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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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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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Law enforcement officials and financial services regulators have filed a raft of criminal and civil charges against Sam Bankman-Fried, the founder of the bankrupt cryptocurrency exchange company FTX, alleging wide-ranging fraud that eventually brought down the company, which was valued at $32 billion earlier this year.

The Department of Justice on Tuesday morning unsealed an indictment charging Bankman-Fried with eight criminal counts, including conspiracy to commit wire fraud, actual wire fraud, money laundering, and violation of laws governing donations to politicians and political parties.

At the request of U.S. prosecutors, Bankman-Fried, 30, was arrested on Monday evening at his home in the Bahamas, where the headquarters of FTX is located. The U.S. and the Bahamas have an extradition treaty, and Bankman-Fried is expected to be transferred to U.S. custody in the near future.

‘House of cards’

Earlier Tuesday, the Securities and Exchange Commission issued its own set of civil charges, also accusing Bankman-Fried of “years-long fraud” that included hiding information from investors, diverting customer funds to a hedge fund he owned, using other customer funds to make political donations, and to purchase hundreds of millions of dollars in real estate.

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said SEC Chair Gary Gensler. “The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws.”

Also on Tuesday, the Commodity Futures Trading Commission filed a lawsuit against Bankman-Fried.

Rapid rise, rapid fall

In the short time since its founding in 2019, FTX grew to be one of the largest cryptocurrency exchanges in the world, and Sam Bankman-Fried — often referred to as “SBF” — became one of the industry’s most recognizable figures. He was a regular speaker at business conferences, gave testimony before Congress, and was seen by many as a model cryptocurrency executive.

The list of investors who plowed billions of dollars into FTX is long and distinguished, including Sequoia Capital, SoftBank Group, Tiger Global Management, and Third Point Ventures.

Earlier this year, Bankman-Fried positioned his company as a savior for the broader crypto industry when a broad selloff of cryptocurrencies left many firms in the space reeling. FTX extended lines of credit to crypto lender BlockFi and crypto broker Voyager Digital in an effort to help them weather the storm. Both BlockFi and Voyager eventually filed for bankruptcy protection.

Signs of trouble

In September, news reports began raising questions about the relationship between FTX and Alameda Research, a hedge fund owned by Bankman-Fried which was supposed to be a completely separate corporate entity from FTX.

However, it gradually became clear that the two companies were actually closely connected. Media reports began to reveal that a large share of Alameda’s assets was tied up in an illiquid crypto token called FTT, which was issued by FTX. Over several days in early November, customers rushed to pull their money from accounts with FTX, sending the company into a massive liquidity crisis and forcing it to stop processing customer withdrawals.

After several days of attempts to arrange a rescue package, including a briefly considered sale of FTX to Binance, its largest competitor, FTX, Alameda, and more than 100 affiliated companies filed for bankruptcy.

On Tuesday, the Justice Department and the SEC alleged that Alameda actually had “virtually unlimited” access to funds held by FTX on behalf of its customers.

The charges against Bankman-Fried claim that Alameda illegally used those funds to invest in highly illiquid cryptocurrency tokens, as well as to make “undisclosed venture investments, lavish real estate purchases, and large political donations.”

Before its collapse, cryptocurrency investors around the world had placed billions of dollars in their accounts with FTX. In large part because of transfers to Alameda, FTX is facing an estimated shortfall of $8 billion.

‘I made a lot of mistakes’

Against the advice of his attorneys, Bankman-Fried has given a number of interviews to news organizations since his company declared bankruptcy. His contention has been that, while he may have made mistakes, he never intended to defraud anyone.

In early December, Bankman-Fried told The Wall Street Journal that he could not account for money that FTX customers transferred to Alameda Research.

In an appearance at a conference sponsored by The New York Times, he said, “Clearly I made a lot of mistakes. There are things I would give anything to be able to do over again. I did not ever try to commit fraud on anyone. I was excited about the prospects of FTX a month ago. I saw it as a thriving, growing business. I was shocked by what happened [in November.]”

His claims contradict the allegations leveled by prosecutors in the indictment unsealed Tuesday, which accuse Bankman-Fried of “willfully and knowingly” defrauding investors and customers.

‘Utter failure’ of controls

Last month, control of FTX and its constituent companies was turned over to John Ray III, an attorney and corporate insolvency specialist who has been brought on to manage multiple companies facing bankruptcy, including the failed energy giant Enron in the early 2000s. His primary task will be to assemble all the remaining assets of FTX in an effort to recover some of the money its customers lost in the exchange’s collapse.

Ray appeared at a hearing held by the House Financial Services Committee on Tuesday, during which he described a company that lacked even the most basic corporate governance structures and was run by a small cabal ill-equipped for the job of running a multi-billion dollar corporation.

In prepared testimony, Ray said, “[N]ever in my career have I seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever.”

In the broadest sense, Ray said, the company’s failure was the result of the “absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets.”

Under questioning, Ray said that the asset recovery process will take months to complete, and will not make FTX customers whole. “At the end of the day, we’re not going to be able to recover all the losses here,” he said.

The committee had also expected to hear from Bankman-Fried on Tuesday, but the FTX founder’s arrest on Monday made that impossible.

