AFP

Germany’s economy grew slightly in the second quarter, an upgrade from a previous estimate of stagnation, revised official data showed Thursday, pushing back the spectre of recession.

Output expanded by 0.1 percent in the April to June period, according to the federal statistics agency, which had previously projected zero growth.

The economy was propped up by both private and public domestic demand, with spending by the state up by 2.3 percent.

Private spending rose 0.8 percent from the previous quarter as the end of Covid-19 restrictions brought more tourism and restaurant dining.

Europe’s biggest economy has been slowing as inflation soars, with Russia’s invasion of Ukraine sending energy and food prices through the roof.

Germany has been highly reliant on supplies of Russian gas to meet its energy demands, but Moscow has slowly dwindled supplies since the start of the war.

The threat that Russia could cut deliveries completely has raised the possibility of shortages over the winter and brought Germany closer to rationing supplies, with a punishing impact on business.

Even if the latest data offered Germany some reprieve from negative growth, economic indicators in the last days are painting a pessimistic picture.

The Ifo monthly confidence barometer, based on a survey of 9,000 companies, slumped for a third month in a row in August to reach 88.5 points.

“Companies were somewhat less satisfied with their current business, and the strong pessimism of their outlook for the coming months is virtually unchanged,” said the institute.

“Uncertainty among the companies remains high, and the German economy as a whole is expected to shrink in the third quarter,” it added.

Bundesbank president Joachim Nagel had warned in a recent interview that although the German economy held up well in the second quarter, new supply chain problems would “further darken the outlook for the second half”.

Particularly, if the energy crisis were to worsen, “a recession appears probable for the coming winter”.

Hong Kong led gains in Asian markets Thursday after China unveiled fresh measures to boost its economy, while investors awaited a speech by the Fed chair that may hold clues about future rate hikes.

Central bankers are meeting in Jackson Hole in the US state of Wyoming, and all eyes are on Federal Reserve boss Jerome Powell’s Friday speech for clues about plans to tame inflation.

Market sentiment was also boosted by the Chinese government’s Wednesday announcement of new policies to help sustain the recovery of the world’s second-largest economy.

Asian traders on Thursday followed a positive lead from Wall Street, where the Dow, Nasdaq and S&P 500 all closed higher.

After Typhoon Ma-On delayed the start of trading until 1:00pm local time (0500 GMT), Hong Kong surged to close more than 3.6 percent higher.

Tokyo, Shanghai and Sydney rose. There were also gains in Singapore, Taipei and Seoul.

In early European trade, London, Frankfurt and Paris opened higher.

There are concerns that the Fed’s fight against soaring inflation could lead to a recession in the United States, which could, in turn, hit a global economy still recovering from the Covid-19 pandemic.

“A slower global growth environment is not going away anytime soon and now we are clearly seeing broader signs of weakness for the US economy,” OANDA’s Edward Moya said in a note.

“Powell’s fight against inflation might send the US economy into a recession late next year, but for now he needs to stick to the hawkish script and leave all options of tightening on the table.”

– China stimulus –

Central banks around the world are trying to find a delicate balance between curbing inflation and avoiding recessions.

The challenge has been compounded this year by Russia’s invasion of Ukraine, which has sent energy and food prices skyrocketing.

Traders are also keeping an eye on how China will repair the economic damage from its strict Covid controls, a crisis in its property sector and power shortages caused by a record-breaking heatwave.

Fresh measures to shore up the economy were announced by China’s State Council on Wednesday, including steps to encourage lending, consumption and investment, according to the official Xinhua news agency.

They also included support for electricity producers and agriculture, two sectors hit especially hard by the heatwave, though Xinhua’s readout of the State Council meeting did not mention the extreme weather.

Crude oil traded higher Thursday with concerns building about global supplies, affected by key exporter Saudi Arabia teasing the possibility of production cuts and ongoing talks about the resurrection of the Iran nuclear deal.

– Key figures at around 0815 GMT –

Tokyo – Nikkei 225: UP 0.6 percent at 28,479.01 (close)

Hong Kong – Hang Seng Index: UP 3.6 percent at 19,968.38 (close)

Shanghai – Composite: UP 1.0 percent at 3,246.25 (close)

London – FTSE 100: UP 0.8 percent at 7,527.96

Euro/dollar: UP at 0.9996 from 0.9967 on Wednesday

Pound/dollar: UP at 1.1837 from 1.1797

Euro/pound: DOWN at 84.46 pence from 84.49 pence

Dollar/yen: DOWN at 136.57 yen from 137.06 yen

West Texas Intermediate: UP 0.3 percent at $95.15 per barrel

Brent North Sea crude: UP 0.5 percent at $101.70

New York – Dow: UP 0.2 percent at 32,969.23 points (close)

Asian markets rose Thursday after China unveiled fresh measures to boost its economy, while investors awaited a speech by the Fed chair that may hold clues about future rate hikes.

Central bankers are meeting in Jackson Hole in the US state of Wyoming, and all eyes are on Federal Reserve boss Jerome Powell’s Friday speech for clues about plans to tame inflation.

Market sentiment was also boosted by the Chinese government’s Wednesday announcement of new policies to help sustain the recovery of the world’s second-largest economy.

Asian traders on Thursday followed a positive lead from Wall Street, where the Dow, Nasdaq and S&P 500 all closed higher.

