In recent years, emerging markets have often raised interest rates in anticipation of the Fed’s slow and steady moves to avoid big swings in their currency values, which depend partly on interest rate differences across borders. But this set of rate increases is different: Inflation is running at its fastest pace in decades in many places, and a range of developed-economy central banks, including the European Central Bank, the Swiss National Bank, the Bank of Canada and the Reserve Bank of Australia, are joining — or may join — the Fed in pushing rates quickly higher.

“It’s not something we’ve seen in the last few decades,” said Bruce Kasman, chief economist and head of global economic research at JPMorgan Chase.

The last time so many major nations abruptly raised rates in tandem to fight such rapid inflation was in the 1980s, when the contours of global central banking were different: The 19-country euro currency bloc that the E.C.B. sets policy for did not exist yet, and global financial markets were less developed.

That so many central banks are now facing off against rapid inflation — and trying to control it by slowing their economies — increases the chance for market turmoil as an era of very low rates ends and as nations and companies try to adjust to changing capital flows. Those changing flows can influence whether countries and businesses are able to sell debt and other securities to raise money.

“Financial conditions have tightened due to rising, broad-based inflationary pressures, geopolitical uncertainty brought on by Russia’s war against Ukraine, and a slowdown in global growth,” Janet L. Yellen, the U.S. Treasury secretary, said in speech last week. “Now, portfolio investment is beginning to flow out of emerging markets.”

fastest pace since 1983. In the United Kingdom, it is similarly at a 40-year-high.

kick off rate increases back in December and has been steadily raising rates since. Policymakers are increasingly worried about inflation creating a cost-of-living crisis in Britain and worry that higher rates could compound economic pain. At the same time, they have signaled that they could act more forcefully, taking their cue from their global peers. There is a “willingness — should circumstances require — to adopt a faster pace of tightening,” Huw Pill, the chief economist of the Bank of England, said this month.

“Many central banks are looking at this as a sort of existential question about getting inflation and inflation expectations down,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank.

The Fed raised rates by a quarter point in March, half a point in May, and three-quarters of a percentage point in June. While its officials have predicted that they will maintain that pace in July, they have also been clear that an even bigger rate increase is possible.

“Inflation has to be our focus, every meeting and every day,” Christopher Waller, a Fed governor, said during a speech last week. “The spending and pricing decisions people and businesses make every day depend on their expectations of future inflation, which in turn depend on whether they believe the Fed is sufficiently committed to its inflation target.”

The Bank of Canada has already gone for a full percentage point move, surprising investors last week with its largest move since 1998, while warning of more to come.

said in a statement.

of other central banks have made big moves. More action is coming. Central banks around the world have been clear that they expect to keep moving borrowing costs higher into the autumn.

“I wouldn’t say we’re at peak tightening quite yet,” said Brendan McKenna, an economist at Wells Fargo. “We could go even more aggressive from here.”

A key question is what that will mean for the global economy. The World Bank in June projected in a report that global growth would slow sharply this year but remain positive. Still, there is “considerable” risk of a situation in which growth stagnates and inflation remains high, David Malpass, head of the World Bank, wrote.

If inflation does become entrenched, or even show signs of shifting expectations, central banks may have to respond even more aggressively than they are now, intentionally crushing growth.

Mr. Kasman said the open question, when it comes to the Fed, is: “How far have they gone toward the conclusion that they need to kick us in the teeth, here?”

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Pakistan to get $4 billion from friendly countries to shore up reserves, finance minister says

>>> Don’t Miss Today’s BEST Amazon Deals!<<<<

People wait for their turn to buy low-priced bun-kabab from a shop in Karachi, Pakistan June 10, 2022. REUTERS/Akhtar Soomro

Register now for FREE unlimited access to Reuters.com

ISLAMABAD, July 16 (Reuters) – Pakistan is likely to get $4 billion from friendly countries this month to bridge a gap in foreign reserves highlighted by the International Monetary Fund, the country’s finance minister said, two days after sealing a deal with the lender.

The IMF has reached a staff level agreement with Pakistan that would pave the way for a disbursement of $1.17 billion. The board is also considering adding $1 billion to a $6 billion programme agreed in 2019. read more

“As per the IMF, there is a $4 billion gap,” the minister, Miftah Ismail, told a news conference in Islamabad, referring to the shortfall in foreign reserves.

