- Lagarde: Inflation will Rise Further in 2nd Half
- OPEC Forecasts Global Oil Demand to Increase by 6 Million Barrels Per Day this Year
- Trade Talks Between the USA and Taiwan
Lagarde: Inflation will Rise Further in 2nd Half
Despite the strong recovery, uncertainties persist, according to Lagarde and the ECB. The economic outlook still depends on the course of the pandemic and how economies will respond to the reopening.
While the ECB’s 2021 growth forecast was increased from 4% to 4.6, 2022 growth forecast from 4.1% to 4.7%, 2023 growth forecast was left as 2.1%.
Inflation expectations were raised from 1.5% to 1.9% for 2021, and from 1.2% to 1.5% for 2022. The 1.4% level predicted for 2023 has not been changed.
Some highlights from Lagarde’s speech are as follows:
“Eurozone inflation is expected to rise further in the second half of the year with temporary effects. Afterwards, it is expected to weaken again.”
“The Eurozone continued to contract by 0.3 in the first quarter of the year – GDP remained 5.1% below the first quarter of 2019. Business expectations surveys point to a serious improvement in activity in the second quarter of this year. As the number of cases decreases, we see that the activity is rising.”
“We have examined the quarterly forecasts a lot. We are more optimistic about the economic outlook than three months ago. It seems that a strong recovery has started at the beginning of the second quarter. This brings a moderate optimism to the markets. Both the acceleration of vaccination and the fact that we are gradually exceeding the pace in advanced economies, as well as the fact that the restrictions have started. “When you look at the service PMIs, it has reached 55.2. Historical records have been seen. Manufacturing PMI, which has started to strengthen before, is still strong and has stabilized at a very high level.”
“Therefore, we revised our 2021 growth forecast upwards. Of course, we also follow the inflation side. We predict that inflation may rise up to 1.9 % in the short term.”
OPEC Forecasts Global Oil Demand to Increase by 6 Million Barrels Per Day this Year
The Organization of Petroleum Exporting Countries (OPEC) announced that it forecasts global oil demand to be 96 million 580 thousand barrels per day, with an increase of approximately 6 million barrels per day compared to last year.
According to OPEC’s oil market report for June, the lower-than-expected oil demand in the US and Europe in the first quarter of the year caused the annual oil demand of the Organization for Economic Cooperation and Development (OECD) countries to be revised downwards. However, developments such as the easing of restrictions, positive data in April in America and Europe, increased mobility and opening of borders compensated for the negative developments in the first half, causing demand expectations for the second half of the year to increase.
For this reason, it is predicted that the oil demand of OECD countries will increase by 2 million 700 thousand barrels per day this year. It is estimated that most of the increase in global oil demand this year will come from the United States, but still the region’s oil demand will not reach pre-Covid-19 levels.
Oil demand of non-OECD countries is expected to increase by 3 million 300 thousand barrels per day, mostly due to China and India. It is predicted that a healthy economic recovery in these regions will also support the oil consumption of the industry and the demand for petrochemicals.
In this context, demand for OPEC crude oil is expected to be around 27 million 700 thousand barrels this year.
It is estimated that the global oil demand will increase by approximately 6 million barrels (6.57%) on a daily basis and reach 96 million 580 thousand barrels in this period.
Trade Talks Between the USA and Taiwan
Trade Representatives of the United States and Taiwan held talks on the trade and investment relations of the two countries.
US Trade Representative Katherine Tai highlighted the importance of Washington’s trade relations with Taipei.
In the virtual meeting, Tai’s Taiwanese counterpart, John Deng, emphasized the importance of working together on common issues in multinational organizations, the US Trade Representative said in a statement.
“Ambassador Tai emphasized the importance of the U.S.-Taiwan trade and investment relationship and explained the Biden-Harris administration’s worker-centered trade priorities,” USTR said in a statement.
Deng’s office said the atmosphere of the talks was “harmonious and constructive.”
Taiwanese President Tsai Ing-wen has announced that he wants to make a trade deal with the United States and other countries. The president also loosened restrictions on meat imports from January.
The two countries signed a trade and investment framework agreement in 1994.
A senior official at Taiwan’s economy ministry told Reuters they hope to resume the Trade and Investment Framework Agreement(TIFA) talks this year.
The USTR statement did not provide specific timing of the meeting, which it said would come under the auspices of the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States.
However, seems like any such agreement with Taiwan is likely to irritate China. China, which sees Taiwan as its territory, opposes official talks between the United States and Taiwan.