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Thanks to robust growth and its relative insulation from geopolitical crisis, the U.S. economy has left Europe behind.

By PAUL HANNON and Yuka Hayashi
Wed, Jan 31, 2024 1:35pmGrey Clock 4 min

Europe’s economy stagnated in the final three months of last year, expanding a divide between a booming U.S. economy and a European continent that is increasingly left behind.

The fresh economic data showed higher borrowing costs had compounded the earlier impact of higher energy prices in the wake of Russia’s invasion of Ukraine.

By contrast, the U.S. economy has been expanding robustly and enjoyed its strongest performance relative to the eurozone since 2013—with the exception of the Covid-19 pandemic.

One factor that is threatening to weigh further on the European economy is its proximity to geopolitical flashpoints. Russia’s war on Ukraine sent energy prices rocketing in 2022, hitting European manufacturers. The U.S., as an energy producer, was comparatively unaffected, and its natural-gas industry even benefited when it became Europe’s energy supplier of last resort after Russia throttled gas deliveries to the region.

Now the crisis in the Middle East, which has gummed up cargo traffic through the Red Sea, is adding costs to European importers and disrupting European supply chains. There too, the U.S. hasn’t suffered as much since it has alternative routes for goods coming from Asia.

Europe’s Stoxx 600 index rose 12.64% last year, a little over half the performance of the S&P 500, which rose 24.23% over the same period.

The European Union’s statistics agency Tuesday said gross domestic product in the eurozone was unchanged in the final three months of last year. That followed a decline in the three months through September. During 2023 as a whole, Eurostat recorded growth of just 0.5%, while the U.S. economy expanded by 2.5%.

Still, the divergence between the giant economic blocs is more a story of surprising U.S. strength than unanticipated weakness in the eurozone. The U.S. grew much faster than economists had expected it would at the start of 2023, while the eurozone was about as badly hit by high energy prices and rising interest rates as had been expected. Economists forecast the growth gap will narrow somewhat in the course of the year.

Europe’s policymakers don’t expect the stagnation in output to extend deep into 2024. Instead, they see a pickup in activity as wages rise faster than prices, reversing the declines in real incomes that followed the war in Ukraine and a rise in energy and food bills.

“We have the conditions for recovery that are coming into place,” said European Central Bank President Christine Lagarde Thursday. “I’m not suggesting that it’s going to pick up radically, but it’s coming into place from what we see.”

Helping Europe is the fact that energy prices are falling from post-invasion highs faster than policymakers had expected. That should help boost household spending on other goods and services and lower costs for Europe’s hard-pressed factories.

With inflation easing, the ECB is expected to lower its key interest rate later this year, which would also jolt growth by easing the pressure on household spending and business investment.

Yet the eurozone faces fresh threats too, mainly from the conflict that began with the attack on Israel by Hamas on Oct. 7. Disruptions to shipping in the Red Sea have pushed freight costs sharply higher and led to delays for European manufacturers that rely on Asian suppliers for parts. A further escalation of the conflict could reverse the decline in energy costs and stall the anticipated recovery.

The International Monetary Fund now expects the eurozone to grow by 0.9% this year, a downgrade from its previous 1.2% growth estimate, according to the Fund’s quarterly World Economic Outlook report published on Tuesday. By contrast, it sees the U.S. growing by 2.1% against its earlier 1.5% forecast.

Strong U.S. growth and an estimated 4.6% increase in China’s GDP according to the IMF should more than offset Europe’s disappointing performance and translate into a soft landing for the world economy this year. The IMF now sees the world economy growing at 3.1% this year, the same rate as last year and faster than the 2.9% growth projected in October.

“We find that the global economy continues to display remarkable resilience,” Pierre-Olivier Gourinchas, IMF Chief Economist, told reporters, pointing to the speed at which inflation had receded as a positive surprise.

He warned, however, that geopolitical distortions could reignite price increases. Core inflation—which excludes volatile energy and food prices—isn’t quite back to the pre pandemic trend, particularly for services sector prices, he said.

IMF economists also cautioned that financial markets have been overly optimistic in anticipating early rate cuts by central banks. They project policy interest rates to remain at current levels for the U.S. Federal Reserve, the European Central Bank, and the Bank of England until the second half of 2024, before gradually declining as inflation moves closer to targets. Some investors and analysts expect a Federal Reserve rate cut in the first half of this year.

Back in Europe, Tuesday’s GDP data showed Germany was the weakest of Europe’s large economies at the end of last year, with output falling in the final quarter. However, revised figures showed it avoided a contraction in the three months through September.

“The economy remains stuck in the twilight zone between recession and stagnation,” said Carsten Brzeski, an economist at ING Bank.

While Italy’s economy expanded slightly, the French economy flatlined for the second straight quarter. Ireland, which had been a major source of growth for the eurozone over the previous decade, saw its GDP fall by 1.9% in 2023 as a pandemic-driven boom in its key pharmaceutical industry ended.

In a rare bright spot, Spain finished the year with another strong quarter and matched the U.S. growth rate over 2023 as a whole, thanks to a surge in international tourism as the last of the Covid-19 restrictions were lifted.


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AACCI’s Strategic Vision for Enhancing Australia-Arab Trade Relations

The Australian Arab Chamber of Commerce & Industry (AACCI) is fostering robust trade relations between Australia and Arab countries.

Mon, May 20, 2024 5 min

In an era where global trade and international relationships are more crucial than ever, the Australia Arab Chamber of Commerce & Industry (AACCI) serves as a bridge, for cooperation and growth between Australia and the Arab nations. Led by its Chairman, Mr. Mohamed Hage, the AACCI has taken on projects aimed at strengthening relationships and fostering development across borders.

