Global news wrap: COP tussle, monetary policies, luxury market fall

Every month, Mint’s Plain Facts section brings out an update on key global data to thread together the biggest developments in the world that are worth paying attention to. The accompanying analysis and charts explain how each story is creating ripples on the global stage, where it is headed in the coming weeks, and whether it can impact India. 

This month we track how the climate finance package at the 29th United Nations climate summit (COP29) irked many countries. Meanwhile, several countries like the US, the UK, and India, among others, are scheduled to announce their monetary policies over the next month.

1. COP clash

Despite 2024 being on track to be the warmest year on record, with the temperature going 1.5 degrees Celsius above pre-industrial levels for the first time, the world is still bickering over the right way to tackle the climate crisis. COP29, held in Azerbaijan from 11 November to 22 November, raised the climate financing goal to $300 billion annually by 2035 from $100 billion but it failed to gain wider acceptance. 

Developing nations had demanded $1.3 trillion a year from developed countries, whose historical contribution to the climate crisis far exceeds that of poorer nations’. India called the amount “abysmally poor” and an “optical illusion”, and rejected it, as did Nigeria, Malawi and Bolivia. Moreover, there are anxieties over next year’s negotiations following the victory of Donald Trump, who during his presidential campaign promised to withdraw the US from climate deals.

2. Policy forecasts

As central banks prepare for their December policy meetings, expectations are shifting amid evolving global economic conditions. In the coming days, the US, the UK, India, the European Central Bank (ECB), Japan, and Indonesia will announce their monetary policies. 

The US Federal Reserve is widely expected to implement another rate cut, despite inflation concerns tied to president-elect Donald Trump's proposed policies. In the past two months, the Fed has already reduced rates by 75 basis points. The ECB is also likely to continue cutting rates, with Eurozone inflation moving towards its 2% target. 

Meanwhile, the Reserve Bank of India is expected to keep its policy rate unchanged amid ongoing uncertainties regarding food prices. The Bank of England, after reducing interest rates to their lowest in over a year, is also expected to hold its bank rate. In Japan, the central bank is anticipated to maintain ultra-low rates due to deflationary pressures, while Indonesia is expected to keep rates unchanged to stabilize its currency.

3. War woes

It has been over 1,000 days of the Russia-Ukraine war and over 400 days of the Israel-Hamas war and the conflicts are nowhere close to their end. The wars have led to massive casualties in the regions, with signs of escalation emerging over the past few days. 

Russian President Vladimir Putin recently signed a revised nuclear doctrine after the US allowed Ukraine to use long-range missiles against Moscow. 

Meanwhile, with the one-sided casualty in the Israel-Hamas war, with 43,000 Palestinians dead and 1.9 million internally displaced, the International Criminal Court (ICC) has issued arrest warrants for Israel’s prime minister Benjamin Netanyahu and former defence minister Yoav Gallant along with the Hamas’ military commander Mohammed Deif. 

The US, which is supporting Israel, has rejected the legitimacy of the arrest warrants even as Canada among other allies have indicated Netanyahu and others would be arrested if they visit these countries.

4. Drowsing housing

Since the end of September, China has announced a series of fiscal stimulus packages to revitalize its slowing economy and resolve the housing market crisis. While these announcements have led to a surge in stock market capitalization, the impact on the housing market is yet to be seen. 

China’s housing price index continued to fall in October, marking a consistent decline since May 2022. The pace of decline has increased over the months. China’s property market, which accounts for about 25% of its economic activity, has been facing a downturn since 2021. 

The fiscal package included major announcements to uplift the housing market, with the government cutting the minimum down-payment ratio for second homes to 15% from 25% among other relaxations in purchase restrictions. However, analysts expect the housing market to record recovery in 2025, with housing prices expected to stabilize by the second half of the year.

5. Losing luxury

The post-pandemic world created a space for massive discretionary spending, also termed as revenge buying, but the upturn may now be over, even for the luxury market. According to a study by Bain & Company, the global personal luxury goods market is likely to fall by about 2% to 363 billion euros in 2024. 

The slowdown in China and economic challenges in South Korea are expected to lead the decline in the luxury market even as Japan, southern Europe and the US are likely to support. While luxury shoes and watches struggled in 2024, jewellery was resilient, beauty and eyewear were among the strongest categories. 

The luxury market has grown rapidly after covid hit the world followed by stringent lockdowns in 2020. In the current year, Bain & Company estimates that a third of luxury brands will see growth as opposed to two-thirds in the previous year.