<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="542" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108090573-1737563583857-108090573-1737562015258-jM8zMyA-1-820x542.jpg" alt="" class="wp-image-579392" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108090573-1737563583857-108090573-1737562015258-jM8zMyA-1-820x542.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108090573-1737563583857-108090573-1737562015258-jM8zMyA-1-300x198.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108090573-1737563583857-108090573-1737562015258-jM8zMyA-1-136x90.jpg 136w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108090573-1737563583857-108090573-1737562015258-jM8zMyA-1-768x507.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108090573-1737563583857-108090573-1737562015258-jM8zMyA-1-1536x1015.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108090573-1737563583857-108090573-1737562015258-jM8zMyA-1-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



U.S. President Donald Trump has only been in office for a matter of days, but his impact on markets has already been significant.



U.S. stocks notched back-to-back weekly gains last week and although the rally paused on Friday, the S&amp;P 500 still hit a fresh record during the day.



It comes after the U.S. leader called for lower interest rates and cheaper oil prices in a Thursday address at the World Economic Forum in Davos, Switzerland. Investors have also been betting on potential tax cuts and deregulation under the new president, sending stocks higher.



Not everyone is bullish looking ahead, however, with some — such as JPMorgan Chase CEO Jamie Dimon — suggesting markets could be overpriced.



After a week of interviews with business leaders, lawmakers and investors in the Swiss ski resort, here’s what top industry names told CNBC:



<h2 class="wp-block-heading" id="h-larry-fink-ceo-and-chairman-blackrock"><a></a>Larry Fink, CEO and chairman, BlackRock</h2>



“I’m cautiously optimistic — that being said I have scenarios where it could be pretty bad,” Fink told CNBC’s Andrew Ross Sorkin.



“I believe if we were to unlock all this private capital we’re going to have enormous growth, [but], at the same time, some of this is going to unlock new inflationary pressures,” he explained. “And I do believe that’s the risk that is not factored into the market.”



<h2 class="wp-block-heading"><a></a>Ted Pick, CEO, Morgan Stanley</h2>



Pick said he believed corporate earnings could lift growth in markets over the next 12 to 24 months as they “continue to be strong.”



“That is kind of the indicator … How many companies right now are really talking about recession, how many are talking about inflation? &nbsp;I feel like the earnings pull through looks pretty sanguine,” he said.



“More importantly, I know we like to look at the index, but the index is dominated by half a dozen technology companies — which, by the way are all doing great — but if you look at the deregulation possibilities in the energy sector, in the financial services sector, those sectors are still in multiples that aren’t that expensive,” Pick added.



“If you’re an investor and you think about allocating over the next 12 to 18 months, sure there could be a drawdown at the index level, but [do] you really want to be thinking about where do I have sector exposure?”



<h2 class="wp-block-heading"><a></a>Christine Lagarde, President, European Central Bank</h2>



Lagarde told Karen Tso that there was divergence in monetary policy between the euro area and the U.S. due to a “different economic setting.”



She also said that she was not “overly concerned” about the risk that inflation abroad will be imported into Europe, adding that she expected the ECB will continue to gradually lower interest rates as the price growth rate moves toward target.



“We are certainly interested to see the U.S. grow, because growth in the U.S. has always been a favorable factor for the rest of the world,” Lagarde said.



<h2 class="wp-block-heading"><a></a>Nicolai Tangen, CEO, Norges Bank Investment Management&nbsp;</h2>



“I don’t think you should give any advice to the U.S., but if you look at the risk to financial markets, I think inflation is for sure one, all driven by tariffs,” Tangen said Tuesday. “Geopolitical tensions generally are negative for financial markets and for financial returns.”



Tangen added that “purely financially,” Trump’s arrival was going to be “very positive” for a lot of U.S. companies.



<h2 class="wp-block-heading"><a></a>Jamie Dimon, CEO, JPMorgan Chase</h2>



Dimon said he thinks U.S. asset prices are “kind of inflated” at their current levels.



“By any measure, they are in the top 10% or 15%,” Dimon told Andrew Ross Sorkin on Wednesday, referring to U.S. stock markets. “They’re elevated and you need fairly good outcomes to justify those prices.



“We’re all hoping for that, and having pro-growth strategies helps make that happen, but there are negatives out there and they can tend to surprise you,” he added.



<h2 class="wp-block-heading"><a></a>David Solomon, CEO, Goldman Sachs</h2>



Solomon said markets were in risk-on mode and that there was a sense of optimism in equities both because of the new U.S. administration and because of advances in technology.



Solomon also told Andrew Ross Sorkin that he was noticing a focus on growth, in the U.S., as well as in his conversations with European clients at Davos.



“I think people are optimistic, and it’s not going to be a smooth, perfect path, but people are optimistic that we are going to run a more growth-prone agenda. We’re going to free up some investment, we’re going to unlock the private sector a little but more, and that’s got to be constructive,” he said.



“It’s hard to dispute the fact that equity multiples are high &#8230; I think the equity markets exhibit a sense of optimism at the moment, but they also exhibit a sense of optimism around growth and technology, in particular this AI wave. Of course it’s not going to be a straight line, but some of the technology we’re seeing, the opportunities for that technology to improve productivity meaningfully are extraordinary.”



<h2 class="wp-block-heading"><a></a>Khaldoon al-Mubarak, CEO, Mubadala&nbsp;</h2>



“Continuing on the trends we’ve seen in 2024 being a positive year in most markets … I see that continuing in 2025, I see a continuation of strong tailwinds in the in the core markets, the U.S., Asia, particularly the growth driven markets in Asia,” al-Mubarak told CNBC’s Dan Murphy Monday.



“I see a continuation of good tailwinds in technology and healthcare and financial services, life sciences,” he added. “So I would say, maybe almost the same words I used last year: cautiously optimistic. When I look at 2025, it’s going to be an exciting year.”



<h2 class="wp-block-heading"><a></a>Ray Dalio, Founder, Bridgewater</h2>



Bridgewater founder Ray Dalio told CNBC that price-earnings ratios were high in U.S. markets, but that there could be further scope to climb in artificial intelligence beneficiaries.



“We have gone pretty far already &#8230;I think it’s led by the sectors that are great sectors, the disruptors, AI and so on.”



“I don’t think it’s been carried down to the applications of AI, to the uses of AI &#8230; the applications of AI are under-discounted I think.”



<h2 class="wp-block-heading"><a></a>Brian Moynihan, CEO, Bank of America</h2>



Moynihan told Andrew Ross Sorkin on Tuesday he thought U.S. markets had room to climb in 2025, and that the key concern for business and financial services would be regulatory policy, rather than inflation.



“Our research team thinks there’s room to go this year, they predict the market to go up. Not as much as last year, and the unusual thing is you had a couple years in a row of very strong growth, but that was coming off a couple years of very unusual times,” he said.



Moynihan added, “I believe that if you look at the key thing for businesses generally, including financial services and the banking businesses, it’s the regulation question.”



<h2 class="wp-block-heading"><a></a>Sergio Ermotti, CEO, UBS</h2>



Tariffs proposed by U.S. President Donald Trump could prevent disinflation and keep interest rates higher, the banking chief told Andrew Ross Sorkin on Tuesday.



“Inflation is much more sticky than we have been saying,”&nbsp;Ermotti said.



“Tariffs will probably not really help inflation to come down. And therefore I don’t see [interest] rates coming down as fast as people believe,” he said.



<h2 class="wp-block-heading"><a></a>C. S. Venkatakrishnan, CEO, Barclays</h2>



Venkatakrishnan, whose British bank makes around 40% of its revenue in the U.S., said he was “optimistic” about U.S. deal activity this year.



“I think there are two things driving it. One is interest rates have reached a relatively stable level. Our own economists are calling for maybe one rate cut in the U.S. over the next year,” he told Andrew Ross Sorkin.



“They’re still high, but they’re stable, so you can at least plan better, because you don’t have the volatility in rates. The second is with the change in [U.S.] administration, it should be easier for mergers to take place.”



Venkatakrishnan added that he expected President Trump to relax regulation, which would be “generally good for business sentiment and good for business opportunity.”



<h2 class="wp-block-heading"><a></a>Rachel Reeves, UK Finance Minister</h2>



The U.K. needs to attract more oversees investment to boost economic growth, Reeves told CNBC.



“My message to U.S. investors and global investors too is: Britain is open for business, we want your investment.”



She also discussed Trump’s global tariff threats.



“I do understand that President Trump is concerned about countries that are running large and persistent surpluses on the trade balance with the U.S. That’s not the case for the U.K.,” Reeves said.



“We are not part of the problem here. So we, the U.K., increased trade with President Trump last time he was in office.”



<h2 class="wp-block-heading"><a></a>Christian Sinding, CEO, EQT</h2>



Sinding, CEO of Swedish private equity firm EQT, told CNBC’s Karen Tso and Steve Sedgwick on the ground that the market for M&amp;A and big business deals was “continuing to improve.”



“We had a record year in 2024 we did over $20 billion of investments,” he said. “We did more than $10 billion of exits, and that’s kind of building up to 2025, [when] I think a lot of the market participants are now ready to transact, whether it’s private equity or family offices or strategic buyers. And, of course, if you look at the global capital markets, the IPO market is wide open. The credit markets are strong, so we’re fairly positive looking into the next year.”

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Dimon, Dalio, Lagarde and more: Top CEOs and policymakers on what’s next for markets

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108092452-1737937237483-gettyimages-2194836499-cfoto-chineseg250123_npDEz-820x547.jpeg" alt="" class="wp-image-579329" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108092452-1737937237483-gettyimages-2194836499-cfoto-chineseg250123_npDEz-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108092452-1737937237483-gettyimages-2194836499-cfoto-chineseg250123_npDEz-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108092452-1737937237483-gettyimages-2194836499-cfoto-chineseg250123_npDEz-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108092452-1737937237483-gettyimages-2194836499-cfoto-chineseg250123_npDEz-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108092452-1737937237483-gettyimages-2194836499-cfoto-chineseg250123_npDEz-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108092452-1737937237483-gettyimages-2194836499-cfoto-chineseg250123_npDEz-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Workers produce garments for export to overseas markets at Sihong Guoshun Garment Co., Ltd. in Weiying town, Sihong County, Suqian city, East China’s Jiangsu province, on January 23, 2025.. Costfoto | Nurphoto | Getty Images</figcaption></figure>



China’s factory activity in January unexpectedly contracted, in part due to a slow season ahead of the Lunar New year, reversing the growth seen in the previous three months&nbsp;and keeping alive calls for stronger fiscal support to boost the economy.



