Global implications of the reopening of China’s economy

When China announced the end of its zero Covid restrictions and the opening of its economy last week, the news sent a positive outlook on the global economic recovery and prompted concerns about its potential inflationary impact on global oil prices.

According to Gita Gopinath, Deputy Managing Director of the IMF, the economy is expected to grow around 4% or more. “We expect growth in China to come back, pick up,” Gopinath told Reuters on the sidelines of the recently concluded World Economic Forum (WEF) in Davos, Switzerland. “But if growth in China comes in much stronger, which is a possibility, then we could see another spike in oil or energy prices.”

China is the world’s manufacturing center and second largest economy with a population of 1.45 billion people. For most of the past year, its economy and manufacturing sector have been shut down due to the spread of COVID-19. To that end, the country’s demand for staples like gas dropped significantly. As it reopens, there will be an increase in gas demand from China as households and businesses demand more. That would reduce Europe’s share of the limited gas resources available on the world oil market.

Africa’s oil giant is hungry for oil

For almost three months, Nigerians have experienced persistent fuel shortages across the country. Nigeria’s growing fuel shortage has caused the cost of fuel to rise from N170/1 liter in November to almost N300/1 liter at many filling stations across the country. That has skyrocketed inflation in the West African state and many residents are under pressure from rising consumer goods. The fuel shortage has prompted an increase in the cost of living.

According to local news, the Association of Major Petroleum Traders of Nigeria, (MOMAN), has attributed the fuel shortage to the high costs of vessels and trucks inadequate to deliver petroleum products from depots to service stations in Nigeria. Although the agency claims fuel queues are caused by exceptionally high demand and bottlenecks in the fuel distribution chain, some residents believe the shortages are man-made and caused by oil markets hoarding fuel for reasons selfish.

Google announces plan to lay off 12,000 workers

Last Friday, Alphabet Inc., the parent company of Google, announced plans to lay off 12,000 employees worldwide as it doubles down on AI. The job cuts will affect 6% of its global workforce. Interestingly, the company’s shares rose more than 5% after the announcement.

Sundar Pichai, CEO of Alphabet and Google, said the layoffs will start immediately in the US, while in other countries the process “will take longer due to local laws and practices.” The chief technology officer even said this was a time to sharpen the company’s focus, reshape its cost base, and direct its talent and capital to its highest priorities.

So far in 2023, tech companies that have laid off employees include WeWork, Microsoft, Amazon, Stitch Fix, Salesforce, Vimeo, ByteDance, Teladoc Health, Riot Games, Hootsuite, Carvana, CoSchedule,, Coinbase, Thinkific, Citrix and Twitter.

ICYMI: market overview

  • The NGX All-Share Index fell -0.06% to close at 52,594.68 points on January 20, 2023.
  • The top gainers were Abbey Mortgage Bank +9.80%, Prestige Assurance +9.52%, International Energy Insurance Company +8.89%, Cornerstone Insurance +7.14% and Cocoa Processors Ftn +3.57%. Those that fell the most were Linkage Assurance -9.62%, Consolidated Hallmark Insurance -7.35%, Mutual Benefits Assurance -3.23%, Dangote Sugar Refinery -2.58% and Jaiz Bank -2.22%.
  • The naira closed the week at N455.06/1$ on Friday compared to N461.90/$1 recorded last week.
  • Brent crude closed the week at $87.66while US West Texas Intermediate (WTI) crude closed at $81.69.
  • the global cryptocurrency the market capitalization stood at $1.05 trillion, as of 6:23 p.m. $304.29, a decrease of 0.22% in 17 days.
  • Kwara, a Kenyan fintech startuphas raised a $3 million seed outreach round. SA prop tech startup Flow secures $4.5 million in funding for its global expansion. Kenyan startup iGas launches a digital LPG marketplace.