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China’s gross domestic product grew 4.5% in the first quarter of the year, boosted by increased consumption and retail sales, after authorities abruptly abandoned the stringent “zero-COVID” strategy. 

The growth in the world’s No. 2 economy from January to March compared to the same period in 2022 was the fastest in the past year, and outpaced the 2.9% growth in the previous quarter, according to government data released Tuesday. 

The growth in GDP comes amid a rebound in consumption, as people flocked to shopping malls and restaurants after harsh COVID-19 restrictions were removed. 

In March, total retail sales of consumer goods went up by 10.6% year on year and grew 7.1 percentage points compared to the first two months of the year. 

Industrial production output, which measures activity in the manufacturing, mining and utilities sectors, grew by 3.9% in March compared to the same time last year. 

Fixed-asset investment — in which China invests in infrastructure and other projects to drive growth — rose by 5.1% in the first three months of 2023 compared to the same period last year. 

Investors are expected to scrutinize China’s first-quarter economic data for indicators of recovery following years of harsh lockdowns and a crackdown on the industries such as technology and real estate. 

Earlier this year, China’s government set this year’s economic growth target at “around 5%.” Last year’s growth in the economy fell to 3%, hampered by anti-virus controls that caused snap lockdowns and kept millions at home, sometimes for weeks on end. 

On Monday, China’s central bank kept rates on its one-year policy loans unchanged. Last week, it had vowed to step up support for the economy and maintain ample liquidity to support growth.  
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U.S. House Speaker Kevin McCarthy pledged Monday that the narrow Republican majority in the House of Representatives will vote to raise the country’s debt ceiling to avert a default on the government’s financial obligations in the coming months, but will also stipulate that future spending increases be capped at 1%.

The White House strongly criticized the announcement.

McCarthy, in a speech at the New York Stock Exchange, called the country’s nearly $31.7 trillion debt a “ticking time bomb” and assailed Democratic President Joe Biden as “missing in action” in resolving the contentious issue before the government runs out of money to pay its bills, which could be as soon as June.

Any resulting default on the government’s financial obligations would be a U.S. first and could roil the world economy, plunge stock values and force widespread layoffs.

Biden and White House officials have called on Congress to approve a debt ceiling increase without conditions, as has often been done in the past, including during Republican administrations. But McCarthy said, “Since the president continues to hide, House Republicans will take action.”

McCarthy, who has had trouble in getting his 222-seat majority in the 435-member House to agree on a package of spending cuts to present to Biden, nonetheless told Wall Street leaders that the Republican caucus would pass legislation that would raise the debt ceiling for one year, pushing the issue next year into the midst of the 2024 presidential election campaign.

In addition, McCarthy said Republicans would roll back federal spending to fiscal 2022 levels and curb future spending boosts to no more than 1%. Republicans are also hoping to cut federal spending for social safety net programs for poorer Americans.

The White House, in a statement, said that McCarthy was breaking with the politically bipartisan norm in approving a debt ceiling increase without conditions, as happened twice during former President Donald Trump’s tenure. Biden has said he is willing to discuss future spending separately, aside from increasing the debt ceiling to authorize government borrowing to pay debts already incurred.

The White House said the Republican House leader “again failed to clearly outline what House Republicans are proposing and will vote on.” The White House contended Republicans would “increase costs for hard-working families, take food assistance and health care away from millions of Americans, and yet would enlarge the deficit when combined with House Republican proposals for tax giveaways skewed to the super-rich, special interests, and profitable companies.”

Biden and McCarthy met in early February about the debt ceiling but not since.
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When the gas rig arrived off the coast of Saint-Louis, residents of this seaside Senegalese town found reason to hope. Fishing has long been the community’s lifeblood, but the industry was struggling with climate change and COVID-19. Officials promised the drilling would soon bring thousands of jobs and diversification of the economy.

Instead, residents say, the rig has brought only a wave of problems, unemployment and more poverty. And it’s forced some women to turn to prostitution to support their families, they told The Associated Press in interviews.

To make way for the drilling of some 15 trillion cubic feet of natural gas (425 billion cubic meters) discovered off the coasts of Senegal and neighboring Mauritania in West Africa in 2015, access to fertile fishing waters was cut off, with the creation of an exclusion zone that prevents fishermen from working in the area.

At first, the restricted areas were small, but they expanded to 1.6 square kilometers (0.62 square miles), roughly the size of 300 football fields, with construction of the platform that looms about 6 miles (10 kilometers) offshore.

Soon the work was overtaking the diattara, a word in the local Wolof language for the fertile fishing ground that lies on the ocean floor beneath the platform. With 90% of the town’s 250,000 people relying on fishing for income, the catch — and paychecks — were shrinking. Boxes of fish turned into small buckets, then nothing at all.

Saint-Louis, Senegal’s historic center for fishing, has faced many troubles over the past decade. Sea erosion from climate change washed away homes, forcing moves. Thousands of foreign industrial trawlers, many of them illegal, snapped up vast amounts of fish, and local men in small wooden boats couldn’t compete. The COVID-19 pandemic shut down market sales of the tiny hauls they could manage.

