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President Joe Biden enumerated billions of dollars’ worth of U.S. investments in Africa in remarks to African leaders and the continent’s business community at a three-day summit. VOA White House correspondent Anita Powell reports from the U.S.-Africa Leaders Summit in Washington.
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The Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth. 

The U.S. central bank’s projection of the target federal funds rate rising to 5.1% in 2023 is slightly higher than investors expected heading into this week’s two-day policy meeting and appeared biased if anything to move higher. 

Only two of 19 Fed officials saw the benchmark overnight interest rate staying below 5% next year, a signal they still feel the need to lean into their battle against inflation that has been running at 40-year highs. 

“The (Federal Open Market) Committee is highly attentive to inflation risks … Ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” the Fed said in a statement nearly identical to the one it issued at its November meeting. 

The new statement, approved unanimously, was released after a meeting at which officials scaled back from the three-quarters-of-a-percentage-point rate increases that were delivered at the last four gatherings. The Fed’s policy rate, which began the year at the near-zero level, is now in a target range of 4.25% to 4.50%, the highest since late 2007. 

Fed Chair Jerome Powell is scheduled to hold a news conference at 2:30 p.m. EST (1930 GMT) to provide further details on the policy meeting, which was the last of 2022. 

The new rate outlook, a rough estimate of where officials feel they can pause their current rate-hike cycle, was issued along with economic projections showing an extended battle with inflation still to come, and with near recessionary conditions developing over the year. 

Inflation, based on the Fed’s preferred measure, is seen remaining above the central bank’s 2% target at least until the end of 2025, and will still be above 3% by the end of next year. 

The median projected unemployment rate is seen rising to 4.6% over the next year from the current 3.7%, an increase that exceeds the level historically associated with a recession. 

Gross domestic product is seen growing by just 0.5% next year, the same as estimated for 2022, before rising to 1.6% in 2024 and 1.8% in 2025, a level considered to be the economy’s long-run potential. 

 
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India’s economy is posting the fastest growth among major economies putting it on track to become the world’s third largest before the end of the decade, according to financial forecasts.

As companies record strong growth and hand out pay hikes, there is a wave of optimism among professionals.

“There are good projections for the Indian economy. Plus, even in our friends’ circle, a lot of people are changing jobs, moving to better pastures. For us also, my wife, has switched recently to a new job,” said Jaideep Manchanda, a marketing professional in New Delhi who recently bought a new car.

Consumers like Manchanda and his wife, Tanya Tandon, are driving domestic demand as India emerges strongly from the COVID-19 pandemic — the automobile industry for example recorded its highest-ever sales in November. New investment is flowing into the country, helping it withstand the trend of slowing growth in most countries.

India is expected to grow by nearly 7% this year despite the economic turbulence created by Russia’s war in Ukraine. That momentum is likely to continue, helping it overtake Japan and Germany to become the world’s third-largest economy, according to a recent forecast by New York-based investment firm Morgan Stanley and S&P Global.

The International Monetary Fund projects India to reach that position by 2028. The United States and China are the world’s biggest economies.

The World Bank’s latest report on the Indian economy released in December also said that India is relatively well positioned to weather global headwinds compared to most other emerging markets.

“India’s economy has been remarkably resilient to the deteriorating external environment,” Auguste Tano Kouame, World Bank’s country director, said releasing the report “Navigating the Storm” earlier this month.

India’s economy is relatively insulated partly because it has a large domestic market and is relatively less exposed to international trade, according to the World Bank.

Growth is expected to dip in the coming year as, like many other countries, India grapples with inflation following a surge in global food and fuel prices. A potential global recession also poses a risk to its economic momentum.

However, that is not dampening optimism. “Even if the economy grows consistently at around five and a half or 6% will be remarkable,” according to Abhijit Mukhopadhyay, an economist at the Observer Research Foundation in New Delhi. “A lot of changes are happening across the world, and we hope that some of them will be beneficial for the Indian economy.”

New opportunities are opening for India as trade and geopolitical tensions between China and the United States deepen, analysists say.

For decades, global investors flocked to China to set up factories while India’s manufacturing sector lagged, holding back the economy. Efforts by Prime Minister Narendra Modi to promote a “Make in India” campaign since he took office eight years ago had met with a tepid response, but that could be changing.

