Recharging the Global Economy: Assad’s Fall Adds to Middle East Instability

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(Bloomberg) — The overthrow of Bashar al-Assad’s government has added a new source of unrest to the Middle East, as Turkey asserts itself to be playing a major role in shaping Syria’s future.

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Turkey has a strong incentive to help build a stable and peaceful Syria from the ruins of the Assad regime, not least because the country hosts at least 3 million refugees from its southern neighbor. Turkish companies can also benefit if and when post-war reconstruction begins.

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Meanwhile, the cost of money is getting cheaper in the world’s largest economies. The European Central Bank, the Swiss National Bank and the Bank of Canada cut interest rates ahead of an expected cut by the Federal Reserve next week.

Here are some charts from Bloomberg this week on the latest developments in the global economy, markets and world politics:

Europe & Middle East

The government of Syrian President Bashar al-Assad has fallen after a dramatic advance by the opposition. The overthrow of the long-time ruler has shocked countries in the Middle East and will be a major blow to Russia and Iran, his main foreign backers.

The ECB cut interest rates for the third consecutive meeting, signaling further cuts next year as inflation nears 2% and the economy struggles. Reflecting its changing stance, the ECB’s statement backtracked on the wording that policy would remain “adequately restrictive” for as long as necessary.

The Swiss National Bank delivered an interest rate cut of 50 basis points more than expected, a move that could help curb gains in the franc. The main reduction of the central bank in the current cycle is like a demonstration of strength in the first decision of Martin Schlegel as president, aimed at solving the traders who farm money in the franc recognizing their traditional role as a place of independence in times of national depression.

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The world

The sudden and unusual diplomatic move by Kristalina Georgieva underscored the International Monetary Fund’s sense of urgency about maintaining stability in the Middle East, before events this week in Syria once again showed how weak its governments can be. Economic rulers who have seen precious few gains in living standards since the Arab Spring broke out 15 years ago are watching with dismay as another fire burns in a region already devastated by the conflict in Gaza and the unrest in the Red Sea.

Next year, Bloomberg Economics predicts global growth of a staggering 3.1%, unchanged from 2024. Inflation is expected to ease to 3.4% from 6%, as readings in the US and other advanced economies move back to the 2% central banks already have. long term target.

Apart from the ECB, the Bank of Canada and the SNB, Australia’s central bank left borrowing costs unchanged and acknowledged that it has gained confidence that inflation is falling. Uzbekistan and Peru also kept prices unchanged. Brazil raised prices by a full percentage point and promised more to control inflation, while Armenia and Denmark cut them.

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US & Canada

Consumer prices rose at a strong pace in November that was in line with expectations, bolstering expectations for the Federal Reserve to cut interest rates next week. Housing costs, one of the persistent sources of inflation in recent years, have cooled since last month.

The Bank of Canada has cut interest rates for the second straight time and signaled policymakers are ready to slow the pace of monetary easing. In a period of five meetings in about six months, the central bank of Canada reduced the cost of borrowing by 175 basis points, which was one of the most aggressive rate-cutters among the central banks of major economies.

Charging a 25% tax on oil and gas from the US’s top two trading partners would raise gas prices in the Midwest, raise electricity costs in both US regions and boost profits for US refiners, among other consequences, experts say. While the price hikes could be disruptive to any market, they threaten to be particularly difficult for the North American energy industry which has been tightly integrated for decades and already heavily favors US interests.

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US economic indicators can move global markets by billions of dollars at a time. The agencies that collect and publish those statistics are begging for a few more millions, to maintain the integrity of the most important numbers in the financial world. Now they face an uphill battle to find it, as Donald Trump returns to Washington with a plan to dismantle the federal bureaucracy.

In Asia

China’s top leaders have signed off on tougher economic support next year in their most direct language on stimulus in years, as Beijing prepares for a trade war when Donald Trump takes office. The Politburo also promised a “more effective” monetary policy at its monthly meeting, raising expectations that Beijing will increase the fiscal deficit from 3% at the annual Parliament meeting in March.

South Korea faces major economic risks as it tries to mitigate the impact on its currency of the turmoil caused by last week’s declaration of martial law, the finance minister said on Wednesday.

Emerging Markets

Brazil’s central bank raised its key interest rate by one percent and surprised investors by promising two more hikes of the same size, its strongest move yet to restore investor confidence and reduce inflation expectations that have been fueled by public spending and a hot economy.

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Inflation in Mexico fell less than expected in November, raising the prospect of a fourth consecutive interest rate cut at the central bank’s meeting next week.

South African retail sales unexpectedly rose to their highest level in more than two years in October and are set to continue to improve, which is a boon for the economy.

—With help from Tom Orlik (Economist), Beril Akman, Bastian Benrath-Wright, Maria Eloisa Capurro, Sam Dagher, Katia Dmitrieva, Elizabeth Elkin, Selcan Hacaoglu, Erik Hertzberg, Lucia Kassai, Sam Kim, Yujing Liu, Iain Marlow, Abeer Abu Omar , Zoe Schneeweiss, Omar Tamo, Randy Thanthong-Knight, Robert Tuttle, Monique Vanek, Alex Vasquez and Josh Xiao.

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