Shock

• Major central banks are continuing to tighten monetary policy to combat energy price shocks. • Norges Bank kept interest rates at 4.25% in August, while the Norwegian economy grew by only 0.3% in the second quarter. • Markets expect one more quarter-point rate hike by the end of the year, which increases borrowing costs for businesses and consumers.

• Crude oil prices exceeding $100 per barrel are creating a simultaneous price and supply shock across Asia. • Middle East output is falling, leading analysts to warn of lasting demand destruction as fuel demand drops and inflation rises. • High costs may force companies to improve efficiency and push consumers toward electric vehicles or altered travel habits.

• Indian Prime Minister Narendra Modi warned BRICS leaders on Sunday that geopolitical tensions, supply chain shocks, and climate crises are threatening global stability. • Modi specifically cautioned that the weaponization of technology and critical minerals could hinder shared prosperity and global development. • These disruptions create economic risks for the Global South, necessitating strengthened international cooperation to protect developing nations.

• India is building rice buffers to protect against potential trade crises or weather-related production disruptions. • The country currently maintains rice stocks that exceed its own domestic needs. • These strategic reserves aim to stabilize the local market and ensure food security during global supply shocks.

• The Philippine economy faced a series of systemic shocks over the past year, including domestic corruption and global geopolitical instability. • A flood control corruption scandal restricted state spending while overseas conflicts triggered a global energy shock that increased domestic prices. • These events highlight structural vulnerabilities that threaten the long-term resilience of the national economy.

• European Central Bank President Christine Lagarde stated that the inflation shock affecting the Eurozone will persist longer than previously expected. • The central bank leader indicated that price pressures are remaining stubborn across the currency bloc. • This outlook suggests that interest rates may stay higher for a longer period to combat rising costs for consumers and businesses.

• English teams dominated the opening round of the Champions League league phase, leading in expected goal difference by country. • Italian teams struggled during the first round, with Italy ranking at the bottom of the expected goal difference chart. • This performance gap suggests a current disparity in competitive strength between the English and Italian markets in European football.

• The European Central Bank raised its deposit interest rate by a quarter point to 2.5% on Thursday to combat rising inflation. • This marks the second rate hike in three months following an energy shock driven by the war in Iran. • Higher rates increase borrowing costs for businesses and consumers to prevent prices from rising too quickly across the eurozone.

• The European Central Bank raised its deposit rate to 2.5% to combat inflation risks caused by energy shocks. • This rate hike responds to persistent pressure on eurozone prices and financial markets. • Higher borrowing costs may slow economic growth while attempting to stabilize the purchasing power of the euro.

• The European Central Bank raised its economic growth and inflation projections because high inflation is expected to persist as energy price shocks ease slowly. • Consumption, investment, and industrial output are holding up well, showing that firms and households are adapting quickly to the shifting environment. • These updates indicate the European economy is more resilient to energy price shocks than previously predicted.

• Currency markets remained stable on Thursday as investors reacted to rising oil prices and global bond yields. • Traders paused the Japanese yen's recent strong rally while awaiting upcoming economic data. • Market participants are monitoring these shifts to gauge the impact of inflation on central bank policies.

• HSBC reported that global financial markets have remained resilient despite a series of economic shocks in recent years. • The bank noted that equity and credit markets are operating on the assumption that higher interest rates will not cause material damage to economic growth. • This trend puts investors at risk if inflation pressures force central banks to tighten rates more aggressively than currently priced.

• German Chancellor Friedrich Merz is continuing to push unpopular economic reforms following a landslide regional election victory by the far-right Alternative for Germany (AfD) party. • Russian presidential envoy Kirill Dmitriev described the result as a historic win that will put migration under control and restore common sense to Europe. • The AfD victory creates a high probability of the first far-right state government in Germany, signaling a shift in the political landscape of Europe's largest economy.

• European bond yields rose at the start of the trading week as traders reacted to surging energy prices. • Oil climbed to $98 per barrel and Dutch TTF gas reached €74 per megawatt hour following tit-for-tat strikes between the US and Iran on regional vessels. • Rising energy costs and the Japanese Yen breaking key support levels create increased volatility for currency and bond markets.

• The far-right Alternative for Germany (AfD) party won a landslide victory in the Saxony-Anhalt regional elections. • This result challenges Germany's grand coalition model, which typically relies on a broad alliance of centrist parties to govern. • The shift threatens the stability of the centrist political alliance that currently underpins the governance of the European Union.

• German Chancellor Friedrich Merz reaffirmed his commitment to unpopular economic reforms on Monday following a landslide regional election victory by a far-right party. • The winning party is now positioned to potentially form the first far-right state government in Germany since the Nazi era. • This political shift puts pressure on the leadership of Europe's largest economy to balance necessary fiscal changes with rising right-wing sentiment.

