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For much of the global economy, 2023 is going to be a tough year as the main engines of global growth – the United States, Europe and China – all experienced weakening activity, the head of the International Monetary Fund said Sunday.

The new year is going to be “tougher than the year we leave behind,” IMF Managing Director Kristalina Georgieva said on the CBS Sunday morning news program “Face the Nation.”

“Why? Because the three big economies – the U.S., EU and China – are all slowing down simultaneously,” she said.

In October, the IMF cut its outlook for global economic growth in 2023, reflecting the continuing drag from the war in Ukraine as well as inflation pressures and the high interest rates engineered by central banks like the U.S. Federal Reserve aimed at bringing those price pressures to heel.

Since then, China has scrapped its zero-COVID policy and embarked on a chaotic reopening of its economy, though consumers there remain wary as coronavirus cases surge. In his first public comments since the change in policy, President Xi Jinping on Saturday called in a New Year’s address for more effort and unity as China enters a “new phase.”

“For the first time in 40 years, China’s growth in 2022 is likely to be at or below global growth,” Georgieva said.

Moreover, a “bushfire” of expected COVID infections there in the months ahead are likely to further hit its economy this year and drag on both regional and global growth, said Georgieva, who traveled to China on IMF business last month.

“I was in China last week, in a bubble in a city where there is zero COVID,” she said. “But that is not going to last once people start traveling.”

“For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative,” she said.

In October’s forecast, the IMF pegged Chinese gross domestic product growth last year at 3.2% — on par with the fund’s global outlook for 2022. At that time, it also saw annual growth in China accelerating in 2023 to 4.4% while global activity slowed further.

Her comments, however, suggest another cut to both the China and global growth outlooks may be in the offing later this month when the IMF typically unveils updated forecasts during the World Economic Forum in Davos, Switzerland.

US economy ‘most resilient’

Meanwhile, Georgieva said, the U.S. economy is standing apart and may avoid the outright contraction that is likely to afflict as much as a third of the world’s economies.

The “U.S. is most resilient,” she said, and it “may avoid recession. We see the labor market remaining quite strong.”

But that fact on its own presents a risk because it may hamper the progress the Fed needs to make in bringing U.S. inflation back to its targeted level from the highest levels in four decades touched last year. Inflation showed signs of having passed its peak as 2022 ended, but by the Fed’s preferred measure, it remains nearly three times its 2% target.

“This is … a mixed blessing because if the labor market is very strong, the Fed may have to keep interest rates tighter for longer to bring inflation down,” Georgieva said.

Last year, in the most aggressive policy tightening since the early 1980s, the Fed lifted its benchmark policy rate from near zero in March to the current range of 4.25% to 4.50%, and Fed officials last month projected it will breach the 5% mark in 2023, a level not seen since 2007.

Indeed, the U.S. job market will be a central focus for Fed officials who would like to see demand for labor slacken to help undercut price pressures. The first week of the new year brings a raft of key data on the employment front, including Friday’s monthly nonfarm payrolls report, which is expected to show the U.S. economy minted another 200,000 jobs in December and the jobless rate remained at 3.7% – near the lowest since the 1960s.
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Croatia on Sunday switched to the euro and entered Europe’s passport-free zone — two major milestones for the country after joining the EU nearly a decade ago.

At midnight local time (2300 GMT Saturday) the Balkan nation bid farewell to its kuna currency and became the 20th member of the eurozone.

It is the 27th nation in the passport-free Schengen zone, the world’s largest, which enables more than 400 million people to move freely around its members.

Experts say the adoption of the euro will help shield Croatia’s economy at a time when inflation is soaring worldwide after Russia’s invasion of Ukraine sent food and fuel prices through the roof.

But feelings among Croatians are mixed. While they welcome the end of border controls, some worry about the euro switch, with right-wing opposition groups saying it only benefits large countries such as Germany and France.

Many Croatians fear that the introduction of the euro will lead to a hike in prices, in particular that businesses will round up price points when they convert.

‘Elite club’

For tourist agency employee Marko Pavic, “Croatia joins an elite club.”

“The euro was already a value measure — psychologically it’s nothing new — while entry into Schengen is fantastic news for tourism,” he told AFP.

Use of the euro is already widespread in Croatia.

Croatians have long valued their most precious assets such as cars and apartments in euros, displaying a lack of confidence in the local currency.

About 80% of bank deposits are denominated in euros, and Zagreb’s main trading partners are in the eurozone.

Officials have defended the decision to join the eurozone and Schengen, with Prime Minister Andrej Plenkovic saying Wednesday that they were “two strategic goals of a deeper EU integration.”

Croatia, a former Yugoslav republic of 3.9 million people that fought a war of independence in the 1990s, joined the European Union in 2013.

“The euro certainly brings (economic) stability and safety,” Ana Sabic of the Croatian National Bank (HNB) told AFP.

Experts say the adoption of the euro will lower borrowing conditions amid economic hardship.