On a visit to New Delhi last month United States Treasury Secretary Janet Yellen spoke of building closer economic ties with India.

“The United States is pursuing an approach called friend-shoring to diversify away from countries that present geopolitical and security risks to our supply chain. To do so we are proactively deepening economic integration with trusted trading partners like India,” Yellen said addressing technology leaders at a Microsoft facility.

Analysts say that many companies are looking at India as they consider adding production capacity in a second nation besides China.

The U.S.-based tech company Apple is expected to move some iPhone manufacturing to India and scale it up over the next three years. Taiwanese electronic company Foxconn and local conglomerate Vedanta have announced a $19.5 billion investment to make semiconductors in the western Indian state of Gujarat.

“Now, after China, India is probably being seen as the next place where growth will come. This is the expectation, and the initial signs are already there,” points out economist Mukhopadhyay. “That is why a lot of global investment, direct investment and a lot of global financial capital are now betting on India.”

Modi’s government is making efforts to lure companies by offering incentives for producing in India and investing billions of dollars in improving the country’s creaky infrastructure that has long deterred investors.

The mood is upbeat among Indian professionals, who often looked overseas for career opportunities. Now many feel they are better off at home, especially after the tens of thousands of layoffs by leading technology companies in the United States that have impacted many Indians.

“India has great potential across the sectors, across geographies, and across small and bigger cities,” said Tanya Tandon, a marketing professional.

Maintaining high growth will be vital for India, a country of 1.4 billion people, which still needs to lift millions out of poverty and also faces a massive challenge in creating jobs for its huge, young population.
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Yiwu, a city in China’s Zhejiang province, produces more than half the world’s Christmas ornaments purchased by the billions of people who celebrate the holiday.

China’s “zero-COVID” policy, coupled with global pandemic fears, dulled the local export-fueled year-round glitterfest. Christmas orders fell by 50% in 2020, according to the official Global Times with raw material costs and labor shortages hindering a recovery in 2021, which saw only a 10% to 20% increase in sales over the previous year.

Then, faster than elves could hitch those nine reindeer to Santa’s sleigh, a day after Beijing began lifting zero-COVID restrictions on December 3, a Zhejiang trade delegation departed for Germany and France to launch the “Thousand Missions and Ten Thousand Enterprises to Expand the Market and Grab Orders Action.” The goal: Sell enough stuff to help spark China’s economy back to pre-pandemic growth.

They hit a snag. “It seems like the Europeans’ and Americans’ purchasing power is so weak now. If the markets there are weak, China’s economy is definitely suffering too,” said Steven Gao, a businessman in Zhejiang province who exports Christmas ornaments and other trinkets to Europe and the U.S.

Beyond pandemic aftereffects such as not-yet-normal supply chains, Gao blames the bleak economic prospect on President Xi Jinping’s recent policies, particularly his focus on “common prosperity” during the 20th party congress, which met in October in Beijing and gave him a third term. The phrase refers to an official effort to address income inequality, a push often linked to personal wealth accumulated by founders and executives in sectors such as tech.

“Many of my rich friends are thinking about moving to other countries,” said Gao, 45, who asked to use a pseudonym to avoid attracting official attention when he spoke with VOA Mandarin on Tuesday. “They are afraid their wealth will be seized. This lack of faith, combined with pandemic control, led to the slide of economic growth.”

According to a CNBC report on December 4, U.S. manufacturing orders in China are down 40%, according to the latest CNBC Supply Chain Heat Map data, and Chinese factories are expected to shut down two weeks earlier than usual for the Lunar New Year that falls on January 22, 2023.

When Xi presided over a December 6 meeting of the Politburo of the Communist Party, China’s second-highest decision-making body, he emphasized the need to stabilize the economy and to attract foreign investment.

After the gathering, the official Securities Times reported on December 7 that the Suzhou Bureau of Commerce planned to charter flights to France and Germany after a “successful trip” to Japan returned with guaranteed orders worth more than 1 billion yuan, or $142 million.

