AGP Executive Report

Europe’s Outlook: The ECB says AI investment, lower fossil-fuel dependence and public spending are helping the eurozone weather an energy shock, but Germany’s economy likely stagnated in the third quarter as weak exports and shipping disruptions weighed on activity. Business and Taxes: Two Stanford economists estimate California’s proposed billionaire tax could raise about $30 billion, far below supporters’ $100 billion projection, as wealthy residents move out of state. Argentina’s Slowdown: Economic activity fell 1.7% year over year in August, with manufacturing and trade among the weakest sectors; a slight monthly rebound offered little relief. Digital Growth: Southeast Asia’s digital economy is forecast to expand 17% to $368 billion this year, with AI helping drive growth even as prices rise and demand cools.

Digital Markets: Malaysia will review competition in its digital economy, with Prime Minister Anwar Ibrahim warning that high platform commissions, restrictive contracts and control of consumer data can disadvantage small businesses. Growth and Costs: China’s economy grew 4.5% year on year in the third quarter, up from 4.3%, while a global survey found nearly 70% of accountants’ firms faced higher operating costs. Southeast Asia’s digital economy is forecast to reach $368 billion this year and top $1 trillion by 2035. Public Finances: South Africa’s weak growth is adding pressure to government finances ahead of its mid-term budget, with economists urging spending discipline. Household Strain: Sudan’s currency hit a record 10,000 pounds per dollar on the parallel market, a 60% fall that is pushing basic goods further out of reach. In the US, rising airfares are exposing a K-shaped economy, with wealthier households better able to absorb price shocks. Africa’s Resources: Economists say the continent must expand power and process more minerals locally to capture lasting value from rising global demand.

Canada Outlook: The Parliamentary Budget Officer cut its growth forecasts to 0.9% for 2026 and 1.5% for 2027 as U.S. tariffs weigh on trade. If tariffs persist, Canada’s economy could be about 1.4% smaller over the medium term than otherwise expected. China’s Growth Model: China’s economy grew 4.5% in the third quarter, powered by exports, while domestic demand remains soft. Beijing is preparing a 2026–30 plan to lift spending and household incomes. AI Investment: China has launched a state-owned data group to develop data resources and support AI, underscoring the government’s push to turn digital infrastructure into a growth engine. Rates: Nearly all economists in a Reuters poll expect the Fed to hold rates in October and raise them in December as inflation persists, keeping borrowing costs in focus for businesses and investors.

China’s Growth: GDP rose 4.5% in the third quarter and 4.6% in the first nine months, powered by exports and emerging industries. But weak domestic demand remains a concern, and the top economic planner says it will step up efforts to boost consumption. Regional Trade: SCO members adopted a 2026–2030 economic cooperation plan, while Pakistan’s Ishaq Dar urged the bloc to expand local-currency settlements and establish development and investment funds. US–Uzbekistan Investment: The two countries signed 54 agreements worth about $12 billion during Secretary of State Marco Rubio’s visit, as Washington seeks deeper commercial ties in Central Asia. South Africa’s Finances: Ahead of the medium-term budget, economists expect improved revenue and a stronger primary surplus, but warn lasting debt stability will require spending discipline and faster growth. A separate city-risk assessment says municipal debt, failing infrastructure and weak administration are undermining investment and growth. Germany’s Innovation Gap: An Ifo Institute study links Germany’s focus on mid-tech research, rather than high-tech fields, to weaker growth prospects.

Digital Investment: Malaysia plans new rules for data centers, targeting pressure on water and energy supplies while ensuring projects benefit local businesses and support a circular economy. China’s Growth: China’s economy expanded 4.5% in the third quarter, beating forecasts as exports and AI demand lifted growth, but weak domestic spending remains a concern. AI Financial Risk: The IMF warns that heavy borrowing and intertwined investments could amplify a sharp AI market correction, threatening broader economic stability if expected profits fail to materialize. U.S. Consumers: Bank of America sees spending holding up, but rising everyday costs are squeezing some households and could keep interest rates in focus. Insurance Resilience: Insurer groups from Australia, New Zealand, the UK and Canada have formed an alliance to address shared pressures, including climate risk, inflation, cyber threats and the cost of coverage.

China’s Growth: GDP rose 4.5% in the third quarter, beating forecasts as exports and industrial output strengthened. But weak domestic demand remains a concern; the yuan climbed to a four-year high after the data. Market Jitters: European shares and bonds fell as violence in France renewed concerns about debt, while India’s Sensex dropped 876 points amid higher oil prices and weak bank stocks. Africa’s Outlook: The IMF urged governments to protect vulnerable households from economic shocks, warning that energy disruptions and declining foreign aid could intensify pressure. Malaysia’s Reforms: Prime Minister Anwar Ibrahim said fiscal reforms and targeted subsidies have supported growth, and urged effective implementation to improve living standards. The government is also preparing rules to ensure data-centre investment fits energy and water capacity. Central Asia: Kyrgyzstan’s economy expanded 10.8% in the first nine months, led by a surge in construction.