Croatia’s inflation rate reached 13.5% in November compared to 10% in the eurozone.

Analysts stress that eastern EU members with currencies outside of the eurozone, such as Poland or Hungary, have been even more vulnerable to surging inflation.

Borders gone

As some Croatians lamented the demise of the national currency, HNB governor Boris Vujcic said while it was a sentimental moment for him, it was the “only reasonable politics.”

The kuna was adopted in 1994, during the independence war. 

Kuna means marten, a weasellike carnivore whose fur was used as currency in the Middle Ages.

Early Sunday, Vujcic will symbolically withdraw euros from a cash machine in downtown Zagreb.

Interior and foreign ministers will attend brief ceremonies at border crossings with Croatia’s EU peers Slovenia and Hungary respectively while the bloc’s chief Ursula von der Leyen is to visit the country later Sunday.

Local papers hailed the two events on Saturday, with the best-selling Vecernji List daily labelling them the “crown of (Zagreb’s) EU membership.”

Croatia’s entry into the Schengen borderless area will also provide a boost to the Adriatic nation’s key tourism industry, which accounts for 20% of its GDP.

Previously long queues at the 73 land border crossings with Slovenia and Hungary will become history.

Border checks will end on March 26 at airports because of technical issues.

Croatia will still apply strict border checks on its eastern border with non-EU neighbors Bosnia, Montenegro and Serbia. 
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Iran appointed a new head of its central bank Thursday after the currency crashed to its lowest level ever against the dollar amid mass protests and ongoing Western sanctions.

Mohammad Reza Farzin, 57, a senior banker and former deputy finance minister, was tapped to replace Ali Salehabadi, who resigned after 15 months at the post, the official IRNA news agency reported.

The rial was trading at about 430,000 to the dollar Thursday, down from 370,000 earlier this month. Already battered by years of Western sanctions over Iran’s nuclear program, the rial was trading at 315,000 when anti-government protests erupted in mid-September.

The protests were ignited by the death of a woman who was detained by the country’s morality police. The demonstrations rapidly escalated into calls for an end to more than four decades of clerical rule. Security forces have launched a heavy crackdown, using live ammunition and birdshot, as well as beating and detaining protesters, according to rights groups.

At least 508 protesters have been killed and more than 18,600 people have been arrested, according to Human Rights Activists in Iran, a group that has closely monitored the unrest. Iranian authorities have not provided an official death toll.

Iran’s currency was trading at 32,000 rials to the dollar at the time of the 2015 nuclear accord that lifted international sanctions in exchange for tight controls on Iran’s nuclear program. That deal unraveled after then-President Donald Trump unilaterally withdrew the United States from it in 2018.

The Biden administration had been trying to restore the agreement until the protests broke out, but those talks hit a deadlock several months ago.

In a separate development on Thursday, Iran summoned the Italian ambassador over Rome’s criticism of its response to the protests.

Italian Foreign Minister Antonio Tajani had summoned Iran’s envoy the day before to express concern over the crackdown, which he said had nothing to do with protecting Iran’s security.
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Holiday sales rose this as American spending remained resilient during the critical shopping season despite surging prices on everything from food to rent, according to one measure.

Holiday sales rose 7.6%, a slower pace than the 8.5% increase from a year earlier when shoppers began spending the money they had saved during the early part of the COVID pandemic, according to Mastercard SpendingPulse, which tracks all kinds of payments including cash and debit cards.

Mastercard SpendingPulse had expected a 7.1% increase. The data released Monday excludes the automotive industry and is not adjusted for inflation, which has eased somewhat but remains painfully high.

U.S. sales between Nov. 1 and Dec. 24, a period that is critical for retailers, were fueled by spending at restaurants and on clothing.

By category, clothing rose 4.4%, while jewelry and electronics dipped roughly 5%. Online sales jumped 10.6% from a year ago and in-person spending rose 6.8%. Department stores registered a modest 1% increase over 2021.

“This holiday retail season looked different than years past,” Steve Sadove, the former CEO and chairman at Saks and a senior advisor for Mastercard, said in a prepared statement. “Retailers discounted heavily, but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings post-pandemic.”

Some of the increase reflected the impact of higher prices across the board.

Consumer spending accounts for nearly 70% of U.S. economic activity, and Americans have remained resilient ever since inflation first spiked almost 18 months ago. Cracks have begun to show, however, as higher prices for basic necessities take up an increasingly large share of everyone’s take-home pay.

Inflation has retreated from the four-decade high it reached this summer, but it’s still sapping the spending power of consumers. Prices rose 7.1% in November from a year ago, down from a peak of 9.1% in June.

Overall spending has slowed from the pandemic-infused splurges and shifted increasingly toward necessities like food, while spending on electronics, furniture, new clothes and other non-necessities has faded. Many shoppers been trading down to private label goods, which are typically less expensive than national brands. They’ve been going to cheaper stores like dollar chains and big box stores like Walmart.

