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Romania's inflation rate remained stubbornly high in December, clocking in at 9.7% and holding at nearly three times the central bank's target. The persistent price pressure follows government actions designed to shrink the budget deficit, which have inadvertently helped fuel consumer price growth.

December Inflation Aligns with Forecasts

The year-over-year consumer price increase of 9.7%, reported by the statistics office in Bucharest on Wednesday, was just slightly below the November reading. This figure was in line with the median estimate from a Bloomberg survey of economists but edged past the central bank's own forecast of 9.6%.

Month-over-month, prices saw a modest increase of 0.2%.

Fiscal Policy's Impact on Consumer Prices

The country’s pro-European government recently pushed through a series of tax increases as part of a plan to cut its budget shortfall from over 9% of gross domestic product to below 8.4% by 2025.

According to central bank Governor Mugur Isarescu, these fiscal measures, combined with the elimination of an energy price cap, had a greater-than-expected impact on consumer prices. The fiscal push came after the administration overcame the most severe political crisis since the end of communism.

Central Bank Holds Steady on Interest Rates

While the December inflation figure is far above the central bank's upper target band of 3.5%, policymakers have maintained a steady monetary policy. The key interest rate has been held at 6.5% since mid-2024.

Officials have repeatedly said they expect price growth to slow sharply in the second half of 2026.

Analysts Predict Rate Cuts Later This Year

Some economists see a path toward monetary easing. Nicolae Covrig, an economist at Raiffeisen Bank SA, projects that inflation will cool "significantly" to 4% by the end of the year, which could allow the central bank to begin cutting rates.

"With inflation decreasing and fiscal consolidation progressing, we expect the central bank to resume its key rate cutting cycle this year in May at the earliest," Covrig wrote in a report before the data release. He forecasts that the benchmark rate could be lowered to 5.25%.

Iranians gather while blocking a street during a protest in Tehran

Source: CNBC

China's imports from Canada fell in 2025 for the first time since 2020, according to official data released just hours before Canadian Prime Minister Mark Carney’s scheduled arrival in Beijing. The figures underscore the economic leverage China holds as the two nations navigate a period of tense relations.

The high-stakes visit, the first by a Canadian prime minister since 2017, aims to mend a diplomatic rift that has strained economic ties.

Canadian Prime Minister Mark Carney travels to China for a high-stakes diplomatic visit aimed at stabilizing trade relations.

A Look at the Sharp Downturn in Trade

According to China's customs authority, Chinese imports from Canada dropped by 10.4% in 2025, falling to $41.7 billion. This marks a notable decline from the all-time high of $46.6 billion recorded in 2024.

The last time inbound shipments from Canada decreased was during the pandemic in 2020, when they fell by 22.3%. The trend isn't isolated to Canada; Chinese imports from the United States also slumped by 14.6% in 2025.

Carney's Mission to Repair Strained Relations

Prime Minister Mark Carney is expected to arrive in Beijing on Wednesday with a focus on narrowing the diplomatic divide. Relations soured significantly in 2024 after former Prime Minister Justin Trudeau mirrored the Biden administration's policy by imposing 100% tariffs on Chinese electric vehicles.

"I'm headed to Beijing," Carney announced on social media as he departed. "China is our second-largest trading partner, and the world's second largest economy. A pragmatic and constructive relationship between our nations will create greater stability, security, and prosperity on both sides of the Pacific."

The trip follows a positive meeting between Carney and Chinese leader Xi Jinping in South Korea in October. While that encounter did not result in major breakthroughs—Chinese tariffs continue to block Canadian canola from its largest market—both leaders agreed to move bilateral ties forward, leading to Xi's invitation.

The US Factor: Seeking 'Strategic Autonomy'

Canada's renewed engagement with China is also driven by a need to diversify its export markets. This comes after U.S. President Donald Trump imposed tariffs on Canada last year and made inflammatory remarks about the country's sovereignty.

Ahead of the visit, Chinese state media advised Carney to maintain "strategic autonomy" from the United States. An editorial in the state-run China Daily on Monday argued that Ottawa could better serve its interests by working directly with Beijing to manage differences.

The outlet suggested that previous setbacks in the relationship were caused by the Trudeau government's policy of aligning with Washington's efforts to contain China, and that upholding strategic independence would help avoid similar outcomes.

Germany’s corporate landscape faced a severe downturn in 2025, as business bankruptcies surged to their highest level in two decades. The wave of insolvencies accelerated late in the year, casting a shadow over the economy despite government promises of a turnaround.

Figure 1: Germany's economy faced a historic wave of corporate insolvencies in 2025, reaching a 20-year peak and signaling significant financial distress.