This exclusive interview explores the initiatives implemented by the AACCI to expand its presence and influence in the region including the significant establishment of a new operational hub in Dubai. We also delve into how the Chamber embraces education through training and research, its participation in major international exhibitions, and its active support for both large corporations and small businesses.

Looking towards tomorrow, Mr. Mohamed shares his vision for broadening AACCI’s reach emphasizing the importance of the on-ground operations and cultural understanding in building business connections.

-Could you elaborate on the Australia Arab Chamber of Commerce & Industry, including its objectives and main areas of focus?

The Australia Arab Chamber of Commerce & Industry (AACCI) plays a fundamental role, in promoting business partnerships and trade between Australia and the 22 Arab countries. As a member of the Union of Arab Chambers affiliated with the Arab League, AACCI focuses on strengthening trade and investment ties, across these countries.

To nurture these connections effectively AACCI has outlined four objectives: facilitating trade and investment activities, certifying documents, educating stakeholders, and offering marketing assistance.

Our initiatives are designed not only to empower trade and investment endeavors but to also ensure engagement with specific sectors that drive these activities. With an understanding of the characteristics, strengths and preferences of each country, AACCI prides itself on its specialized knowledge customized to suit the distinct business environments of these nations.

– As the AACCI approaches its 50th anniversary, what have been some of the key milestones and achievements?

I believe one of AACCI’s accomplishments is the opportunities it has opened up for numerous Australian companies to access markets, in the region. Moreover, the strong bilateral trade relationship that has developed between Australia and the 22 Arab nations over the five decades has led to trade transactions amounting to billions of dollars.

This extensive trade covers industries such as food and beverages, luxury hotels and many more services. Each successive generation, within AACCI has built upon the foundation laid by its predecessors enriching their knowledge base and expanding their range of services.

– How does the AACCI leverage its diverse leadership team to enhance trade and investment opportunities between Australia and the Arab region?

Since taking on the role of chairman, my main focus has been on expanding our presence in the region. This led to the idea of opening an office in Dubai, which symbolizes our dedication to deepening our engagement in that area. We have successfully secured the license to open our first office in Dubai after 50 years, which will serve as a gateway to the GCC and North Africa.

I strongly believe that building two-way trade and investment ties requires more than a degree of business connectivity; it demands having local representatives present in each region. With trends emphasizing strategies the value of face-to-face engagements cannot be overstated.

Setting up offices in the region is essential for the Chamber to truly serve as a link and support system for business activities. Ultimately this expansion will bring benefits to our members and partners by providing them with access, to dynamic markets and diverse prospects.

– Can you discuss the significance of AACCI’s role in cultural and business exchanges between the two regions?

The importance of understanding cultures in our operations cannot be overstated. To address this, we have included a training platform within the Chamber to strengthen our cultural awareness initiatives. This new program offers our members access to modules on our website focusing on global business practices.

Furthermore, we have set up a Center of Excellence specifically dedicated to researching areas like food security and cultural awareness. These research endeavors are essential for promoting knowledge between the two regions.

By combining the resources of the Center of Excellence, our training resources, and the forthcoming local office in Dubai, we’re providing cultural awareness not only in the region but also in Australia. This approach ensures that our members are well equipped and knowledgeable boosting their effectiveness and involvement, in markets.

– What is the objective of your on-ground presence at conferences and events?

Participating in conferences and on ground events is very important for increasing awareness in industries like construction where knowledge of opportunities in the Arab world may not be widespread. When we see projects such as NEOM or notice the construction boom happening in the region it becomes important for organizations like the Chamber of Commerce to highlight these prospects. By taking part in large scale expos such as the Sydney Build Expo we position ourselves at the forefront of these advancements.

Our presence at these events enables interaction giving entrepreneurs a chance to visit our booth engage in discussions and learn more about the region in an approachable and personalized manner. This plays a role in simplifying the process and making opportunities concrete.

– With such a diverse membership base, how does AACCI tailor its services to meet the needs of both large corporations and small startups?

When it comes to discussing business it’s important to grasp how influence and vision come into play. Businesses looking to expand are often motivated by a desire to achieve something whether they are big companies or small enterprises. Small businesses typically aim to raise their brands profile while larger corporations seek recognition and market dominance.

Standing out in this area can be tough mainly because the key driving force is the passion to showcase the brand and products on a platform. This determination serves as a motivator for entrepreneurs.

At the Chamber we make a point of recognizing the needs of both big and small players by understanding each members individual situation. We ensure that every member is well informed about the opportunities and risks that come with expanding. For small businesses, this means being aware of the financial demands, while large businesses are advised on the necessity of both financial and emotional resilience.

– How does AACCI plan to expand or evolve its services in the coming years to further support its members?

The importance of having resources on the ground cannot be emphasized enough. Having local staff is key to establishing connections with the communities we serve. Without a presence in the area staying updated on events and activities becomes quite challenging.

This is why, as I’ve mentioned before, we have established an office in Dubai, staffed with personnel dedicated to supporting our members. This local office will help us effectively bridge the gap between Australia and the Arab world. And our members will benefit from insights and assistance from someone who truly knows the landscape.

In Australia we have equipped offices throughout the country staffed by individuals who play a significant role in our operations. This strong domestic network complements our efforts ensuring that we provide support to our members both locally and globally. This strategic approach is crucial, for nurturing business relationships and fostering continental understanding.



Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual

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