Author: CensorBiz

When Tesla’s Shanghai plant and other auto factories were shut over the last two months by emergency measures to control China’s biggest COVID-19 outbreak, the burning question was how quickly they could restart to meet surging demand.

But with the Shanghai lockdown grinding into its fourth week, and similar measures imposed in dozens of smaller cities, the world’s largest boom market for electric cars has gone bust.

Other companies from luxury goods makers to fast-food restaurants have also offered a first read on the lost sales and shaken confidence of recent weeks, even as Beijing rolls out measures to help COVID-hit industries and stimulate demand.

Joey Wat, CEO of Yum China, which owns KFC and Taco Bell, said in a letter to investors that April sales had been “significantly impacted” by COVID-19 controls. In response, the company simplified its menu, streamlined staffing and promoted bulk orders for locked-down communities, she said.

The pressing question now is: how and when will Chinese consumers start buying everything from Teslas to tacos again?

In China’s once-hot EV market, the recent turmoil is a stark example of a one-two economic punch, first to supply and then to demand, from Beijing’s hard-line implementation of COVID-19 controls across the world’s second-largest economy.

Before Shanghai was locked down in early April to contain a COVID-19 outbreak, sales of electric vehicles had been booming. Tesla’s sales in China had jumped 56% in the first quarter, while sales for EVs from its larger rival in China, BYD, had quintupled. Then came the lockdowns.

Showrooms, stores and malls in Shanghai were shut and its 25 million residents were unable to shop online for much beyond food and daily necessities due to delivery bottlenecks. Analysts at Nomura estimated in mid-April that 45 cities in China, representing 40% of its GDP, were under full or partial lockdowns, with the economy at a growing risk of recession.

The China Passenger Car Association estimated retail deliveries of passenger cars in China were 39% lower in the first three weeks of April from a year earlier.

COVID-19 control measures cut into shipments, car dealers held back from promoting new models, and sales tumbled in China’s richest markets of Shanghai and Guangdong, the association said.

“Much will depend on how fast these restrictions can be lifted but the coming weeks may be difficult,” Helen de Tissot, chief financial officer at French spirits maker Pernod Ricard, told Reuters on Thursday. 

Kering, which owns luxury brands including Gucci and Saint Laurent, said a “significant chunk” of its stores had been shuttered in April.

“It’s very difficult to predict what will happen after the lockdown,” said Jean-Marc Duplaix, Kering’s chief financial officer. 

Apple also warned at its latest results over COVID-19-hit demand in China. 

City authorities from Beijing to Shenzhen are trying to stimulate some demand by giving out millions of dollars’ worth of shopping vouchers to encourage residents to spend.

On Friday, Guangdong, a manufacturing powerhouse with an economy larger than South Korea’s, rolled out its own incentives to try to restart sales of EVs and plug-in hybrids.

These include subsidies of up to $1,200 for a select range of what China classes as “new energy vehicles,” including from Volkswagen and BYD. Tesla, second in EV sales in China, was excluded from the subsidy program.

The U.S. automaker did not respond to a request for comment.

Chongqing, another major auto manufacturing hub, in March said it would offer cash of up to $300 for shoppers who exchange old cars for new models and set aside another $3 million for other measures to spur sales.

While noting such measures, Credit Suisse analysts still said they believe COVID-19 control measures have put both online and offline consumption on a downward spiral.

“We see the consumer sector as being at major risk if the prolonged pandemic and further tightening continue across China,” they said in an April 19 research note.
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Germany says it’s making progress on weaning itself off Russian fossil fuels and expects to be fully independent of Russian crude oil imports by late summer.

Economy and Climate Minister Robert Habeck said Sunday that Europe’s largest economy has reduced the share of Russian energy imports to 12% for oil, 8% for coal and 35% for natural gas. Germany has been under strong pressure from Ukraine and other nations in Europe to cut energy imports from Russia that are worth billions of euros, which help fill Russian President Vladimir Putin’s war chest.

“All these steps that we are taking require an enormous joint effort from all actors and they also mean costs that are felt by both the economy and consumers,” Habeck said in a statement. “But they are necessary if we no longer want to be blackmailed by Russia.”

The announcement comes as the whole European Union considers an embargo on Russian oil following a decision to ban Russian coal imports starting in August.

Germany has managed to shift to oil and coal imports from other countries in a relatively short time, meaning that “the end of dependence on Russian crude oil imports by late summer is realistic,” Habeck’s ministry said.

Weaning Germany off Russian natural gas is a far bigger challenge.

Before Russia invaded Ukraine on Feb. 24, Germany got more than half of its natural gas imports from Russia. That share is now down to 35%, partly due to increased procurement from Norway and the Netherlands, the ministry said.

To further reduce Russian imports, Germany plans to speed up the construction of terminals for liquified natural gas, or LNG. The Energy and Climate Ministry said Germany aims to put several floating LNG terminals into operation as early as this year or next. That’s an ambitious timeline that the ministry acknowledged “requires an enormous commitment from everyone involved.”

Germany has resisted calls for an EU boycott on Russian natural gas. It also watched with worry last week as Moscow immediately halted gas supplies to Poland and Bulgaria after they rejected Russian demands to pay for gas in rubles. European officials called those moves by Russia “energy blackmail.”