Consumers also waited for deals. Stores expected more procrastinators to hit stores in the last few days before Christmas compared with a year ago when people began shopping earlier due to a global disruption of the supply chain that created thousands of product shortages.

“Consumers are trying to spread out their budget, and they are evaluating and shopping at different stores,” said Katie Thompson, the lead of consultancy Kearney’s Consumer Institute.

In November, shoppers cut back sharply on retail spending compared with the previous month. Retail sales fell 0.6% from October to November after a sharp 1.3% rise the previous month, the government said in mid-December. Sales fell at furniture, electronics, and home and garden stores.

A broader picture of how Americans spent their money arrives next month when the National Retail Federation, the nation’s largest retail trade group, comes out with its combined two-month results based on November-December sales figures from the Commerce Department.

The trade group expects holiday sales growth will slow to a range of 6% to 8%, compared with the blistering 13.5% growth of a year ago.

Analysts will also be dissecting fourth-quarter financial results from major retailers in February.
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The end of 2022 saw major layoffs at Twitter, Amazon, Salesforce and Snap. Meta, the parent company of Facebook and Instagram, had its first layoffs ever, cutting about 13% of its staff. Deana Mitchell looks at what the tech job losses mean for the future.
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The global economy was gripped by an economic crisis in 2022, as the aftermath of the coronavirus pandemic was exacerbated by Russia’s invasion of Ukraine – which sent energy prices soaring. Henry Ridgwell reports from London.
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As Belkis Fajardo, 69, walks through the dense streets of downtown Havana with a small bag of lettuce and onions in hand, she wonders how she’ll feed her family over the holidays.

Scarcity and economic turmoil are nothing new to Cuba, but Fajardo is among many Cubans to note that this year is different thanks to soaring inflation and deepening shortages.

“We’ll see what we can scrap together to cook for the end of the year,” Fajardo said. “Everything is really expensive … so you buy things little by little as you can. And if you can’t, you don’t eat.”

Basic goods such as chicken, beef, eggs, milk, flour and toilet paper are difficult and often impossible to find in state stores.

When they do appear, they often come at hefty prices, either from informal shops, resellers or in expensive stores only accessible to those with foreign currency.

It’s far out of the range of the average Cuban state salary, approximately 5,000 pesos a month, or $29 USD on the island’s more widely used informal exchange rate. Nearby, a pound of pork leg was selling for 450 pesos (around $2.60).

“Not everyone can buy things, not everyone has a family who sends remittances (money from abroad),” Fajardo said. “With the money my daughter earns and my pension, we’re trying to buy what we can, but it’s extremely hard.”

In October, the Cuban government reported that inflation had risen 40% over the past year and had a significant impact on the purchasing power for many on the island.

While Fajardo managed to buy vegetables, rice and beans, she still has no meat for Christmas or New Year’s.

The shortages are among a number of factors stoking a broader discontent on the island, which has given rise to protests in recent years as well as an emerging migratory flight from Cuba. On Friday, U.S. authorities reported stopping Cubans 34,675 times along the Mexico border in November, up 21% from 28,848 times in October.

The dissatisfaction was made even more evident during Cuba’s local elections last month, when 31.5% of eligible voters didn’t cast a ballot — a far cry from the nearly 100% turnout during Fidel Castro’s lifetime.

Despite being the highest voting abstention rate the country had seen since the Cuban revolution, the government still hailed it as “a victory.” However, in an address to Cuban lawmakers last week, President Miguel Díaz-Canel acknowledged the government’s shortcomings in handling the country’s complex mix of crises, particularly food shortages.

“I feel an enormous dissatisfaction that I haven’t been able to accomplish, through leadership of the country, the results that the Cuban people need to attain long-desired and expected prosperity,” he said.

The admission provoked a standing ovation in the congressional assembly, made up solely of politicians from Díaz-Canel’s communist party.

But Ricardo Torres, a Cuban and economics fellow at American University in Washington, said he saw the words as “meaningless” without a real plan to address discontent.

“People want answers from their government,” he said. “Not words — answers.”

For years, the Caribbean nation has pushed much of the blame for its economic turmoil on the United States’ six-decade trade embargo on Cuba, which has strangled much of the island’s economy. However, many observers, including Torres, stress that the government’s mismanagement of the economy and reluctance to embrace the private sector are also to blame.

On Friday, a long line of Cubans waited outside an empty state-run butchery, waiting for a coveted item: a leg of pork to feed their families on New Year’s Eve.

About a dozen people The Associated Press asked for an interview said they were scared to speak, including one who said, “it could have consequences for us.”

Estrella, 67, has shown up to the state butcher every morning for more than two weeks, waiting her turn to buy pork to share with her children, grandchildren and siblings. So far, she’s come up dry.

Although pork is available to buy from private butchers, it’s often far more expensive than at state-run facilities, which subsidize prices.

