Weekly Briefing: Key Policy Developments
This weekly briefing provides overviews of the top policy developments that business leaders should monitor.
Key policy and political developments for the week ended January 12, 2024:
Global economy on track for slowest half-decade in 30 years: Global growth is projected to slow for the third year in a row, from 2.6% last year to 2.4% in 2024, according to the World Bank's latest Global Economic Prospects report. The risk of a global recession has receded, “largely because of the strength of the U.S. economy,” but “mounting geopolitical tensions could create fresh near-term hazards for the world economy.” Growth in advanced economies is set to slow to 1.2% this year from 1.5% in 2023 and many developing economies have a poor medium-term outlook “amid slowing growth in most major economies, sluggish global trade, and the tightest financial conditions in decades.”
2023 was hottest year in recorded history: The E.U.’s Copernicus Climate Change Service reported that global temperatures reached “exceptionally high levels” in 2023 and were higher than in any year going back to at least 1850. The global average temperature of 14.98°C in 2023 was 0.17°C higher than the previous highest annual value in 2016. The year was 0.60°C warmer than the 1991-2020 average and 1.48°C warmer than the 1850-1900 pre-industrial level. It is likely that a 12-month period ending in January or February 2024 will exceed 1.5°C above the pre-industrial level.
Escalation of U.S.-Iranian tensions impacts oil prices: U.S.-Iranian tensions put upward pressure on oil prices. U.S. and British warships shot down 21 drones and missiles and drones fired into the Red Sea shipping lane. The attacks on commercial shipping from the Iranian-backed rebels have led companies to reroute voyages away from the Red Sea and around southern Africa. U.K. forces could take further measures to protect shipping lanes. In the Gulf of Oman, on the other side of the Arabian Peninsula, Iran seized a tanker with Iraqi crude bound for Turkey in retaliation for the U.S. seizure of the vessel and its oil last year.
Additional reading
Oil climbs 1% as tankers avoid Red Sea after strikes on Houthis (Reuters)
Inflation ticked up to 3.4% in December thanks in part to outsized housing costs (NBC)
Fed's Williams says more work needed to bring inflation back to target (Reuters)
What’s at Risk as Half of the World’s GDP Heads Into an Election Year (Bloomberg)
Trumponomics 2.0: What to Expect If Trump Wins the 2024 Election (Bloomberg)
Yellen Says Extending Trump Tax Cuts Would Worsen Deficit (Yahoo)
Former ECB head Draghi sounds out businesses to boost EU competitiveness (Reuters) (Bloomberg)
Xi Elevates China’s Ties With Record Number of Nations to Counter US (Bloomberg)
US, China Resume In-Person Defense Policy Coordination Talks (Bloomberg)
How global trade could fragment after the EU’s tax on ‘dirty’ imports (FT)
OECD sees global minimum tax reshaping investment flows (Reuters)
Rental giant Hertz dumps EVs, including Teslas, for gas cars (Reuters)
Macron’s reshuffle tilts French cabinet to the right ahead of EU elections (France24)
Political and Economic Risk Outlooks for 2024
Geopolitical
Forbes: Predictions Are Passé. To Navigate 2024, Focus On What’s Plausible
Eurasia Group: Top Risks predictions for 2024: A year of grave concern
Economic
Policy