ISA Economic Data Release: 27 January 2023

Highlights From the Past Week

The United States economy expanded at a faster pace than expected in the fourth quarter of last year, growing by 2.9% on an annualized basis. Consumer spending on services and motor vehicles accelerated in the fourth quarter. In contrast, exports declined in the fourth quarter, as did fixed investment. For the year in 2022, the world’s largest economy expanded by 2.1%.

 

After strengthening dramatically over the previous 18 months, the US dollar has weakened in recent months. Some economists believe that the US dollar could weaken much further in the coming months. However, the potential for a stronger-than-expected performance by the US economy in 2023 and the high levels of risk currently in place around the world suggest that a major depreciation is unlikely.

 

For the past 30 years, Japan was synonymous with deflation, with inflation averaging just 0.2% per year in that country between 1992 and 2021. However, inflation rates have risen sharply in Japan in recent months. Last month, inflation in Japan rose to 4.0% year-on-year. This higher rate of inflation was the result of a weak yen, higher commodity prices and rising energy costs in Japan.

 

A Look Ahead

A number of emerging markets, including many in Africa and South Asia, are expected to suffer from worsening electricity shortages in the coming years, holding down economic growth in these two regions.

 

 

Three of the world’s four largest economies (USA, China and Germany) recorded stronger-than-expected economic growth in the fourth quarter of last year, boosting hopes for the global economy in early 2023.