The Scale of the Insolvency Wave

Data from the Leibniz Institute for Economic Research Halle (IWH) reveals a total of 17,604 corporate bankruptcies for the year. This figure translates to an average of 48 partnerships and corporations failing every day.

The institute noted that this total is approximately 5% higher than the number recorded during the 2009 financial crisis, highlighting the severity of the current situation.

The problem worsened significantly in the final month of the year. December saw 1,519 insolvency applications, a figure 75% higher than the monthly average for December between 2016 and 2019.

Jonas Eckhardt, an economic expert at the transformation consultancy Falkensteg, described the situation bluntly: "The German economy is no longer just struggling with headaches. She's got a fever. That won't change anytime soon."

Key Sectors Under Pressure

According to Professor Dr. Steffen Müller, Head of IWH Insolvency Research, the rise in bankruptcies was a broad-based phenomenon affecting the entire economy. However, certain sectors were hit particularly hard.

• Hospitality

• Construction

• Real Estate

Müller identified the interest rate increases at the end of 2022 as a primary factor, noting that higher borrowing costs stalled investment and expansion plans across these industries.

From Local Businesses to Large Corporations

The financial distress has impacted companies of all sizes. In Saxony, a sausage company was forced to dismiss its entire staff. In Lower Saxony, the Leifert bakery chain’s insolvency affected 220 employees, while the failure of another large bakery, Hansen Mürwik, impacted 145 workers.

Large corporations have not been immune. A survey by Falkensteg found that 471 companies with annual sales over €10 million filed for insolvency in 2025, marking a 25% increase from the previous year. The number of these major insolvencies has nearly tripled since 2021.

National Concerns and Broader European Woes

The escalating crisis has captured the attention of Germany’s leadership. Chancellor Friedrich Merz recently stated that parts of the German economy are in a "very critical state." While he did not specify which sectors, the automotive industry is widely seen as being under intense pressure, largely due to rising competition from Chinese manufacturers.

This economic strain is not unique to Germany. French President Emmanuel Macron recently traveled to China, telling leaders there that "European industry is facing a 'life or death' moment." Macron argued that China's trade surplus is "untenable" and warned that Europe may resort to tariffs if China does not adjust its trade practices to allow for more European imports.

The trip, however, concluded without any major business deals, and analysts widely viewed it as unsuccessful in achieving its primary objectives. In a notable observation, China has achieved its economic status with very low levels of immigration, with the total number of foreigners in the country comparable to the foreign population of the city of Berlin alone.

Outlook for 2026 Remains Grim

While some experts, like Professor Müller, suggest that insolvencies can serve as a market adjustment mechanism to make way for more resilient companies, the immediate outlook is negative.

Jonas Eckhardt emphasized that for many medium-sized businesses, the current climate is no longer a simple downturn but a "question of survival." Experts do not foresee a recovery in 2026 and instead predict a further increase in bankruptcies, particularly among large companies.

China's crude oil imports surged to an all-time high last year, with official statistics showing an average daily intake of 11.55 million barrels. This amounted to a total of 557.73 million tons for the year, marking a 4.4% increase from 2024.

The momentum continued into the final month of the year, as December imports also set a new record. The daily average for the month hit 13.18 million barrels, for a total of 55.97 million tons.

Record Imports Challenge Demand Slowdown Narrative

These record-breaking figures cast doubt on the narrative that China's oil demand is entering a permanent decline driven by the electrification of its transport sector.

However, a significant portion of these imports did not fuel the economy directly but instead flowed into the country's growing strategic and commercial stockpiles. Despite this, China's strong purchasing activity has provided crucial support for global oil prices, helping to counteract production hikes from OPEC+ and persistent concerns over the global demand outlook amid uncertain U.S. trade policies.

The Real Driver: A Massive Stockpiling Strategy

The scale of China's oil stockpiling became particularly clear starting in March 2025. Frederic Lasserre, global head of research and analysis at commodity trading firm Gunvor, highlighted an "impressive rate of stockpiling, like close to one million barrels per day" around that time.

Lasserre anticipates that China will continue building its crude reserves well into 2026. He noted that the country's storage facilities are only about 60% full, suggesting significant capacity remains for further inventory accumulation.

Building for the Future: Expanding Storage Capacity

To support this long-term strategy, China is aggressively building out its storage infrastructure. A total of 11 new storage sites are planned for construction across the country over 2025 and 2026.

Key details on the expansion include:

• Total New Capacity: The new sites will add a combined storage capacity of approximately 169 million barrels.

• Import Equivalence: This volume is equal to roughly two weeks' worth of China's crude oil imports.

• Historical Context: This follows the addition of between 180 and 190 million barrels of new storage capacity between 2020 and 2024, according to data from Vortexa and Kpler.

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