Potemkin growth. Closer examination of first-quarter economic data released Friday in the United States paints a less rosy picture than the headline would suggest. Officially, the U.S. economy grew by an estimated 3.2 percent, a full percentage point higher than growth in the fourth quarter of 2018. Much of the growth came from an inventory buildup and a sharp fall in imports, both of which are signs of weak domestic demand. And, in fact, consumer spending grew by only 1.2 percent, less than half the rate of growth in the previous quarter. Analysts at Goldman Sachs cut their forecast of second-quarter growth by 0.5 percent, to 2.2 percent. Morgan Stanley went much further, projecting growth of just 1.1 percent in the period from April to June.
Russia goes with the flow. Following talks with Belarusian, Ukrainian and Polish officials in Minsk, Russian Deputy Prime Minister Dmitry Kozak said Russian oil supplies would start flowing again through the Druzhba pipeline in two weeks. A spokesman for Transneft, Russia’s state-owned pipeline company, said Friday that the contamination that led to the suspension of supplies – high levels of organic chloride, which can severely corrode refinery equipment, were detected last week – may have been deliberate. In the meantime, Moscow’s challenge is figuring out how to divert the more than 1 million barrels per day of oil that would normally go through the Druzhba pipeline. Russia’s RIA news agency reported on Friday that Russian Railways had discussed transporting it on as many as 5,000 rail tankers. Crude oil accounted for almost 29 percent of the value of all Russian exports in 2018, and Europe is by far the biggest export market for Russian crude.
One Belt, One Road, 28 policies. Germany’s economy minister suggested on Friday that Germany, France, Spain and the U.K. wanted to sign a memorandum of understanding on China’s Belt and Road Initiative as a bloc, not as individual states. But an unnamed European Union official was quick to shoot down the idea, telling Euractiv that the EU’s stance on BRI was unchanged. Member states may decide on their own to sign up – as Italy did last month – but they remain bound by EU rules and regulations. Besides Italy, 13 other EU states (Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Greece, Latvia, Lithuania, Malta, Poland, Portugal, Slovakia and Slovenia) have signed BRI MOUs according to Italy’s ANSA.
- A YouGov poll, conducted April 24-26 for the British daily The Times, found that 49 percent of Scots would vote for independence from the United Kingdom, the highest figure since February 2015 and up from 45 percent last June.
- Spain will hold general elections on Sunday. The incumbent Socialist Workers’ Party is expected to come out on top, but talks to form a government will likely be difficult.
- U.S. President Donald Trump said Friday that a bilateral trade deal with Japan could be ready by the time he visits the country in late May.
- S&P Global Ratings kept Italy’s credit rating at BBB, two notches above junk status. The negative outlook went unchanged.
- African swine fever appears to have spread beyond the border of China to North Korea. According to DailyNK, a South Korean newspaper that focuses on North Korean affairs, Pyongyang began prohibiting the sale of pork in response to the outbreak in mid-February. Industry experts are concerned that the disease may spread to South Korea, which is a large pork exporter.
- The head of Mexico’s ruling party, Morena, traveled to China to discuss anti-poverty efforts, anti-corruption measures and commercial development with officials in Beijing.
- During a speech to the National Rifle Association, Trump signed a letter effectively withdrawing the U.S. from the Arms Trade Treaty, which is intended to discourage conventional weapons sales to countries with poor human rights records.
- Russian President Vladimir Putin said Saturday that he is considering extending fast-tracked Russian citizenship to all Ukrainians, not just those in secessionist eastern regions, Tass reported.