Severe Winter Conditions Cause Billion-Dollar Losses to the Global Economy

Economic

Summary:

The winter of 2024-2025 is one of the harshest in recent history, with extreme cold and heavy snowfall disrupting transportation, energy supply, and agricultural production worldwide...

Record-breaking Winter Disrupts Economies Worldwide

The ongoing winter season has wreaked havoc across multiple continents, leading to economic losses, infrastructure damage, and disruptions in key industries. The combination of extreme snowfall, freezing temperatures, and prolonged cold waves has paralyzed daily life, affecting global trade and economic activity.

United States: Blizzard Causes $1.2 Billion in Damages

A massive snowstorm hit the U.S. East Coast in early 2025, bringing heavy snowfall and record-low temperatures. Major cities faced transportation paralysis, flight cancellations, and widespread power outages. The National Oceanic and Atmospheric Administration (NOAA) reported an estimated $1.2 billion in economic losses due to the storm, with businesses and supply chains suffering severe setbacks.

Europe: $3 Billion Losses Due to Transportation Disruptions

European nations, including Germany, France, and the UK, have been significantly affected by relentless snowfall. Public transportation systems ground to a halt, and supply chain disruptions impacted key industries. Economic losses across Europe are estimated at around $3 billion, with severe weather conditions expected to continue into February.

Japan: Agricultural and Transportation Sector Takes a $1 Billion Hit

Japan has faced intense snowstorms that disrupted railway operations, particularly affecting high-speed train services. The agricultural sector suffered as freezing temperatures damaged crops, causing long-term financial setbacks for farmers. National broadcaster NHK reported that economic losses from the winter storms have reached approximately $1 billion.

South Korea: Energy Demand Surges as Economy Loses $500 Million

South Korea experienced one of its coldest winters in years, with energy demand soaring due to heating needs. Localized power outages were reported, and extreme weather conditions exacerbated infrastructure vulnerabilities. According to Yonhap News, the economic damage is estimated at $500 million, with the hardest-hit areas concentrated in Gyeonggi Province. The city of Anseong alone recorded over $25 million in property damage and multiple casualties.

Canada: Toronto Struggles With Harsh Cold, Suffering $800 Million in Losses

Toronto faced prolonged subzero temperatures between late December 2024 and early January 2025. Heavy snowfall disrupted business activities, canceled flights, and strained public services. The Canadian Broadcasting Corporation (CBC) estimated the economic impact at around $800 million.

Russia: Agricultural Sector Suffers Due to Unpredictable Snowstorms

In Moscow, frequent snowstorms—some even appearing as late as May—have disrupted the Russian economy, particularly in agriculture. Grain market analyst Alexander Korbut highlighted that frost damage has significantly impacted fruit and berry crops, worsening food security concerns.

China: Beijing Records $1.2 Billion in Cold-related Losses

Beijing has endured prolonged cold spells, with nighttime temperatures regularly dropping below -5°C throughout January 2025. Industrial production slowed down as extreme weather conditions affected supply chains. Xinhua News reported an estimated economic loss of $1.2 billion due to the extended winter freeze.

Vietnam: Cold Snap Hits Agriculture, Causing $170,000 in Losses

Northern Vietnam has been affected by an extreme cold wave since January 2025, with mountain regions experiencing frost and freezing rain. These conditions have led to significant agricultural losses, particularly for livestock and crops. In Sơn La, 100 hectares of coffee plantations have been damaged due to prolonged frost, resulting in estimated losses of 4 billion VND ($170,000). The timing of the cold spell, occurring just before the Lunar New Year, has further strained local farmers.

Climate Change and Economic Vulnerabilities

The severity of the 2024-2025 winter underscores the increasing risks associated with climate change. Extreme weather events, including prolonged cold spells and unpredictable snowfall, disrupt global economic stability and supply chains. The mounting financial toll on infrastructure, agriculture, and energy sectors highlights the need for stronger climate resilience strategies.

The widespread economic impact of this severe winter serves as a stark reminder of the challenges posed by climate-induced weather extremes. Governments and industries must prioritize investment in climate adaptation strategies, infrastructure resilience, and early warning systems to mitigate future disruptions. As climate patterns become more erratic, proactive planning will be critical in safeguarding economic stability and reducing financial losses.

Source: VNF

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Warren Takunda

Economic

The eurozone economy grounded to a halt in the fourth quarter of 2024, as Germany and France, the bloc’s two largest economies, posted worse-than-expected contractions, reinforcing concerns over persistent economic weakness in the region.

