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Global Economic Roundup - November '21

Executive Summary

The month of November saw the global economy being once again at risk of rising Covid-19 cases, mainly in Europe, as well as ongoing supply chain disruptions hindering recovery while fueling inflationary pressures.

How has the resurgence of Covid-19 affected things?

Global cases have now hit 259 million while deaths are at a staggering 5.17 million. A significant rise in the pace of deaths is expected if the recent resurgence seen in Europe continues at its current trajectory due the spread of the more powerful Delta variant.

Covid-19 cases breaks record in Europe and Central Asia: There has been a series of European countries including Slovakia, the Czech Republic, the Netherlands and Hungary that have recently witnessed daily highs in Covid-19 cases. As winter approaches there has been more indoor gathering increasing the risk of Covid-19. The WHO said Covid deaths in both Central Asia and Europe could rise by another 700000 by March.

Cases surge by 23% in the Americas: Cases jumped by 23% mid-November mainly in North America with both the United States and Canada seeing a significant jump in daily recorded cases. The Pan American Health Organization (PAHO) warned that the region might be facing a relapse as seen Europe. Canada's Yukon and Northwest territories saw a two- to three-fold increase in new infections

However most Asian countries have reopened their borders for travel: While there has been rising cases in Europe most Asian countries have braced themselves for the December holiday season, seeing momentum in their vaccination campaigns, several are cautiously reopening their borders and welcoming travelers. Singapore for example has been easing border restrictions since last month after 20 months of strict border restrictions.

How has the inflation story been developing?

One of the main highlights this month was growing concern of China’s economic slowdown and the cascading effects it my have on the rest of the world, especially on inflation. Supply chain issues still persist as well while inflation continues to increase, having investors anticipating a potential rate hike by the Feds next year as a result of it.

High shipping costs, auto and chip supply chain issues continue to constraint recovery: UNCTAD recently pointed out that high shipping costs put smaller countries at risk as they depend greatly on imported goods by sea and thus will be hit hard by a spike in import prices. A surge in demand for consumer goods during the pandemic has created major supply bottlenecks around the world and are dampening global recovery, data from the WTO shows. The WTO barometer which attempts to quantify these disruption show that indices for automotive products and semiconductors have changed adversely.

Recent US inflation data shows a strong surge in October: Inflation rose strongly in October increasing at its fastest pace since 1991. Prices for personal consumption expenditures excluding food and energy increased 4.1% from a year ago. Inflation has also negatively impacted consumer and investor sentiment, investors are now pricing in three 25 basis point rate hikes in 2022 following the recent indication of fast rising prices.

Worries persist on the impact China’s slowdown will have on the global economy: Goldman Sachs Group Inc, Nomura Holdings Inc and Barclays have cut their growth forecasts for the Chinese economy for 2022 to below 5%, while an advisor to the nations central bank warned that the economy could enter a period of “quasi-stagflation” with relatively slow growth and excessively high inflation. Meanwhile US treasury secretary Janet Yellen warned that China’s ailing property market which struggles to pay back billions in loans could have repercussions for the global economy.

How have commodities been performing?

Oil prices rise again after a short fall:

Oil prices rose to a peak of just above US$85 per barrel on the 10th of November and then fell to roughly US$78 on the 22nd of November to only start rising again up to around US$82 by the 25th of November. The rise was attributed to a move by the United States and other nations that released millions of barrels of oil from their emergency reserves.

Gold prices fall:

Gold prices rose to a peak of around US$1877 an ounce on the 16th of November and then fell after to around $1793 an ounce by the 25th of November as the dollar hit 16-month highs. and on expectations that US interest rates will rise sooner than expected after the renomination of Federal Reserve Chairman Jerome Powell.


Top 5

Over 1 in 4 investors feel 'bearish' about emerging markets: HSBC survey

More than one in four investors feel 'bearish' about emerging markets, an HSBC survey showed on Wednesday, as slowing economic growth and the spectre of tighter monetary policy in the United States clouds the outlook.

Covid, soaring inflation threaten second winter of woe for world economy

The world economy is approaching winter in disarray, unable to shake off the coronavirus crisis amid persisting supply disruptions, soaring prices and resurgent outbreaks. With parts of Europe confronting renewed restrictions to contain another wave of the virus, China’s rebound fading and rising infections taking hold in America too, much of the global economy is now staring at the threat of a second northern winter of woe.

Budget cuts will take a big chunk out of the world economy next year

With an unexpected rapid increase in inflation in most of the countries, there is a high possibility that there would be a tightening of fiscal and monetary policies, with most countries withdrawing from pandemic spending.

China’s economy beats expectations amid property market fears

China’s economy performed better than expected in October as retail sales and industrial output beat estimates, relieving concern a property slump was broadening. The better-than-expected numbers will come as a relief after the economy’s momentum weakened in the second half of the year, with both demand and supply coming under pressure.

Consumers to the Rescue: US economy improves after the weak third quarter

For US consumers October’s Retail Sales were a classic case of ‘watch what we do, not what we say. Retail Sales saw a significant recovery in October following 4 months of the lowest sentiment in years. Part of the rush may have been spurred by fears of shortages around the Christmas holidays.

Compiled by: Emaad Rizwan

Disclaimer: This information has been compiled from sources believed to be reliable but Frontier Research Private Limited does not warrant its completeness or accuracy. Opinions and estimates constitute our judgment as of the date of the material and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The recipient of this report must make their own independent decision regarding any securities or financial instruments mentioned herein. Securities or financial instruments mentioned herein may not be suitable to all investors.


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