unlikely to return to the European Central Bank’s 2% target before 2025. So overall, the OECD is neither pumped nor worried about the Euro area’s immediate future. It’s ‘meh’.
🇨🇳 China – “Following a moderate rebound, the Chinese economy will return to its gradually slowing path with potential growth falling due to unfavourable demographics and slower productivity growth.”
The OECD has slightly nudged up its forecasts for China, with a little help from government spending and recovering exports. But that’s no reason for Beijing to crack open the baijiu just yet, especially given the OECD’s warnings about China’s property markets, debt, and ageing. That’s why the world (or at least us) will be glued to the Communist Party’s long-delayed third plenum in July.
🇿🇦 South Africa – “Parliamentary elections scheduled for late May have heightened uncertainty.”
South Africa’s 29 May election is shaping up to be the most competitive since apartheid ended. The ruling African National Congress (ANC) party is now set to lose its decades-long majority in parliament, due in part to its inability to confront South Africa’s various economic problems.
Between blackouts, bottlenecks, and unemployment, growth came in at 0.4% in 2023, so the OECD is recommending a shopping list of structural changes: reducing government wages, reforming state-owned companies, fixing the energy grid, and slashing regulation. Seems easy enough, right…?
INTRIGUE’S TAKE
Is there any point to these kinds of international reports? Here are three:
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Forecasting can be glorified guesswork, but it offers something to help investors, businesses, and governments nail that Jell-O to the wall
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These reports can offer ammunition to domestic reformers, who seize on specific lines to try and shift the political debate at home, and
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The reports are really the culmination of deep research by thousands of experts at both the OECD and IMF, and this research gets shared with the OECD’s 38 member governments who fund the organisation.
Plus, a fun fact to close: China isn’t an OECD member, but it’s a regular observer and participant, which makes sense when you remember that China is the top trade partner for most OECD members.
Also worth noting:
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The OECD’s most important annual event is its Ministerial Council Meeting, which wraps in Paris today (Friday). The prime minister of Japan, Fumio Kishida, delivered the opening address yesterday on “co-creating the flow of change” to overcome global crises.
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There are currently six countries in the process of joining the OECD: Argentina, Brazil, Bulgaria, Croatia, Peru, and Romania, while Indonesia has expressed interest in joining.
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MEANWHILE, ELSEWHERE…
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🇰🇬 Kyrgyzstan: The Kyrgyzstan foreign ministry has recommended its citizens avoid travel to Russia. The Central Asian country now joins neighbouring Tajikistan, which warned last weekend against travel to Russia due to “unfair treatment” of its citizens.
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🇺🇦 Ukraine: Kyiv’s foreign ministry has announced it’ll use AI as its first “digital representative” to provide comment to the media. The spoken statements will be written by humans and will include QR codes back to the official government site to avoid deep fakes.
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🇬🇧 Chagos Islands: Exiled folks from the Chagos Islands, a disputed British Indian Ocean Territory, are saying their current home of Mauritius is altering their passports to show Mauritius as their birthplace. It’s seen as an attempt by Mauritius to bolster its claims to the Chagos.
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🇨🇦 Canada: Bank of Canada Governor Tiff Macklem has defended the bank’s decision to keep rates at a near 23-year high. He told parliament he first wants to see recent drops in inflation sustained, and said there’s a limit to how much Canada’s rates can diverge from the US.
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🇹🇷 Turkey: Ankara has reportedly halted all trade with Israel, a month after it imposed export controls on 54 products. Turkish officials say the trade halt will remain in place until Israel allows full humanitarian aid into Gaza.
EXTRA INTRIGUE
Some recommendations from Team Intrigue if you’re in 🇮🇪 Dublin this weekend
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Eat: Book a table at ‘Mister S’ for a live fire grill experience to warm you up during the chilly Irish spring.
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Visit: Why not pop by the ‘The Little Museum of Dublin’, or you might prefer the ‘The Irish Rock and Roll Museum Experience’.
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Walk: Take a stroll down Bull Island, and be sure to go in the afternoon for the perfect picture of the sun setting across the bay.
DIPLOMATIC STRATEGY OF THE DAY
Credits: CFP.
Diplomacy comes in different shapes and sizes, but one of its most lovable (if sometimes contentious) iterations is bear-shaped. Earlier this week, a pair of giant pandas named Jin Xi and Zhu Yu touched down in Madrid, Spain after an exclusive long-haul flight directly from their home country of China.
Beijing has engaged in Panda diplomacy for decades, sending its national animal to faraway countries as a sort of furry ambassador. But sometimes China also withdraws them when relations get frosty, as happened with the US and UK last year.
FRIDAY QUIZ
1) What weapon did the signatories of the 1980 Geneva Convention on Inhumane Weapons agree to curtail on 3 May 1996? |
2) Upon which modern-day island did Christopher Columbus set foot on 3 May 1494? |
3) Which country cut diplomatic ties with the United States on 3 May 1965? |
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