The official purchasing managers’ index for January came in at 49.1, data released by the National Bureau of Statistics on Monday showed, compared with Reuters poll estimates of 50.1.



PMI had stayed above the 50 mark that separates expansion from contraction for the past three months, coming in at 50.1 in December, 50.3 in November and 50.1 in October, according to the official data.



The manufacturing PMI in January tends to be softer, as migrant workers return to hometowns ahead of the Chinese New Year, which falls on Jan. 29, said Hui Shan, chief China economist at Goldman Sachs.



The blue-chip CSI 300 reversed gains earlier in the day to trade slightly lower, following the data release.



Despite the softer manufacturing PMI, the overall demand outlook appears positive, said Bruce Pang, senior research fellow at the National Institution for Finance and Development, citing stronger readings in two price sub-indexes.



The indexes measuring price levels for purchasing and selling major raw materials improved in January — albeit still in contraction territory — Zhao Qinghe, senior statistician at the NBS said in a press release. A gauge of companies’ production and operation activity outlook expanded to 55.3, Zhao added, showing that most manufacturers were increasingly confident about business expansion after the holidays.



China’s non-manufacturing PMI, which measures services and construction activity, fell to 50.2 in January, compared to 52.2 in the preceding month.



The services PMI rose 50.3, less than the prior month, but still expanding given holiday-induced demand, especially in sectors benefiting from the seasonal travel rush, such as public transportation, hotels, food and beverage industries, NBS’ Zhao said.



The construction PMI fell to 49.3, as activity stalled in the lead up to the festival.



“The disappointing PMI data underscores the difficulty policymakers face in achieving a sustained recovery in growth,” Zichuan Huang, China economist at Capital Economics, said in a note.



While the economic activity might pick up in the coming months as policymakers are likely to step up stimulus and front-load deficit spending at the start of 2025, the economy is still struggling amid the structural headwinds and tariff threats from the new U.S. administration, Huang said.



<h2 class="wp-block-heading" id="h-dwindling-profits"><a></a>Dwindling profits</h2>



China’s industrial profits in 2024 fell 3.3% from the previous year, extending declines to a third consecutive year. In December, however, profit jumped 11% from a year earlier, growing for the first time since July.



Corporate profits have been recovering from a sharp 27% year-on-year plunge in September — their steepest drop since March 2020 during the Covid-19 pandemic. They had dropped 7.3% on year in November and 10% in October, as a slump in the real estate sector and bleak income prospects continued to weigh on consumer demand.



Industrial profits are a key indicator of the financial health of factories, utilities and mines in China.



The world’s second-largest economy met official annual growth target last year, expanding 5.0%, as a barrage of stimulus measures kicked in. Economists had pointed to the industrial output growth outpacing retail sales, underscoring the country’s supply-side strength while domestic demand remained weak.



The manufacturers for consumer goods saw steady growth in their profits, increasing 3.4% last year from a year ago, NBS statistician Yu Weining said in a statement, boosted by policy incentives for consumption and strong exports.



A PMI sub-index measuring China’s new export orders stood at 46.4 in January, its lowest level since February last year. The level was “not bad” given the seasonality factor during Chinese new year, Pang said, noting that “the frontloading of exports due potential trade tensions is still ongoing.”



Chinese exporters have been rushing to frontload shipments due to worries over potential tariff hikes. U.S. president Donald Trump has threatened to impose additional 10% tariffs as soon as Feb. 1. During his campaign trail he had suggested tariffs upward of 60% on Chinese goods.



China’s economic downturn has not yet seen a “turning point,” Goldman Sachs’ Shan said, given still-weak domestic consumption and uncertainty over the scale and timing of U.S. tariffs. “The bottom line is that we do need a large stimulus from the government to even have a chance to improve inflation and confidence,” she added.

108092452-1737937237483-gettyimages-2194836499-cfoto-chineseg250123_npDEz

China PMI surprises as factory activity contracts in January; December industrial profits jump

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108089378-1737420172919-gettyimages-2194232437-TRUMP_INAUGURATION_2025-820x547.jpeg" alt="" class="wp-image-577095" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108089378-1737420172919-gettyimages-2194232437-TRUMP_INAUGURATION_2025-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108089378-1737420172919-gettyimages-2194232437-TRUMP_INAUGURATION_2025-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108089378-1737420172919-gettyimages-2194232437-TRUMP_INAUGURATION_2025-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108089378-1737420172919-gettyimages-2194232437-TRUMP_INAUGURATION_2025-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108089378-1737420172919-gettyimages-2194232437-TRUMP_INAUGURATION_2025-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108089378-1737420172919-gettyimages-2194232437-TRUMP_INAUGURATION_2025-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">U.S. President Donald Trump during a rally at Capital One Arena ahead of the 60th presidential inauguration in Washington, DC, US, on Sunday, Jan. 19, 2025.  Al Drago | Bloomberg | Getty Images</figcaption></figure>



<h2 class="wp-block-heading" id="h-what-you-need-to-know-today">What you need to know today</h2>



The 47th U.S. president President Donald J. Trump was sworn into the White House on Monday and began signing a flurry of executive orders. He issued “full pardons” to people charged in relation to the attack on the U.S. Capitol on Jan. 6, 2021; halted, for at least 75 days, the enforcement of a law that would ban TikTok in the United States; and created the Elon Musk-led Department of Government Efficiency, or DOGE.



National energy emergency declared Trump on Monday declared a national energy emergency — part of a sweeping agenda that aims to increase fossil fuel production — and ordered the U.S. to withdraw from the Paris climate agreement. He also repealed the Biden administration’s various climate goals, such as achieving net-zero emissions by 2050.



Trump targets tariffs Trump told reporters on Monday that he’s thinking of imposing levies of 25% on Mexico and Canada, and is targeting Feb. 1 for them to come into effect. He also issued a trade memorandum instructing federal agencies to scrutinize trade policies with other nations, especially China, Canada and Mexico — but the memo stopped short of introducing new duties.



Biden’s pardons Former U.S. President Joe Biden on Monday issued preemptive pardons for several family members, citing concerns that they would be targeted by “baseless and politically motivated investigations.” Biden also issued pardons for Anthony Fauci, Gen. Mark Milley, members of Congress who investigated the Jan. 6 Capitol riot and others who he said were under threat of being “baselessly” targeted for political purposes.



Asian markets rise after inauguration U.S. markets were closed Monday for Martin Luther King Jr. Day. Stock futures mostly edged lower Tuesday after Trump indicated he’s considering tariffs on Mexico and Canada. Asia-Pacific markets advanced Tuesday. Hong Kong’s Hang Seng index added almost 1%, while Korea’s Kospi index ticked down around 0.1% as the country’s wholesale inflation rate for December climbed 1.7% on an annual basis.



[PRO] Second time an echo of the first? Trump’s second term might have the same effects on certain asset classes as it did the first-time round, according to some on Wall Street. To find out, CNBC Pro looked at the performance of several assets during the first 100 days of Trump’s last presidency and asked analysts how those assets will fare.



<h2 class="wp-block-heading" id="h-the-bottom-line"><a></a>The bottom line</h2>



Donald Trump has hit the ground running since officially becoming the 47th president of the United States, signing numerous executive orders fresh off his inauguration. Here are the two main issues investors will keep an eye on.



Tariffs



“To me, the most beautiful word in the dictionary is ‘tariff,’” Trump told the Chicago Economic Club in October. Trump said on Monday he’s mulling over imposing 25% tariffs on goods from Canada and Mexico by Feb. 1. On the campaign trail, Trump vowed to levy a universal tariff of up to 20% on all imports to the U.S and more than 60% on Chinese products.



Tariffs are imposed by governments ostensibly to protect domestic industries. Companies that import goods pay what is essentially a tax, driving up costs. This nudges them to look for local suppliers instead.



With supply chains being so integrated globally, and much of the manufacturing being done outside the U.S., companies may find it hard to shift production to local shores. The higher costs, then, will likely be passed on to the consumer in the form of increased prices.



In other words, tariffs could lead to more inflation.



Deportations



At a pre-inauguration event titled “Make America Great Again Victory Rally,” Trump pledged to his supporters that “the invasion of our country will have come to a halt.” Like tariffs, tighter immigration policies — or outright deportations — are typically enacted to protect the domestic economy (among other reasons).



The theory is that, with fewer people competing for each open job, it’ll be easier to gain employment.



But many parts of the U.S. economy, such as construction and agriculture, are staffed by undocumented immigrants, who take on jobs undesirable to residents. Even documented immigrants are crucial to higher-skilled sectors such as tech — as proven by Elon Musk’s tussle with Trump supporters over H-1B visas.



If reliable sources of labor vanish overnight, companies will have to raise wages to attract talent, which might reintroduce the prospect of the dreaded wage-price spiral.



Other policies



Trump has promised many other economic measures, such as corporate tax cuts, legitimizing cryptocurrency and pulling back on green energy subsidies.



Tariffs, however, might have the biggest impact on the economy and financial institutions globally.



— CNBC’s Sam Meredith, Ryan Ermey, Annie Nova, Rebecca Picciotto, Evelyn Cheng and Lim Hui Jie contributed to this report.

108089378-1737420172919-gettyimages-2194232437-TRUMP_INAUGURATION_2025

Keep an eye on these Trump 2.0 policies

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/105325942-1531403759987gettyimages-996948238-820x461.jpeg" alt="" class="wp-image-576846" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/105325942-1531403759987gettyimages-996948238-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/105325942-1531403759987gettyimages-996948238-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/105325942-1531403759987gettyimages-996948238-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/105325942-1531403759987gettyimages-996948238-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/105325942-1531403759987gettyimages-996948238-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/105325942-1531403759987gettyimages-996948238.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">U.S. President Donald Trump at a press conference at the end of the NATO summit in July 12, 2018. Bernd von Jutrczenka | dpa | picture alliance | Getty Images</figcaption></figure>



U.S. President-elect Donald Trump returns to the White House on Monday, and much of the world is watching on with bated breath.



The prospect of more unpredictable foreign and trade policies, particularly the threat of universal trade tariffs of 10-20%, has stoked concerns internationally and spooked financial markets. But Trump’s transactional approach and his “America First” policy are not universally feared.



In fact, many countries welcome a new era that’s being labeled “Trump 2.0.”