A similar flight organized by the Suzhou province government took off for Europe on December 9. “Racing against time, grabbing more orders and opportunities … these are the most crucial tasks the Chinese companies took on when boarding the plane,” editorialized the official Global Times news outlet which pointed out “Yiwu… has been the starting point of numerous international trade channels linking the entire world.”

Alibaba, China’s biggest e-commerce platform, recently launched a special operation code-named “Digital Hybrid Trade Show” to start at least 100 overseas exhibitions in the near future, Securities Times reported on December 12. The exhibitions cover more than 10 important foreign trade target markets, including the United States, Germany, Britain, Japan, Singapore and Australia.

Some analysts, however, believe that China’s response to the pandemic may have made it less attractive to foreign businesses for manufacturing and investing.

The state news agency Xinhua reported that those in the December 6 meeting stressed that stability is Beijing’s top priority in an international economic environment marked by “high winds and waves.”

Zhao Chunshan, chief adviser of the Asia-Pacific Peace Research Foundation, a private think tank in Taiwan, told VOA Mandarin that “Capitalists are running away. No one dares to invest, causing economic instability. If there is a problem in the economy there is no way to stabilize.”

Zhao says that local governments with high debt loads must look outside China rather than to the central government for stability.

“China’s central government has no way to solve local debts,” he said. “The central government’s allocation alone is not enough. They have to attract foreign investment and business on their own. To some extent, the central government also gives localities such authority.”

In an interview with VOA Mandarin, Lai Rongwei, an assistant professor at the Center for Liberal Studies at Taiwan’s Longhua University of Science and Technology, said the fact that provinces and cities are scrambling to form groups to go abroad reflects the fears of local officials.

“China’s measures to seal off cities have led to a severe shortage of supplies, including medicine,” Lai said. “The debt of local governments is already huge, and the lack of revenue in the past years has made the situation even worse. People actively going abroad shows a great deal of panic, fearing that the economic downturn can’t be alleviated, and the risks are becoming bigger.”

But Lai said that after the pandemic lockdowns, China is no longer as attractive to foreign investors as it used to be.

“Foreign investors must take into account the cost of investment,” Lai said. “Cities could be shut down and power cut off any time when there’s an order from higher authorities. … Private enterprises find it hard to survive, and now the governments are looking for solutions from foreign investors.”

Bo Gu contributed to this report.
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The increase in U.S. consumer prices eased again in November, rising at their slowest pace since last December, the Labor Department reported Tuesday.

The consumer price index climbed 7.1% in November from a year ago, down sharply from the 7.7% figure recorded in October and continuing a trend of slower-paced inflation since the 9.1% peak in June.

While gasoline prices at service station pumps have dropped markedly in recent months, food prices remain much higher than normal in the world’s biggest economy. But overall, the inflation rate has dropped from the four-decade high in mid-2022, while remaining well above the 2.1% average rate in the three years before the coronavirus pandemic significantly affected the American economy starting in March 2020.

On a month-to-month basis, consumer prices also eased, increasing a tenth of a percentage point in November over October, down from the 0.3% figure in October and 0.6% increases in both August and September.

Gasoline, utility, medical care and used-car prices all fell in November.

The latest consumer price report likely leaves policymakers at the country’s central bank, the Federal Reserve, on track Wednesday to increase its benchmark interest rate by a half percentage point, after it had imposed 0.75% increases at four straight meetings to curb the rampant inflation rate.

The benchmark rate was near zero earlier this year, and now with Wednesday’s expected increase, would reach 4.25 to 4.5%.

The benchmark rate ripples throughout the U.S. economy, pushing borrowing costs higher for businesses buying supplies and raw products and for consumers getting loans to buy cars, furniture and other consumer goods.

U.S. President Joe Biden took note of the slowing pace of inflation and said he hopes prices will be back to normal by the end of next year.

“I want to be clear, it’s going to take time to get inflation back to normal levels,” he said at the White House. “As we make the transition to a more stable growth, we could see setbacks along the way, as well. We shouldn’t take anything for granted.”

Biden said his goal was to get price increases under control without stunting economic growth. Even with millions of families struggling to make ends meet, the U.S. continues to add hundreds of thousands of new jobs to corporate payrolls every month, and the U.S. jobless rate remains near a five-decade low.
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