• The Philippine peso became the worst-performing currency in emerging-market Asia this year as it fell while its regional peers advanced against the U.S. dollar. • The currency has dropped 6.2% so far this year. • This decline is driven by a spike in oil prices that is eroding the country's dollar reserves more than those of its neighbors.

• The far-right Alternative for Germany (AfD) party achieved a landslide victory in the Saxony-Anhalt regional elections. • This win challenges Germany's traditional grand coalition model, which relies on a broad alliance of centrist parties to govern. • The result signals a potential shift toward far-right forces governing independently, threatening the centrist political stability of the European Union.

National Audit Office urges government to act as climate crisis, disease and cyberattacks pose growing risksThe climate crisis, disease and cyber-attacks pose growing risks to the UK’s food supplies and the government needs to act to make the system more resilient, according to the public spending watchdog.The National Audit Office (NAO) is urging the Department for Food, the Environment and Rural Affairs (Defra) to work more closely with households, communities and businesses to ensure the flow of crucial food into the country can withstand supply shocks that are becoming increasingly common and severe. Continue reading...

• Economies across Asia, including India, Malaysia, and Australia, posted solid growth last quarter, defying worst-case economic scenarios. • Growth was sustained by government interventions to secure energy supplies and the use of fiscal buffers to protect households from energy shocks. • A global boom in artificial intelligence provided a timely economic boost, contributing to the region's overall resilience.

• Several Asian economies outperformed growth predictions in the June quarter, with India expanding by 7.8%, Malaysia by 6%, and Singapore by 5.9%. • Growth was driven by strong fiscal buffers that mitigated energy shocks and a surge in AI demand, which significantly boosted technology exports. • Taiwan recorded its fastest first-half growth in approximately 50 years, while South Korea saw its strongest expansion since 2020.

• European government bond markets are experiencing a significant sell-off, leading to a sharp rise in yields across the region. • Investors are reacting to a combination of escalating inflation risks, economic growth uncertainty, and a widespread political reluctance to implement fiscal belt-tightening. • While the drivers differ slightly from those in the United States, the volatility reflects a broader global trend of instability in debt markets.

• Geopolitical shocks and global conflicts are severely undermining Africa's climate goals by triggering widespread economic and environmental disruption. • These distant crises drive up inflation and increase the cost of energy, diverting critical funding away from vital climate resilience projects. • The situation is critical because it stalls the continent's ability to adapt to climate change, leaving vulnerable populations more exposed to natural disasters.

• India's economy grew by 7.8% in the first quarter of FY 2026-27, exceeding expectations despite a challenging global environment. • The growth demonstrates significant resilience in the face of economic shocks stemming from the crisis in West Asia. • This performance is critical as it highlights India's ability to maintain momentum while other regions face instability.

Survivors begin receiving letters with payment amounts months after $305m settlement agreement was struck Survivors of child rape and other sexual abuse within New Orleans’s Roman Catholic archdiocese learned that $641,000 or so is the most they can individually get under a settlement approved in December to resolve a years-long bankruptcy protection case.Those amounts were communicated in letters that hundreds of clergy abuse survivors participating in the New Orleans archdiocese’s bankruptcy began quietly receiving on Tuesday. The figures are well below a $2.4m jury verdict awarded to an unrelated Louisiana religious sexual abuse claimant in June 2025 after the state’s legislature temporarily eliminated filing deadlines for such cases. Continue reading...

• A wave of lethal temperatures and devastating wildfires across Europe this summer has highlighted a growing disconnect between climate-conscious voters and political leaders. • While most European politicians are accused of remaining silent or avoiding long-term systemic changes, Spanish Prime Minister Pedro Sánchez is noted as one of the few leaders actively addressing the crisis. • This political inertia matters because it delays the urgent structural choices required to mitigate global heating and protect populations from increasing extreme weather events.

Lethal temperatures ​and wildfires have exposed a widening gulf between voters demanding ​action and politicians unwilling to confront the long-term choices global heating requires• Don’t get This Is Europe delivered to your inbox? Sign up hereThe climate crisis means “we’re going to have to change everything – the way we live, the way we produce, the way we trade,” France’s veteran radical-left firebrand, Jean-Luc Mélenchon, told the summer congress of his France Insoumise party last weekend.The term “climate change”, said Mélenchon – the most likely rival to Marine Le Pen in next year’s presidential run-off, according to one poll this week – may sound “almost reassuring”, but its actual impact will feel like “landing on another planet whenever we leave home”. Continue reading...