“Trump’s return is lamented by America’s long-term allies, but almost nobody else,” the European Council on Foreign Relations think tank said as it published a global poll that found that people in China and Russia were more optimistic about Trump’s return to power than long-standing allies in Europe and Asia.



“Many think Trump will not just be good for America but that he will bring peace or reduce tensions in Ukraine, the Middle East and U.S.-China relations,” the poll of over 28,000 people in 24 countries found.



“In countries from India and China to Turkey and Brazil, more respondents think Trump will be good for America, for their country and for peace in the world than think he will be bad for them,” the ECFR said of the findings.



The survey showed that respondents in India, Saudi Arabia and Russia were the most optimistic about Trump’s return to office, both in terms of it being good for U.S. citizens and for their own countries.



Almost 60% of Russian respondents felt Trump’s election was good for U.S. citizens and 49% felt it was a good thing for Russia.



Closely following, 46% of Chinese respondents felt Trump’s return was good for China. That’s despite Trump’s threat to impose tariffs of 60% to 100% on goods imported from China, a move that could deal a blow to the Chinese economy but also backfire, likely pushing up prices for U.S. consumers.



Positive sentiment toward Trump among the original BRICS nations (Brazil, Russia, India, China and South Africa) — and the belief that a more peaceful world might ensue as a result of his presidency — was far higher than in the EU, U.K. and South Korea, where only 11% of citizens polled regarded a Trump presidency as a good thing for their future.



Just a tad more cheerful, only 15% of British respondents thought Trump would be good for the U.K. So much for the “special relationship.”



“When Donald Trump returns to the White House, much of the world will welcome him. In Europe, anxiety is widespread, but people in many other countries feel either relaxed or actively positive about Trump’s second term,” the ECFR noted as it published the survey, conducted in November.



“U.S. allies in Europe and South Korea are notably pessimistic about the incoming president — suggesting a further weakening of the geopolitical ‘West’,” it added.



<h2 class="wp-block-heading" id="h-trump-empowered"><a></a>Trump empowered</h2>



Geopolitical analysts say things will be different with President Trump this time round, and the world needs to be ready.



Not only will he be emboldened by the scale of his 2024 electoral victory, the firm support of a unified Republican Party and returning to the White House with more experience, he has also surrounded himself with loyalists who are more ideologically aligned with him, noted Ian Bremmer, founder and president of Eurasia Group.



Bremmer told CNBC that Trump 2.0 will see the president hold more power and sway than before, while the West and the Group of Seven — a group that includes the U.K., Canada and Germany — lose status.



“Trump has significantly more power vis-a-vis other countries this time around — both U.S. allies and adversaries — so they’re more inclined to listen to him and take him seriously,” Bremmer told CNBC in emailed comments.&nbsp;



“Trump also has more countries and populations lined up in support of his “my country first” approach to governing,” Bremmer added.



“He had a strong relationship with Israel and the Gulf states in his first term, but now add to that Italy, Hungary, Argentina, El Salvador … and large parts of populations in a number of other countries as well. It’s very different than Trump showing up at the G20 and everyone snickering behind his back,” he noted.



“Today’s G-Zero world is a very different environment,” Bremmer added, referring to his view of a world in which no one power or group of powers is willing and able to drive a global agenda to maintain international order.



Market analysts agree that while Trump’s antipathy toward China, the U.S.′ greatest economic rival, is well known, his long-standing ambivalence toward NATO and his anger over a continuing trade deficit with much of Europe make allies on the continent a target for Trump’s likely more assertive, and potentially hostile, trade and defense policies.



European countries make up the majority of constituents of NATO and the EU is the U.S.′ largest trading partner as a bloc.



“Here in Europe, we are concerned,” market strategist Bill Blain [if he’s not independent can we state the company/org he’s from please] said in emailed comments last week. “However, the rest of the World is largely unbothered at the scale of change that might be coming.”



“It’s clear the geopolitical lines are being redrawn. So will the grounds of global economics be redefined,” Blain added.

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As America braces for Trump 2.0, here’s how the world views his return

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="648" height="338" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087533-1737021407372-gettyimages-2192558603-cfoto-shanghai250110_npafS.jpeg" alt="" class="wp-image-575896" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087533-1737021407372-gettyimages-2192558603-cfoto-shanghai250110_npafS.jpeg 648w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087533-1737021407372-gettyimages-2192558603-cfoto-shanghai250110_npafS-300x156.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087533-1737021407372-gettyimages-2192558603-cfoto-shanghai250110_npafS-160x83.jpeg 160w" sizes="auto, (max-width: 648px) 100vw, 648px" /><figcaption class="wp-element-caption">Railway builders erect a box girder at the site of the standard project in front of the Huning section of the Shanghai-Nanjing-Hefei high-speed railway in Suzhou, Jiangsu province, China, on January 10, 2025.  Costfoto | Nurphoto | Getty Images</figcaption></figure>



China’s economic activity accelerated more than expected in the final three months of 2024 as stimulus measures kicked in, allowing Beijing to meet its annual growth target.



China’s gross domestic product expanded by 5.4% in the fourth quarter, beating Reuters-polled economists’ estimates of a 5.0% growth, and outpacing the 4.6% in the third quarter, 4.7% in the second quarter, 5.3% in the first quarter.



That last-quarter sprint helped lift China’s full-year GDP growth to 5.0% in 2024, according to China’s National Bureau of Statistics on Friday, in line with the official target of “around 5%.”



“The shift of policy stance in September last year helped the economy to stabilize in Q4, but it requires large and persistent policy stimulus to boost economic momentum and sustain the recovery,” Zhiwei Zhang, president and chief economist, Pinpoint Asset Management, said in a note.



Last year’s growth was slower compared with the 5.4% rise in 2023, post-pandemic. As part of an annual revision to preliminary figures, the statistics bureau in late December revised the 2023 GDP growth to 7.4%, according to a CNBC calculation of the official data.



In December, retail sales jumped 3.7% from a year earlier, exceeding Reuters’ forecast of 3.5%. Industrial output expanded 6.2% from a year earlier, versus expectations of 5.4%, underscoring China’s imbalance between domestic production and weak demand.



The full-year fixed asset investment rose 3.2% in 2024, shy of the projected 3.3% increase in a Reuters poll, as real estate investment drag steepened to a 10.6% drop, compared with the January to November period.



Kang Yi, head of the statistics bureau, said real estate was recovering. The sector’s drag on economic growth had narrowed, he said, while the role of new growth drivers, such as in digital tech, was expanding.&nbsp;



The urban unemployment rate ticked higher to 5.1% in December from 5.0% in the prior month.



Disposable income for urban residents grew by 4.4%, slower than the overall economic growth, while that of rural residents increased by 6.3% in 2024.



Mainland China’s blue-chip CSI 300 index reversed course to edge up 0.31%, following the upbeat data. Chinese offshore yuan strengthened slightly to 7.3398 per U.S. dollar, while the benchmark 10-year government bond yield dropped 2 basis points to 1.638, according to the LSEG data.



“The stock market’s moderate response to today’s data release reflects investor caution as they await further policy clarity after the Chinese New Year,” said Chaoping Zhu, Shanghai-based global market strategist at J.P. Morgan asset management.



“There is room for domestic consumers and business confidence to rebound with the right policies in place,” Zhu added, stressing that “policy consistency and coordination will be crucial.”



<h2 class="wp-block-heading" id="h-growth-demographic-concerns"><a></a>Growth, demographic concerns</h2>



However, some economists made the case that China’s economic recovery may not be as rosy as the headline figures suggest.&nbsp;



Despite the accelerated growth in real GDP figures, China’s economy saw deflation persisting for the seventh straight quarter, Larry Hu, chief China economist at Macquarie said in a note.



Hu remained skeptical of China’s ability to achieve higher inflation. “We don’t bet against policymakers’ will and ability to deliver 5% real GDP growth in 2025, but can they achieve higher inflation? It will largely depend on the fiscal and housing stimulus, which is key to boosting domestic demand.”



China’s consumer inflation has remained barely above zero, while wholesale prices fell for a 27th consecutive month in December, official data showed last week.



Statistics bureau head Kang reiterated Friday Beijing’s priority this year was to boost consumption, while acknowledging that consumers’ ability to spend was still weak.



This year,&nbsp;the “unfavorable impact of external factors may deepen,” he flagged.



Friday’s data comes just days before Donald Trump is set to be inaugurated as the next U.S. president on Jan. 20. Trump has said that soon after taking office, he plans to impose additional tariffs of at least 10% on Chinese goods. He has also appointed some China hawks to key cabinet posts.



The growth momentum, buoyed by a surge in exports, may be sustained into the first quarter this year, said Erica Tay, director of macro research at Maybank. But it is likely to weigh on GDP growth in the second half-year, “regardless of Trump’s tariffs,” given that foreign importers have amassed ample stockpiles, she added.



The data released Friday indicated that “domestic growth engines remain soft as retail sales growth responded marginally to trade-in subsidies,” Tay said, pointing to sluggish consumer spending.



The national population&nbsp;declined to 1.408 billion in 2024, dropping by 1.39 million from 2023, according to the statistics bureau. It had declined by 2.08 million people in 2023 from the prior year.



The fall in population, despite a rebound in birth rates, reflects a deepening demographic crisis, said Tianchen Xu, senior economist at Economic Intelligence Unit, stressing that the death rate in China had ticked up to 7.76% last year from 7.1% before the pandemic.



<h2 class="wp-block-heading"><a></a>Stimulus boost</h2>



China has been striving to boost economic growth and has taken several measures towards this end, as a real estate slump and uncertainty about future income has continued to weigh down consumer spending and business confidence, adding to deflation concerns.



Since late September, Chinese authorities have called for halting the real estate decline, cut interest rates and announced a five-year fiscal package worth 10 trillion yuan ($1.4 trillion) to ease local governments’ financing crisis. Beijing has also expanded a program for consumers to trade-in used cars and home appliances, and buy new ones at a discount.



“They are betting on a substantial infusion of policy stimulus and reforms to turbo boost the country’s economy in 2025, invigorating domestic demand and warding off disinflationary loom,” said Bruce Pang, distinguished senior research fellow at the National Institution for Finance and Development.



Top leaders have pledged “proactive” fiscal measures and a “moderately loose” monetary policy stance for the current year. Some analysts expect stimulus might start to take effect this year, but it will take longer to see a significant impact.



The government is expected to reveal the official growth targets for 2025 and additional stimulus measures at the annual parliamentary meetings in March. Economists expect Beijing to keep its GDP growth target for 2025 at around 5%, if not slightly lower.

