China’s industrial profits grow, and other economics stories to read this week

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Joe Myers, Writer, Forum Agenda

• This weekly round-up brings you the latest news from the world of economics and finance.
• Top economy stories: China’s industrial profits return to growth; Fed posts loss in 2023; Sri Lanka’s central bank cuts interest rates.

1. China’s industrial profits return to growth

Industrial firms in China posted higher profits in the opening months of 2024, according to official data.

The National Bureau of Statistics said that profits at industrial firms increased by 10.2% in January and February, compared to a year earlier. Profits had declined by 2.3% across the whole of 2023.

The jump comes amid other positive indicators for the Chinese economy, reports Reuters.

“If the recovery of manufacturing continues, it would contribute toward reaching the 2024 growth target, but more supportive policies are still needed to sustain the momentum and recovery,” Lynn Song, Chief Economist for Greater China at ING, told Reuters.

2. Fed posts loss in 2023

The US Federal Reserve saw a net negative income of $114.3 billion last year, a record loss. The preliminary figure is a result of expenses tied to managing the bank’s short-term interest rate target.

The Fed, by law, hands over profits to the Treasury, and earns incomes from services provided to the financial system and interest on securities it owns. Over recent years it has earned significant profits.

To maintain interest rate targets, the Fed pays banks, funds and other financial firms to park cash with it, which means it has been paying out significantly more in interest.

3. News in brief: Stories on the economy from around the world

Land prices in Japan rose at their quickest pace in 33 years in 2023, returning to their pre-COVID-19 levels.

South Korean consumer confidence fell in March, amid concerns around higher produce prices, according to a new survey from the country’s central bank. The Bank of Korea has also warned that further slumps in the real estate sector could hit broader economic growth.

Sri Lanka’s central bank has cut interest rates by 50 basis points. The move was unexpected, as a majority of the Reuters economists polled had predicted rates would remain unchanged.

Sales of new, single-family homes in the US fell unexpectedly last month. However, the market remains short of previously owned homes.

Core inflation in Singapore increased at its fastest rate in seven months in February, with the Lunar New Year driving prices higher. Core inflation was 3.6% in February from a year earlier, up from 3.1% in January.

Consumer confidence in South Africa improved in the first quarter of 2024, although still sits in negative territory, rising from -17 points to minus -15 points on the Consumer Confidence Index.

Official figures show the UK economy entered recession last year, with gross domestic product shrinking 0.1% in the third quarter, and 0.3% in the fourth quarter.

4. More on finance and the economy from our blog

Seisaku Kameda, the Executive Economist at the Sompo Institute Plus, explores Japan’s era of negative interest rates – which has come to an end after eight years – and the impact of the recent rate rise.

Millions of people in the world’s least-developed countries risk being left behind in the digital transformation, with economic and social consequences. However, international funding and national efforts could help close the digital divide.

A new World Economic Forum report – the Future of the Care Economy – explores the state of the world’s care systems and how challenges can be overcome to build them in more equitable ways.