Tokyo, Hong Kong and Sydney rose. There were also gains in Shanghai, Singapore, Taipei and Seoul.

There are concerns that the Fed’s fight against soaring inflation could lead to a recession in the United States, which could, in turn, hit a global economy still recovering from the Covid-19 pandemic.

“A slower global growth environment is not going away anytime soon and now we are clearly seeing broader signs of weakness for the US economy,” OANDA’s Edward Moya said in a note.

“Powell’s fight against inflation might send the US economy into a recession late next year, but for now he needs to stick to the hawkish script and leave all options of tightening on the table.”

– China stimulus –

Central banks around the world are trying to find a delicate balance between curbing inflation and avoiding recessions.

The challenge has been compounded this year by Russia’s invasion of Ukraine, which has sent energy and food prices skyrocketing.

Traders are also keeping an eye on how China will repair the economic damage from its strict Covid controls, a crisis in its property sector and power shortages caused by a record-breaking heatwave.

Fresh measures to shore up the economy were announced by China’s State Council on Wednesday, including steps to encourage lending, consumption and investment, according to the official Xinhua news agency.

They also included support for electricity producers and agriculture, two sectors hit especially hard by the heatwave, though Xinhua’s readout of the State Council meeting did not mention the extreme weather.

Crude oil traded higher Thursday with concerns building about global supplies, affected by key exporter Saudi Arabia teasing the possibility of production cuts and ongoing talks about the resurrection of the Iran nuclear deal.

– Key figures at around 0630 GMT –

Tokyo – Nikkei 225: UP 0.6 percent at 28,479.01 (close)

Hong Kong – Hang Seng Index: UP 2.4 percent 19,734.60

Shanghai – Composite: UP 0.1 percent at 3,219.58

Euro/dollar: UP at 1.0025 from 0.9967 on Wednesday

Pound/dollar: UP at 1.1852 from 1.1797

Euro/pound: UP at 84.59 pence from 84.49 pence

Dollar/yen: DOWN at 136.55 yen from 137.06 yen

West Texas Intermediate: UP 0.4 percent at $95.31 per barrel

Brent North Sea crude: UP 0.5 percent at $101.77

New York – Dow: UP 0.2 percent at 32,969.23 points (close)

London – FTSE 100: DOWN 0.2 percent at 7,471.51 (close) 

With its stated purpose to “create a sustainable world together”, Japan on Saturday kicks off its aid conference for Africa, where rival China has invested heavily in recent years.

The eighth Tokyo International Conference on African Development (TICAD8) comes against the backdrop of China’s rising influence, cemented on the continent by its “Belt and Road” infrastructure initiative.

A “complex” international environment caused by issues including “the situation in Ukraine” surrounds the meeting in Tunisia’s capital, the Japanese foreign ministry said.

It is the first TICAD — held every three years either in Japan or an African country — since the pandemic began and Prime Minister Fumio Kishida will be attending remotely after testing positive for Covid-19.

Replacing him at the head of the Japanese delegation will be his Foreign Minister Yoshimasa Hayashi, and about 5,000 participants are expected to attend.

Among them will be 30 heads of state and government, converging on the Tunisian capital from across the continent.

Alongside the summit, businesspeople will attend an economic conference while various parallel events and workshops will address civil society and women’s inclusion.

Since their inception in 1993, the TICAD conferences, co-sponsored by the United Nations, World Bank and African Union, have generated 26 development projects in 20 African countries, largely funded by the Japan International Cooperation Agency (JICA).

– An alternative to China –

With a view to “accelerating Japanese investment in Africa”, the conference will focus on three pillars: economy; society; and peace and stability, according to the official presentation.

With more than $130 million already set to be delivered in food aid, Japan will also provide assistance for “rice production and food security” in view of the food crisis worsened by the Ukraine war.

Japanese economic paper Nikkei reported that aid to Africa could increase by 40 percent over the next three years, compared to 2020-2022.

Such assistance comes “in response” to other powers that have bolstered their presence in Africa, namely the United States, Europe and in particular China, Nikkei said.

In response to competition from China, a Japanese foreign ministry official said Tokyo’s “African diplomacy… can be boiled down to two words: ownership and partnership”.

“Japan has a 30-year history of involvement” in the continent through TICAD, he said.

“The core message we would like to get across this time is that Japan wants to remain Africa’s partner.”

At the closing of the last TICAD in 2019, former premier Shinzo Abe — who was assassinated at a campaign event last month — warned investors in Africa that they must beware of burdening countries with “excessive” debt, in an apparent swipe at China.

– Production hub –

On the Tunisian side, authorities hope to profit from holding the summit, particularly as Tunis is a two-hour flight from many major European capitals.

Tunisia hopes to attract Japanese investment domestically, particularly for its health, automotive and renewable energy sectors.

More than 80 projects are on the table with a value of $2.7 billion, according to Hedi Abbes, head of the Tunisian-Japanese chamber of commerce.

These projects, on offer to Tunisian and other African private investors, are expected to create about 35,700 jobs, he said.

With its industrial capacities, Tunisia hopes to become a hub for the production of medicines and vaccines, as some African countries have lagged far behind in vaccination efforts.

During a global Covid-19 summit in May, the Japanese premier stressed the importance of promoting “local production capacity for pharmaceuticals and medical products, including vaccines”.

“To that end, we have decided to provide assistance of up to $200 million through JICA to enhance the capacity in Africa,” Kishida said.