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China’s fourth-quarter GDP grows at 5.4%, beating market expectations as stimulus measures kick in

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087644-1737033990337-gettyimages-2179804474-AA_24102024_1913709-820x547.jpeg" alt="" class="wp-image-575868" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087644-1737033990337-gettyimages-2179804474-AA_24102024_1913709-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087644-1737033990337-gettyimages-2179804474-AA_24102024_1913709-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087644-1737033990337-gettyimages-2179804474-AA_24102024_1913709-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087644-1737033990337-gettyimages-2179804474-AA_24102024_1913709-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087644-1737033990337-gettyimages-2179804474-AA_24102024_1913709-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108087644-1737033990337-gettyimages-2179804474-AA_24102024_1913709-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Family photo of leaders taken at the 16th BRICS Summit in Kazan, Russia on Oct. 24, 2024.  Anadolu | Anadolu | Getty Images</figcaption></figure>



President-elect Donald Trump has pledged a 100% tariff against BRICS nations if they continue to undermine the U.S. dollar — but the threat won’t rein in the group’s expansion, analysts tell CNBC.



Most recently, Brazil announced Indonesia’s admittance into the bloc as a member last Monday.



Under outgoing President Joe Biden’s administration, Washington has been relatively dismissive of the 10-member coalition, with White House National Security Communications Advisor John Kirby saying during a press briefing last October that the U.S. does not view BRICS — an economic coalition of emerging markets — as a “threat.” Sentiment could change once Trump enters the White House later this month, following early indications that he may impose tariffs on alliance members if they subvert the U.S. dollar.



“A key policy shift with the incoming Trump administration is its explicit treatment of BRICS as an entity,” Mihaela Papas, director of research at the MIT Center for International Studies, told CNBC by email.



<h2 class="wp-block-heading" id="h-china-will-ease-the-tariff-pain-nbsp"><a></a>China will ease the tariff pain&nbsp;</h2>



Originally established by Brazil, Russia, India, and China in 2009, then joined by South Africa in 2010, the Beijing-led BRICS was set up as a force to rival Western dominance on the international stage.&nbsp;



The alliance’s 16th annual summit in Kazan saw Egypt, Ethiopia, Iran and the United Arab Emirates officially admitted into the group. According to Russian officials and official paper of the Chinese Communist Party’s Central Committee, more than 30 countries have expressed interest in joining the coalition in 2024. CNBC could not independently verify this estimate.



The size of the bloc makes it increasingly unlikely that the U.S. will apply punitive 100% tariffs on BRICS countries, according to Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics. Doing so would risk steering nations neutral in the U.S.-China rivalry toward Beijing and interfere with U.S. interests, Wrigley told CNBC by email.



The world’s second-largest economy could even step in to ease the pain of any potential U.S. trade measures against BRICS members, according to David Lubin, senior research fellow at Chatham House.



“From Beijing’s point of view, establishing China as an alternative pillar of global order is a critically important objective and it can’t be met without the support of the developing world,” Lubin said in emailed comments. “And since some 120 countries count China as their main trading partner, this shouldn’t be too difficult.”



China is already starting to do this, putting forward a zero-tariff policy for least developed countries with diplomatic ties with Beijing, which came into effect from December last year and builds on similar measures extended to the least developed African countries.



<h2 class="wp-block-heading" id="h-dollar-is-king-nbsp"><a></a>Dollar is king&nbsp;</h2>



Trump’s tariff threat is conditional on BRICS dethroning the U.S. dollar as the world’s most widely used trade currency — which could prove to be a tall order for the alliance.



Russia has been pushing for de-dollarization in a bid to sidestep the SWIFT network, a globally recognized standard for bank transactions, and to curtail the impact of U.S sanctions against Moscow. In the Kazan talks, Vladimir Putin reiterated the use of the dollar as a “weapon” and a “big mistake,” The Guardian reports. 



One of the group’s options to topple the dollar was to create a unified BRICS currency — a proposal spearheaded by Brazil, which has yet to gain traction.



Another possibility was setting up multi-currency trade, which is already taking place among several members: some Chinese and Russian trade is being done through the yuan and ruble. Nations have also agreed to continue to strengthen trading through local currencies and expressed support for the idea of an independent cross-border settlement infrastructure for payments.



Chatham House’s Lubin notes that the Chinese currency is “much less useable internationally than dollars,” given that financial markets are largely denominated in the greenback.



<h2 class="wp-block-heading" id="h-just-a-talking-shop"><a></a>Just a ‘talking shop’</h2>



The lack of a concrete allied strategy and action from BRICS members raises doubts over whether it will be considered a threat to the U.S., with Pantheon Macroeconomics’ Wrigley saying the emerging markets alliance is currently not much more than a “talking shop.”



The bloc is still too loose and unorganized to create any substantive change, with the 2024 Kazan summit resulting in “nothing really concrete”, according to Cecilia Malmström, nonresident senior fellow at the Peterson Institute for International Economics.



This might just insulate BRICS members and partner countries from a trade war with the U.S. — which has China as one of its main targets.



While Beijing holds a significant position in the group, there is still much internal caution amongst other member nations over Beijing’s dominance and potential trade imbalances, according to MIT’s Papas.&nbsp;



“Even if China seeks to leverage its position, internal caution among members is likely to remain a limiting factor,” she adds.



Many BRICS members also still maintain their friendly relations with the U.S. as a “crucial trade partner,” Gustavo Medeiros, head of research at Ashmore Group told CNBC by email.&nbsp;



“There is no reason to believe members of the bloc would be automatically at economic or geopolitical risk in the case of a trade war between the U.S. and China,” Medeiros says.

108087644-1737033990337-gettyimages-2179804474-AA_24102024_1913709

The BRICS bloc is growing — and Trump’s tariff threat isn’t expected to put off aspiring members

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108042998-1727981319037-gettyimages-2176462447-img_2907_uiod5ijt-820x461.jpeg" alt="" class="wp-image-575613" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108042998-1727981319037-gettyimages-2176462447-img_2907_uiod5ijt-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108042998-1727981319037-gettyimages-2176462447-img_2907_uiod5ijt-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108042998-1727981319037-gettyimages-2176462447-img_2907_uiod5ijt-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108042998-1727981319037-gettyimages-2176462447-img_2907_uiod5ijt-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108042998-1727981319037-gettyimages-2176462447-img_2907_uiod5ijt-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108042998-1727981319037-gettyimages-2176462447-img_2907_uiod5ijt.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Two women sit on the sidewalk of Qiansimen Jialing River Bridge, decorated with Chinese national flags, on October 3, 2024 in Chongqing, China. National Day Golden Week is a holiday in China commemorates the founding of the People’s Republic of China in 1949.  Cheng Xin | Getty Images</figcaption></figure>



BEIJING — As promised government support is still to meaningfully kick in, China’s economy hasn’t yet seen the turnaround investors have been waiting for.



While policymakers have, since late September, cut interest rates and announced broad stimulus plans, details on highly anticipated fiscal support won’t likely come until an annual parliamentary meeting in March. Official GDP figures for 2024 are due Friday.



“China’s fiscal stimulus is not yet enough to address the drags on economic growth &#8230; We are cautious long term given China’s structural challenges,” BlackRock Investment Institute said in a weekly report Tuesday. The firm, which is modestly overweight Chinese stocks, indicated it was ready to buy more if the circumstances changed.



Of growing urgency in the meantime is the drop in domestic demand, and worries about deflation. Consumer prices barely rose in 2024, up by just 0.5% after excluding volatile food and energy prices. That’s the slowest rise in at least 10 years, according to records available on the Wind Information database.



“Consumer spending remains weak, foreign investment is declining, and some industries face growth pressure,” Yin Yong, Beijing city mayor, said Tuesday in an official annual report.



The capital city targets 2% consumer price inflation for 2025, and aims to bolster tech development. While nationwide economic goals won’t come out until March, senior economic and finance officials have told reporters in the last two weeks that fiscal support is in the works, and issuance of ultra-long bonds to spur consumption would exceed last year’s.



China’s announced stimulus will begin to take effect this year, but it will likely take time to see a significant impact, Mi Yang, head of research for north China at property consultancy JLL, told reporters in Beijing last week.



Pressure on the commercial property market will continue this year, and prices may accelerate their drop before recovering, he said.



Rents in Beijing for high-end offices, called Grade A, fell 16% in 2024 and are expected to drop by nearly 15% this year, with some rentals even nearing 2008 or 2009 levels, according to JLL.



New shopping centers in Beijing opened in 2024 with average occupancy rates of 72% — previously such malls would not be opened if the rate was below 75% or much closer to 100%, JLL said. Within a year, however, the new malls have seen occupancy rates reach 90%, the consultancy said.



<h2 class="wp-block-heading" id="h-home-appliances"><a></a>Home appliances</h2>



Unlike the U.S. during the Covid-19 pandemic, China has not handed out cash to consumers. Instead, Chinese authorities in late July announced 150 billion yuan ($20.46 billion) in ultra-long bonds for trade-in subsidies and another 150 billion yuan for equipment upgrades.



China has already issued 81 billion yuan for this year’s trade-in program, officials said this month. It covers more home appliances, electric cars and an up to 15% discount on smartphones priced at 6,000 yuan or less.



Consumers who buy premium phones tend to upgrade and recycle their devices more frequently than buyers on the lower end of the market, indicating the government may want to encourage a new group to shorten their upgrade cycle, said Rex Chen, CFO of ATRenew, which operates stores for processing smartphones and other secondhand goods.



Chen told CNBC on Monday he expects the trade-in subsidies program can boost recycling transaction volumes of eligible products on the platform by at least 10 percentage points, up from 25% growth in 2024. He also expects the government to carry out a similar trade-in policy for the next few years.



However, it’s less clear whether the trade-in program alone can lead to a sustained recovery in consumer demand.



Nomura’s Chief China Economist Ting Lu said in a report Tuesday that he expects the sales boost to fade by the second half of this year, and that tepid new home sales will limit demand for home appliances.



<h2 class="wp-block-heading" id="h-real-estate"><a></a>Real estate</h2>



Real estate and related sectors such as construction once accounted for more than a quarter of China’s economy. When central authorities started cracking down on developers’ high debt levels in 2020, that had ripple effects on the economy, alongside the Covid-19 pandemic.



China shifted its stance on real estate in September following a high-level meeting led by President Xi Jinping that called for halting the sector’s decline.



