Japan’s inflation continues to exceed central bank target

Japan’s annual inflation came in at 2.4% in June, exceeding the central bank’s inflation target for the third month in a row, official figures showed on Friday.

The country’s annual inflation rate was 2.5% both in April and May, while it was 1.2% in March and minus 0.5% in June 2021.

On Thursday, the Bank of Japan decided to maintain its ultra-low interest rates at minus 0.1%, while it increased its inflation target from 1.9% to 2.3% for 2022.

The statistical department data showed that the annual inflation rate was 16.5% for energy and 3.7% for food.

Source: Anadolu Agency

Oil prices rise on strengthening demand

The uptick in global oil demand pushed oil prices higher on Friday.

International benchmark Brent crude was trading at $105.32 per barrel at 09.50 a.m. local time (0650 GMT) for a 1.41% increase after the previous session closed at $103.86 a barrel.

American benchmark West Texas Intermediate (WTI) was at $97.66 per barrel at the same time for a 1.36% raise after the previous session closed at $96.35 a barrel.

Strong demand signals in Asia, combined with data showing a rise to record high levels in gasoline demand in India in June, support upward price movements.

A possible price cap on Russian oil is also pushing prices up. US Deputy Treasury Secretary Wally Adeyemo hinted on Wednesday that there could be an agreement on capping the price of Russian oil by December.

However, recession fears in Europe and the US, which could curb global oil demand growth, continue to limit oil price increases.

Source: Anadolu Agency

Government debt to GDP ratio 95.6% in eurozone

As of the end of the first quarter of this year, the government debt to gross domestic product (GDP) ratio was 95.6% in the euro area, according to Eurostat data.

The ratio was 87.8% in the EU, official figures showed on Thursday.

Ratios were down from 95.7% and 88.1%, respectively, at the end of the last quarter of 2021.

“For both the euro area and the EU, the slight decrease in government debt to GDP ratio is due to an increase in GDP outweighing the increase in government debt in absolute terms,” Eurostat said.

Among member states, the highest ratios were posted by Greece (189.3%), Italy (152.6%), Portugal (127%), Spain (117.7%), and France (114.4%).

The lowest figures were seen in Estonia (17.6%), Luxembourg (22.3%), and Bulgaria (22.9%).

Source: Anadolu Agency

Daily gas flow from Russia to Europe at lowest in last 4 years

Natural gas flow from Moscow to Europe has decreased to the lowest levels in the past four years, below 100 million cubic meters since the beginning of July from quantities ranging from 400 to 500 million cubic meters per day.

According to data from the International Energy Agency (IEA) and Ukraine transmission system operator, Europe imported 155 billion cubic meters of natural gas from Russia, corresponding to about 40% of the continent’s natural gas consumption last year.

Russia, which sends natural gas to Europe via Ukraine, also transmits natural gas to Europe and Türkiye using the TurkStream, Nord Stream 1, Yamal and Blue Stream natural gas pipelines.

However, since the start of the war with Ukraine, its exports to Europe have dropped significantly from the highs seen in October 2019 of over 500 million cubic meters, IEA data confirms.

From Feb. 24 this year, with the start of Russian attacks in Ukraine, reduced flow transiting via Ukraine and a halt in transmission from the Nord Stream-2 natural gas pipeline, the decline accelerated and fell to 200 million cubic meters as of the end of May.

This flow further dropped to 100 million cubic meters at the beginning of July, marking an 80% plummet relative to the record highs of 500 million cubic meters.

The decrease in the capacity of the Nord Stream 1 pipeline was decisive in the decline in gas flow. Russia’s Gazprom had warned on June 15 of reduced shipments through the pipeline, citing the non-return of technical equipment necessary for maintenance from Germany’s Siemens company.

The pipeline, which can transmit 160 million cubic meters of gas per day, is only transmitting 65 million cubic meters of natural gas per day from July 21.

Europe continues its plan to wean off Russian gas supplies

Since Europe is highly dependent on Russian energy, the EU has accelerated efforts to diversify supplies and has sought alternatives by buying liquefied natural gas (LNG) and filling natural gas storage tanks where possible from the current 64% occupancy rate.

To this end, a memorandum of understanding was signed between the EU and Baku for more gas purchases from Azerbaijan to alleviate shortages over the winter season.

However, despite the nine LNG import terminals in Europe, the UK and Türkiye, Germany, one of the largest Russian gas importers, is unable to avail of these facilities because it only imports gas via pipeline.

The highest LNG import capacity in Spain of around 70 billion cubic meters has a limited gas transmission link to other European countries, notably France, which has no connection preventing transmission to other neighboring countries.

Although Germany has access to LNG terminals in the Netherlands, it is insufficient for the country’s demand.

During former US President Donald Trump’s term, the construction of an LNG import terminal came to the fore from US pressure on Germany, but the process was suspended due to financial reasons. After the war between Moscow and Kyiv, the issue resurfaced and Germany ultimately agreed to build LNG terminals.

To alleviate shortages, the EU demanded that all member countries reduce their gas consumption by 15% within the scope of the emergency plan it prepared against the possibility of interruption of natural gas flow from Russia on July 20.

However, Spain was the first to respond to this with a statement from the Spanish Environment Minister Teresa Ribera who said that, “no matter what happens, the gas and electricity of Spanish families will not be cut off. Whatever happens, Spain will defend the position of Spanish industry.”

Source: Anadolu Agency

Germany’s manufacturing activity hits 25-month low

Germany’s manufacturing activity was at its weakest level in 25 months as its purchasing managers’ index (PMI) hit 49.2 in July, the US-based financial services company S&P Global said on Friday.

Manufacturers registered a sharp fall in new orders in July, the biggest since May 2020, according to the S&P Global flash estimate.

Germany’s composite PMI decreased to 48 in July, pointing to the first contraction of activity since December 2021 and the worst performance in 25 months.

Declines in both domestic and export demand were indicated by the latest data as a combination of an uncertain business environment, supply shortages and stretched client budgets weighing on the sector, it said.

Flash Germany services PMI activity index fell to a seven-month low at 49.2 in July, down from 52.4 in June.

The fall in services activity reflected a combination of staff shortages and a retrenchment of new business, according to the S&P Global.

Future expectations have dived into negative territory for the first time since May 2020, when the first wave of the COVID-19 pandemic was felt earnest.

Source: Anadolu Agency