The daily business briefing: January 17, 2023
China's economic growth slows, threat of global recession dampens mood in Davos, and more
China's economic growth slowed in 2022
China's economy grew just 3 percent in 2022, the slowest rate in decades, as COVID-19 lockdowns and a brutal December coronavirus surge hampered business activity. Last year's growth figure, reported Tuesday by the National Bureau of Statistics, fell short of Beijing's 5.5 percent target, and marked a sharp slowdown from the 2021 pace of 8.1 percent. Other than 2020, when China's economy grew just 2.2 percent, 2022 was "the worst year for gross domestic product growth in China since 1976, the year that Mao Zedong's death ended the decade of strife known as the Cultural Revolution, The Wall Street Journal reported, citing World Bank data. In 1976, China's economy contracted by 1.6 percent.
World Economic Forum starts in Davos as recession threat dampens mood
The threat of a global recession "cast a long shadow" over the opening day of the World Economic Forum in Davos, Switzerland, on Monday, Reuters reported. Two-thirds of economists surveyed by the WEF said a global recession is likely this year. "The current high inflation, low growth, high debt, and high fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world's most vulnerable," WEF Managing Director Saadia Zahidi said. Critics are wondering whether the Forum, where the international elite gather to "solve global problems," is sliding toward "irrelevance," according to Axios. But companies, especially startups, and nations seeking "global investment and respect" still see attendance as a must, Axios said.
EVs accounted for 10 percent of 2022 new-car sales
Automakers sold about 7.8 million fully electric vehicles last year, an increase of roughly 68 percent over 2021, The Wall Street Journal reported Monday, citing preliminary research from LMC Automotive and EV-Volumes.com. The jump lifted EV sales to about 10 percent of global automobile sales in 2022 for the first time. The numbers were boosted by strong growth in Europe and China, where fully electric vehicles accounted for 11 percent and 19 percent of total sales, respectively. "Last year, every fourth vehicle we sold in China was a plug-in, and this year it will be every third auto," said Ralf Brandstätter, the head of Volkswagen AG's China business. "We haven't reached the tipping point yet, but we're expecting to get there between 2025 and 2030."
Edelman Trust Barometer says people trust business more than government
The new Edelman Trust Barometer concluded that the people of the world trust business more than government, media, and even nonprofits. The annual survey by the Edelman Trust Institute conducted online interviews with more than 32,000 adults in more than two dozen countries. The report, released Monday, said business was the "only institution seen as competent and ethical." The study, timed to kick off the World Economic Forum in Davos, Switzerland, found that 62 percent of respondents said they trusted business, compared to 59 percent for NGOs. Government and media trailed at 51 percent and 50 percent, respectively. In the United States, 26 percent of Republicans trust government, compared to 61 percent of Democrats.
Stock futures under pressure ahead of more earnings reports
U.S. stock futures struggled early Tuesday as investors braced for more corporate earnings reports. Futures tied to the Dow Jones Industrial Average were down 0.2 percent at 6:45 a.m. ET. S&P 500 and Nasdaq futures were down 0.3 percent. The three major U.S. indexes started strong in the first two weeks of the year, led by the tech-heavy Nasdaq, which gained 5.9 percent as the outlook for growth stocks improved. The Dow and the S&P 500 have risen 3.5 percent and 4.2 percent, respectively. The gains came as December inflation data showed prices fell 0.1 percent in December, bringing down annual inflation to 6.5 percent, enough of a slowdown to increase hopes the Federal Reserve could soon slow interest rate hikes intended to curb inflation.