Measures to prop up the sector include using a whitelist process to finish construction on the many apartments that have been sold but yet not been built due to developers’ financial constraints. New apartments in China are typically sold ahead of completion.



Jeremy Zook, lead analyst for China at Fitch Ratings, said the real estate market had yet not reached a bottom, and that authorities might provide more direct support. He pointed out that it was difficult for the economy to transition away from real estate, despite China’s wishes to reduce its reliance on the sector for growth.



The government’s latest measures have helped the broader stock market rally, and lifted sentiment slightly.



Sales of new homes in China’s largest cities over the last 30 days have surged by nearly 40% from a year ago, Goldman Sachs analysts said in a Jan. 5 report.



But they cautioned that high inventory levels in smaller cities indicate property prices “have further room to fall” and that homebuilding is “likely to remain depressed for years to come.”



In the relatively affluent city of Foshan — near Guangzhou city in southern China — housing inventory could take 20 months to clear in one district, and seven months in another district, according to a 2024 report from Beike Research Institute, a firm affiliated with a major housing sales platform in China.



The city overall saw floor space sold last year fall by 16% to the lowest in 10 years, the report said.



<h2 class="wp-block-heading" id="h-geopolitical-concerns"><a></a>Geopolitical concerns</h2>



Complicating China’s economic challenges are tensions with the U.S. Similar to Washington’s export controls, Beijing has also made efforts to ensure national security by prioritizing domestic players in strategic sectors such as technology.



That stance has pressured an increasing number of European businesses in China to localize — despite added costs and reduced productivity — if they are to retain customers in the country, the EU Chamber of Commerce in China said in a report last week.



Official Chinese statements have also emphasized coupling security with development.



A slogan for part of Beijing’s efforts to support growth is an effort to build “security capabilities in key areas,” pointed out Yang Ping, director of the investment research institute within the National Development and Reform Commission. She was speaking at a press event Wednesday.



This year, “boosting consumption has been prioritized ahead of improving investment efficiency,” Yang said in Mandarin, translated by CNBC. “Expanding and boosting consumption are the main focus of this year’s policy adjustment.”



She dismissed concerns that the impact of trade-in subsidies on consumption would fade after an initial spike, and indicated more details would emerge after the March parliamentary meeting.

108042998-1727981319037-gettyimages-2176462447-img_2907_uiod5ijt

China’s slowing economy is waiting for more stimulus. Here’s how the country plans to boost growth

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107174540-1672936825177-gettyimages-1245949857-Vuk_Valcic_City_of_London_skyline_020123_3-820x461.jpeg" alt="" class="wp-image-575588" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107174540-1672936825177-gettyimages-1245949857-Vuk_Valcic_City_of_London_skyline_020123_3-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107174540-1672936825177-gettyimages-1245949857-Vuk_Valcic_City_of_London_skyline_020123_3-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107174540-1672936825177-gettyimages-1245949857-Vuk_Valcic_City_of_London_skyline_020123_3-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107174540-1672936825177-gettyimages-1245949857-Vuk_Valcic_City_of_London_skyline_020123_3-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107174540-1672936825177-gettyimages-1245949857-Vuk_Valcic_City_of_London_skyline_020123_3-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107174540-1672936825177-gettyimages-1245949857-Vuk_Valcic_City_of_London_skyline_020123_3.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">People walk along Waterloo Bridge past the City of London skyline, the capital’s financial district. U.K.-focused equity funds saw record outflows in 2022. Sopa Images | Lightrocket | Getty Images</figcaption></figure>



The U.K. economy grew at a lackluster pace of 0.1% in November, data from the Office of National Statistics showed Thursday.



This compares with the 0.2% month-on-month growth expected by economists polled by Reuters.



Monthly real gross domestic product (GDP) fell by 0.1% in October, following a decline of 0.1% in September and growth of 0.2% in August.



The ONS said the slight growth in economic output in November was largely due to growth in the services sector. While meager, the data is the first sign of life in the U.K.’s wider economy for three months.



British Chancellor Rachel Reeves said in a statement after the data Thursday that she was “determined to go further and faster to kickstart economic growth.”



“That means generating investment, driving reform and a relentless commitment to root out waste in public spending, and today I will be pressing regulators on what more they can do to deliver growth,” she said in emailed comments from the Treasury.



The ONS nevertheless said the real GDP is estimated to have shown no growth in the three months to November, compared with the three months to August.



“Services showed no growth over this three-month period, while production fell by 0.7% and construction grew by 0.2%,” the ONS said in the data release.



The British pound fell 0.2% against the dollar to trade at $1.2214 following the GDP print, which comes as the Bank of England considers whether to lower interest rates at its next meeting on Feb.6.



<h2 class="wp-block-heading" id="h-next-bank-of-england-move"><a></a>Next Bank of England move</h2>



A cooler-than-expected annual inflation print for December, out Wednesday, fueled broad expectations of a 25-basis-point rate cut when the central bank meets.



Such a trim would bring the key interest rate from 4.75% to 4.5% although BOE policymakers will be factoring in inflationary pressures, such as resilient wage growth and uncertainty over Britain’s economic outlook. The central bank’s inflation target is 2%.



The Labour government and Treasury have been under pressure in recent weeks amid rising government borrowing costs and questions over their fiscal plans and a higher tax burden on businesses. Both were given something of a reprieve on Wednesday, however, when the latest inflation data showed consumer price growth had cooled more than expected to 2.5% in December,&nbsp;with core price growth slowing further.



The print came in below the expectations of economists polled by Reuters, who had anticipated the inflation rate would remain unchanged from the 2.6% reading of November.



Core inflation, which excludes more volatile food and energy prices, came in at 3.2% in the twelve months to December, down from 3.5% in November.



The U.K.’s inflation rate had hit a more than three-year low of 1.7% in September, but monthly prices had accelerated since then on the back of higher fuel costs and the price of services.&nbsp;In December, the annual services inflation rate stood at 4.4%, down from 5% in November.



The U.K. economy has found itself in a tight spot of late, with economists voicing concerns over the country’s sluggish growth prospects and worries over headwinds caused by both external factors, such as potential trade tariffs once President-elect Donald Trump takes office on Jan. 20, along with internal fiscal and economic challenges that have dogged the Labour government and Treasury since the October budget.



Correction: This article’s headline has been updated to reflect the U.K. economy grew by 0.1% in November. A previous version had misstated the figure.

107174540-1672936825177-gettyimages-1245949857-Vuk_Valcic_City_of_London_skyline_020123_3

UK economy ekes out 0.1% growth in November, below expectations

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="720" height="405" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108086316-1736874753444-gettyimages-2193324665-AFP_36TV4A9.jpeg" alt="" class="wp-image-575354" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108086316-1736874753444-gettyimages-2193324665-AFP_36TV4A9.jpeg 720w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108086316-1736874753444-gettyimages-2193324665-AFP_36TV4A9-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108086316-1736874753444-gettyimages-2193324665-AFP_36TV4A9-160x90.jpeg 160w" sizes="auto, (max-width: 720px) 100vw, 720px" /><figcaption class="wp-element-caption">World Economic Forum president and CEO Borge Brende holds a press conference to present the upcoming WEF annual meeting held in Davos, in Geneva, on January 14, 2025. Fabrice Coffrini | Afp | Getty Images</figcaption></figure>



Risk specialists identified armed conflict, extreme weather and disinformation among the top global risks for the year ahead, according to a World Economic Forum (WEF) survey released on Wednesday.



Nearly a quarter (23%) of respondents in the WEF’s flagship “Global Risks Report” ranked state-based armed conflict as the most pressing concern for 2025.



Misinformation and disinformation were cited as top risks over a two-year time horizon for the&nbsp;second straight year, while environmental concerns such as&nbsp;extreme weather events,&nbsp;biodiversity loss&nbsp;and&nbsp;ecosystem collapse&nbsp;dominated the 10-year risk rankings.



Extreme weather events, which include heatwaves, tornadoes and floods, featured prominently among both short-term and long-term risks. The climate crisis is making extreme weather&nbsp;more frequent and more intense.



The report comes as close to 3,000 leaders from more than 130 countries prepare to take part in the&nbsp;WEF’s annual meeting. The four-day event kicks off in the Swiss&nbsp;mountain village of Davos on Monday.



&#8220;Rising geopolitical tensions and a fracturing of trust are driving the global risk landscape&#8221; said Mirek Dušek, Managing Director, World Economic Forum. &#8220;In this complex and dynamic context, leaders have a choice: to find ways to foster collaboration and resilience, or face compounding vulnerabilities.&#8221;



The survey considers risks over the short term to 2025, the short to medium term to 2027 and the long term through to 2035. More than 900 global risks experts, policymakers and industry leaders were surveyed in September and October last year to inform the report.



<h2 class="wp-block-heading" id="h-world-is-in-a-dire-state"><a></a>‘World is in a dire state’</h2>



WEF said armed conflict was overlooked as a leading short-term risk two years ago, a development that reflects escalating geopolitical tensions and an increasingly fractured global landscape.



United Nations Secretary-General Antonio Guterres has previously&nbsp;warned&nbsp;that the world is facing the highest number of conflicts since World War II, citing Russia’s full-scale invasion of Ukraine, as well as conflicts in the Middle East and Africa.



Some of the other short-term risks identified in the WEF’s latest report include societal polarization, cyber espionage, pollution and inequality.



“It’s clear that the world is in a dire state and the global risk landscape is like a squirrel’s nest where risks are interconnected, layered on top of one another, making the business environment very, very difficult to navigate,” Carolina Klint, chief commercial officer at Marsh McLennan Europe, told CNBC’s Silvia Amaro in an interview out Wednesday.



Klint said these risks do not necessarily reflect a new emerging trend — but rather one that is “getting more and more aggressive.”



“I think we’re navigating an era now marked by increasing economic tensions,” Klint said. “And I think we have to recognize the fragmentation is not a theoretical concern. It is something that we need to confront today. So, it has resulted in a more complex and uncertain trading environment.”

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Conflict, extreme weather and disinformation top global risks in 2025, Davos survey says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-1-820x461.jpeg" alt="" class="wp-image-575285" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-1-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-1-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-1-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-1-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-1-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107375514-1708434236970-gettyimages-1985552002-20240207_bank_of_england_010-1.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



LONDON — U.K. inflation fell to a lower-than-expected 2.5% in December,&nbsp;with core price growth slowing further,&nbsp;according to data released by the Office for National Statistics on Wednesday.



The consumer price index (CPI) rose to 2.6% in November, with economists polled by Reuters expecting the December reading to stay unchanged.



