The Day at a Glance | September 27 2021

The Top

*The economy is close to reaching its target levels for the withdrawal of liquidity to start: Charles Evans, Chicago FED.

*China could be hit by a greater negative economic because of less electricity production due to environmental regulations.

*Natural gas prices continued to increase at a global level; low inventory levels were reported in Europe prior to the winter season.

*Mexican exports decreased (-) 4.58% during August (+9% annual); imports decreased (-) 3.36% (+43.3% annual).

*Mexico`s economy grew 0.5% during July (7.7% annual), according to the IGAE.

*The United States House of Representatives is preparing to vote on approving Biden`s economic agenda this week.

*Divided election in Germany forces the start of negotiations to try to form a government; there is uncertainty regarding the future of the country`s fiscal policy.

Economic environment

Problems with global energy levels. While natural gas prices in Europe have increased up to 360% in a little less than a year, China faces greater disruptions regarding electricity supply. Both cases are evidence of a new shock in supply that could hinder economic recovery after the pandemic. Demand for energy at a global level has increased substantially since the world`s economies have started to rebound after the pandemic-triggered crisis, which has boosted prices. However, the problem has become larger in Europe due to low inventory levels of natural gas (after strong demand during last winter and summer) and few alternatives for energy supply as the European economy`s block transitions towards cleaner energy sources. This has caused an excessive increase in natural gas prices, which has affected costs of production for businesses and are impacting family incomes; in addition to putting pressure on the economy`s prices. Fears of an energy scarcity crisis in the winter have increased – as well as concerns that the rise in natural gas prices will extend to the rest of the world. In China, Beijing`s efforts to reach its greenhouse gas emission levels has forced companies and homes to decrease electricity use and has even led to cutting its supply in several industrial centers. This has affected economic activity in entire industries and growth estimates for China have started to decrease for 2021. Meanwhile, inflationary estimates – especially for producers – have increased as the use of carbon for electricity generation has been reduced.