If a conflict drives global uncertainty and causes investors to pour money into dollars, pushing up the value of the currency, it could actually make United States imports cheaper.

Other trade risks loom. Unrest at the nexus of Europe and Asia could pose risk for supply chains that have been roiled by the pandemic.

Phil Levy, the chief economist at Flexport, said that Russia and Ukraine were far less linked into global supply chains than a country like China, but that conflict in the area could disrupt flights from Asia to Europe. That could pose a challenge for industries that move products by air, like electronics, fast fashion and even automakers, he said at an event at the National Press Foundation on Feb. 9.

“Air has been a means of getting around supply chain problems,” Mr. Levy said. “If your factory was going to shut because you don’t have a key part, you might fly in that key part.”

Some companies may not yet realize their true exposure to a potential crisis.

Victor Meyer, the chief operating officer of Supply Wisdom, which helps companies analyze their supply chains for risk, said that some companies were surprised by the extent of their exposure to the region during the Russian invasion of Ukraine in 2014, when it annexed Crimea.

Mr. Meyer noted that if he were a chief security officer of a company with ties to Ukraine, “I would militate rather strongly to unwind my exposure.”

There could also be other indirect effects on the economy, including rattling consumer confidence.

Households are sitting on cash stockpiles and probably could afford higher prices at the pump, but climbing energy costs are likely to make them unhappy at a moment when prices overall are already climbing and economic sentiment has swooned.

“The hit would be easily absorbed, but it would make consumers even more miserable, and we have to assume that a war in Europe would depress confidence directly too,” Ian Shepherdson at Pantheon Macroeconomics wrote in a Feb. 15 note.

Another risk to American economic activity may be underrated, Mr. Obstfeld said: The threat of cyberattack. Russia could respond to sanctions from the United States with digital retaliation, roiling digital life at a time when the internet has become central to economic existence.

“The Russians are the best in the world at this,” he said. “And we don’t know the extent to which they have burrowed into our systems.”

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U.S. should boost financing to Caribbean nations: Antigua PM

Antigua and Barbuda’s Prime Minister Gaston Browne poses for photo in this undated handout picture distributed to Reuters on January 25, 2022. Government of Antigua and Barbuda/Handout via REUTERS

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MIAMI, Jan 26 (Reuters) – The United States should increase financing and aid to the Caribbean to help the region recover from the pandemic and cope with the growing impact of climate change, Antigua and Barbuda Prime Minister Gaston Browne said in an interview.

Countries in the region are facing unsustainable debt loads often equivalent to 100% of gross domestic product (GDP), Browne said, adding that many have been relying on loans from China due to favorable terms offered by Chinese banks.

“I feel that the U.S. ought to pay more attention to the Caribbean region in helping us to maintain our standard of living to avoid any mass movement of people,” he said in a telephone interview on Tuesday.

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“If people are unable to live in (Caribbean) countries, then clearly they’ll end up on the shores of the United States as refugees.”

China has lent over $4 billion to Caribbean nations in the last 10 years, according to figures compiled by the Washington-based Inter-American Dialogue, much of which has gone to finance infrastructure development.

The conditions of those loans are more favorable than even those provided by multilateral agencies such as the International Monetary Fund (IMF), Browne said, adding that borrowing from Chinese banks should not be understood as a political statement.

The U.S. State Department did not immediately reply to a request for comment.

The Caribbean was disproportionately affected by the COVID-19 pandemic, according to the IMF, which last year said tourism-dependent countries in the region saw economies contract by 9.8% in 2020.

Many struggle to get aid because multilateral agencies tend to classify them as a middle- or high-income nations based on per-capita GDP measurements, which do not factor in the higher costs facing small island nations or their vulnerability to climate change.

Sustained U.S. support for changing those criteria would provide a significant boost for the Caribbean, Browne said.

“We expect the United States would use its influence in the multinational financial institutions to effect that change,” Browne said, adding he had not seen evidence that this was happening.

The vast majority of some $336 million in U.S. aid to members of the Caribbean Community, or Caricom, goes to Haiti, with only around $70 million being distributed among 13 other countries, he said. The population of those countries is around 7.5 million.

“It’s just miniscule,” Browne said.

Antigua and Barbuda, a nation of two main islands and several smaller ones in the northeastern Caribbean, has, like other countries in the region, faced growing expenses associated with extreme weather events.