Register now for FREE unlimited access to Reuters.com

“We will, God willing, fill this gap in the month of July,” he said. “We think that we will get $1.2 billion in deferred oil payment from a friendly country. We think that a foreign country will invest between $1.5 to $2 billion in stocks on a G2G (government-to-government) basis, and another friendly country will perhaps give us gas on deferred payment and another friendly country will make some deposits.”

Depleting reserves, a widening current account deficit and the depreciation of the Pakistani rupee against the U.S. dollar have left the South Asian nation facing a balance of payment crisis.

Without the IMF deal, which should open up other avenues for external finance, Ismail said the country could have headed towards default.

He said the country will also get around $6 billion from the World Bank and the Asian Development Bank in FY2022-2023.

Pakistan secured a $6 billion IMF programme in 2019, but less than half of that amount has been disbursed to date.

Pakistan’s central bank has hiked its key interest rate to 15% to curb inflation, which hit 21.3% in June.

Register now for FREE unlimited access to Reuters.com

Reporting by Asif Shahzad; Editing by Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Gustavo Petro Wins the Election, Becoming Colombia’s First Leftist Leader

BOGOTÁ, Colombia — For the first time, Colombia will have a leftist president.

Gustavo Petro, a former rebel and a longtime legislator, won Colombia’s presidential election on Sunday, galvanizing voters frustrated by decades of poverty and inequality under conservative leaders, with promises to expand social programs, tax the wealthy and move away from an economy he has called overly reliant on fossil fuels.

His victory sets the third largest nation in Latin America on a sharply uncertain path, just as it faces rising poverty and violence that have sent record numbers of Colombians to the United States border; high levels of deforestation in the Colombian Amazon, a key buffer against climate change; and a growing distrust of key democratic institutions, which has become a trend in the region.

Mr. Petro, 62, received more than 50 percent of the vote, with more than 99 percent counted Sunday evening. His opponent, Rodolfo Hernández, a construction magnate who had energized the country with a scorched-earth anti-corruption platform, won just over 47 percent.

official figures.

part of a different rebel group, called the M-19, which demobilized in 1990, and became a political party that helped rewrite the country’s constitution. Eventually, Mr. Petro became a forceful leader in the country’s opposition, known for denouncing human rights abuses and corruption.

called his energy plan “economic suicide.”

riddled with corruption and frivolous spending. He had called for combining ministries, eliminating some embassies and firing inefficient government employees, while using savings to help the poor.

One Hernández supporter, Nilia Mesa de Reyes, 70, a retired ethics professor who voted in an affluent section of Bogotá, said that Mr. Petro’s leftist policies, and his past with the M-19, terrified her. “We’re thinking about leaving the country,” she said.

Mr. Petro’s critics, including former allies, have accused him of arrogance that leads him to ignore advisers and struggle to build consensus. When he takes office in August, he will face a deeply polarized society where polls show growing distrust in almost all major institutions.

He has vowed to serve as the president of all Colombians, not just those who voted for him.

On Sunday, at a high school-turned-polling station in Bogotá, Ingrid Forrero, 31, said she saw a generational divide in her community, with young people supporting Mr. Petro and older generations in favor of Mr. Hernández.

Her own family calls her the “little rebel” because of her support for Mr. Petro, whom she said she favors because of his policies on education and income inequality.

“The youth is more inclined toward revolution,” she said, “toward the left, toward a change.”

Megan Janetsky contributed reporting from Bucaramanga, Colombia, and Sofía Villamil and Genevieve Glatsky contributed reporting from Bogotá.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Global Growth Will Be Choked Amid Inflation and War, World Bank Says

For large and small nations around the globe, the prospect of averting a recession is fading.

That grim prognosis came in a report Tuesday from the World Bank, which warned that the grinding war in Ukraine, supply chain chokeholds, Covid-related lockdowns in China, and dizzying rises in energy and food prices are exacting a growing toll on economies all along the income ladder. This suite of problems is “hammering growth,” David Malpass, the bank’s president, said in a statement. “For many countries, recession will be hard to avoid.”

World growth is expected to slow to 2.9 percent this year from 5.7 percent in 2021. The outlook, delivered in the bank’s Global Economic Prospects report, is not only darker than one produced six months ago, before Russia’s invasion of Ukraine, but also below the 3.6 percent forecast in April by the International Monetary Fund.