So she waits, hopeful that she’ll be able to cook Cuba’s traditional holiday dish.

“If we’re lucky, we’ll be able to buy it today,” she said. “If we’re not, we’ll come back tomorrow.”
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The United Nations says high food prices in 2022 led to a crisis of affordability that has pushed millions more people into hunger. VOA U.N. Correspondent Margaret Besheer talks to experts about the situation and what to expect in 2023.
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During the past decade, China funded the construction of massive infrastructure projects in Sri Lanka meant to boost the island nation’s economy. However, after the economic collapse of the tiny Indian Ocean country earlier this year, there were questions whether these projects had contributed to the worst crisis it has ever faced.

A port city that dominates Colombo’s seafront was built on a 269-hectare patch of land reclaimed from the sea. It was to become a thriving business and financial hub, but it is virtually deserted. An international airport commissioned nearly a decade ago at Mattala city is called the “emptiest airport in the world.” Both the Chinese-funded projects are seen as “white elephants” that have added to Sri Lanka’s debt.

“The airport is not functioning. The Colombo port city was supposed to attract international investors, but there is not a single investor right now,” said Asanga Abeyagoonasekera, a Sri Lankan security and geopolitics analyst. “There is a question over the revenue model of all these projects because they are not financially viable. They were built with unsustainable large amounts of borrowings with high interest rates.”

The focus zeroed in on the Chinese projects when Sri Lanka ran out of foreign exchange to import food, fuel and medicines earlier this year. The catastrophic economic downturn has pushed many in the nation of 22 million people into poverty. In what was once a middle-income country, living standards have plummeted as inflation rages. The World Food Program estimates that nearly 6 million people need food assistance.

The country’s crisis is blamed on economic mismanagement by the previous government led by former president Mahinda Rajapaksa and the COVID-19 pandemic that led to a loss of vital tourism earnings in the scenic Indian Ocean country.

Analysts say the billions of dollars spent on Chinese-funded projects deepened Sri Lanka’s woes. Estimates are that the share of Chinese loans in Sri Lanka’s $40 billion debt range from 10% to 20%.

“China is known for working out arrangements that often turn out much costlier than just looking at the paper would tell you,” said Harsh Pant, vice president for studies and foreign policy at the Observer Research Foundation in New Delhi. “The inability of the Sri Lankan political class to understand the long-term consequences of the kind of short-term gains that they were making from China has allowed this to happen.”

Sri Lanka was one of the countries to sign onto China’s Belt and Road initiative under which Beijing extends loans to developing countries to build roads, airports, seaports and other infrastructure.

Sri Lanka’s debt to China could make it harder to push back against Beijing, according to analysts. In August, Sri Lankan authorities initially refused permission to a Chinese navy ship, Yuan Wang 5, to dock at the Chinese-built Hambantota port following objections by India and the United States, but later allowed it to come.

China has called the ship a scientific and research vessel, but security analysts said India was concerned because it was a surveillance ship packed with space and satellite-tracking electronics that can monitor rocket and missile launches.

The incident reinforced worries that the Chinese projects are linked to its strategic ambitions in the Indian Ocean. The Hambantota port was leased to China for 99 years in 2017 when Sri Lanka was unable to pay back the money borrowed to build it. That raised fears in India and Western countries that the port could be used by China’s navy to project power in the Indian Ocean, a vital seaway for global commerce.

“From my findings I found that these projects are more than a civil operation in Sri Lanka. There could be a military operation that they would introduce in the future such as from Hambantota,” according to Abeyagoonasekera.

China strongly rejects such concerns. At a foreign ministry briefing last month, Chinese foreign ministry spokesperson Zhao Lijian said that “China has never attached any political strings to its aid to Sri Lanka or sought any political interests from its investment and financing in that country.” Saying that Beijing empathizes with Sri Lanka’s difficulties, he said that “China has also been offering assistance to the economic and social development in Sri Lanka within its capacity.”

Sri Lanka is now hoping to hold early talks with China to restructure its debt, which is crucial to secure a $2.9 billion bailout from the International Monetary Fund.

Colombo reached a staff-level agreement with the IMF in September for getting the loan, but it is contingent on assurances from its creditors, including China, India and Japan, that the debts will be restructured.
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Across the globe, people are on the move as a hectic Christmas and New Year’s holiday travel season is in full swing. December and January are among the busiest months for global aviation, with passenger traffic this year expected to be the highest since travel restrictions were imposed because of the pandemic.

“This is the first time visiting my relatives for the holidays in three years,” Lyla Singh of Aldie, Virginia, told VOA. She arrived at Dulles International Airport outside Washington nearly four hours before her flight to New Delhi. “With so many people traveling and fewer airline staff means you really have to be patient.”

Like other countries, air travel to and from India has picked up since COVID-19 restrictions eased.

“I was going to avoid the crowds and travel overseas in March but wanted to see my family when they all gather,” Singh said.