Hurricane Irma in 2017 ravaged Barbuda, leaving all buildings uninhabitable and forcing the evacuation of all residents for nearly 18 months. Reconstruction costs were in excess of $200 million.

Antigua and Barbuda bore most of those costs, but got only $169,000 in aid from the United States in 2019, Browne said.

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Reporting by Brian Ellsworth in Miami; editing by Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

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Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy

The price increases bedeviling consumers, businesses and policymakers worldwide have prompted a heated debate in Washington about how much of today’s rapid inflation is a result of policy choices in the United States and how much stems from global factors tied to the pandemic, like snarled supply chains.

At a moment when stubbornly rapid price gains are weighing on consumer confidence and creating a political liability for President Biden, White House officials have repeatedly blamed international forces for high inflation, including factory shutdowns in Asia and overtaxed shipping routes that are causing shortages and pushing up prices everywhere. The officials increasingly cite high inflation in places including the euro area, where prices are climbing at the fastest pace on record, as a sign that the world is experiencing a shared moment of price pain, deflecting the blame away from U.S. policy.

But a chorus of economists point to government policies as a big part of the reason U.S. inflation is at a 40-year high. While they agree that prices are rising as a result of shutdowns and supply chain woes, they say that America’s decision to flood the economy with stimulus money helped to send consumer spending into overdrive, exacerbating those global trends.

The world’s trade machine is producing, shipping and delivering more goods to American consumers than it ever has, as people flush with cash buy couches, cars and home office equipment, but supply chains just haven’t been able to keep up with that supercharged demand.

by 7 percent in the year through December, its fastest pace since 1982. But in recent months, it has also moved up sharply across many countries, a fact administration officials have emphasized.

“The inflation has everything to do with the supply chain,” President Biden said during a news conference on Wednesday. “While there are differences country by country, this is a global phenomenon and driven by these global issues,” Jen Psaki, the White House press secretary, said after the latest inflation data were released.

the euro area. Data released in the United Kingdom and in Canada on Wednesday showed prices accelerating at their fastest rate in 30 years in both countries. Inflation in the eurozone, which is measured differently from how the U.S. calculates it, climbed to an annual rate of 5 percent in December, according to an initial estimate by the European Union statistics office.

“The U.S. is hardly an island amidst this storm of supply disruptions and rising demand, especially for goods and commodities,” said Eswar Prasad, a professor of trade policy at Cornell University and a senior fellow at the Brookings Institution.

But some economists point out that even as inflation proves pervasive around the globe, it has been more pronounced in America than elsewhere.

“The United States has had much more inflation than almost any other advanced economy in the world,” said Jason Furman, an economist at Harvard University and former Obama administration economic adviser, who used comparable methodologies to look across areas and concluded that U.S. price increases have been consistently faster.

The difference, he said, comes because “the United States’ stimulus is in a category of its own.”

White House officials have argued that differences in “core” inflation — which excludes food and fuel — have been small between the United States and other major economies over the past six months. And the gaps all but disappear if you strip out car prices, which are up sharply and have a bigger impact in the United States, where consumers buy more automobiles. (Mr. Furman argued that people who didn’t buy cars would have spent their money on something else and that simply eliminating them from the U.S. consumption basket is not fair.)

Administration officials have also noted that the United States has seen a robust rebound in economic growth. The International Monetary Fund said in October that it expected U.S. output to climb by 6 percent in 2021 and 5.2 percent in 2022, compared with 5 percent growth last year in the euro area and 4.3 percent growth projected for this year.

“To the extent that we got more heat, we got a lot more growth for it,” said Jared Bernstein, a member of the White House Council of Economic Advisers.

$5 trillion in spending in 2020 and 2021. That outstripped the response in other major economies as a share of the nation’s output, according to data compiled by the International Monetary Fund.

Many economists supported protecting workers and businesses early in the pandemic, but some took issue with the size of the $1.9 trillion package last March under the Biden administration. They argued that sending households another round of stimulus, including $1,400 checks, further fueled demand when the economy was already healing.

Consumer spending seemed to react: Retail sales, for instance, jumped after the checks went out.

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation costs and toys.

Americans found themselves with a lot of money in the bank, and as they spent that money on goods, demand collided with a global supply chain that was too fragile to catch up.

Virus outbreaks shut down factories, ports faced backlogs and a dearth of truckers roiled transit routes. Americans still managed to buy more goods than ever before in 2021, and foreign factories sent a record sum of products to U.S. shops and doorsteps. But all that shopping wasn’t enough to satisfy consumer demand.

stop spending at the start of the pandemic helped to swell savings stockpiles.