Germany’s central bank has said a total cutoff of Russian gas could mean 5 percentage points of lost economic output and higher inflation.
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Germany said Sunday it has made progress in sharply reducing its reliance on Russian energy, a strategic shift Europe’s biggest economy has embarked on since Russia invaded Ukraine.

Russian supplies now make up 12 percent of Germany’s oil imports compared to 35 percent previously, the economy ministry said in a statement.

Coal from Russia has also been slashed to eight percent compared to 45 percent of Germany’s purchases previously.

Dependence on gas remains substantial, but Europe’s biggest economy had also reduced its Russian sources to 35 percent of the total compared to 55 percent before Russia’s aggression in Ukraine.

The government had in March laid out plans to halve oil imports from Russia by June and to end coal deliveries by the autumn.

Germany is also expected to be able to largely wean itself off Russian gas in mid-2024. 

“All these steps that we have taken require an enormous effect from all players and they also mean costs that are being felt by the economy and consumers,” said Economy Minister Robert Habeck.

“But they are necessary if we no longer want to be blackmailed by Russia,” he stressed. 

The reliance of Europe’s biggest economy on Russian energy has been exposed as an Achilles’ heel as Western allies scramble to penalize Vladimir Putin for his attack on Ukraine.

The export giant has since been racing to find alternative energy suppliers to replace Russian contracts.
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Billionaire finance guru Warren Buffett, who complained recently that he did not know where to put his money, said Saturday he has invested billions of dollars so far this year, even as he took jabs at Wall Street.

Buffett, 91, took questions for five hours at the much-anticipated annual shareholder meeting of his holding company Berkshire Hathaway in Omaha, Nebraska, its first in-person gathering since before the COVID-19 pandemic. He did so along with his right-hand man Charlie Munger, who is 98.

The event, dubbed a “Woodstock for Capitalists,” draws thousands of shareholders from around the world to hear the investment wisdom of Buffett, revered among investors as the “Oracle of Omaha.”

As markets vacillated since the start of the year, Berkshire Hathaway spotted bargains and bought shares worth more than $51 billion from January through March.

For example, it raised its investment in oil company Chevron from $4.5 billion in late 2021 to $26 billion in late March. Chevron is now among the top four of the holding’s investments, along with American Express, Apple and Bank of America. Berkshire Hathaway also acquired a 14% stake in Occidental Petroleum.

It bought an 11% stake in computer maker HP, as well, and increased its share of video game maker Activision — which is being acquired by Microsoft — to 9.5%.

Berkshire sold shares worth $10 billion over the same January to March period.

Bottom line, Berkshire’s war chest of cash on hand dropped from $147 billion to $106 billion.

But Buffett said investors need not worry because Berkshire “will always have a lot of cash” to weather hard times.

Joining him and Munger on the podium were vice president Greg Abel — at 59, he is Buffett’s designated successor — and company executive Ajit Jain.

Profits down

Buffett took some pot shots at Wall Street, saying, “They make a lot more money when people are gambling than when they are investing.”

He said the fact that his company acquired 14% of Occidental Petroleum in just two weeks shows that “overwhelmingly large companies in America, they became poker chips.”

Of cryptocurrencies, he said: “Whether it goes up or down in the next year or five or 10 years, I don’t know. But the one thing I’m pretty sure of is it doesn’t produce anything.”

The question of succession at Berkshire Hathaway is a big one because of the age of Buffett and Munger, but neither said anything about retiring.

Before the meeting, Berkshire said its net profit plunged by 53% in the first quarter due to a drop in the paper value of its investments.

Berkshire listed net profits of $5.5 billion, down sharply from the $11.7 billion of the year-earlier period.

Operating profits of companies owned by the conglomerate — ranging from insurance companies to energy providers and even frozen desserts — remained essentially unchanged, at $7.04 billion.

A drop in profits from insurance companies was compensated by profits from rail lines, energy firms, manufacturing, services and retail sales, said a statement from Berkshire Hathaway.

But the value of its investments, which can be volatile from one quarter to the next, plunged amid the year’s market weakness, leading to a paper loss of $1.58 billion.

Buffett regularly advises his shareholders to ignore quarterly fluctuations, whether positive or negative.

The value of Berkshire shares themselves has held up well— rising 7% since the beginning of the year, while the S&P 500 index, representing the 500 biggest Wall Street-traded firms, lost more than 13%. 
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Prices for Russian credit default swaps — insurance contracts that protect an investor against a default — plunged sharply overnight after Moscow used its precious foreign currency reserves to make a last-minute debt payment Friday.

The cost for a five-year credit default swap on Russian debt was $5.84 million to protect $10 million in debt. That price was nearly half the one on Thursday, which at roughly $11 million for $10 million in debt protection was a signal that investors were certain of an eventual Russian default.

Russia used its foreign currency reserves sitting outside of the country to make the payment, backing down from the Kremlin’s earlier threats that it would use rubles to pay these obligations. In a statement, the Russia Finance Ministry did not say whether future payments would be made in rubles.

Despite the insurance contract plunge, investors remain largely convinced that Russia will eventually default on its debts for the first time since 1917. The major ratings agencies Standard & Poor’s and Moody’s have declared Russia is in “selective default” on its obligations.