According to preliminary data released by Eurostat on Thursday, eurozone gross domestic product (GDP) remained unchanged from the previous quarter, a sharp slowdown from the 0.4% growth recorded in the third quarter and below the 0.1% expansion forecast by analysts. This marks the weakest performance since the fourth quarter of 2023.

For the broader European Union (EU), GDP edged up 0.1% quarter-on-quarter. On an annual basis, seasonally adjusted GDP increased by 0.9% in the euro area and 1.1% in the EU, slightly improving from the previous quarter’s readings of 0.9% and 1.0%, respectively.

Germany and France disappoint, Portugal outperforms

The biggest drag on growth came from Germany and France, which both unexpectedly contracted.

Germany’s economy shrank by 0.2%, worse than the anticipated 0.1% decline, while France’s GDP fell by 0.1%, missing expectations of stagnation. Meanwhile, Italy’s economy remained flat for a second consecutive quarter, defying projections of a modest 0.1% increase.

On the other hand, some peripheral economies outperformed, with Portugal (+1.5%) leading the growth rankings, followed by Lithuania (+0.9%) and Spain (+0.8%).

The weakest performances were recorded in Ireland (-1.3%), Germany (-0.2%), and France (-0.1%).

"Once again, it is the periphery driving most of the growth, with particularly strong expansions in Portugal and Spain. France and Germany remain a drag, as both face well-documented structural and cyclical headwinds alongside political turmoil," said Kyle Chapman, FX Markets Analyst at Ballinger Group.

ECB rate cut widely expected amid weak data: More to come?

The weaker-than-expected GDP figures strengthen expectations that the European Central Bank (ECB) will cut interest rates at its policy meeting today.

Markets are fully pricing in a 25-basis-point reduction to 2.75%, and predict four rate cuts expected by the end of 2025.

Frankfurt remains under pressure to continue its rate-cutting cycle to stimulate an economy that is visibly struggling, while inflation progresses towards the ECB’s 2% target.

ECB President Christine Lagarde is expected to stress that monetary policy alone is not sufficient to revive growth and that fiscal measures, alongside structural reforms, are needed to improve competitiveness.

Policy divergence between ECB and Fed widens

The ECB’s expected rate cuts highlight a growing monetary policy divergence with the US Federal Reserve, which kept rates steady between 4.25% and 4.50% at its Wednesday meeting.

Fed Chair Jerome Powell reiterated there is “no rush” to cut rates further, highlighting the resilience of the US economy.

"The eurozone economy is fragile, facing stagnant growth and rising recession risks. Q4 GDP data confirms near-zero growth, and PMI surveys indicate ongoing manufacturing contraction. In contrast, the US economy remains robust, driven by consumer spending, a tight labour market, and AI-driven investment," said Boris Kovacevic, Global Macro Strategist at Convera.

Market reactions

The euro remained steady around $1.04 in mid-morning European trading ahead of the ECB meeting. Sovereign bond yields fell across the eurozone, reflecting increased demand for safe-haven assets.

The benchmark German Bund yield dropped 6 basis points to 2.52%, while France’s 10-year OAT yield declined to 3.26%. Italy’s BTP yield slid 7 basis points to 3.60%.

Eurozone equities saw limited reaction, with the Euro STOXX 50 index rising 0.5%. Dutch semiconductor giant ASML Holding N.V. gained 3.3%, extending its 5.5% rally from Wednesday, after posting stronger-than-expected earnings and issuing an improved outlook.

Germany’s DAX index climbed 0.2% to a new record high, although Deutsche Bank shares slumped 3.4%, as investors reacted to stagnant revenue guidance and rising costs.

Spain’s IBEX 35 outperformed, rising 0.8%, led by gains in real estate and banking stocks.

Source: Euronews

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Adam

Economic

Fed Maintains Interest Rates Amid Economic Uncertainty

On January 29, the Federal Reserve opted to keep interest rates unchanged at 4.25%-4.5%, marking a pause after three consecutive rate cuts. This decision, unanimously supported by all 12 voting members of the Federal Open Market Committee (FOMC), reflects the Fed’s measured stance amid a stable yet unpredictable economic environment.

Chairman Jerome Powell emphasized that there is no urgency to adjust rates, highlighting the Fed’s commitment to data-driven decision-making. He noted that while inflation has moderated, it remains above the 2% target, necessitating a wait-and-see approach. The central bank's decision comes at a time when macroeconomic fundamentals appear steady, yet potential policy shifts under Trump’s administration—ranging from tariffs to tax reforms—could introduce volatility.