In other parts of Asia, tens of millions of people are traveling by air, road and rail. China is expecting a surge in domestic travel after the country relaxed its zero-COVID pandemic control measures earlier in December.

The government eliminated many requirements, including frequent virus testing, and relaxed quarantine rules. The moves came as China prepares for Lunar New Year festivities in January, the country’s busiest travel season.

Economic boost

Analysts believe a surge in vacationing will help China’s ailing economy. Chinese state media quoted Chen Linan, a spokesperson for China-based online travel site Ctrip, as saying, “The increase in travel New Year’s Day and during the Spring Festival could be the biggest turning point in China’s tourism sector in three years.”

In Europe, travel experts foresee the busiest Christmas travel season in years after a protracted period of disruptions because of COVID-19 lockdowns.

“There’s a strong demand for Christmas travel, with ticket revenue up 18%,” Johan Lundgren, CEO of British airline easyJet, told Reuters. The airline also expects more passengers will take to the skies in the first part of 2023.

London’s Heathrow Airport lifted its 100,000 daily passenger limit to avoid major disruptions at the end of October and said it would not cap passenger numbers for the Christmas peak travel time.

Industry observers still warn travelers to prepare for potential labor disputes by transportation workers and staff shortages at European airports and rail stations that could cause cancellations. Two of Air France’s cabin crew unions that failed to reach a contract agreement last October filed to take strike action at any time from Thursday to January 2. The French air carrier issued a statement pledging to maintain a full schedule, adding it hoped to avoid cancelations or delays.

US holiday travel

More than 112 million Americans will travel during the Christmas and New Year’s holidays, according to AAA, a travel services company. Of those, more than 7 million will fly.

“I’m glad to be flying out to Atlanta before the bad weather arrives,” said Washington resident Todd Brunson, who booked his flight several days before the Christmas holiday. “I find the closer you get to Christmas, chances increase you won’t get to your destination on time.”

According to AAA, 2022 is shaping up to be the third-busiest year for holiday travel in the United States since it began tracking numbers in 2000.

The trepidations that holiday travel could get worse grew as weather forecasters predicted disruptions stemming from a fierce winter storm sweeping across the country, affecting 180 million people in 40 states. The storm brought treacherous road conditions and caused thousands of flights to be canceled.

“There’s snow in Kansas City waiting for us, so we are little bit nervous about getting there, but I think we are going to beat it, so we’ll be OK,” Lindsay Bittfield, who was flying from New York City, told WABC-TV.

Chicago, a major airline hub, is bracing for high winds, subzero temperatures and possibly 30 centimeters of snow before Christmas.

“We prepared well in advance for whatever weather conditions come, whether it’s snow, rain or wind,” said Karen Pride, director of media relations for the Chicago Department of Aviation. “We have 350 pieces of snow removal equipment that’s ready to clear snow on runways and around the airport.”

In anticipation of the storm, airlines rerouted flights and issued weather waivers that allow passengers to reschedule their flights without incurring fees.

“I’m keeping my fingers crossed,” Brunson said. “I just hope the joy of the season won’t be spoiled by any travel headaches.”
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The Central Bank of Nigeria has raised the maximum weekly limit for cash withdrawals after a public uproar over the caps it announced two weeks ago. The new limit is five times higher than the initial cap for individuals and ten times more for companies. The bank announced the limits to rein in excess cash and promote cashless payments, but critics say it could stifle millions of small businesses. 

The revised Central Bank withdrawal limits were announced in a circular released by the bank Wednesday.

The limit for individual withdrawals was raised from $225 to $1,125, while the limit for corporate entities was raised from $1,100 to $11,000.

Under the directive, any withdrawal above the set limits must be approved in advance in writing by the financial institution from where the withdrawal is to be made.

The CBN also lowered its processing fee for withdrawals above set limits.

But many people like Salisu Umar Garu, a former chairman of the Abuja Zone 4 traders association, say even the new limits will be difficult for businesses yet to be fully integrated into the online banking system.

“The minimum amount, it cannot buy anything for anybody,” he said. “Maybe the CBN should have come to ask us for advice, like if I do this how will it affect the country and the economy.” 

The new cash withdrawal limits take effect January 9. 

The central bank unveiled newly designed 200-, 500- and 1,000-naira bills in late November in a bid to combat counterfeiting, hoarding, corruption and other crimes.  

Authorities also said the action will promote more online-based transactions.

Citizens also have until the end of this month to exchange old bills for the new tender.

Isaac Botti, a finance analyst at the Centre for Social Action, said the policy, if properly implemented, will help stabilize Nigeria’s economy and prevent vote-buying during the February elections. 

“Issues around corruption, insecurity, election manipulation and vote-buying, will all be addressed,” he said. “It is important that we recognize that when policies are developed to put the economy in the right direction, it could be painstaking but it needs consistency.”

This week, the Nigerian House of Representatives summoned CBN governor Godwin Emefiele after initially asking the CBN to suspend the cash withdrawal limits.