Russia has been hit with extensive sanctions by the United States, the EU and others in response to its Feb. 24 invasion of Ukraine and its continuing military operation to take over Ukrainian territory.

The Credit Default Determination Committee — an industry group of 14 banks and investors that determines whether to pay on these swaps — said Friday that they “continue to monitor the situation” after Russia’s payment. Their next meeting is May 3.

At the beginning of April, Russia’s finance ministry said it tried to make a $649 million payment due April 6 toward two bonds to an unnamed U.S. bank — previously reported as JPMorgan Chase.

At that time, tightened sanctions imposed for Russia’s invasion of Ukraine prevented the payment from being accepted, so Moscow attempted to make the debt payment in rubles. The Kremlin, which repeatedly said it was financially able and willing to continue to pay on its debts, had argued that extraordinary events gave them the legal footing to pay in rubles, instead of dollars or euros.

Investors and rating agencies, however, disagreed and did not expect Russia to be able to convert the rubles into dollars before a 30-day grace period expired next week.
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Nepal has banned imports of cars, alcohol and other luxury goods to conserve foreign exchange reserves as spiraling prices of fuel and food imports stemming from the war in Ukraine strain an economy already battered by the COVID-19 pandemic.

The Himalayan nation between India and China is the second South Asian country, after Sri Lanka, to face a foreign exchange crunch.

The goods that will not be imported include expensive televisions and mobile phones, the government said this week. The ban will remain in force until mid-July.

To conserve fuel, which Nepal imports, the work week in government offices has been shortened to five days.

“This is a short-term measure taken to prevent the economic condition of the country from going bad,” said Narayan Prasad Regmi, a senior official in the Industry, Commerce and Supplies Ministry.

Nepal’s central bank has said foreign exchange reserves are sufficient to cover just over six months of imports, down from 10 months in mid-2021. The landlocked nation of 29 million is heavily dependent on imports.

The government hopes the measures will help stave off a crisis like the one roiling Sri Lanka, where acute foreign exchange shortages have resulted in massive supply shortfalls, runaway price increases of fuel and food and a suspension of payments of its foreign debt.

Experts however call Nepal’s temporary ban on luxury goods and the shortening of the work week “desperate measures” that will not address the root cause of the problem that the economy faces.

“All this is only a quick fix and a Band-Aid over essentially what is a very big crack. The basic problem is that our imports far exceed our exports, so we face a huge balance of payments problem,” according to Santosh Sharma Poudel, co-founder of Nepal Institute for Policy Research.

Nepal’s foreign exchange crunch began during the COVID-19 pandemic. With tourism hit, earnings from foreign visitors plummeted in a country where more than a million tourists used to come before the pandemic.

Remittances sent by an estimated 3 million to 4 million Nepali migrants employed mostly in the Middle East and India have also taken a hit – before the pandemic they added up to as much as one-fourth of the country’s gross domestic product.

The war in Ukraine has added to its woes, as prices of both crude oil and food spiral in global markets — Nepal’s imports most of its essential needs, such as fuel, and food, such as cooking oil.

While Nepal’s economy is not as fragile as Sri Lanka’s, there is apprehension of what lies in store in one of the world’s poorest nations. The World Bank warned this week that the war in Ukraine is set to cause the “largest commodity shock” since the 1970s and “households across the world are feeling the cost-of-living crisis.”

They are households like that of Vijay Thapa, who works as a cook in New Delhi to support his family in a village in Nepal. “They can no longer manage in what I send. Prices of everything have spiked, whether it is cooking oil or wheat. Taxi fares have gone up by 50%.”

The situation is more worrisome for small countries, experts say.

“This is the second example in South Asia of how the war just after the pandemic is affecting us,” said Dhanajay Tripathi, a professor at the South Asian University in New Delhi.

“There are real worries for countries like Nepal because with smaller incomes it is harder for them to absorb the shock of high imports compared to larger countries such as India where the huge economy makes it possible to manage,” he said.

Analysts also warn that fixing the economy could be more difficult because Nepal also has some of the political problems that contributed to Sri Lanka’s crisis.

“We also have crony capitalism; corruption is high and there is political instability. That makes it harder to put long-term efficient policies in place,” Poudel said.

Economic mismanagement that led to the crisis in Sri Lanka has been blamed on the powerful Rajapaksa political dynasty that controls the government. Although some family members have resigned as ministers, President Gotabaya Rajapaksa and his brother Mahinda, who is prime minister, still hold the top posts.

In Nepal constant infighting among political parties has resulted in short-lived governments for the last three decades.  For much of last year, the country was mired in political turmoil and is presently ruled by a fragile five-party coalition.

Plummeting COVID-19 cases, though, have encouraged the country to lift restrictions on tourists. Tourism earnings are up, although still far below prepandemic levels. And as Middle East countries increase crude output after the pandemic, when demand had plunged, jobs are coming back for Nepalese nationals, which could mean remittances will again pick up.
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Chris Mei has been stuck in his Shanghai flat for a month save for PCR testing and occasional volunteer work delivering food to neighbors. That will change in a couple of days when he boards his flight for a long-scheduled trip home to Portland, Oregon.