Financial analysts, including Greg McBride from Bankrate, pointed out that progress toward the 2% inflation goal has stalled, reinforcing the Fed’s cautious stance. McBride stated that unless there is a consistent stream of positive inflation data, further rate cuts are unlikely in the near term.

Stock Market Responds With Mild Declines

Following the Fed’s announcement, U.S. equities experienced moderate losses. The Dow Jones Industrial Average dropped 225 points (0.5%) before recovering slightly to close 137 points lower (-0.31%). The S&P 500 and Nasdaq Composite also saw declines of 0.47% and 0.51%, respectively.

The market’s reaction suggests that investors had already priced in the likelihood of interest rates remaining elevated for an extended period. The Fed’s stance aligns with its signals from the December meeting, where policymakers hinted at a potential pause in rate reductions for early 2025.

Trump’s Frustration: A Clash Over Monetary Policy

President Donald Trump had publicly urged for immediate rate cuts, stating at the World Economic Forum in Davos a week earlier, "I will demand a rate cut immediately." However, the Fed’s decision to maintain its stance contradicts his expectations, further straining relations between the central bank and the White House.

During his post-meeting press conference, Powell dismissed suggestions of direct communication with Trump, reaffirming the Fed’s independence. He stressed that monetary policy decisions would be guided by economic data rather than political pressure.

Trump, however, was quick to criticize the Fed’s decision. Hours after the announcement, he took to his social media platform, Truth Social, accusing the Fed of failing to address inflationary challenges. He reiterated his plan to "boost American energy production, cut regulations, rebalance international trade, and revitalize domestic manufacturing," positioning these actions as solutions to economic instability.

The president also suggested shifting regulatory oversight of the banking sector from the Fed to the Treasury Department. However, legal experts argue that such a move would require congressional approval and could face significant resistance.

Implications for the U.S. Economy and the Fed’s Future Moves

The Fed’s decision reflects its balancing act between controlling inflation and maintaining economic growth. By keeping rates steady, it signals confidence in the economy’s resilience but also acknowledges persistent inflationary pressures.

With the next Fed policy meeting scheduled for March, attention now turns to incoming inflation and employment data. If inflation continues to decline, the Fed may consider rate cuts later in the year. However, if price pressures persist or Trump’s economic policies introduce new uncertainties, the central bank may opt for prolonged monetary tightening.

Trump’s public criticism of the Fed highlights a broader debate about the central bank’s role and independence. While his push for lower rates aligns with his pro-growth agenda, the Fed remains focused on its dual mandate—price stability and full employment—without political influence.

As the U.S. heads into an election year, monetary policy decisions will likely become even more contentious. The Fed’s ability to maintain its independence amidst political pressures will be crucial in shaping the trajectory of the U.S. economy.

Source: Reuters

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Warren Takunda

Economic

German GDP contracted more than expected in the final three months of 2024, according to flash estimates published on Thursday.

Gross domestic product (GDP) was 0.2% lower year on year in 2024 than in the previous year against estimates of 0.1%, the federal statistics office Destatis said.

"Cyclical and structural pressures stood in the way of better economic development in 2024," said Destatis president Ruth Brand on Thursday.

"These include increasing competition for the German export industry on key sales markets, high energy costs, an interest rate level that remains high, and an uncertain economic outlook. Against this backdrop, the German economy contracted once again in 2024."

In manufacturing, output was down and gross value added marked a sharp 3% decline year on year.

Key sectors, such as machinery and equipment manufacture and the automotive industry saw a marked decline in production. Production remained at a low level in energy-intensive industrial branches, which include the chemical and metal-working industries. In 2023, production had decreased considerably owing to the sharp rise in energy prices, Destatis added.

On an annual average, 46.1 million people were in employment in 2024, a rise of 72,000, or 0.2%, from the previous year and a new record high for the number of persons in employment.

However, the pace of employment growth "slowed considerably and ultimately came to a halt" towards the end of 2024. Employment gains observed in 2024 were entirely attributable to the public service, particularly education and health, while the number of people employed in industry and construction decreased.

Source: Sharecast

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Winkelmann

Economic

The World Bank’s agricultural prices index gained momentum in the second half of 2024, propelled by record-breaking price increases in beverages. However, this surge was partially offset by declining food prices. Looking ahead, agricultural prices are projected to decrease by 4 percent in 2025 before stabilizing in 2026. This outlook, however, is subject to significant risks, including extreme weather events, input cost fluctuations, trade restrictions, and long-term challenges such as climate change and evolving biofuel mandates.

