Global Economic Highlights for April 17, 2026

1. Inflationary Pressures and Interest Rate Trajectory in Japan: A recent survey conducted from April 7 to 14 revealed that about 65% of experts anticipate the Bank of Japan (BoJ) raising its key rate to 1% by the end of June 2026 as inflation remains above its target. The yen has depreciated by around 2% against the US dollar since the start of the Middle East conflict, prompting BoJ to consider lifting interest rates to 1.5% in 2027. Despite a significant projected drop in growth in the second quarter to 0.4%, policymakers are focusing on price control to keep interest rates below the current neutral level of 0.75%.

2. South Korea Aims to Become a Global AI Hub: South Korea’s Finance Minister, Koo Yun Cheol, reaffirmed the country’s commitment to becoming a global hub for artificial intelligence (AI) by attracting international organizations like the World Bank and Asian Development Bank to establish AI centers. South Korea plans to focus on areas such as high-bandwidth memory chips, sensor chips, and small-scale AI language models for applications in shipbuilding and automotive industries to maintain a competitive edge over the US.

3. G7 Prepares to Intervene to Ease Middle East Conflict: Finance ministers and central bank governors from the G7 have pledged urgent intervention measures to limit global economic losses resulting from the ongoing Middle East conflict. The G7 is considering market regulation options, including blocking oil from strategic reserves, in response to the energy price surge caused by the blockade of the Strait of Hormuz.

4. US Dollar Declines for Second Consecutive Week: The US dollar index held at 98.212 points on April 17, marking its second consecutive week of decline. Signs of a ceasefire in the Middle East led investors to move away from safe-haven assets, while optimism about a potential US-Iran meeting allowed several currencies to recover losses.

5. Aluminum Prices Reach Historic Highs Due to Supply Shortages: Global aluminum prices have surged 15% since late February 2026, driving the LMEX metals index to record levels due to severe supply disruptions in the Middle East. JPMorgan warned of an unprecedented aluminum industry shortage following damages to facilities in the United Arab Emirates and Bahrain.

6. Europe Faces Aviation Fuel Shortage: The International Energy Agency (IEA) warns that European aviation fuel reserves are only sufficient for about six weeks due to disruptions in air traffic in the Strait of Hormuz. Major airlines like Lufthansa have started reducing capacities and canceling thousands of flights as fuel prices surged over 100%.

7. IMF Urges ECB to Raise Interest Rates to Control Inflation: The International Monetary Fund (IMF) recommends that the European Central Bank (ECB) implement two major rate hikes of about 50 basis points each in 2026 to curb the energy price spike caused by the Strait of Hormuz closure.

8. AI Sector Faces Infrastructure Shortage: The rapid growth of AI entities has created a frenzy for computing resources, leading to a significant imbalance between supply and demand in GPU rentals and impacting projects of major companies like OpenAI and Anthropic.

Source: Baotintuc