Botti was skeptical of the lawmakers’ claims to be protecting small and medium-sized enterprises, or SMEs. He thinks the lawmakers want the limits withdrawn so they can access large amounts of money they’ve stashed away. 

“I’m beginning to wonder why some persons, including the lawmakers, are saying it will affect SMEs,” he said. They’re crying for themselves. This sudden love and protection for SMEs is borne out of their own selfish interests”. 

The CBN says it’s working with money agents in rural areas to help pull in old notes before their expiration date.

But citizens say the changeover time for the newly unveiled bank notes is too short and that unless authorities extend the deadline, up to 40% of Nigerian citizens without access to banks could lose their savings.
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Elon Musk had an eventful year, capping 2022 with a $44 billion acquisition of Twitter, a takeover that almost didn’t happen. The controversial CEO has brought changes and disruptions, layoffs and resignations that put Twitter’s fate into question. VOA’s Tina Trinh has more.
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Every time a part of his old grey Mercedes breaks, 62-year-old Beirut cab driver Abed Omayraat faces a tough choice: go into debt to import an expensive car part, or raise fares for customers whose wallets are already drained by a severe economic crisis.

It’s a dilemma he says has become more acute in recent months as Lebanon’s government moved to increase tariffs on imported goods about ten-fold in a country that ships in more than 80% of what it consumes – including spare parts he needs.

“My tires are finished now, you can see they’re worn out. When it rains, I’m worried the car will slide,” Omayraat said. Changing them is necessary, “but I can’t afford it.”

Lebanon’s economic meltdown, now in its fourth year, has seen the currency lose more than 95% of its value and left eight in 10 Lebanese poor, according to the United Nations.

With foreign currency coffers dwindling, the state has already lifted subsidies on fuel and most medication.

Hiking the rate at which the customs fee is calculated, officials say, will boost state revenues and is a step towards unifying various exchange rates.

They are among pre-conditions set by the International Monetary Fund in April for Lebanon to get a $3 billion bailout, but the lender of last resort says reforms have been too slow.

The tariff jump came into effect on Dec 1. Import taxes began being calculated at an exchange rate of 15,000 Lebanese pounds per dollar instead of the old 1,507, meaning traders suddenly had to pay much more to bring in products like home appliances, telephones or car parts.

That is set to pile even more financial pressure on people struggling to make ends meet.

Omayraat says many passengers already ask for discounts to the standard 40,000 L.L. ride fee.

“Do you tell a person that you want a 100,000 pound fare? I’m basically telling them: don’t ride with me. Neither can he (afford it), nor can I take him. He’s not able to eat and I won’t be able to eat,” Omayraat said.

Rabih Fares, an architect from northern Lebanon who began importing used cars when business slowed down, said the new rate was forcing car dealerships to boost prices or go out of business. 

“You need to work four to five years just to be able to afford the customs rate on a car now,” said Fares, who estimated fees to import one used car could average 94 million Lebanese pounds – or about 156 times the minimum monthly wage.

The finance ministry said revenues gathered in the 15 days since the decision came into effect showed a “huge difference” but said figures would be ready by the end of the month.

Parliament agreed on the rate in September but it was not rolled out until December – a delay that caretaker Economy Minister Amin Salam said allowed traders to load up on imports before the tariff hike, while increasing selling prices.

“When you announced it three months ago, it’s as if you are going and telling those who don’t want to work right in the market: go find a way to benefit. And this is what happened,” he said. 

It has left him sceptical that Lebanon will implement the reforms necessary to score a final IMF bailout in the coming months.

“As we are now, I in my personal opinion do not see it happening soon – which worries me because, as I said, each day of delay is costing the country millions and millions and costs the people pain and misery,” Salam told Reuters.
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“I feel anxious about inflation every time I go to the grocery store,” Caroline Fitzsousa, a bar manager in Baltimore, Maryland, told VOA. “And at work, my customers aren’t happy either. The rising cost of food and liquor caused us to raise prices. People are frustrated having to pay more for the same items they’ve always ordered.”

That frustration was felt across the United States in 2022, as global supply chain disruptions, Russia’s invasion of Ukraine, stimulative U.S. fiscal policies and other factors contributed to the highest inflation levels – and the biggest price increases for many goods and services – America has seen in four decades.

Inflation peaked in June when the consumer price index, a measure of the average change in the cost of goods and services compared to the year before, rose 9.1%. For October, the index was 7.7% higher, which economists saw as an improvement but still stubbornly high. 

The U.S. Federal Reserve aims for 2% annual inflation and has been aggressively raising interest rates in hopes of bringing it under control.

For consumers and businesses alike, the impact of rising prices and falling purchasing power has been plain to see.

“There are some nights that seem as busy as before the pandemic,” Fitzsousa said, commenting on her bar’s ability to attract customers, “but there are also plenty of patches of time when the bar is dead because people can’t afford to eat and drink out as much.”