Heat waves affect crop yields. The current year will likely set a record as the warmest year in recorded history, with global average temperatures surpassing pre-industrial levels by over 1.5 degrees Celsius, according to the European Space Agency. Heat waves have had widespread effects on crop yields, with notable impacts on maize, rice, soybeans, and wheat in China; rapeseed and sunflower seed in the European Union and the Black Sea region; sugarcane in Brazil; and palm oil in Indonesia. As heat waves grow in frequency, intensity, and duration, they are likely to exert upward pressure on agricultural prices, posing major challenges for global food security.

Risks and Challenges in Global Agricultural Markets_1

Declining input costs offer temporary relief. Energy and fertilizer prices are projected to decline by 6 percent and 2 percent, respectively, in 2025. These reductions reflect easing oil and coal prices, alleviating some of the cost pressures that agricultural producers faced during the 2022 and 2023 crop seasons. Notably, the fertilizer affordability index (which measures the ratio of fertilizer prices to agricultural prices) has returned to pre-pandemic levels. However, risks remain: Escalating conflicts in the Middle East or reductions in Russian natural gas exports could reverse this trend and drive up oil and natural gas prices. Such developments would likely increase fertilizer costs, potentially pushing food commodity prices higher again.

Risks and Challenges in Global Agricultural Markets_2

Trade restrictions and global supply disruptions. Trade measures, including tariffs and export bans, have increasingly disrupted global agricultural markets in recent years. For example, in 2018, U.S. soybean exports to China dropped by almost three quarters (from 31.7 to 8.2 million tons), reducing China’s share of U.S. soybean exports from 57 percent to 18 percent. Additionally, with half of the world’s population living in countries that held elections in 2024, policy shifts by new governments could further impact trade flows. Moreover, rising protectionism or renewed trade tensions may affect grain prices, global inventories, and trade partnerships.

Risks and Challenges in Global Agricultural Markets_3

Climate change is a growing threat to tropical commodities. Beyond heat waves, climate change continues to drive extreme weather patterns such as floods, hurricanes, and wildfires, which disproportionately affect tropical commodities like coffee and cocoa. These crops face unique vulnerabilities:

Long investment cycles: Tree crops take years to yield output, limiting flexibility.

Geographic concentration: These crops are often grown in specific regions, making them more susceptible to localized climate disruptions.

Limited substitutability: Unlike annual crops, tree crops cannot easily switch varieties or alternatives year-to-year.

The World Bank’s Beverage Price Index—which includes coffee, cocoa, and tea—surged 70 percent in November 2024, year-over-year, while the Food Price Index fell 6 percent during the same period. Tropical commodities remain particularly exposed to climate risks, underscoring the need for effective resilience policies and investment strategies.

Risks and Challenges in Global Agricultural Markets_4

Rising biofuel mandates. Biofuel production is expected to stabilize in 2025, supported by declining energy prices and moderate economic growth. However, evolving biofuel policies are driving higher demand for feedstocks, such as soybean oil, palm oil, sugar, and maize. Numerous countries are raising or planning to raise their biofuel mandates. For example:

Argentina and Brazil are planning to increase their biodiesel blending mandates.The European Union has imposed anti-dumping tariffs on Chinese biodiesel to boost domestic production.Indonesia plans to raise its biodiesel blend from 35 percent to 40 percent by early 2025.

With demand growth driven by emerging markets favoring higher admixtures, biofuel demand could exceed expectations, potentially raising prices for feedstocks like grains, vegetable oils, and sugar.

Risks and Challenges in Global Agricultural Markets_5

Agricultural prices are levelling off, but uncertainties remain. While the World Bank’s agricultural prices index has experienced significant fluctuations in 2024, the future remains uncertain with a projected decrease in prices in 2025 and stabilization in 2026. The agricultural sector faces numerous challenges, including extreme weather events, fluctuating input costs, trade restrictions, and the ongoing impacts of climate change and evolving biofuel policies. As we navigate these complex dynamics, it is crucial for policymakers, industry leaders, and other global players to focus on strategies that can enhance resilience and ensure a more stable and sustainable agricultural market.

Sources:WorldBank

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Warren Takunda

Cryptocurrency

Bitcoin reached a crucial breakout level on Jan. 30 as BTC price action left altcoins in the dust. Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_1

Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_1

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView

BTC price action shrugs off hawkish FOMC, DeepSeek

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $105,563 on Bitstamp, a six-day high.

Erasing the entire DeepSeek dip, Bitcoin made market participants once again hopeful of new all-time highs.

“Bitcoin structure looks flawless. It really does, from LTFs to HTFs, it really looks like it wants higher,” trader Castillo Trading wrote in a post on X.