Iran: CENTCOM says the U.S. blockade has halted at least $25 billion in Iranian crude exports, squeezing state finances and leaving some troops unpaid. Singapore Trade: September non-oil exports jumped 68.4% year on year, though one-off shipments inflated the figure; excluding them, growth was still 36.1%. RHB raised its full-year export forecast to 25%. Nigeria: Business leaders say the country’s $1 trillion-economy ambition needs productive investment and tighter public spending. Finance Minister Taiwo Oyedele is targeting 7% growth, above the IMF’s 4.2% forecast for 2026. Dubai: Real GDP fell 2.3% in the first half of 2026 to Dh473 billion, as financial services, healthcare and construction offset weakness in tourism and transport. China: Foreign trade grew 18.8% in the first nine months, powered partly by surging demand for AI-related exports. Air Travel: U.S. economy-class domestic fares rose 21% in September to an average $608 per round trip, while passenger trips increased just 2%.

Energy and Sanctions: President Trump has paused new Russia sanctions for 60 days while officials assess their effects on fuel prices and the US and global economies, underscoring how conflict is complicating energy markets. Global Outlook: The IMF sees global growth improving to 3.4% in 2027 from 3.1% this year, but warns that debt, energy shocks and geopolitical tensions leave little room for complacency. Ghana’s Investment Plan: President Mahama says a five-year, US$10 billion programme will target nine job-rich sectors, financed with domestic funds rather than borrowing. Digital Growth: Indonesia is counting on investment and its expanding digital economy to help lift growth to 6% by 2027; its online-market value neared US$100 billion last year. Nigeria’s Reforms: The government says easing inflation, stronger reserves and growth are beginning to show results, while promising social support to cushion hardship. Israel’s Economic Risks: Sixty-one senior economists warn that wider European sanctions over settlement expansion and violence could deepen Israel’s isolation and raise living costs.

Global Outlook: IMF chief Kristalina Georgieva said policymakers left Bangkok with both optimism about economic resilience and concern over inflation, debt, energy shocks and AI-related risks. Asian Growth: Malaysia’s economy grew 5.3% year over year in the third quarter, slowing from 6% in the second; services and manufacturing led expansion. Brazil’s activity rose 0.3% in August, in line with forecasts. Pakistan Finance: Finance Minister Muhammad Aurangzeb and JPMorgan discussed debt strategy, bond options and reforms as Pakistan seeks stronger credit ratings and longer-term financing. He also warned that attacks on Gulf energy infrastructure threaten the country’s outlook. Investment: China’s Yadea is considering an electric-bike factory in Punjab, while Sindh’s chief minister pitched Shanghai Electric on expanding into renewables, energy storage and other projects. Market Oversight: Pakistan’s competition regulator has developed an AI system to flag suspected bid-rigging in public procurement, a market estimated at $60 billion annually.

Global Outlook: IMF officials say the world economy has weathered recent shocks, but conflicts, trade disruption, heavy debt and AI risks are thinning its resilience. Pakistan: The central bank says reserves have climbed to $21.5 billion and inflation has eased, while the finance minister warns Gulf energy attacks threaten the longer-term outlook; supplies are secured through November. Interest Rates: Most economists now expect the Bank of England to raise rates by a quarter-point in November as inflation proves stubborn. Japan: Officials say deflation is over, pointing to inflation near the 2% target and rising wages, while stressing that investment must lift growth without weakening fiscal discipline. Poland: Its planned 2027 upgrade to developed-market status reflects decades of growth and deeper integration with Western Europe; GDP has topped $1 trillion.

Global Outlook: The IMF warned that growth increasingly reliant on AI investment leaves economies exposed to shocks, while debt, inflation and borrowing costs remain risks. It also cautioned that growth alone cannot resolve the U.S. debt burden, now above $40 trillion. Inflation and Energy: Rising fuel costs are spreading through supply chains: U.S. wholesale prices jumped 6.3% year over year in September, adding pressure on businesses and household budgets. Growth and Trade: Malaysia’s economy expanded 5.3% in the third quarter, while Canada and India advanced trade talks and announced 34 commercial agreements worth nearly $300 million. Business and Technology: Morocco created a ministry for AI and digital transformation, targeting $10 billion in additional GDP by 2030. SME Finance: Senegal pledged to clear 1.9 trillion FCFA in public arrears, prioritizing small businesses strained by delayed government payments.