He uses Zoom to do factory inspections for his 2-year-old import-export firm, Shanghai Fanyi Industry, but he can’t complete all the orders for clients overseas. He’s locked down like most of the 26 million people in the city, along with some of the factories where he normally sources goods, such as artificial plants and solar lights.

“In terms of how’s business, it’s definitely affected us,” Mei said. “Clients abroad always have deadlines, especially for some of our products.” He continued, “For example, for a shipment that recently went out, we had a portion of the order canceled due to the fact that the factory, they were on lockdown as well, so we basically could only produce what they could, and then the remaining part of the order basically passed the client’s deadline in South America.”

Leaving a city in lockdown has become an expensive, multistep process. Mei, a U.S. citizen, applied for permission to leave Shanghai by getting a pass from his neighborhood committee. He then found a driver with special permission to take him to the airport during lockdown – for about six times the usual price of that ride.

Shanghai’s residents have been ordered to stay home since early April in response to a spike in COVID-19 infections. Last week, authorities began easing restrictions in parts of the city to restore economic activity.

Mei’s case is typical, analysts who follow China say. Large numbers of foreign businesspeople in China are planning on leaving the country, for now or for good. The lockdowns have hammered an economy already hobbled by the 4-year-old Sino-U.S. trade dispute, capital outflows and last year’s crackdown on tech giants.

On March 18, That’s Shanghai, a local magazine, reported the results of an online survey saying 85% of foreigners in the city would “rethink their future in China” because of the lockdowns. The survey found that 48% of respondents plan to leave China over the next year and that 37% would wait in case anti-pandemic measures improve.

Risk seems to be increasing

Shipments through seaports in Shanghai and the Chinese tech hub Shenzhen, which locked down in March, have slowed because of a lack of workers and a shortage of truckers who are allowed to move imports and exports around the country.

Larger businesses can afford to wait in case lockdowns ease and China resumes its robust economic growth, said Doug Barry, communications vice president with the U.S.-China Business Council, a 265-member advocacy group in Washington.

Smaller companies are having more trouble because they depend on China’s advanced contract manufacturing ecosystem and cannot easily relocate, Barry said. He said some businesses have closed temporarily because so many workers can’t report to their jobs.

Others have spent money to help feed workers and even let them stay overnight at workplaces so they can report to their jobs the next day.

Overseas-based company leaders are staying away from their China projects because of quarantine rules, he said.

“Business in some cases has come to a complete stop,” Barry said. “The risk seems to be increasing, and the unknowns are also increasing and you’re looking at bottom lines and the future of things, and you’re wondering what to do.”

While foreign businesspeople are thinking of leaving, the significance of China to outside companies can be seen in the numbers. Foreign businesses invested $173.5 billion in China last year, up from $163 billion in 2020 and $140 billion a year earlier, according to the United Nations Conference on Trade and Development’s latest report.

Just more than 1 million foreign companies were registered in China at the end of 2020.

Companies normally relocate in China for contract manufacturing – which is seen as professional yet inexpensive – or to sell cars, coffee, phones and fashion apparel to the massive consumer market.

Incentives to stay

Mei will be back in Shanghai after a couple of months at home. By then, he expects there will be a “more solid” response to COVID-19 with clarity about people’s mobility.

Some people he knows have been called back to work in May, he said.

William Frazier, a 58-year-old U.S.-born owner of a business advisory firm in Shanghai, has lived in the city continuously since 2002.  He has no plans to leave the city even though he’s been locked down since March 16. Frazier has a spacious flat in a high-end compound, making life tolerable as he works though emails, phone and video conferences. The economic chaos has caused more clients to call him for information.

“No real significant impact, I would say, not for me,” Frazier said. “I don’t see hiccups. I see opportunities.”

Local officials in China want foreign investors to stay in the country, the U.S.-China Business Council has found. They are willing to meet and hear out American businesspeople, Barry said, though no government body has offered them any economic stimulus.

Sticking around will keep companies competitive after China returns to normal, he said.

If lockdowns in Shanghai end in May, more businesspeople are likely to stay in the city, said Yan Liang, professor and chair of economics at Willamette University in Salem, Oregon. Local and central government policymakers have the economic aftershocks of COVID-19 “on their radar,” she said.

“It’s just so important to be able to have a foothold in a large market like this,” Liang said. “And I think some of the sentiments (are) also that even though there are some maybe temporary or maybe more permanent slowdowns, the Chinese economy is still a really bright spot when you compare with other countries in the world.”

That makes the lure of the largest market in the world worth waiting for, for businesses that can afford to hold out until cities open again.
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Amazon share prices fell 11% Friday after the massive online retailer posted its first quarterly loss in seven years.

Amazon lost $3.84 billion during the first quarter of this year after recording a profit of $8.11 billion in the same period last year.

Revenue growth for the quarter was the slowest ever for the company, rising 7.3%.

The company blamed investments in warehouses and more staff for the slowdown. It also said there is uncertainty about consumer spending caused by inflation, supply chain problems and the war in Ukraine.

“With inflation hitting household budgets around the world, spontaneous Amazon purchases are likely to be reined in,” Sophie Lund-Yates, analyst at Britain-based financial services company Hargreaves Lansdown, said.

Another big hit to Amazon’s bottom line came from its stake in electric vehicle maker Rivian, shares of which are down 70% this year.