She added, “You hear people complaining about places being overpriced, but there’s nothing we can do. If we’re going to recover from the pandemic’s losses and keep our doors open, this is what we have to charge. Things just cost more this year.”

Year of worry

A November survey conducted by U.S. News & World Report and The Harris Poll reported that 86% of U.S. adults were either very or somewhat concerned about the economy and inflation.

And, with the holiday shopping season under way, 41% of American consumers plan to spend less this year than they did in 2021, according to a CNBC All-America Economic Survey.

“In most current polls, you’ll see Americans rank higher prices and the economy as the country’s biggest problem,” said Robert Collins, professor of urban studies and public policy at Dillard University in New Orleans, Louisiana. “It ranks ahead of crime, border security, the environment, abortion, and everything else. The economy is top of mind.”

Despite it being a priority, Collins said this isn’t a challenge that can be solved quickly. Inflation takes time to go down, he warns, and relief will be slow and incremental.

For many Americans, such as Steve Ryan, an investor and professional poker player living in Las Vegas, Nevada, however, the need for relief is urgent. 

“I’m honestly worried about my ability to continue to afford living here,” he told VOA. “The stock market stagnated and it doesn’t seem like it’s going to rebound any time soon, but I have to sell my shares at rock bottom prices because I need to cobble together money just to afford my rent.”

And that rent, unfortunately, is rising. Ryan had to leave his apartment of more than a decade because the price nearly doubled after renovations were made. 

“I found a new place,” he said, “but it definitely costs more. And I’m paying for it while making less than I used to. At some point, I may just have to leave.”

Complicated economy

“It’s important to remember that the economy is very complex and very cyclical,” said Collins of Dillard University. “One of the things that caused the inflation we’re seeing now is the low unemployment rate most workers see as a good thing.”

In November, the economy added 263,000 jobs, keeping the national unemployment rate at 3.7%, which is near a half-century low.  

Robust job creation is usually associated with an expanding, vibrant economy. But finding workers to fill those jobs has been a challenge for many employers over the last two years.

“I love that workers are gaining more power,” said Fitzsousa in Baltimore, “but we’re having a tough time attracting the staff we need to run our business because there are less people to choose from and more jobs competing for them. As a small business our profit margins are so thin. It’s hard to keep pace with the higher wages corporate restaurant groups can pay to bring in workers.”

As employers offer higher wages to attract workers, the increased labor costs usually are passed down to consumers in the form of higher prices.

“Unfortunately, the increased wages workers are receiving aren’t keeping up with the inflation it’s helping to fuel,” explained Patrick Button, associate professor of economics at Tulane University in New Orleans.

That’s been the case for Lisa Martin, a teacher in Cincinnati, Ohio, whose dream of home ownership has been put on hold.

“Rent is so expensive and I know buying a house is a smart move,” she told VOA. “It’s a goal of mine, but my income isn’t high enough to allow me to save for a mortgage. I’m hopeful this year prices might come down a little.” 

Looking ahead

As the Federal Reserve keeps boosting interest rates, the heads of some large U.S. banks warn a recession could loom in 2023. 

“Those things might very well derail the economy and cause this mild to hard recession that people are worried about,” JPMorgan Chase & Co.’s chief executive, Jamie Dimon, told CNBC earlier this week.

It’s a worry for millions in this country, especially Americans nearing retirement.

“I feel the economy has affected those of us preparing for retirement in a big way,” 62-year-old Lisa Ash of Mandeville, Louisiana, told VOA. “Our lifelong savings – whether in the stock market or in our savings accounts – have taken a big hit and I don’t see that correcting itself in the next three years.”

She added, “I’m no longer thinking about buying another home or about traveling. I’m working.”

For all the gloom, some financial experts have a simple message: hang in there.

“Throughout history the economy expands and the economy contracts; business peaks and business troughs,” said Marigny deMauriac, a certified financial planner in New Orleans. “It’s called a cycle because it’s happened before and it will happen again. There might be some pain next year in the case of a recession, but the sooner there is pain, the sooner there will be relief.”
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Stocks tumbled on Wall Street and across European markets Thursday as investors grew increasingly concerned that the Federal Reserve and other central banks are willing to risk a recession to bring inflation under control.

The S&P 500 fell 2.5%, with more than 90% of stocks in the benchmark index closing in the red. The Dow Jones Industrial Average fell 2.2%, and the Nasdaq composite lost 3.2%. The broad slide erased all the weekly gains for the major indexes.

European stocks fell sharply, with Germany’s DAX dropping 3.3%.

The wave of selling came as central banks in Europe raised interest rates a day after the U.S. Federal Reserve hiked its key rate again, emphasizing that interest rates will need to go higher than previously expected in order to tame inflation.

“It’s this coordinated central bank tightening — stocks tend to not do well in that environment,” said Willie Delwiche, investment strategist at All Star Charts.

