Americas: Annual inflation hits 104.3 per cent in Argentina; economic crisis set to deepen

Sectors: all
Key Risks: economic; sovereign default

In Argentina, on 14 April official statistics agency INDEC reported that annual inflation hit 104.3 per cent in March amid a cost-of-living crisis that has significantly increased poverty. Inflation for the month was 7.7 per cent, marking the fastest monthly rise since 2002 and raising pressure on the government ahead of the October general elections. The poverty rate increased by 3 percentage points to 39.2 per cent of the population from H1 to H2 2022. On 1 April the IMF cut the level of foreign exchange reserves the country needs to have by end-2023 by US$1.8bln and the Economy Ministry is seeking to further ease the targets set in the US$44bln IMF loan programme as a severe drought continues to impact exports. The risk of sovereign default will remain heightened as the economic crisis is set to deepen.

Asia Pacific: China exports increase 14.8 per cent in March y-o-y; signifies economic recovery

Sectors: all
Key Risks: economic; inflation; business 

In China the Customs Administration released data demonstrating that total exports increased by 14.8 per cent in March year-on-year after five months of consecutive decline. March exports reached a new monthly record of US$5bln. Shipments to ASEAN countries including Vietnam, Singapore and Malaysia contributed significantly to the hike as well as increased shipments to Russia. Headline inflation is expected to have fallen to around 9 per cent in March and core inflation is expected to have fallen back to around 6 per cent after a 0.4 point hike from January to February. Although Beijing appears on track to reach its lowest GDP target of 5 per cent in over 30 years, Q1 data – expected to be released on 18 March – will provide a more accurate reflection of the country’s reopening and economic rebound.

Eurasia: Extension of Black Sea Grain Deal appears increasingly uncertain

Sectors: all; agriculture;
Key risks: business, trade disruptions, 

In Ukraine, on 12 April officials announced that the inspection of vessels under the Black Sea Grain Initiative had resumed, a day after Russian officials barred inspections in Turkey, raising fears that Moscow planned to withdraw from the deal. Nevertheless, the Kremlin warned on 13 April that it would not extend the deal after its expiration on 18 May if the West fails to remove several obstacles to the export of Russian grain and fertilisers. The initiative was first agreed in July 2022 and Moscow has repeatedly threatened to withdraw. The deal was extended on 18 March but Kyiv and Moscow differed over the length of the extension, with the former claiming it was for 120 days but the latter insisting on only 60 days. If the deal collapses, grain exports could tumble and Russia may increase attacks on Odesa Oblast.

Europe: At least 25,000 workers to go on strike in the coming week in Norway 

Sectors: construction; transport; manufacturing
Key Risks: business and economic risks

In Norway, on 16 April two major labour unions announced that approximately 25,000 private sector workers would go on strike on 17 April after negotiations with employers failed. The unions added that another 16,000 workers would join the strike from 21 April should no agreement be reached and that the industrial action could further escalate in the coming days, eventually involving up to 200,000 workers. The strike will affect the construction sector, breweries, ferry operators and manufacturers. Unions demand at least a 5 per cent salary increase to match the projected 4.9 per cent inflation in 2023. Employers have been reluctant to do so, arguing that such an increase could spin inflation out of control. The strike is expected to cause disruptions across the country and further industrial action cannot be ruled out.

MENA: Standoff over judicial overhaul rekindles in Israel

Sectors: all
Key Risks: civil unrest; political stability; political violence

In Israel, on 15 April tens of thousands of people demonstrated across the country to protest the government’s delayed judicial reforms. On 27 February Prime Minister Benjamin Netanyahu announced a pause in the reforms legislative process until May in a bid to restore calm, following 12 weeks of nationwide protests and significant capital flights. The controversial reforms – under which the executive would have increased control over the judiciary – were widely denounced as a threat to Israeli democracy. Concurrently, on 14 April Moody’s downgraded the outlook for the country’s sovereign credit rating from ‘positive’ to ‘stable’, citing uncertainty over governance issues, in relation to the widespread public opposition to the government’s plans. Predictably, the respite in unrest was short-lived and weekly demonstrations will likely restart in the run-up to the government reintroducing the reform bills in the Knesset.

Sub-Saharan Africa: Fighting breaks out between military forces in Sudan

Sectors: all
Key Risks: war on land; country evacuation

In Sudan, on 15 April fighting broke out between the Sudanese Armed Forces (SAF) and fighters of the paramilitary Rapid Support Forces (RSF) in the capital Khartoum. Clashes have since spread to Omdurman, Merowe, Port Sudan and several other areas across the country. At least 97 people have been killed and more than 1,100 people have been injured – with fatalities expected to rise as the conflict continues. Both forces have accused the other of staging a coup and instigating the confrontations. The clashes were sparked by tensions over the integration of the RSF into the national army as part of efforts to return the country to civilian rule. Several airliners have suspended flights to the country due to the closure of the Khartoum International Airport. Additionally, Egypt and Chad closed their land borders with the country, which will severely complicate evacuation efforts.