Amazon Web Services remained a strong point for the company as revenue for the cloud computing service jumped 36.6%.

The value of Amazon stock has dropped 23.2% this year.
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Russia made what appeared to be a late u-turn to avoid a default on Friday, as it made a number of already-overdue international debt payments in dollars despite previously vowing they would only be paid in rubles.

Whether the money would make it to the United States and other Western countries that sanctioned Russia was still not clear, but it represented another major twist in the game of financial chicken that has developed about a possible default.

Russia’s finance ministry said it had managed to pay $564.8 million on a 2022 Eurobond and $84.4 million on a 2042 bond in dollars – the currency specified on the bonds.

The ministry said it had channeled the required funds to the London branch of Citibank, one of the so-called paying agents of the bonds whose job is to disburse them to the investors that originally lent the money to Moscow.

Russia has not had a default of any kind since a financial crash in 1998 and has not seen a major international or ‘external’ market default since the aftermath of the 1917 Bolshevik revolution.

The risk of another one though is now a flashpoint in the economic tussle with Western countries which have blanketed Russia with sanctions in response to its actions in Ukraine that Moscow has termed a “special military operation.”

The bonds were originally supposed to be paid earlier this month but an extra 30-day ‘grace period’ that government bonds often have in their terms meant Moscow’s final deadline was on May 4.
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Indonesian President Joko Widodo, who holds this year’s Group of 20 (G-20) presidency, announced Friday that he has invited Ukrainian President Volodymyr Zelenskyy to the economic forum’s November summit in Bali.

“We understand the G-20 has a catalyst role in global economic recovery, and when we speak of global economic recovery there are two important factors right now; COVID-19 and the war in Ukraine,” Widodo said in a video outlining the rationale of his invitation to Zelenskyy.

Widodo said he extended the invitation during a call with Zelenskyy Wednesday when he turned down a request for weapons but offered humanitarian assistance to Ukraine. He said he spoke to Vladimir Putin on Thursday and the Russian president informed him that he will be attending the summit.  

“Indonesia wants to unite G-20,” Widodo said. “Peace and stability are the keys to global economic recovery and growth.”

That may be a tall order amid Western leaders’ demands to kick Russia out of the group of the 20 largest economies. U.S. President Joe Biden, Canadian Prime Minister Justin Trudeau and Australian Prime Minister Scott Morrison, among others, have raised concerns about Putin’s participation in the summit and signaled they will not attend if Putin is there.

Not enough for Biden

“The president has been clear about his view, this shouldn’t be business as usual and that Russia should not be a part of this,” White House Press Secretary Jen Psaki said to VOA Thursday when asked if Biden would consider attending with Zelenskyy invited.

It was Biden who suggested that Kyiv be able to attend G-20 meetings should other members disagree to kick out Russia. He made the point following a meeting with NATO members and European allies in Brussels last month, where he said they discussed expelling Putin from the G-20.

With China supporting Moscow to remain in the group, analysts point out that Widodo is in a tough position. Ultimately his government may have to decide whether it is willing to trade Putin’s attendance for several Western leaders’ absence.

“I think the perfect solution for Indonesia would be, they invite Zelenskyy and then the Russians say that Putin decided not to come and then Jokowi doesn’t have to make this decision,” said Gregory Poling to VOA, using Widodo’s nickname. Poling researches U.S. foreign policy in the Asia Pacific at the Center for Strategic and International Studies.

Earlier this month the Biden administration signaled it wants the G-20 to discuss the international economic repercussions of the Russian invasion and potentially Ukraine’s reconstruction.  

That idea is likely to create further rifts in the economic forum. Middle-power G-20 members, including India, Brazil, South Africa, Mexico, Saudi Arabia and others, have their own agenda centered around post-pandemic recovery that do not align with the West’s focus of isolating Putin and helping Ukraine.

Jakarta has set three pillars for its G-20 presidency: global health architecture, sustainable energy transition and digital transformation. It has chosen “Recover Together, Recover Stronger” as the theme of this year’s summit – a proposal that could unravel amid new geopolitical rivalries triggered by Putin’s war.

Eva Mazrieva and Virginia Gunawan contributed to this report.
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The U.S. economy unexpectedly shrank 1.4% in the first three months of 2022 compared to a year ago, the government reported Thursday, raising fears that the world’s largest economy could face a recession. 

After more than a year of rapid growth as the United States recovered from the initial ravages of the coronavirus, the American economy was buffeted in the January-to-March period by the fastest increase in consumer prices in four decades, the new wave of coronavirus omicron variant cases and Russia’s invasion of Ukraine. 

The slowdown is the first since the coronavirus recession ended in April 2020, a period when millions of workers were laid off and many businesses shut their doors or sharply curtailed their operations. 

Most U.S. economists in the U.S., however, believe the U.S. economy is resilient and project that it could resume modest growth in the April-to-June period, although some analysts are suggesting that a recession — two straight quarters of a receding economy — cannot be ruled out. 

Still, hundreds of thousands of jobs are routinely being added to the economy month after month and March’s 3.6% unemployment rate was just a tick above the 3.5%, 50-year-low recorded just before the debilitating pandemic swept into the country. 