Core inflation, which excludes more volatile food and energy prices, came in at 3.2% in the twelve months to December, down from 3.5% in November.



The U.K.’s inflation rate had hit a more than three-year low of 1.7% in September, with monthly prices picking up since on the back of higher fuel costs and of services fees rising rising faster than the price of goods.&nbsp;In December, the annual services inflation rate stood at 4.4%, down from 5% in November.



The British pound was down 0.3% against the dollar at 07:15 a.m. London time, shortly after the release.



The data will be food for thought for the Bank of England ahead of its next meeting on Feb.6, at which&nbsp;the central bank is expected to cut the key interest rate from 4.75% to 4.5%, despite inflationary pressures, such as resilient wage growth and uncertainty over Britain’s economic outlook. The central bank’s inflation target is 2%.



The U.K. economy has found itself in a tight spot of late, with economists voicing concerns over the country’s sluggish growth prospects and worries over headwinds caused by both external factors, such as potential trade tariffs once President-elect Donald Trump takes office, and internal fiscal and economic challenges that have dogged the Labour government and Treasury since the October budget.



Responding the latest data, British Chancellor Rachel Reeves said Wednesday that “there is still work to be done to help families across the country with the cost of living,” and that economic growth was the U.K.’s priority.



The data&nbsp;will&nbsp;be “welcome news” for Rachel Reeves, Capital Economics’ Deputy Chief UK&nbsp;Economist Ruth Gregory commented, with underlying price pressures appearing “a bit more favourable than we had thought.”



The reading strengthened the case for a&nbsp;25-basis-point&nbsp;interest rate cut by the BOE in February, she said in emailed comments, “and lends some support to our view that rates will fall further and faster than markets expect.”



“Our forecast is that CPI inflation will rebound in January, perhaps to almost 3.0% and that inflation will be a bit higher than most expect in the first half of this year. But we expect it to drop below the 2% target next year as the persistence of inflation fades further,” she said.



<h2 class="wp-block-heading" id="h-fiscal-challenges"><a></a>Fiscal challenges</h2>



Tax rises announced by the government last fall, which are due to come into effect in April, have caused consternation among British businesses that warn that investment, hiring and growth will be stunted.



The U.K. also saw its borrowing costs and currency weaken amid jitters over the country’s economic outlook and fiscal plans, posing a dilemma for Finance Minister Rachel Reeves’s ambitions to balance the budget.



Reeves has vowed to keep to self-imposed fiscal rules to make sure all day-to-day spending is met from revenues and that government debt is on a downward trend. She could now be forced to decide whether to tweak or break these restrictions.



The choice she faces is to do nothing and hope that unfavorable borrowing conditions subside, to hike taxes further — a move likely to elicit more criticism from businesses and the public — or to cut public spending, a step that is already mooted by the government but goes against Labour’s anti-“austerity” position. Last weekend, Reeves said the fiscal rules laid out in the budget were “non-negotiable,” adding that “economic stability is the bedrock for economic growth and prosperity.”



Ben Zaranko, associate director at the Institute for Fiscal Studies, said Reeves faces “a rather unenviable set of options.”



“This unfortunate predicament is largely the consequence of a difficult fiscal inheritance and global economic factors,” he said in comment.



“But it also reflects a series of government choices and mutually incompatible promises: to stick to a hard, numerical fiscal rule while leaving only the finest of margins against it; to prioritise public services and avoid imposing another round of austerity; not to raise the biggest taxes, and not to raise taxes again after the Autumn Budget; and to hold only one fiscal event per year. If higher interest rates wipe out the so called ‘headroom’, something will have to give,” Zaranko added.

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UK inflation unexpectedly cools to 2.5%, core price print slows further

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107316539-1697159674866-gettyimages-1720140335-fc_1113145-1-820x461.jpeg" alt="" class="wp-image-574781" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107316539-1697159674866-gettyimages-1720140335-fc_1113145-1-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107316539-1697159674866-gettyimages-1720140335-fc_1113145-1-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107316539-1697159674866-gettyimages-1720140335-fc_1113145-1-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107316539-1697159674866-gettyimages-1720140335-fc_1113145-1-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107316539-1697159674866-gettyimages-1720140335-fc_1113145-1-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/107316539-1697159674866-gettyimages-1720140335-fc_1113145-1.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">An aerial view of a container ship leaving the dockyard in Qingdao in east China’s Shandong province. Future Publishing | Future Publishing | Getty Images</figcaption></figure>



China’s trade data in December beat expectations by a large margin, with exporters continuing to frontload shipments as worries over additional tariffs mount, while the country’s stimulus measures appear to be supporting demand in the industrial sector.



Exports in December jumped 10.7% in U.S. dollar terms from a year earlier, data from China’s customs authority showed Monday, beating expectations of a 7.3% growth in a Reuters poll. That compares with a 6.7% growth in November and a spike of 12.7% in October.



Customs data showed imports rose 1.0% last month from a year earlier, reversing from the contraction in the preceding two months. Analysts had forecast imports to fall 1.5% on year. That compares with a bigger drop of 3.9% in November and 2.3% in October.



Last year, China’s yuan-denominated total exports jumped 7.1% from the previous year, accelerating from a modest growth of 0.6% in 2023, customs officials said at a press conference on Monday.



China’s imports last year rose 2.3%, picking up from a fall of 0.3% in 2023.



“Outbound shipments are likely to stay resilient in the near-term, supported by further gains in the global market share,” Zichun Huang, China economist at Capital Economics, said in a note, thanks to a weak yuan.



The outlook for exports for the full year, however, appears less optimistic, as “potential tariff hikes could dampen momentum,” said Bruce Pang, distinguished senior research fellow at the National Institution for Finance and Development.



“In the short term, import volumes are also expected to rebound further, driven by stronger demand for industrial commodities, with accelerated fiscal spending,” Pang added.



China’s domestic demand has been hit due to a prolonged real estate crisis, leaving the country more reliant on exports to power its growth.



Economists expect exports to have significantly supported China’s economic growth last year. The country’s full-year GDP data is due later this week.



Exports have been a rare bright spot in China’s battered economy amid heightened trade tensions with its major trading partners — U.S., European Union — but this growth could be jeopardized after U.S. President-elect Donald Trump returns to the White House.



This year, China will need to focus more on boosting domestic demand as external momentum fades, Gary Ng, senior economist at Natixis told CNBC in an email. “China’s deflationary pressure in the manufacturing sector may continue to fuel more geopolitical tensions,” he added.



Weak consumer sentiment, uneven recovery in real estate and tepid growth in local government infrastructure projects continue to slow down domestic demand recovery, Ng said.



In December, shipments to most markets climbed, with double-digit increases to the Association of Southeast Asian Nation and the U.S., where exports grew 18.9% and 15.6%, respectively, from a year earlier, according to CNBC’s calculations of the official customs data.



Imports from the U.S. in December rose 2.6% and ASEAN — China’s largest trading partner — were up 5.4%.



Exports to the European Union rose 8.76% while imports fell 4.9%. The country’s exports to BRICS partner Russia were up 5.5% while imports shrank 4.7%.



Last year, China’s exports of electric vehicles and semiconductors increased 13.1% and 18.7% last year, respectively, according to the customs officials.



Meanwhile, the country’s steel exports hit the highest level since 2015, with shipments hitting 110.7 million tons, as the country strived to make up for weak domestic demand due to a property crisis and a slowdown in manufacturing activities.



<h2 class="wp-block-heading" id="h-a-residue-of-caution"><a></a>‘A residue of caution’</h2>



Trump — who is set to take office on Jan. 20 — has stoked fears about higher tariffs on Chinese exports. He has pledged an additional 10% tariffs on all Chinese goods entering the U.S.



Chinese authorities have since late September ramped up policy support to prop up the country’s economy as growth staggers and social tensions mount. But “a residue of caution and restraint remains,” Gabriel Wildau, managing director at Teneo said in a note last Friday.



China has cut policy rates, loosened property purchase restrictions, injected liquidity into the financial market as well as unveiled a debt-swap program to alleviate local governments’ fiscal strains.



“Though top leaders recognize the need to boost real GDP growth, Xi still appears reluctant to embrace the additional degree of stimulus required to combat deflation,” Wildau added.



“Policymakers need to keep some stimulus powder dry to enable an ample response if the tariff impact is severe,” he said, suggesting that the uncertainty about exports growth creates an additional reason for Beijing to avoid a “big bang approach.”



Among a slew of key economic data on tap this week, China is set to release its full-year as well as fourth-quarter GDP figures on Friday. The growth is pegged at 5.1% year on year in the final quarter of 2024, according to a Reuters poll.



For this year, the top leadership pledged to make boosting domestic consumption a top priority while expanding fiscal spending to fund the consumer goods trade-in and equipment upgrade policy. Launched in July last year, the trade-in program subsidizes consumers to swap old cars or home appliances and buy new ones at a discount.

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China’s imports post surprise growth in December; exports beat expectations as higher tariffs loom

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108038935-17272715482024-09-25t132450z_828786131_rc2p7aapgnt6_rtrmadp_0_un-assembly-starmer-820x461.png" alt="" class="wp-image-574742" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108038935-17272715482024-09-25t132450z_828786131_rc2p7aapgnt6_rtrmadp_0_un-assembly-starmer-820x461.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108038935-17272715482024-09-25t132450z_828786131_rc2p7aapgnt6_rtrmadp_0_un-assembly-starmer-300x169.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108038935-17272715482024-09-25t132450z_828786131_rc2p7aapgnt6_rtrmadp_0_un-assembly-starmer-160x90.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108038935-17272715482024-09-25t132450z_828786131_rc2p7aapgnt6_rtrmadp_0_un-assembly-starmer-768x432.png 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/108038935-17272715482024-09-25t132450z_828786131_rc2p7aapgnt6_rtrmadp_0_un-assembly-starmer.png 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Britain’s Prime Minister Keir Starmer gives a media interview while attending the 79th United Nations General Assembly at the United Nations Headquarters in New York, U.S. September 25, 2024. Leon Neal | Via Reuters</figcaption></figure>



LONDON — The U.K is looking to build a homegrown challenger to OpenAI and drastically increase national computing infrastructure, as Prime Minister Keir Starmer’s government sets its sights on becoming a global leader in artificial intelligence.



Starmer is set to visit Bristol, England, on Monday to announce the pledge, which follows work done by British tech investor Matt Clifford to establish an “AI Opportunities Action Plan.” The plan aims to help the U.K. take advantage of the potential of AI.