In the U.S., the market’s losses were widespread, though technology stocks were the biggest weight on the S&P 500. The benchmark index fell 99.57 points to 3,895.75.

The Dow slid 764.13 points to 33,202.22, while the tech-heavy Nasdaq dropped 360.36 points to 10,810.53.

Small company stocks also fell. The Russell 2000 index slid 45.85 points, or 2.5%, to close at 1,774.61.

The Fed raised its short-term interest rate by half a percentage point on Wednesday, its seventh increase this year. Central banks in Europe followed along Thursday, with the European Central Bank, Bank of England and Swiss National Bank each raising their main lending rate by a half-point Thursday.

Although the Fed is slowing the pace of its rate increases, the central bank signaled it expects rates to be higher over the coming few years than it had previously anticipated. That disappointed investors, who hoped recent signs that inflation is easing somewhat would persuade the Fed to take some pressure off the brakes it’s applying to the U.S. economy.

The federal funds rate stands at a range of 4.25% to 4.5%, the highest level in 15 years. Fed policymakers forecast that the central bank’s rate will reach a range of 5% to 5.25% by the end of 2023.

Their forecast doesn’t call for a rate cut before 2024.

The yield on the two-year Treasury, which closely tracks expectations for Fed moves, rose to 4.24% from 4.21% late Wednesday. The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.45% from 3.48%.

The three-month Treasury yield slipped to 4.31% but remains above that of the 10-year Treasury. That’s known as an inversion and considered a strong warning that the economy could be headed for a recession.

“The [stock] market’s reaction is now factoring in a recession and rejecting the possibility of the ‘soft/softish’ landing” that Fed Chair Jerome Powell raised in a speech last month, said Quincy Krosby, chief global strategist for LPL Financial.

The prospect of more Fed rate hikes have heightened Wall Street’s worries about how company earnings could fare in a recession, Delwiche said.

“[Inflation] has peaked. It will peak. It did peak — whatever. That’s not the story,” he said. “The story now is how does the economy hold up? How do earnings hold up?”

The central bank has been fighting to lower inflation at the same time that pockets of the economy, including employment and consumer spending, remain strong. That has made it more difficult to rein in high prices on everything from food to clothing.

On Thursday, the government reported that the number of Americans applying for unemployment benefits fell last week, a sign that the labor market remains strong. Meanwhile, another report showed that retail sales fell in November. That pullback followed a sharp rise in spending in October.

Like the Fed, central bank officials in Europe said inflation is not yet corralled and that more rate hikes are coming.

“We are in for a long game,” European Central Bank President Christine Lagarde said at a news conference.
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Botswana’s government says rural communities have earned $5 million since last year from the proceeds of elephant hunting. Conservationists object to the practice, but local officials say the hunts are necessary to reduce human-wildlife conflict. The annual activity attracts hunters from overseas who pay huge sums to shoot elephants.

Acting Minister of Environment and Tourism, Sethabelo Modukanele, said communities are benefiting following the lifting of a five-year hunting ban.

“Hunting was reinstated in 2019 following a five-year moratorium after extensive stakeholder consultation. This allowed communities to generate considerable revenues amounting to 50 million pula over two years [from 2021 to 2022] for their development projects,” said Modukanele.

Most of the revenue is from international hunters who pay up to $50,000 to shoot a single elephant.

Botswana Wildlife Producers Association chief executive, Isaac Theophilus, says more could be done to ensure communities benefit from wildlife resources.

“Communities can make more from hunting. The problem right now is that communities only depend on selling their hunting quotas, subleasing some of the areas allocated to them. In order to gain more from hunting, communities have to explore other avenues of trying to raise funds, like investing the P50 million that they have accrued into income generating activities,” said Theophilus.

Botswana’s growing elephant population, at more than 130,000, has created conflict with humans, as the animals often trample crops, injure or kill people.

But animal biologist Keith Lindsay said elephant hunting could hurt the species’ breeding patterns.

“The biggest male elephants are the ones that contribute most of the population in terms of survival and mating success. Their genes are actively selected and chosen by female elephants; they prefer mating with the biggest males. By taking away those big males, you are damaging the population’s genetic structure and survival chances in the future,” he said.

Meanwhile, Minister Modukanele said the government has distributed nearly 400 wild animals to small-scale farmers to ensure locals have a stake in agro-tourism.

“Government made a deliberate decision to support start-up ventures for Batswana who showed interest and met the requisite criterion for keeping of game in plowing fields. Those who qualified were assisted with animals of various species, such as impala, gemsbok, eland and zebra. To date, 277 have applied and 251 approved and 67 provided with seed stock, totaling 377 animals,” said Modukanele.

At a recent meeting of parties to CITES, the 1963 treaty to protect endangered species, some African countries tried to present a proposal seeking to ban trophy hunting in Botswana and other southern African elephant ranges.  The attempt was unsuccessful, and elephant hunting will continue in Botswana for the foreseeable future.   
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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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