AI and Interest Rates: Apollo economist Torsten Sløk says the AI investment boom could keep borrowing costs under upward pressure: tech companies expect returns above current rates, making their spending less sensitive to tighter monetary policy. Asian Growth: Malaysia’s economy grew 5.3% in the third quarter, down from 6% in the previous quarter, while Singapore’s growth eased to 5.4% from 6.2%. Services and manufacturing supported Malaysia’s expansion, but mining contracted. Global Outlook: The IMF expects Asia-Pacific growth to slow to 4.8% this year and 4.4% in 2027, with low-income and Pacific economies facing downgrades and uneven gains from the AI boom. Business Confidence: U.S. CEO confidence fell to 46, below the neutral 50 mark, as energy costs, inflation and geopolitical uncertainty weigh on expectations. UK Economy: Britain grew 0.1% in August, beating forecasts, though the modest gain and rising rate concerns point to a fragile outlook.

UK Growth: Britain’s economy unexpectedly expanded 0.1% in August, despite falling consumer spending, offering Chancellor John Healey a small pre-Budget lift. His proposed bank-tax increase could raise £2 billion, but lenders warn it may curb investment. Inflation and Markets: US producer prices rose 6.3% year over year in September, while consumer inflation reached 3.7%; higher energy costs and chipmaker losses added to market jitters. Global Risks: IMF chief Kristalina Georgieva warned that persistent inflation, widening disparities and heavy public debt leave economies exposed, as AI investment and the Iran war reshape growth prospects. Asia’s Rise: The IMF expects India to overtake Japan as the world’s fourth-largest economy in 2027, with GDP projected at $4.52 trillion and 2026 growth forecast at 7%. Energy and Investment: Ireland’s data-centre boom has attracted billions in investment but is intensifying debate over energy supply and whether household needs should take priority.

Malaysia Outlook: TA Securities expects third-quarter growth of 4.7%, slower than the previous quarter’s 6% but still healthy, and kept its 2026 forecast at 5.1%. Chip Investment: Japan and the US are backing a semiconductor project worth up to $21 billion in New York, with the first factory expected to start production in 2029. Global Risks: The IMF forecasts 3.1% global growth this year and warns African economies have little room to absorb another shock as aid declines. Gulf economies face sharp contractions as disruptions to oil production and shipping outweigh higher prices. UK Economy: GDP unexpectedly grew 0.1% in August, helped by factory output; the Bank of England says firms’ energy hedges and AI activity have cushioned the shock. India’s Rise: The IMF expects India to overtake Japan as the world’s fourth-largest economy in 2027, with GDP projected at $4.52 trillion. US Consumers: Polls show the economy and cost of living are top concerns for about eight in 10 voters ahead of midterms, amid persistent price pressures.

U.S. Inflation: Prices rose 3.7% over the year to September, with gasoline driving much of the increase; stocks slipped as investors weighed the hotter-than-expected report. The Fed’s Beige Book found modest growth overall, but rising fuel costs are adding pressure across supply chains. Global Risks: The IMF projects 3.1% global growth in 2026, while warning that heavy debt, geopolitical conflict and an AI investment bust could strain the economy’s resilience. Asia: Singapore’s economy grew 5.4% in the third quarter, slower than the previous quarter’s 6.2%, as manufacturing cooled. Australian Tax: A proposed minimum 30% tax on trust income could affect hundreds of thousands of trusts from 2028; small-business groups warn restructuring and compliance could be costly. Pakistan’s Exports: The government is targeting $100 billion in exports by 2035, arguing that a shift from consumption to production is key to reducing recurring balance-of-payments problems.

Global Outlook: The IMF says global growth is set to slow to 3.1% in 2026 as war, rising debt and AI-related financial risks test the economy’s resilience. It also warns a sharp AI-market reversal could cut global output by 0.4% by 2028. Iran: Oil exports have fallen to zero amid a US blockade, while the rial has lost nearly 35% of its value since July and inflation reached 73.6%; Iran’s central bank governor rejects claims the economy is collapsing. Asia: The IMF raised India’s 2026 growth forecast to 7%, while Singapore’s third-quarter growth eased to 5.4% from 6.2%, as manufacturing slowed. Vietnam reported 9.01% growth in the first nine months and is pushing for growth above 10% this year. Business Risks: Digital fraud costs the global economy an estimated $500 billion to $1 trillion a year, the IMF chief said. A separate report estimates Telstra’s July outage cost Australia’s economy A$854 million. Investment: Idaho Copper’s updated assessment projects a 46-year CuMo mine life, with after-tax net present value of $1.88 billion; the project would require $1.17 billion in initial construction capital.