The government is primarily seeking to expand data center capacity across the U.K. to boost developers of powerful AI models which rely on high-performance computing equipment hosted in remote locations to train and run their systems.



A target of increasing “sovereign,” or public sector, compute capacity in the U.K. by twentyfold by 2030 has been set. As part of that pledge, the government will begin opening access to the AI Research Resource, an initiative aimed at bolstering U.K. computing infrastructure.



Starmer’s administration last year canceled £1.3 billion of taxpayer-funded spending commitments towards two significant computing initiatives in order to prioritize other fiscal plans. The projects, an AI Research Resource and a next-generation “exascale” supercomputer, were pledges were made under Starmer’s predecessor, Rishi Sunak.



Sovereign AI has become a hot topic for policymakers, particularly in Europe. The term refers to the idea that technologies critical to economic growth and national security should be built and developed in the countries people are adopting them in.



To further bolster Britain’s computing infrastructure, the government also committed to setting up several AI “growth zones,” where rules on planning permission will be relaxed in certain places to allow for the creation of new data centers.



Meanwhile, an “AI Energy Council” formed of industry leaders from both energy and AI will be set up to explore the role of renewable and low-carbon sources of energy, like nuclear.



It comes as tech giants like Amazon, Microsoft and Google are investing hundreds of millions of dollars in small modular reactors (SMR) to provide nuclear energy for the data centers that power their AI systems.



<h2 class="wp-block-heading" id="h-building-a-challenger-to-openai"><a></a>Building a challenger to OpenAI</h2>



The last major initiative the U.K. government proposed was to create homegrown AI “champions” of&nbsp;a&nbsp;similar scale to American tech giants responsible for the foundational AI models that power today’s generative AI tools such as OpenAI’s ChatGPT.



Britain plans to use the AI growth zones and a newly established National Data Library to connect public institutions — such as universities — to enhance the country’s ability to create “sovereign” AI models which aren’t reliant on Silicon Valley.



It’s worth highlighting that the U.K. faces serious challenges in its bid to create an effective OpenAI alternative. For one, several entrepreneurs in the country have bemoaned funding challenges that make it difficult for startups in the country to raise the kind of cash available to AI success stories.



Many U.K. founders and venture capitalists have called for the country’s pension funds to allocate a greater portion of their portfolios toward riskier, growth-focused startups — a reform the government has committed to pushing previously.



“In the U.K., there’s $7 trillion in this pocket,” Magnus Grimeland, CEO and founder of venture capital firm Antler, told CNBC in an interview last year. “Imagine if you take just 5% of that and allocate it to innovation — you solve the problem.”



U.K. tech leaders have nevertheless generally praised the government’s AI action plan. Zahra Bahrololoumi, Salesforce’s U.K. boss, told CNBC the plan is a “forward-thinking strategy,” adding she’s encouraged by the government’s “bold vision for AI and emphasis on transparency, safety and collaboration.”



Chintan Patel, Cisco’s chief technology officer in the U.K., said he’s “encouraged” by the action plan. “Having a clearly defined roadmap is critical for the UK to achieve its ambition to become an AI superpower and a leading destination for AI investment,” he said.



Britain doesn’t yet have formal regulations for AI. Starmer’s government has previously said it plans to draw up legislation for AI — but details remain thin.



Last month, the government announced a consultation on measures to regulate the use of copyrighted content to train AI models.



More generally, the U.K. is pitching a differentiated regulatory regime from the EU following Brexit as a positive factor — meaning, it can introduce regulatory oversight for AI but in a way that’s less strict than the EU, which has taken a more hard-line approach to regulating the technology with its AI Act.

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Britain seeks to build homegrown rival to OpenAI in bid to become world leader in artificial intelligence

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="640" height="399" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/ORFYTKEYH5LPDNKGB5ILWDBQIU.avif" alt="" class="wp-image-573081"/><figcaption class="wp-element-caption">A view shows a banner with the logo of the annual BRICS summit next to the Kazan Kremlin in Kazan, Russia October 22, 2024. REUTERS/Maxim Shemetov/File Photo</figcaption></figure>



SAO PAULO, Jan 6 (Reuters)&nbsp;&#8211;&nbsp;Indonesia will&nbsp;formally join BRICS as a full member,&nbsp;Brazil&#8217;s government said on Monday,&nbsp;further expanding the group of major emerging economies that also includes Russia, India, China and South Africa.



Indonesia&#8217;s foreign ministry said in a statement on Tuesday that it welcomed the announcement and that &#8220;BRICS membership is a strategic way to increase collaboration and partnership with other developing nations.&#8221;



Indonesia, the world&#8217;s fourth most populous nation, had previously expressed its desire to join the group as a means of strengthening emerging countries and furthering the interests of the so-called Global South.



Brazil, which holds the bloc&#8217;s presidency in 2025, said in a statement that member states approved Indonesia&#8217;s entry by consensus as part of an expansion push initially endorsed at the 2023 BRICS summit in Johannesburg.



The South American nation noted that Jakarta&#8217;s bid got the green light from the bloc in 2023 but the Southeast Asian country asked to join following the presidential election held last year. President Prabowo Subianto took office in October.



&#8220;Indonesia shares with the other members of the group support for the reform of global governance institutions, and contributes positively to the deepening of cooperation in the Global South,&#8221; the Brazilian government said.



The BRICS group also includes Egypt, Ethiopia, Iran and the United Arab Emirates.



(Reporting by Gabriel Araujo and Stanley Widianto in Jakarta; Editing by Kylie Madry and Saad Sayeed)

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Indonesia joins BRICS bloc as full member, Brazil says

<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108079628-1735035892853-gettyimages-1236187189-LEBANON_GHOSN-820x461.jpeg" alt="" class="wp-image-569560" style="width:840px;height:auto" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108079628-1735035892853-gettyimages-1236187189-LEBANON_GHOSN-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108079628-1735035892853-gettyimages-1236187189-LEBANON_GHOSN-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108079628-1735035892853-gettyimages-1236187189-LEBANON_GHOSN-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108079628-1735035892853-gettyimages-1236187189-LEBANON_GHOSN-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108079628-1735035892853-gettyimages-1236187189-LEBANON_GHOSN-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108079628-1735035892853-gettyimages-1236187189-LEBANON_GHOSN.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Nissan will be the victim of cost-cutting “carnage” if it combines forces with Japanese peer Honda, former Nissan CEO Carlos Ghosn told CNBC on Tuesday.



“I think, without any doubt, Honda is going to be in the driver’s seat, which is very sad to see after having led Nissan for 19 years [and] brought Nissan to the forefront of the industry, to see that they’re going to be the victim of a carnage, because there is total duplication between Nissan and Honda,” he told CNBC’s “Squawk Box Europe.”



Ghosn, who once led three automakers as part of the Nissan-Renault-Mitsubishi alliance, has been residing in Lebanon after being arrested in Japan in November 2018 and fleeing trial on charges of financial crimes. He denies misconduct.



“There is practically no complementarity here, which means, if they want to make synergy it is going to be through maybe cost reduction, duplication of plan, duplication of technology, and we know exactly who’s going to pay the price of it. It’s going to be the minor partner, and it’s going to be Nissan,” Ghosn said.



Nissan had greater complementarities with France’s Renault, Ghosn estimated, referencing a long-standing partnership that has been largely unwound.



Speculation about a potential Honda and Nissan merger began earlier this month, and the two companies confirmed the official start of talks over a business integration during a news conference on Monday. Under current proposals, a holding company would act as the parent of both firms and be listed on the Tokyo Stock Exchange, with Honda — which has a market capitalization around four times that of Nissan — nominating most board members of the new entity. Nissan’s strategic partner Mitsubishi is also engaged in talks over joining the group.



A $54 billion Nissan-Honda group would leapfrog South Korea’s Hyundai to become the world’s third-largest automaker by vehicle sales, behind Japan’s Toyota and Germany’s Volkswagen. The integrated group would also represent a landmark in automotive industry consolidation, which has been long expected in both Japan and worldwide as businesses struggle to shoulder the development costs of electric vehicles and autonomous driving technology.



Executives at both Honda and Nissan on Monday stressed that a combined company would be able to share the intelligence and resources necessary to compete in the EV transition and deliver economies of scale, boosting operating profit to a projected 3 trillion yen ($19.1 billion) in the long term.



Nissan is embarking on the ambitious merger while simultaneously undertaking a deep restructure it announced in November, which will reduce global production capacity by a fifth and cut 9,000 jobs.



Honda CEO Toshihiro Mibe on Monday acknowledged that some shareholders may feel his company would be supporting struggling Nissan as part of the deal, but stressed that the business integration talks will “not come to fruition” if the two automakers fail to stand on their own.



Ghosn nevertheless told CNBC that the merger plan suggests “Nissan is in panic mode, looking for somebody to save them from the situation, because they are unable to generate the solution by themselves.”



He expressed “high doubts” that the turnaround at Nissan will be successful, without providing details.



Kei Okamura, senior vice president and portfolio manager at Neuberger Berman, echoed the sentiment that details of the merger plan still need to be ironed out.



“If you’re an investor you’re going to be thinking about the three to five earnings outlook. What was announced [Monday] was the near term, so the timeline, and the long-term vision. The only issue is how is this merged entity going to get there, and that’s where there are a lot of uncertainties ahead,” Okamura told CNBC’s “Street Signs Asia” on Tuesday.



“The post-merger integration is going to be absolutely essential &#8230; unless these companies are able to really full integrate themselves together in terms of the people, the assets and of course the culture, these deals have the potential to unwind, and we have to take into consideration that this deal may not happen if [Nissan] doesn’t come through with its turnaround program,” Okamura added.



Nissan declined to comment on this story beyond its statement out on Monday. Honda did not immediately respond to a CNBC request for comment.

108079628-1735035892853-gettyimages-1236187189-LEBANON_GHOSN

Nissan could face cost-cutting ‘carnage’ in Honda merger, Carlos Ghosn says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-820x461.jpeg" alt="" class="wp-image-565548" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A coffee cup with a printed message from Salvadoran President Nayib Bukele’s X account is pictured at Franco’s Pupusa restaurant in San Salvador on July 17, 2024. Marvin Recinos | Afp | Getty Images</figcaption></figure>



A record-breaking rally for coffee prices shows no sign of slowing down, analysts say, with some warning it could take years for one of the world’s most traded commodities to recover.