Growth is expected to remain muted next year. And for the remainder of this decade, it is forecast to fall below the average achieved in the previous decade.

poorer, hungrier and less secure.

Roughly 75 million more people will face extreme poverty than were expected to before the pandemic.

Per capita income in developing economies is also expected to fall 5 percent below where it was headed before the pandemic hit, the World Bank report said. At the same time, government debt loads are getting heavier, a burden that will grow as interest rates increase and raise the cost of borrowing.

“In Egypt more than half of the population is eligible for subsidized bread,” said Beata Javorcik, chief economist at the European Bank for Reconstruction and Development. “Now, that’s going to be much more expensive for government coffers, and it’s happening where countries are already more indebted than before.”

stock market’s woes. The conflict has caused​​ dizzying spikes in gas prices and product shortages, and is pushing Europe to reconsider its reliance on Russian energy sources.

“Insecurity and violence continue to weigh on the outlook” for many low-income countries, the World Bank said, while “more rapid increases in living costs risk further escalating social unrest.” Several studies have pointed to rising food prices as an important trigger for the Arab Spring uprisings in 2011.

In Latin American and the Caribbean, growth is expected to slow to 2.5 percent from 6.7 percent last year. India’s total output is forecast to drop to 7.5 percent from 8.7 percent, while Japan’s is expected to remain flat at 1.7 percent.

The World Bank, founded in the shadow of World War II to help rebuild ravaged economies, provides financial support to low- and middle-income nations. It reiterated its familiar basket of remedies, which include limiting government spending, using interest rates to dampen inflation and avoiding trade restrictions, price controls and subsidies.

Managing to tame inflation without sending the economy into a tailspin is a difficult task no matter what the policy choices are — which is why the risks of stagflation are so high.

At the same time, the United States, the European Union and allies are struggling to isolate Russia, starving it of resources to wage war, without crippling their own economies. Many countries in Europe, including Germany and Hungary, are heavily dependent on either Russian oil or gas.

The string of disasters — the pandemic, droughts and war — is injecting a large dose of uncertainty and draining confidence.

Among its economic prescriptions, the World Bank underscored that leaders should make it a priority to use public spending to shield the most vulnerable people.

That protection includes blunting the impact of rising food and energy prices as well as ensuring that low-income countries have sufficient supplies of Covid vaccines. So far, only 14 percent of people in low-income countries have been fully vaccinated.

“Renewed outbreaks of Covid-19 remain a risk in all regions, particularly those with lower vaccination coverage,” the report said.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Russia’s GDP decline could hit 12.4% this year, economy ministry document shows, article with image

>>> Don’t Miss Today’s BEST Amazon Deals!<<<<

A general view of the city skyline during sunset as the spread of the coronavirus disease (COVID-19) continues, in Moscow, Russia May 14, 2020. REUTERS/Maxim Shemetov

Register now for FREE unlimited access to Reuters.com

April 27 (Reuters) – Russia expects the economy to contract by 8.8% in 2022 in its base case scenario, or by 12.4% under a more conservative scenario, an economy ministry document showed on Wednesday, further evidence that sanctions pressure is taking its toll.

The conservative forecast is in line with that of former finance minister Alexei Kudrin, who said earlier this month the economy was on track to contract by more than 10% this year in its biggest decline in gross domestic product since 1994. read more

The economy ministry expects Russia’s economy to grow 1.3% in 2023, 4.6% in 2024 and 2.8% in 2025, the document showed. In the conservative scenario, the economy is seen contracting 1.1%.

Register now for FREE unlimited access to Reuters.com

The extent of the damage to the economy this year is unclear due to uncertainty regarding possible new sanctions and trade issues. The government is likely to revise forecasts several times this year.

Inflation, which has already soared to 17.62% as of April 15, is seen accelerating to as high as 22.6% this year, the document showed, and remaining well above the central bank’s 4% target in 2023.

The central bank hiked rates to 20% from 9.5% in late February in an emergency move that Governor Elvira Nabiullina said helped stabilise the rouble and overcome an inflation spike.

The bank’s key rate was lowered to 17% on April 8 in another unscheduled move. Analysts polled by Reuters now expect rates to fall further, by 200 basis points to 15%, at the bank’s next rate-setting meeting on Friday.