And the Federal Reserve’s interest rates are at rock bottom, which has bolstered demand for big purchases made on credit, from houses and cars to business investments like machinery and computers. Families have been taking on more housing and auto debt, data from the Federal Reserve Bank of New York shows, helping to pump up those sectors.

But if stimulus-driven demand is fueling inflation, the diagnosis could come with a silver lining. It may be easier to temper consumer spending than to rapidly reorient tangled supply lines.

People may naturally begin to buy less as government help fades. Spending could shift away from goods and back toward services if the pandemic abates. And the Fed’s policies work on demand — not supply.

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World’s Growth Cools and the Rich-Poor Divide Widens

As the world economy struggles to find its footing, the resurgence of the coronavirus and supply chain chokeholds threaten to hold back the global recovery’s momentum, a closely watched report warned on Tuesday.

The overall growth rate will remain near 6 percent this year, a historically high level after a recession, but the expansion reflects a vast divergence in the fortunes of rich and poor countries, the International Monetary Fund said in its latest World Economic Outlook report.

Worldwide poverty, hunger and unmanageable debt are all on the upswing. Employment has fallen, especially for women, reversing many of the gains they made in recent years.

Uneven access to vaccines and health care is at the heart of the economic disparities. While booster shots are becoming available in some wealthier nations, a staggering 96 percent of people in low-income countries are still unvaccinated.

restrictions and bottlenecks at key ports around the world have caused crippling supply shortages. A lack of workers in many industries is contributing to the clogs. The U.S. Labor Department reported Tuesday that a record 4.3 million workers quit their jobs in August — to take or seek new jobs, or to leave the work force.

Germany, manufacturing output has taken a hit because key commodities are hard to find. And lockdown measures over the summer have dampened growth in Japan.

Fear of rising inflation — even if likely to be temporary — is growing. Prices are climbing for food, medicine and oil as well as for cars and trucks. Inflation worries could also limit governments’ ability to stimulate the economy if a slowdown worsens. As it is, the unusual infusion of public support in the United States and Europe is winding down.

6 percent projected in July. For 2022, the estimate is 4.9 percent.

The key to understanding the global economy is that recoveries in different countries are out of sync, said Gregory Daco, chief U.S. economist at Oxford Economics. “Each and every economy is suffering or benefiting from its own idiosyncratic factors,” he said.

For countries like China, Vietnam and South Korea, whose economies have large manufacturing sectors, “inflation hits them where it hurts the most,” Mr. Daco said, raising costs of raw materials that reverberate through the production process.

The pandemic has underscored how economic success or failure in one country can ripple throughout the world. Floods in Shanxi, China’s mining region, and monsoons in India’s coal-producing states contribute to rising energy prices. A Covid outbreak in Ho Chi Minh City that shuts factories means shop owners in Hoboken won’t have shoes and sweaters to sell.

worldwide surge in energy prices threatens to impose more hardship as it hampers the recovery. This week, oil prices hit a seven-year high in the United States. With winter approaching, Europeans are worried that heating costs will soar when temperatures drop. In other spots, the shortages have cut even deeper, causing blackouts in some places that paralyzed transport, closed factories and threatened food supplies.

China, electricity is being rationed in many provinces and many companies are operating at less than half of their capacity, contributing to an already significant slowdown in growth. India’s coal reserves have dropped to dangerously low levels.

And over the weekend, Lebanon’s six million residents were left without any power for more than 24 hours after fuel shortages shut down the nation’s power plants. The outage is just the latest in a series of disasters there. Its economic and financial crisis has been one of the world’s worst in 150 years.

Oil producers in the Middle East and elsewhere are lately benefiting from the jump in prices. But many nations in the region and North Africa are still trying to resuscitate their pandemic-battered economies. According to newly updated reports from the World Bank, 13 of the 16 countries in that region will have lower standards of living this year than they did before the pandemic, in large part because of “underfinanced, imbalanced and ill-prepared health systems.”

Other countries were so overburdened by debt even before the pandemic that governments were forced to limit spending on health care to repay foreign lenders.

In Latin America and the Caribbean, there are fears of a second lost decade of growth like the one experienced after 2010. In South Africa, over one-third of the population is out of work.