But the first-quarter decline reported by the Bureau of Economic Analysis was in marked contrast to the 5.7% growth reported for last year, the fastest full-year advance since 1984, and the 6.9% annualized growth rate in the fourth quarter last year. 

Economic analysts said the first-quarter decline was caused in part by a widening trade deficit, meaning that the U.S. imported far more goods than it exported. Businesses rapidly built up their inventories in the latter part of 2021 but slowed the pace in early 2022. Government aid to combat the effects of the coronavirus and boost the economy has now largely ended as well. 

While job growth has been robust and the unemployment rate steadily dipped, most U.S. consumers are worried about inflation, especially with higher food costs and gasoline prices at service stations pinching family budgets. Year over year, consumer prices were up 8.5% in March, a 40-year high. 

Policymakers at the country’s central bank, the Federal Reserve, have embarked on what they have signaled will be a series of increases in the coming months in their benchmark interest rate to tame inflation. 

The expectation is that the Fed’s interest rate increase will push borrowing costs higher for both businesses and consumers, cooling too-rapid growth of the economy.     

 
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However Muslims break their fast this Ramadan, they’re probably paying more for it than last year. Some of the reasons are the same everywhere. Shockwaves from the war in Ukraine, for one. But in economics, there’s rarely just one reason for anything. Here’s what’s raising the cost of five iftar dishes in five countries.
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Tesla lost $126 billion in value on Tuesday amid investor concerns that Chief Executive Elon Musk may have to sell shares to fund his $21 billion equity contribution to his $44 billion buyout of Twitter. 

Tesla is not involved in the Twitter deal, yet its shares have been targeted by speculators after Musk declined to disclose publicly where his cash for the acquisition of Twitter is coming from. The 12.2% drop in Tesla’s shares on Tuesday equated to a $21 billion drop in the value of his Tesla stake, the same as the $21 billion in cash he committed to the Twitter deal. 

Wedbush Securities analyst Daniel Ives said that worries about upcoming stock sales by Musk and the possibility that he is becoming distracted by Twitter weighed on Tesla shares.  

“This (is) causing a bear festival on the name,” Ives said. 

Tesla did not immediately respond to a request for comment. 

To be sure, Tesla’s share plunge came against a challenging backdrop for many technology-related stocks. The Nasdaq closed at its lowest level since December 2020 on Tuesday, as investors worried about slowing global growth and more aggressive rate hikes from the U.S. Federal Reserve.  

Twitter’s shares also slid on Tuesday, falling 3.9% to close at $49.68 even though Musk agreed to buy it on Monday for $54.20 per share in cash. The widening spread reflects investor concern that the precipitous decline in Tesla’s shares, from which Musk derives most of his $239 billion fortune, could lead the world’s richest person to have second thoughts about the Twitter deal. 

“If Tesla’s share price continues to remain in freefall that will jeopardize his financing,” said OANDA senior market analyst Ed Moya. 

As part of the Tesla deal, Musk also took out a $12.5 billion margin loan tied to his Tesla stock. He had already borrowed against about half of his Tesla shares. 

University of Maryland professor David Kirsch, whose research focuses on innovation and entrepreneurship, said investors started to worry about a “cascade of margin calls” on Musk’s loans. 
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One of the citizens feeling the pinch of rising prices in Zimbabwe is Christine Kayumba. She says she can’t afford to buy bread for her four dependents on her salary of less than $250 a month — because a loaf now costs more than $2.

The high school English teacher says she cooks a bland, thin porridge three times a day, and rarely serves rice as it is now expensive too.

“This price increase of bread has reduced me to nothing,” she told VOA. “I don’t feel I am still the mother figure, the bread winner for my family. Because I am failing to provide, each and every morning they wake up crying for porridge, crying for bread.”

Russia’s invasion of Ukraine, one of the world’s largest exporters of wheat, has led to bread prices soaring in importing countries like Zimbabwe. Most impacted are children, said Kayumba, as shortage means they are forced to seek food elsewhere.

“You see bread is something with these children. They want it. Even from next doors, if they see them [neighbors] drinking tea, they will eat there.”

Tafadzwa Musarara is the chairman of the Grain Millers Association of Zimbabwe, which imports grain. He said the Russia-Ukraine conflict is the main cause for the price hike.

“As early as November last year, we were unable to load wheat from that region because political tensions had gone high, and insurers revoked their coverages. This is a supplier who was supplying us with good wheat, accounting for 65% of the wheat that we need.”

Musarara said the impact of the crisis in Ukraine was immediately felt in Zimbabwe. “Suddenly we woke up without that supply… the inflation on the price of bread, the increase on the price of bread is an imported factor.”

Musarara added that a consignment of Zimbabwe’s wheat has been stuck in the embattled Ukrainian city of Mariupol for weeks now. He added that the war is pushing people to look for ways to meet the need in the country. “Now we are making our efforts to see how we can get [it] from other countries. [In] Australia, there is the issue of floods, which affected their agriculture. We are now pushing towards getting wheat from Canada and other countries.”

Andrew Matibiri is the CEO of Zimbabwe Agricultural Society, a group responsible for promoting agricultural development in the country. He said the current wheat shortage the country is facing can also serve as an opportunity.