Castillo Trading noted diverging behavior between BTC and altcoins, with the latter failing to follow its lead.

Data from CoinMarketCap confirmed that over the past seven days, Bitcoin was the only net gainer in the 15 largest cryptocurrencies by market cap, up 2.3%.

“$BTC held up well with all the turmoil, while the rest of the market had weakness,” fellow trader Pentoshi agreed.

“Don't see any reason we don't get new highs soon on this at the very least. Also above the middle of the current range and acting as support.” Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_2

Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_2

BTC/USDT 4-hour chart. Source: Pentoshi/X

Crypto trader, analyst and entrepreneur Michaël van de Poppe predicted that BTC price discovery could return “in the coming weeks,” offering February as a potential target. Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_3

Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_3

BTC/USD 1-day chart. Source: Michaël van de Poppe/X

BTC price bullish divergences “playing out nicely”

Bitcoin’s reaction to new macroeconomic uncertainty came as something of a surprise.

At the latest meeting of the Federal Open Market Committee, or FOMC, the US Federal Reserve chose not to cut interest rates, signaling an ongoing hawkish stance in an anticipated blow to crypto and risk assets.

After an initial drop, however, BTC/USD staged a quick rebound and held higher, even as markets priced in tighter financial conditions through the end of 2025. Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_4

Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_4

Fed target rate probability data (screenshot). Source: CME Group FedWatch Tool

“Last weeks lows raided & market bid liquidity taken,” trader Skew said about BTC price action around the event.

“Confirmation of market strength would be price recovery back above $105K with momentum.” Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_5

Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_5

BTC/USDT 4-hour chart. Source: Skew/X

The move higher ate through sell-side liquidity just below $104,000, with data from monitoring resource CoinGlass showing new liquidation zones appeared closer to $107,000. Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_6

Forget FOMC — Bitcoin Price Now Has 'Plenty of Room' to Reach $108K_6

BTC liquidation heatmap (screenshot). Source: CoinGlass

“Really like what I’m seeing here as I’ve been bullish this entire range,” trader Roman continued, referring to popular leading BTC price metrics.

“Stoch & RSI have plenty of room to break 108 resistance and head higher. We also have bull divs playing out nicely.”

Source: Cointelegraph

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Warren Takunda

Economic

The Federal Reserve decided to keep interest rates unchanged in the 4.25%-4.50% range during its January meeting, in line with market expectations.

Following three consecutive rate cuts totalling one percentage point, the US central bank’s policymakers opted to hit the brake at the first policy meeting since the Trump administration took office.

The US economy remains resilient, with a strong labour market. However, inflation is still deemed ‘somewhat elevated’, prompting the Fed’s committee to reiterate the cautious approach outlined in December:

"In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks."

Essentially, the timing and scale of any further rate cuts will depend on economic data and emerging risks – a notion that had sparked concerns among market participants last month.

The Fed continues to exercise caution, choosing to assess economic developments before implementing further monetary easing—a luxury not available for the European Central Bank, which faces mounting pressure to cut rates more aggressively.

Fed-ECB policy divergence grows

In December, the Fed surprised markets by raising its inflation forecast for 2025 to 2.5% and cutting its projection for interest rate reductions to just two for the year, down from four in its September outlook.

Fed Chair Jerome Powell underscored that rates are close to neutral levels and that any further cuts must be approached with great care.

While the US economy’s strength and persistent inflation are keeping Fed policymakers on edge, the situation in Europe is markedly different: economic outlook is deteriorating, and inflation is making steady progress towards the 2% target.

On Wednesday, the German government slashed its 2025 economic growth forecast to just 0.3%, down from the previous estimate of 1.1% in October.

Economy Minister Robert Habeck described the economic situation as "difficult" and warned that stagnation has persisted for an extended period, exacerbated by labour shortages, excessive bureaucracy, and insufficient public and private investment.

Market expectations currently point to two Fed rate cuts in 2025, beginning in June, while the ECB is expected to implement four rate cuts by year-end.

Euro weakens to 1.04 ahead of Powell

Following the Fed’s decision and ahead of Powell’s press conference, the euro fell to 1.04 against the US dollar, reflecting the greenback’s strength amid growing monetary policy divergence between the two economies.

Powell is also likely to face questions over Donald Trump’s renewed efforts to influence the Fed’s decision-making.

Speaking via videoconference at the World Economic Forum last week, the newly elected US president explicitly stated that he would push for lower interest rates, a stance that could increase political pressure on the central bank in the coming months.