China unemployment, EU consumer confidence, MENA outlook and why it’s a good time to visit Japan

This week's chart pack covers the following data: China unemployment, EU consumer confidence and inflation, EU consumer vs business confidence, MENA food inflation, MENA breakeven oil price, global growth outlook and Japan real effective exchange rate.

June 3, 2022
Julius Probst PhD, with contributions from Arnaud Lieugaut, Patrick Malm and Karl-Philip Nilsson

<span id="China-unemployment">China unemployment</span>

This week, we start with more grim data from the world’s second-biggest economy. China’s national and youth unemployment rate have both surged to a record amid stringent lockdowns. Job prospects for graduates have also deteriorated significantly as the Chinese economy heads towards contraction.

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<span id="EU-consumer-confidence">EU consumer confidence</span>

The mood is hardly better in Europe, where consumer confidence has fallen to historic lows across the euro area. As the chart below shows, the current value has dropped below the 25th percentile for almost every country in the bloc.  

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<span id="EU-consumer-confidence-and-inflation">EU consumer confidence and inflation</span>

Soaring retail prices obviously discourage people from spending money, and this next chart shows the extent of that correlation.

The proportion of consumers with low (below the 25th percentile) or record low confidence has spiked – to levels comparable with the Great Recession, the European debt crisis and the pandemic – as EU inflation hits a record 8.1% this month.

Macrobond users, access the chart here

<span id="EU-consumer-vs-business-confidence">EU consumer vs business confidence</span>

Interestingly, while consumers are feeling the pinch, businesses have hardly felt more buoyant – so much so that the gap between consumer and business confidence has widened to a record! Amid rampant inflation, are businesses managing to maintain profit margins by passing costs on to consumers?

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<span id="MENA-food-inflation">MENA food inflation</span>

To the MENA region now, where consumers are also feeling the pain – or even hunger pangs – of inflation.  

The chart below shows the degree to which headline inflation across the region is being driven by rising food and beverage prices, particularly in north African countries such as Algeria and Egypt.

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<span id="MENA-breakeven-oil-prices">MENA breakeven oil prices</span>

Oil producers in the MENA region, on the other hand, are raking in the profits as the war in Ukraine sends commodity prices soaring.

The chart below shows the breakeven oil price each country needs to cover the cost of its imports (external) and balance its budget (fiscal) compared with the current spot price and 10-year average.

(This short article by the Council of Foreign Relations discusses breakeven oil prices and the pros and cons of using these figures for economic analysis.)

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Don't miss our MENA Economic Outlook webinar on 7 June. Amid global uncertainty, rising inflation and revisions to economic growth, what is the outlook for the region? Join Macrobond and regional experts as we discuss what’s in store for the Middle East, particularly its oil and real estate markets. REGISTER HERE.

<span id="Global-growth-outlook">Global growth outlook</span>

Thanks to high oil prices, MENA is poised for healthy economic growth this year. It trails only Asian emerging markets in the IMF’s growth outlook for 2022, as the chart below shows. Global GDP is now expected to expand by about 3.6%, with significant variation across regions. Note the toll of the Ukraine war on European emerging markets.

Macrobond users, access the chart here

<span id="Japans-real-effective-exchange-rate">Japan’s real effective exchange rate</span>

Finally, a bit of good news for Japanese exporters and tourists to Japan.

Thanks to the Bank of Japan’s ultra-easy monetary policy, the country’s real effective exchange rate – the weighted average of its currency in relation to an index or basket of other major currencies – has dropped to the lowest level since the early 1970s.  

Tip: You can apply the change region function on this chart.

Macrobond users, access the chart here

All written and electronic communication from Macrobond Financial AB is for information or marketing purposes and does not qualify as substantive research.

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