“This is an opportune time for our farmers to produce more, for the government and the private sector to work together, hand in hand, to support farmers who want to go into wheat production,” Matibiri said. “And thank God! We have been having some late rainfalls, which have been helping land preparations. So, all in all, the future of wheat production in this country is good.”

Matibiri said he has confidence in his country’s capacity to face the challenge. “We have shown that we can produce enough for our needs and to produce even more so that we can export to neighboring countries and others who are in need of wheat.”

For Kayumba, that would certainly be good news since she can’t afford to buy bread for her family as it is currently double the price it used to be.
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When the coronavirus pandemic hit New Orleans in March 2020, Jeremy Fogg, an executive pastry chef at a popular local restaurant, suddenly found himself without a job.

Fogg was far from alone. In the first few months of the crisis, approximately 22 million Americans lost their jobs, with millions more seeing their hours cut.

“For the first stretch of the pandemic, I just kind of sat at home and waited for my job to call and tell me we were reopening,” he said. “But as the months went by without a call, I worried I’d run out of money. I opened my own pop-up bakery and began teaching baking at a local college.”

The call to return to work eventually came. When it did, Fogg responded in a way he never would have expected at the onset of the pandemic.

“I told them I wasn’t coming back.”

‘Great Resignation’

Fogg’s decision underscores a larger trend in America over the past two years — one that many experts believe has shifted at least some of the power in the country’s labor market from employers to employees.

The phenomenon is called the “Great Resignation,” in which millions of workers chose not to return to the workforce or traditional positions after the sweeping job losses in the early months of the pandemic.

Many who did return to work have since left their jobs — 47 million U.S. workers quit in 2021. Nearly one in five nonretired adults left their job at some point that year, with the nation’s “quit rate” reaching a 20-year high in November, according to the Pew Research Center.

“I think a lot of us realized during the pandemic that we wanted something different than what we were settling for,” Fogg told VOA.

Some people he worked with before the pandemic left New Orleans to be closer to family. Others switched to careers less demanding than the service industry. Still others moved to service industry jobs with better pay or benefits. Fogg said he got a taste of the rewards of working for himself and didn’t want to go back.

“We realized we deserved better from our jobs, and it’s given us the courage to ask for what we think we deserve,” he said.

Tight labor market

Patrick Button, a professor of economics at Tulane University, said the recession caused by COVID-19 is unlike other recent recessions in the United States.

“Typically, recessions were an issue of demand. Employers weren’t interested in hiring, and people were shut out of the workforce,” Button told VOA. “What we’re experiencing now, however, is a supply-side issue. There is a demand for workers by employers, but workers aren’t eager to return.”

That has forced many employers to meet workers’ demands for better pay and benefits, Button explained.

“Employers are having a difficult time hiring workers, and when they do, they’re having a tough time getting them to stay,” he said. “In order to compete against other businesses for workers, many companies are raising wages and offering a better work environment.”

The trucking industry, for example, had struggled to retain drivers for years before the pandemic as the baby boomer generation retired from the workforce. This has caused supply chain issues across the country.

Sherri Brumbaugh, president and CEO of Garner Trucking Inc., said the driver shortage has become more challenging since the Great Resignation.

“It’s the most difficult hiring situation I’ve ever experienced,” she told VOA.

Older generations, Brumbaugh said, were more accepting of the hardships that come with “life on the road.” Younger drivers, however, have different expectations.

“They don’t want to be away from their families for a week at a time, and they don’t accept waiting for hours at truck stops because freight hasn’t arrived,” she said. “There was a time when maybe we didn’t have to. But now, if we’re going to attract new drivers, we have to adjust to what potential employees are looking for.”

Service industry struggles

Leisure and hospitality workers have reportedly left their jobs at more than twice the national average.

Those in the industry say this trend began pre-pandemic and is resulting in more options for employees.

“There are a lot more jobs out there, and quite frankly, the industry has been slow to respond,” said Jay Frisard, who was a regional manager overseeing multiple restaurants for 25 years before switching careers to the logistics industry during the pandemic.

“Wages are higher for service industry workers now, but it’s still often a life that sucks — long hours, constantly on your feet, angry customers. It’s not easy,” he said.

Eric Cook, who owns two restaurants in New Orleans, including the award-winning Gris-Gris, agrees that restaurant work can be grueling, which may be why he and his industry peers are having difficulties filling positions.

“I think when restaurants and bars were closed during the pandemic, a lot of workers explored other industries,” Cook said. “For me, cooking food is about sharing our culture, and that’s rewarding. But I think for a lot of people, if they found work in another industry, they saw that they can make money while sitting at home and without as much stress.”

To stay competitive, Cook raised salaries from $12 and $14 an hour to $22, and he’s offered more salaried positions. Even so, he hasn’t been able to hire enough staff to open his restaurants full time.

“People keep saying, ‘Pay more. Pay more!’ But I can’t go much further without losing money,” he said. “It’s not like I’m making money doing this as it is. People see a full restaurant and think it’s a gold mine, but with being closed during the pandemic, and now rising labor costs and through-the-roof inflation, figuring out how to make a profit at a restaurant is like trying to land on the fricking moon.”

Effects that last?

A survey from the Pew Research Center found that low pay, a lack of opportunities for advancement and feeling disrespected at work are the top reasons Americans quit their jobs last year.

