Marsh & McLennan Advantage Insights logo
Conversations and insights from the edge of global business
Menu Search

Quick Takes

Taiwan and China’s Economies Are Inextricably Linked

Tensions between the U.S. and China remain high following last week’s visit by U.S. Speaker of the House Nancy Pelosi to Taiwan, the first in 25 years by a top U.S. official. Despite Taiwan’s fraught diplomatic relationship with China, the two countries’ economies are  inextricably linked, reports Investment Monitor.

China is Taiwan’s biggest export partner, with a value of more than $515 billion of goods between 2017-2022, more than double that of the United States. Taiwan’s main export to China is semiconductors — in 2020, China spent more on chips than on oil. 

Taiwan’s electronic exports dwarf any other industry and were valued at more than $844 billion between 2017-2022. Electronics also attract the most foreign direct investment, bringing in more than 16% of all greenfield FDI projects between 2019-2020. While strained trade relations between the U.S. and China have prompted some U.S. companies to relocate from mainland China to Taiwan, the recent rise in tensions may make Taiwan a riskier prospect for foreign investors.

Crypto Facing Strict Regulations in Africa

Africa, one of the fastest growing crypto markets in the world, is starting to regulate its cryptocurrency markets. In the wake of the FTX collapse, financial services executives and lawmakers all over the world are calling for better regulation of the crypto industry. As of now, regulation is patchy worldwide — EU regulations will take effect in 2024, the U.S. is still developing a regulatory framework, and China and Russia ban crypto-assets fully, or partially (respectively).

Sub-Saharan Africa is, in particular, rapidly developing digital currencies because they bypass traditional banking services. While the region accounts for the least cryptocurrency transaction volume, it has some of the world’s most well-developed cryptocurrency markets, according to Chainanalysis. Kenya, Nigeria and South Africa have the highest crypto adoption rates, especially on peer-to-peer exchanges. 

But with the plunge in prices of major cryptocurrencies like Bitcoin and Ethereum, policymakers are concerned that crypto poses risks to financial and macroeconomic stability. Two-thirds of sub-Saharan African countries have implemented some restrictions on crypto-assets, and about 20% have banned them. 

Russia Destroys Ukraine’s Power Grid Before Winter


Source: Investment Monitor

 

A quarter to one-third of Ukraine’s energy infrastructure has been destroyed by Russian missiles, leaving millions of Ukrainians in winter without heat, electricity or water. Since October, Russian missiles and drones have targeted Ukrainian power plants, transformer stations, fuel storage depots, hydroelectric facilities, and nuclear power stations and substations. In the last week of November, Russian missile strikes disabled all of Ukraine’s nuclear power plants at the same time, though Ukrainian officials say they expect the plants to be working again soon.

Ukraine’s national grid, Ukrenergo, warned that the country faces a 30% electricity shortage, as rolling blackouts engulfed the country. The lack of electricity could also endanger other utilities as temperatures drop to below 0 degrees Celsius (32 degrees Fahrenheit).

American officials pledged $53 million to buy power grid equipment for Ukraine at the recent NATO summit in Bucharest, Romania.

Rise in Fossil Fuel Emissions Slowing Worldwide

Source: The Economist

The growth in fossil fuel emissions is slowing down worldwide as countries make some progress in the fight against climate change. The rate of increase in global CO2 emissions has slowed from 3% per year in the 2000s to 0.5% per year in the last decade, reports the Global Carbon Project

Part of the decline is due to a change in the global economy, in which GDP growth is less energy intensive — and therefore produces less carbon emissions (e.g., economies that move from manufacturing to services). In the last decade, 24 countries have decreased their carbon emissions while growing their economies, including countries across Europe, the Americas and Asia. Less-developed countries are also producing less carbon emissions as they use fossil fuels more efficiently than countries in the past. For example, India and Vietnam are greener than China, even though they are primarily powered by coal

Another factor is an increased use of renewable energy and electric vehicles, according to the International Energy Agency. Solar and wind power were the leading sources of renewable energy and grew faster than any other energy source in 2022. But global coal use is also expected to increase, led by demand in Asia and countries looking for alternatives to high natural gas prices.

Global Housing Slump Likely Next Year

 

Housing markets around the world are headed for their biggest slump in over 20 years, as central banks raise interest rates and real wages fall, according to data from Oxford Economics. 

On the heels of the pandemic housing boom, housing sales and prices are falling in wealthy countries like the U.S., Germany, France, the U.K., Canada and New Zealand. In China, property stands empty as construction stalls on around 2 million homes. Inflation is the main factor behind the slowdown: higher mortgage rates, decreased affordability, and stricter lending standards have led analysts to project a moderate-to-steep drop in the housing market in 2023. 

In the U.S., mortgage rates reached 7% for the first time since 2002, pushing potential buyers out of the market. Mortgage rates have almost doubled in 25 cities around the world, including Amsterdam, Toronto and Zurich. Rent prices are also starting to cool after a pandemic surge — in the U.S., rents dropped slightly from September to October, ending a two-year growth streak. Housing prices in China fell at their fastest rate in seven years, and sales fell by 43%. In the U.K., housing sales dropped by 32% year-over-year in September, while U.S. sales of existing homes fell 28% in October.

Get ahead in a rapidly changing world. Sign up for our daily newsletter. Subscribe
​​