Capital investment is set to slump by 25.4-31.8% after growth of 7.7% in 2021, while real disposable incomes, a highly sensitive metric for Russia, especially with rising prices hitting living standards, could drop 9.7% in 2022, according to the ministry’s conservative estimate.

The World Bank has forecast Russia’s 2022 GDP output will fall by 11.2% due to Western sanctions imposed on Russia’s banks, state-owned enterprises and other institutions. read more

Register now for FREE unlimited access to Reuters.com

Reporting by Reuters; Editing by Alex Richardson and Angus MacSwan

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Deadly Clashes in Beirut Escalate Fears Over Lebanon’s Dysfunction

BEIRUT, Lebanon — Armed clashes between sectarian militias transformed Beirut neighborhoods into a deadly war zone on Thursday, raising fears that violence could fill the void left by the near-collapse of the Lebanese state.

Rival gunmen, chanting in support of their leaders, hid behind cars and dumpsters to fire automatic weapons and rocket-propelled grenades at their rivals. At least six people were killed and 30 wounded. Residents cowered in their homes, and teachers herded children into the hallways and basements of schools to protect them from the shooting.

It was some of the worst violence in years to convulse Beirut, aggravating the sense of instability in a small country already buffeted by devastating political and economic crises and inviting recollections of its civil war that ended more than three decades ago.

Since the fall of 2019, Lebanon’s currency has plummeted more than 90 percent in value, battering the economy and reducing Lebanese who were comfortably middle class to poverty. The World Bank has said Lebanon’s economic collapse could rank among the three worst in the world since the mid-1800s.

Grave fuel shortages in recent months have left all but the wealthiest Lebanese struggling with prolonged power blackouts and long lines at gas stations. The country’s once vaunted banking, medical and education sectors have all suffered profound losses, as professionals have fled to seek livelihoods abroad.

A huge explosion in the port of Beirut last year killed more than 200 people and exposed the results of what many Lebanese see as decades of poor governance and corruption. The Covid-19 pandemic has only aggravated the economic distress and sense of despair.

The fighting on Thursday was part of the continuing fallout from the port explosion.

Two Shiite Muslim parties — Hezbollah, an Iran-backed militant group, and the Amal Movement — had organized a protest calling for the removal of the judge charged with investigating the blast and determining who was responsible.

As the protesters gathered, gunshots rang out, apparently fired by snipers in nearby high buildings, according to witnesses and Lebanese officials, and protesters scattered to side streets, where they retrieved weapons and rejoined the fray.

posts on Twitter, saying that the clashes had been caused by “uncontrolled and widespread weapons that threaten citizens in every time and place,” a reference to Hezbollah’s vast arsenal.

His group accused Hezbollah of exploiting sectarian tensions to derail the port investigation over fears it could be implicated.

Hassan Diab, who, along with his cabinet, resigned after the port explosion.

There had been hope that Mr. Mikati would bring some stability as his new government took shape. But at the same time, tensions over the port investigation grew deeper.

The blast at the port was caused by the sudden combustion of some 2,750 tons of volatile chemicals that had been unloaded into the port years before, but more than a year later no one has been held accountable.

The judge investigating the explosion, Tarek Bitar, has moved to summon a range of powerful politicians and security officials for questioning, which could result in criminal charges against them.

Hezbollah has grown increasingly vocal in its criticism of Judge Bitar, and his inquiry was suspended this week after two former ministers facing charges lodged a legal complaint against him.

Families of the victims condemned the move, with critics saying that the country’s political leadership was trying to shield itself from accountability for the largest explosion in the turbulent country’s history.

On Monday, the judge had issued an arrest warrant for Ali Hussein Khalil, a prominent Shiite member of Parliament and a close adviser to the leader of the Amal party. The warrant leveled serious accusations against Mr. Khalil.

“The nature of the offense,” the document read, is “killing, harming, arson and vandalism linked to probable intent.”

On Tuesday, the Hezbollah leader Hassan Nasrallah issued some of his most scathing criticism of Judge Bitar, accusing him of “politically targeting” officials in his investigation and calling for a protest on Thursday.

When Hezbollah followers joined the protests to call for the judge’s removal, witnesses said, the sniper shots rang out.

Ben Hubbard reported from Beirut, and Marc Santora from London. Reporting was contributed by Hwaida Saad and Asmaa al-Omar from Beirut, and Vivian Yee and Mona el-Naggar from Cairo.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

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.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<