And in East Asia and the Pacific, a World Bank update warned that “Covid-19 threatens to create a combination of slow growth and increasing inequality for the first time this century.” Businesses in Indonesia, Mongolia and the Philippines lost on average 40 percent or more of their typical monthly sales. Thailand and many Pacific island economies are expected to have less output in 2023 than they did before the pandemic.

debt ceiling — can further set back the recovery, the I.M.F. warned.

But the biggest risk is the emergence of a more infectious and deadlier coronavirus variant.

Ms. Gopinath at the I.M.F. urged vaccine manufacturers to support the expansion of vaccine production in developing countries.

Earlier this year, the I.M.F. approved $650 billion worth of emergency currency reserves that have been distributed to countries around the world. In this latest report, it again called on wealthy countries to help ensure that these funds are used to benefit poor countries that have been struggling the most with the fallout of the virus.

“We’re witnessing what I call tragic reversals in development across many dimensions,” said David Malpass, the president of the World Bank. “Progress in reducing extreme poverty has been set back by years — for some, by a decade.”

Ben Casselman contributed reporting.

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New Taliban Chancellor Bars Women From Kabul University

Tightening the Taliban’s restrictions on women, the group’s new chancellor for Kabul University announced on Monday that women would be indefinitely banned from the institution either as instructors or students.

“I give you my words as chancellor of Kabul University,” Mohammad Ashraf Ghairat said in a Tweet on Monday. “As long as a real Islamic environment is not provided for all, women will not be allowed to come to universities or work. Islam first.”

The new university policy echoes the Taliban’s first time in power, in the 1990s, when women were only allowed in public if accompanied by a male relative and would be beaten for disobeying, and were kept from school entirely.

Some female staff members, who have worked in relative freedom over the past two decades, pushed back against the new decree, questioning the idea that the Taliban had a monopoly on defining the Islamic faith.

funding from the World Bank and the International Monetary Fund. That effectively deprived thousands of government workers and teachers of their salaries.

According to estimates by lecturers who spoke with The Times, more than half of the country’s professors have left their jobs. Kabul University has lost a quarter of its faculty, one of the university’s board members said, adding that in some departments, like Spanish and French language, there are no teachers left.

“Kabul University is facing a brain drain,” said Sami Mahdi, a journalist and former lecturer at Kabul University School of Public Policy, who spoke over the phone from Ankara, Turkey. He flew out of the country the day before Kabul fell to the Taliban, he said, but has kept in touch with his students back home. “They are disheartened — especially the girls, because they know that they won’t be able to go back,” he said.

gunmen from ISIS walked into a classroom in Kabul University and opened fire, killing 22 of her classmates. After escaping through a window to save her life, she was shot in the hand while running from the building.

She was left traumatized and with chronic pain, but still continued to attend classes. By August, when Taliban soldiers entered Kabul, she was only months away from receiving her degree. But now the Taliban decree appears to have rendered her dream impossible.

“All the hard work I have done so far looks like it is gone,” she said. “I find myself wishing I had died in that attack with my classmates instead of living to see this.”

Wali Arian and Lara Jakes contributed reporting.

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How China Plans to Avert an Evergrande Financial Crisis

“The government can place them under watch and pressure them through their employers or relatives not to make trouble,” said Minxin Pei, a professor of government at Claremont McKenna College who is writing a study of China’s domestic security apparatus.

China has a lot riding on its ability to contain the fallout from an Evergrande collapse. After Xi Jinping, China’s most powerful leader in generations, began his second term in 2017, he identified reining in financial risk as one of the “great battles” for his administration. As he approaches a likely third term in power that would start next year, it could be politically damaging if his government were to mismanage Evergrande.

But China’s problem may be that it controls financial panics too well. Economists inside and outside the country argue that its safeguards have coddled Chinese investors, leaving them too willing to lend money to large companies with weak prospects for repaying it. Over the longer term, though, China’s bigger risk may be that it follows in the footsteps of Japan, which saw years of economic stagnation under the weight of huge debt and slow, unproductive companies.

By not forcefully signaling an Evergrande bailout, the Chinese government is essentially trying to force both investors and Chinese companies to stop channeling money to risky, heavily indebted companies. Yet that approach carries risks, especially if a disorderly collapse upsets China’s legions of home buyers or unnerves potential investors in the property market.

An abrupt default by Evergrande on a wide range of debts “would be a useful catalyst for market discipline, but could also sour both domestic and foreign investor sentiment,” said Eswar Prasad, an economics professor at Cornell University who is a former head of the China division at the International Monetary Fund.