Lawmakers angry

The allegations of fraud and mismanagement at FTX have raised calls in Washington for action by Congress to rein in the cryptocurrency industry, which operates under a poorly defined set of regulatory rules.

House Financial Services Committee Chair Maxine Waters on Tuesday said that she was “deeply troubled” by the revelations coming out about FTX. At the same hearing, U.S. Representative Patrick McHenry, who will take over the chairmanship when Republicans assume control of the House next month, criticized Bankman-Fried but said that he still sees “promise” in digital assets.

Others were less tolerant of the industry, with Representative Brad Sherman, a Democrat, calling the entire industry “a garden of snakes.”

Industry representatives urged lawmakers to tread carefully when it comes to establishing new rules for cryptocurrencies.

“Following the failure of FTX International, it’s understandable that lawmakers want to do something, but they should be wary of passing legislation in haste that would do more harm than good,” Kristin Smith, executive director of the Blockchain Association, wrote on Monday. “Instead, Congress should take its time to investigate the issues we’ve seen and work closely with the crypto industry to find solutions that benefit everyone.”
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The U.S. Securities and Exchange Commission has charged the former CEO of failed cryptocurrency firm FTX with orchestrating a scheme to defraud investors.

An SEC complaint filed Tuesday alleges that Sam Bankman-Fried raised more than $1.8 billion from equity investors since May 2019 by promoting FTX as a safe, responsible platform for trading crypto assets.

The civil complaint says Bankman-Fried diverted customer funds to Alameda Research LLC, his privately-held crypto fund, without telling them. The complaint also says Bankman-Fried commingled FTX customers’ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations.

“Bankman-Fried placed billions of dollars of FTX customer funds into Alameda. He then used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses,” the complaint reads. “None of this was disclosed to FTX equity investors or to the platform’s trading customers.”

Alameda did not segregate FTX investor funds and Alameda investments, the SEC said, using that money to “indiscriminately fund its trading operations,” as well as other ventures of Bankman-Fried.

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said SEC Chair Gary Gensler. “The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws.”

Bankman-Fried was arrested Monday in the Bahamas at the request of the U.S. government, U.S. and Bahamian authorities said.

The arrest was made after the U.S. filed criminal charges that are expected to be unsealed Tuesday, according to U.S. Attorney Damian Williams. Bankman-Fried had been under criminal investigation by U.S. and Bahamian authorities following the collapse last month of FTX, which filed for bankruptcy on Nov. 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

The SEC charges are separate from the criminal charges expected to be unsealed later Tuesday.

A spokesman for Bankman-Fried had no comment Monday evening. Bankman-Fried has a right to contest his extradition, which could delay but not likely stop his transfer to the U.S.

Bankman-Fried’s arrest comes just a day before he was due to testify in front of the House Financial Services Committee. Rep. Maxine Waters, D-Calif., chairwoman of the committee, said she was “disappointed” that the American public, and FTX’s customers, would not get to see Bankman-Fried testify under oath.

That hearing, however, will be held Tuesday despite the arrest of Bankman-Fried.

Bankman-Fried was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion. He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns. FTX grew to become the second-largest cryptocurrency exchange in the world.

That all unraveled quickly last month, when reports called into question the strength of FTX’s balance sheet. Customers moved to withdraw billions of dollars, but FTX could not meet all the requests because it apparently used its customers deposits to cover bad bets at Bankman-Fried’s investment arm, Alameda Research.

Bankman-Fried said recently that he did not “knowingly” misuse customers’ funds, and said he believes his millions of angry customers will eventually be made whole.

The SEC challenged that assertion Tuesday in its complaint.

“FTX operated behind a veneer of legitimacy Mr. Bankman-Fried created by, among other things, touting its best-in-class controls, including a proprietary ‘risk engine,’ and FTX’s adherence to specific investor protection principles and detailed terms of service. But as we allege in our complaint, that veneer wasn’t just thin, it was fraudulent,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “FTX’s collapse highlights the very real risks that unregistered crypto asset trading platforms can pose for investors and customers alike.”
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Large private Norwegian firms must have boards that comprise at least 40% of women or they will be shut down, the government proposed in a bill on Monday, in a further push to break the glass ceiling preventing women from reaching top positions.

The Nordic country was the first in the world to introduce a 40% gender quota on the boards of listed companies, in 2005, kickstarting an international push to force companies to have more women on boards.

Last month, the European Parliament passed a law forcing large listed companies in the European Union to have a minimum 40% of non-executive board members as women from mid-2026. EU states have already approved the law.

Now the center-left government in Oslo is recommending that large private companies, not just listed ones, should have a 40% gender quota.

“Companies are not good enough in using the skills of both genders. It is high time this changes,” Industry Minister Jan Christian Vestre said in a statement.

The proportion of women on boards in private firms is currently 20%, the government said, up from 15% two decades ago.

“It has taken 20 years to increase the share by 5 percentage points. If we continue at this tempo, we will never reach our goal [of having gender balance],” Equality Minister Anette Trettebergstuen said.

The bill would not apply to smaller private companies in order to be “appropriate and not [be] more extensive than necessary”, the statement said. The bill, if voted in its current state, would affect 3-7% of private companies.

The Cabinet rules in a minority in order to pass laws. It is likely this bill could pass with the support of a leftwing party in parliament, the Socialist Left, which supports the Cabinet.
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