Arabica coffee futures with March delivery hit a fresh intraday high of 348.35 cents per pound on Tuesday, notching their highest level in nearly 50 years. The contract has since cut some of its gains but remains up a whopping 70% year-to-date.



The last time the price for arabica beans, the world’s most popular variety, traded that high was in 1977 when snow destroyed large areas of Brazilian plantations.



Renowned for their smooth taste and sweet flavor, arabica beans make up between 60% to 70% of the global coffee market. They are commonly used in espressos and other barista-made coffee.



Drought and high temperatures, alongside a global reliance on supplies from relatively few regions, are regarded as the primary drivers for the recent price rise.



Robusta futures, meanwhile, also climbed to a fresh record high in late November. Robusta beans are known for their strong and bitter flavor and are typically used in instant blends.



The extraordinary price rally for coffee, which is considered the second-most traded commodity by volume, after crude oil, comes amid concerns over the 2025 crop in Brazil, by far the world’s largest producer.



“The country experienced its worst drought in 70 years during August and September, followed by heavy rains in October, raising fears that the flowering crop could fail,” Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said in a research note published Tuesday.



For some, the poor growing weather in Brazil means it could take a long time for coffee prices to unwind.



“History suggests that coffee prices will only ease back as and when supply improves and stocks are replenished,” David Oxley, chief climate and commodities economist at Capital Economics, said in a research note published on Nov. 29.



“Crucially, this is a process that can take years, not months,” Oxley said.



<h2 class="wp-block-heading" id="h-coffee-particularly-vulnerable-to-bad-weather"><a></a>Coffee ‘particularly vulnerable’ to bad weather</h2>



A staple beverage for billions of people across the world, demand for coffee has been boosted in recent years by growing consumption in China. Production, however, has struggled to keep up.



“Like cocoa, coffee is grown in a relatively narrow tropical band, with key producers including Brazil, Vietnam, Colombia, and Ethiopia,” Saxo Bank’s Hansen said.



“This concentration makes it particularly vulnerable to adverse weather conditions, especially in Brazil and Vietnam, which together account for approximately 56% of global production,” he added.



The U.S. Department of Agriculture said in its semi-annual report last month that it expects Brazil’s coffee production for the marketing year 2024/2025 to come in at 66.4 million (60 kilogram per bag) comprising of 45.4 million bags of arabica and 21 million of robusta.



The USDA said its forecast reflected a 5.8% drop from its previous projection, attributing the decrease to irregular weather patterns that negatively affected crop development, particularly for arabica trees.



“In Brazil, this will be the fifth consecutive arabica harvest that is disappointing because of adverse weather,” Carlos Mera, head of agricultural commodities markets at Dutch lender Rabobank, told CNBC via video call.



Asked whether the climate crisis appears to be amplifying the risks for coffee production, Mera said it was difficult to measure accurately, but there are growing concerns across the industry that extreme weather could prevent typical growth in coffee trees.



Looking ahead, Mera said coffee prices “can certainly go even higher” from their current record levels.



<h2 class="wp-block-heading"><a></a>Price increases for coffee drinkers?</h2>



For coffee drinkers, analysts say it is practically inevitable that coffee makers will need to pass on the costs to consumers in order to limit the impact of higher bean prices on their bottom line.



Nestlé, the world’s biggest coffee maker, which owns leading brands including Nescafé and Nespresso, said last month that it would continue raising prices and making packs smaller to offset the impact of higher prices.



“Like every manufacturer, we have seen significant increases in the cost of coffee, making it much more expensive to manufacture our products,” a Nestlé spokesperson told CNBC via email.



“As always, we continue to be more efficient and absorb increasing costs where possible whilst maintaining the same high quality and delicious taste that consumers know and love,” they added.



Italian coffee maker Lavazza and U.S. coffee giant Starbucks both declined to comment when contacted by CNBC.

108074907-1733992205729-gettyimages-2161859444-AFP_364E4TQ

Coffee prices climb to near 50-year highs — and it may take years for the rally to run out of steam

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-820x461.jpeg" alt="" class="wp-image-564863" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Customers shop at a supermarket in Foster City, California, the United States, Sept. 13, 2023. Xinhua News Agency | Xinhua News Agency | Getty Images</figcaption></figure>



Consumer prices rose at a faster annual pace in November, a reminder that inflation remains an issue both for households and policymakers.



The consumer price index showed a 12-month inflation rate of 2.7% after increasing 0.3% on the month, the Bureau of Labor Statistics reported Wednesday. The annual rate was 0.1 percentage point higher than October.



Excluding food and energy costs, core CPI was at 3.3% on an annual basis and 0.3% monthly. The 12-month core reading was unchanged from a month ago.



All of the numbers were in line with the Dow Jones consensus estimates.



The readings come with Federal Reserve officials mulling over what to do at their policy meeting next week, Markets strongly expect the Fed to lower its benchmark short-term borrowing rate by a quarter percentage point when the meeting wraps up Dec. 18, but then skip January as they measure the impact successive cuts have had on the economy.



The report further solidified the outlook for a cut, with traders raising the odds to 99%, according to the CME Group’s FedWatch measure. Odds of a January cut also edged higher, hitting about 23%.



“In-line core inflation clears the way for a rate cut at next week’s [Federal Open Market Committee] meeting,” said Whitney Watson, global co-head and co-CIO for fixed income at Goldman Sachs Asset Management. “Following today’s data the Fed will depart for the holiday break still confident in the disinflation process and we think it remains on course for further gradual easing in the new year.”



While inflation is well off the 40-year high it saw in mid-2022, it remains above the Fed’s 2% annual target. Some policymakers in recent days have expressed frustration with inflation’s resilience and have indicated that the pace of rate cuts may need to slow if more progress isn’t made.



If the Fed follows through with a cut next week, it will have taken a full percentage point off the federal funds rate since September.



Much of the November increase in CPI came from shelter costs, which rose 0.3% and have been one of the most stubborn components of inflation. Fed officials and many economists expect housing-related inflation to ease as new rental leases are negotiated, but the item has continued to increase each month.



The BLS estimated that the shelter item, which has about a one-third weighting in the CPI calculation, accounted for about 40% of the total increase in November. The shelter index rose 4.7% on a 12-month basis in November.



Used vehicle prices rose 2% monthly while new vehicle prices increased 0.6%, reversing the recent trend that has seen those items come down.



Elsewhere, food costs rose 0.4% monthly and 2.4% year over year, while the energy index increased 0.2% but was down 3.2% annually.



The increase in the CPI meant that average hourly earnings for workers were basically flat for the month when adjusted for inflation, but increased 1.3% from a year ago, the BLS said in a separate release.

107308954-1695982808104-gettyimages-1664665862-US-CPI-AUGUST

Annual U.S. inflation rate accelerates to 2.7% in November, as expected

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-820x461.jpeg" alt="" class="wp-image-564731" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/12/108072174-1733432641152-gettyimages-2186442290-AFP_36ND9GA.jpeg 1858w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A man shops at a Target store in Chicago on November 26, 2024. Kamil Krzaczynski | AFP | Getty Images</figcaption></figure>



A key economic report coming Wednesday is expected to show that progress has stalled in bringing down the inflation rate, though not so much that the Federal Reserve won’t lower interest rates next week.



The consumer price index, a broad measure of goods and services costs across the U.S. economy, is expected to show a 2.7% 12-month inflation rate for November, which would mark a 0.1 percentage point acceleration from the previous month, according to the Dow Jones consensus.



Excluding food and energy, so-called core inflation is forecast at 3.3%, or unchanged from October. Both measures are projected to show 0.3% monthly increases.



With the Fed targeting annual inflation at 2%, the report will provide more evidence that the high cost of living remains very much a fact of life for U.S. households.



“Looking at these measures, there’s nothing in there that says the inflation dragon has been slain,” said Dan North, senior economist at Allianz Trade Americas. “Inflation is still here, and it doesn’t show any convincing moves towards 2%.”



Along with the read Wednesday on consumer prices, the Bureau of Labor Statistics on Thursday will release its producer price index, a gauge of wholesale prices that is projected to show a 0.2% monthly gain.



<h2 class="wp-block-heading" id="h-halting-progress-but-more-cuts"><a></a>Halting progress, but more cuts</h2>



To be sure, inflation has moved down considerably from its CPI cycle peak around 9% in June 2022. However, the cumulative impact of price increases has been a burden to consumers, particularly those at the lower end of the wage scale. Core CPI has been drifting higher since July after showing a steady series of declines.



Still, traders in futures markets are placing huge odds that policymakers again will cut their benchmark short-term borrowing rate by a quarter of a percentage point when the Federal Open Market Committee concludes its meeting Dec. 18. Odds of a cut were near 88% on Tuesday morning, according to the CME Group’s FedWatch measure.



“When the market is locked in like where it is today, the Fed doesn’t want to make a big surprise,” North said. “So unless something has skyrocketed that we haven’t foreseen, I’m pretty sure the Fed is on a lock here.”



The CPI increase for November likely came from a few key areas, according to Goldman Sachs.



Car prices are expected to show a 2% monthly increase, while air fares are seen as 1% higher, the firm’s economists projected in a note. In addition, the nettlesome increase in auto insurance is likely to continue, rising 0.5% in November after posting a 14% increase over the past year, Goldman estimated.



<h2 class="wp-block-heading"><a></a>More trouble ahead</h2>



While the firm sees “further disinflation in the pipeline over the next year” from easing in the autos and housing rental categories, as well as softening in the labor markets, it also worries that President-elect Donald Trump’s planned tariffs could keep inflation elevated in 2025.



Goldman projects core CPI inflation will soften, but just to 2.7% next year, while the Fed’s target inflation gauge, the personal consumption expenditures price index, will move to 2.4% on the core reading from its most recent 2.8% level.



With inflation projected to run well above 2% and macro economic growth still running near 3%, this wouldn’t normally be an environment in which the Fed would be cutting. The Fed uses higher interest rates to curb demand, which theoretically would force businesses to lower prices.



Markets expect the Fed to skip the January meeting then possibly cut again in March. From there, market pricing is for only one or at most two cuts through the rest of 2025.



“Two percent to me doesn’t mean just touching 2% and bouncing along. It means hitting 2% for a continuous, foreseeable future, and none of that is evident in any of those reports,” North said. “You don’t really want to cut in that environment.”

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Coffee prices climb to near 50-year highs — and it may take years for the rally to run out of steam

Annual U.S. inflation rate accelerates to 2.7% in November, as expected

The CPI report Wednesday is expected to show that progress on inflation has hit a wall

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