Some global investors worry that Evergrande’s problems represent a “Lehman moment,” a reference to the 2008 collapse of the Lehman Brothers investment bank, which heralded the global financial crisis. Evergrande’s collapse, they warn, could expose other debt problems in China and hit foreign investors, who hold considerable amounts of Evergrande debt, and other property developers in the country.

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A Million Afghan Children Could Die in ‘Most Perilous Hour,’ U.N. Warns

Millions of Afghans could run out of food before the arrival of winter and one million children are at risk of starvation and death if their immediate needs are not met, top United Nations officials warned on Monday, putting the country’s plight into stark relief.

Secretary General António Guterres, speaking at a high-level U.N. conference in Geneva convened to address the crisis, said that since the Taliban takeover in Afghanistan last month, the nation’s poverty rate has soared and basic public services have neared collapse and, in the past year, hundreds of thousands of people have been made homeless after being forced to flee fighting.

“After decades of war, suffering and insecurity, they face perhaps their most perilous hour,” Mr. Guterres said, adding that one in three Afghans do not know where they will get their next meal.

The deepening humanitarian crisis tops a dizzying array of challenges confronting the new Taliban regime as it navigates governing a country propped up for decades by aid from international donors.

face potential collapse. At a local hospital in Chak-e Wardak, administrators have been unable to pay salaries or purchase new medicines with banks still closed, according to Faridullah, the facility’s resident doctor.

as drought enveloped the nation.

On Monday, in his first public remarks to Congress, Secretary of State Antony J. Blinken defended the Biden administration’s withdrawal from Afghanistan, saying there was no reason to believe the country would have stabilized had the United States remained.

“There’s no evidence that staying longer would have made the Afghan security forces or the Afghan government any more resilient or self-sustaining,” Mr. Blinken told the House Foreign Affairs Committee, in a live teleconference call. “If 20 years and hundreds of billions of dollars in support, equipment, and training did not suffice, why would another year, or five, or 10, make a difference?”

international aid workers having fled the country out of safety concerns. Those who remain are unsure if they will be able to continue their work.

During the conference on Monday, the U.N. said it needed $606 million in emergency funding to address the immediate crisis, while acknowledging that money alone will not be enough. The organization has pressed the Taliban to provide assurances that aid workers can go about their business safely. By the end of the gathering, international pledges had surpassed the amount requested.

But even as the Taliban sought to make that pledge, the U.N.’s human rights chief, Michelle Bachelet, also speaking in Geneva, said Afghanistan was in a “new and perilous phase” since the militant Islamist group seized power.

“In contradiction to assurances that the Taliban would uphold women’s rights, over the past three weeks, women have instead been progressively excluded from the public sphere,” she said, a warning that the Taliban would need to use more than words to demonstrate their commitment to aid workers’ safety.

Monday’s conference was also intended to drive home the enormousness of the crisis and offer some reassurance to Western governments hesitant to provide assistance that could legitimize the authority of a Taliban government that includes leaders identified by the U.N. as international terrorists with links to Al Qaeda.

their origin story and their record as rulers.

On Sunday, Taliban authorities sent assurances that they would facilitate humanitarian aid deliveries by road, he said.

some $12 billion in assistance to Afghanistan over four years.

While the Taliban did not have a representative in Geneva for the meeting, Zabihullah Mujahid, the Taliban’s deputy information and culture minister, said the government welcomed all humanitarian efforts by any nation, including the United States.

He also acknowledged that not even the Taliban expected to be in control of the country so quickly.

“It was a surprise for us how the former administration abandoned the government,” he said. “We were not fully prepared for that and are still trying to figure things out to manage the crisis and try to help people in any way possible.”

More than half a million Afghans were driven from their homes by fighting and insecurity this year, bringing the total number of people displaced within the country to 3.5 million, Filippo Grandi, the U.N. refugee chief said.

The danger of economic collapse raised the possibility of stoking an outflow of refugees to neighboring countries.

Said, 33, lived in Kunduz before fleeing to Kabul, where he now lives in a tent in a park. He has been there with his wife and three children for a month.

“It’s cold here, we have no food, no shelter, and we can’t find a job in this city,” he said, adding that he had not received any aid. “We all have children and they need food and shelter, and it’s not easy to live here.”

Jim Huylebroek contributed reporting from Chak-e Wardak, Afghanistan. Sami Sahak also contributed reporting.

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