Hi there,

In today's newsletter, we delve into key events influencing global markets and economies. Brazilian swap rates are anticipated to react to December's CPI, which is likely to indicate moderated price rises. Additionally, China's recent decision to reinstate tariffs on coal imports presents obstacles for Russian exporters, who heavily depend on this significant market. Meanwhile, Chilean President Gabriel Boric foresees strong GDP expansion in the upcoming year, buoyed by a stabilized economic landscape.

– Matheus Zani & Daniel Porto

R&D Featured Article

Nuclear energy FDI and a new world order

The resurgence of nuclear energy is evident as former nuclear hubs, including Europe, backtrack on their shift away from this power source. Climate crisis concerns and energy security, exacerbated by the pandemic and geopolitical events like Russia's invasion of Ukraine, are driving a renewed focus on nuclear energy. Many nations are considering or actively pursuing nuclear programs, with a particular emphasis on self-sufficiency to reduce reliance on foreign gas and oil. However, the challenge lies in the upfront costs and technical expertise required for building nuclear plants, leading developing nations to seek technology and financing partnerships. Russia and China emerge as key providers, using these collaborations to forge geopolitical alignments, especially in emerging markets. The article underscores the nuanced factors influencing these partnerships, including geopolitical alignment, financing options, and the unique case of Saudi Arabia. As nations vie for the best deals, Russia and China's favorable financing terms often outshine those offered by Western counterparts. The alignment extends beyond plant construction to addressing other critical aspects, such as uranium conversion and enrichment. While private sector investment is limited in emerging market projects, developed nuclear markets see more private involvement, exemplified by the recent acquisition of Westinghouse Electric in the US by clean energy investors. The article suggests that the dynamics of global nuclear energy partnerships could reshape the world order over the next few decades.

2. China's Tariff Shift Challenges Russian Coal Export Prospects

At the start of the year, China reimposed tariffs on coal imports, posing challenges for Russian exporters who rely heavily on this major market. The removal of these tariffs in May 2022, following Russia's Ukraine invasion, had facilitated record coal imports, with China increasingly sourcing from Russia. However, China's focus has now shifted to shielding its domestic mining sector from oversupply, as local coal production has surged. Russia stands as China's second-largest coal supplier, with both nations aiming for an annual supply of 100 million tons by 2023. Achieving this target may necessitate Russian coal price reductions. Su Huipeng of the China Coal Transport and Distribution Association noted that with no other viable markets for such massive coal supplies, exporters must lower prices to offset the added tax burden.

3. Chile's Economic Outlook: Growth Predictions and Political Challenges Ahead

Chile's President, Gabriel Boric, predicts robust GDP growth next year following stabilized economic conditions. He emphasized that despite economic cooling, vulnerable sectors remained unharmed. Boric highlighted a pivotal public-private partnership to boost the local lithium industry, vowing continued efforts to enhance employment and wages. He refuted predictions of a recession, affirming Chile's forthcoming strong growth. Amidst high interest rates and economic disparities, Boric aims to rejuvenate Latin America's prosperous economy, focusing on industries like lithium and green hydrogen. However, political polarization persists, exacerbated by a failed constitution rewrite and elevated unemployment rates. Boric urged political unity for national advancement, advocating for pension and tax reforms. Finance Minister Mario Marcel expects a 2.5% GDP growth in 2024, contrasting analysts' 1.9% projection. Boric's 2023 approval stood at 31%, as per a Cadem survey.

Charted Territory

What to look out for today

USD - S&P Global US Manufacturing PMI (Dec)
USD - Atlanta Fed GDP (Q4)
BRL - S&P Global Manufacturing PMI (Dec)

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