“For the most part, those who quit their jobs are finding new ones easily,” Pew’s associate director of research, Juliana Horowitz, told VOA. “That gives people more courage to find something better.”

According to the survey, the decision to seek new work is paying off.

“The majority of respondents are earning more money, and they’re finding work with more advancement opportunities,” Horowitz said.

Some believe the effects of the Great Resignation are being overstated. A recent Harris Poll survey for USA Today said that one in five people who resigned during the pandemic regretted it.

Chris Smalls, a former Amazon warehouse worker who spearheaded the successful campaign to bring the first unionized workplace in the technology giant’s history, mocked the idea that the trend is harming employers.

“When you quit your job, guess what? They hire somebody else,” Smalls, now president and founder of the Amazon Labor Union, told NPR in an interview.

But while economists like Button note that much of the wage gains earned by workers have been offset by inflation, they believe at least some of the gains made by laborers in the past year are meaningful and will be permanent.

“Of course, not everything we’ve seen will linger,” he said. “But employers are seeing that things like the ability to work from home, flexible hours and benefits such as sick pay are important. And I think those changes will stay to some degree.”

Whether it’s stronger unions, leaving a job for a better opportunity, or in his case, starting his own business, Fogg believes the Great Resignation has helped empower many workers to evaluate what they want out of a job.

“There’s nothing wrong with standing up for yourself and not accepting less than you deserve,” he said. “I think a lot of us are finally realizing that.”
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A global shortage of microchips is only a part of the difficulty roiling the global automotive industry. As more drivers return to work as pandemic restrictions ease — increasing demand for new vehicles — inventory is scarce. VOA’s Kane Farabaugh has more from Chicago.
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Tourist operators in the Indian-administered Kashmir Valley are celebrating a return of visitors after several lean years prompted by COVID-19 and — before that — unrest over India’s revocation of the region’s special constitutional status and autonomy.

The Srinagar Airport Authority reported almost 15,000 tourists in the Jammu and Kashmir capital aboard 106 flights on a single day this week. That compares to an average of about 30 flights a day two years ago.

Hotels in the valley are packed and fully booked until June, according to Tariq Rashid Ghani, secretary general of the Jammu and Kashmir Hoteliers Club. “We are hopeful to break all the previous records this year,” he said in an interview.

Authorities say visitors are overwhelmingly from India, attracted by an aggressive promotional campaign within the country and an easing of COVID-19 pandemic limits, which made Indians eager to travel. Foreign visitors accounted for only about 1,000 of the record 340,000 visitors to the scenic valley in the first three months of this year.

“With the steady decline in COVID-19 cases in India, people are encouraged and dare to travel. Like Kashmir, many other hilly states are witnessing similar type of tourist rush,” said Rauf Tramboo, president of the Adventure Tour Operators Association of Kashmir.

Anamika Shil, a tourist from Kolkata, who works for a domestic airline, told VOA she only regretted having not come to Kashmir sooner, having been frightened away by media reports of disturbances and violence. “Not only the stay but I am enjoying the food as well,” she said.

Nevertheless, security is still a concern. According to the South Asia Terrorism Portal, a website that monitors terrorism and low intensity warfare in South Asia, there have been 48 violent incidents in Indian-administered Kashmir already this year, killing 11 civilians and 11 security forces along with 54 insurgents.

Tourism to the valley, famed for its dramatic Himalayan landscapes and pristine lakes, fell off dramatically after the New Delhi government withdrew the region’s special status on August 5, 2019. The action was accompanied by a harsh crackdown in which social media platforms and many other forms of communication were cut off.

By the time the security situation was stabilizing, the coronavirus pandemic was in full swing around the world, sharply reducing interest in tourism, both foreign and domestic. International arrivals in the valley fell to 3,897 in 2020 and just 1,615 last year.

But now, a reluctance to journey abroad among Indian vacationers is working to the region’s advantage, according to G.N. Itoo, the director of Tourism Kashmir.

“People who would otherwise go to Europe and other countries preferred to come to Kashmir [while] restrictions were in force on international travel. Secondly we created good experiences like houseboat festival, sufi festival, winter carnival and many more which created a buzz,” he told VOA.

Dramatic scenery has always been the biggest draw for visitors to Kashmir, who account directly for nearly 8% of its gross domestic product and indirectly for more through patronage of its crafts and cottage industries.

But this year’s tourist season got off to an early start with a banner year for winter sports in Gulmarg, a ski resort high in the Himalayan mountains. Tramboo said almost 1,700 skiers, snowboarders and others from 17 Indian states took part this year.

Other attractions that have contributed to the tourist resurgence include Shri Amarnath, a Hindu temple set in a cave high in the in the snow-capped mountains. Authorities expect that close to 1 million pilgrims will trek to the shrine this year, setting an all-time record.

Another draw is Asia’s largest tulip garden, sprawling across some 30 hectares in the foothills of the Zabarwan range in Srinagar. Farooq Ahmad Rather, director of Floriculture Kashmir, said more than 360,000 visitors, including local residents, came to witness this year’s spring bloom.

Most famous of all the valley’s attractions is Srinagar’s Lake Dal, where visitors can see the mountains reflected in the waters as they circle the lake in small boats known as shikara or arrange a stay in a luxurious houseboat moored to the shore.
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