The rig was the final straw for Saint-Louis, pushing it to the brink of economic disaster, according to locals, officials and advocates. The benefits promised from the initial discovery of energy off the coast haven’t materialized. Production for the liquified natural gas deal — planned by a partnership among global gas and oil giants BP and Kosmos Energy and Senegal and Mauritania’s state-owned oil companies — has yet to begin.

Traditionally, many women make a living processing fish, while the men catch it; sons, husbands and fathers spend weeks at sea. But with the restrictions, families couldn’t feed their children or pay rent. They begged for leftovers from neighbors. Some were evicted.

Senegalese officials and the gas companies say people should be patient, as jobs and benefits from the gas deal will materialize. But locals say they’ve been stripped of their livelihoods and provided with no alternatives. That’s driven some women to prostitution, an industry that’s been legal in Senegal for five decades but still brings shame for those who break cultural and religious norms.

For them, prostitution is faster and more reliable than working in a shop or restaurant — jobs that don’t pay well and can be hard to find.

Four women who have started having sex with men for money since the rig came to town shared their stories with the AP on condition of anonymity because of the shame they associate with the work. They’ve hidden it from their husbands and families. They say they know many others like them.

The women explain the influx of cash as loans from friends and relatives. They know prostitution is legal but won’t register with Senegalese officials. That would mean a health screening and an official ID to carry with them.

They’re unwilling to legitimize work they say has been forced upon them.

For one family of seven, hitting bottom came when they were evicted. The father, a 45-year-old fisherman, lost his job. There wasn’t enough food to feed the five children, ages 2 to 11.

The mother tried washing clothes and other jobs, but at less than $10 a day, it wasn’t enough. The family moved in with relatives and she had nothing to feed the children before school each morning.

“I’m obliged to find money through prostitution,” she told the AP, her shoulders hunched and voice weary in a hotel room where she wouldn’t be seen by her husband or friends.

“When we use the money, when my children eat the food I cook from that money, it’s hard,” she said.

The family and others in Saint-Louis learned of the gas discovery shortly after it was announced in 2015. Two years later, energy companies BP and Kosmos established a presence in both Senegal and Mauritania and partnered with Petrosen and SMHPM, the state-owned companies, respectively.

The Greater Tortue Ahmeyim project, as the overall deal is called, is expected to produce around 2.3 million tons (2.08 million metric tons) of liquified natural gas a year, enough to support production for more than 20 years, according to the gas companies. Total cost for the first and second phases is nearly $5 billion, according to a report by Environmental Action Germany and Urgewald, a German-based environmental and human rights organization. The energy companies say phase one of the project is a multibillion-dollar investment, but didn’t specify the amount.

Completion of phase one is expected by the end of this year, when gas production should start, the companies said.

As early as 2018, Saint-Louis residents say, they were warned they would lose access to some of their favored fishing waters. Installation of the breakwater, the area where the platform sits, began by 2020.

BP is the operator and investor, owning nearly 60% of the project in Senegal and Mauritania. The deal promises to create thousands of jobs and provide electricity to a nation where approximately 30% of its 17 million people live without power.

The AP asked BP and Kosmos officials via email to comment for this story. The AP also sought comment about the companies’ efforts to mitigate effects of lost income in the community, their response to the women who say they’ve turned to prostitution, and other matters related to the deal.

In a statement to the AP, spokesman Thomas Golembeski said Kosmos had worked to build community relationships and that its employees visit Saint-Louis regularly to inform people of operations and act on feedback. Golembeski emphasized the project will provide a source of low-cost natural gas and expand access to reliable, affordable and cleaner energy. He also cited access to a micro-finance credit fund established for the fishing community.

He referred other questions to BP, as operator of the project.

BP sent prepared statements in response to the AP’s inquires. BP said it is engaging with the fishing communities in Senegal and Mauritania and trying to benefit the wider economy by locally sourcing products, developing the workforce and supporting sustainable development. More than 3,000 jobs in some 350 local companies have been generated in Senegal and Mauritania, according to the company. BP also cited its work to renovate the maternity unit at the Saint-Louis hospital and its help of 1,000 patients with a mobile clinic operating in remote areas.

But local officials, advocates and residents say they haven’t seen many jobs or other options to combat the economic loss.

BP did not respond to follow-up questions. Neither BP nor Kosmos addressed the AP’s questions about women who say they’ve been driven to prostitution.

When locals talk about the hardships stemming from the gas project, they use just one word: Fuel. To them, it encompasses all they feel has gone wrong in the community.

The rig looms in the background off the coast. Easy to spot on a clear day, the lights on the platform shine at night and resemble a cruise ship docked offshore. The smell of fish still permeates Saint-Louis, as pirogues — small wooden boats — line the shores and horse-drawn carts carry the diminishing catch to town.

Seasoned fishermen who’ve weathered past storms and changes to the industry say the gas deal poses problems on a different scale, largely thanks to the exclusion zone. Smaller boats aren’t equipped to venture past it, creating overcrowding in other fishing areas and depleting stocks for fishermen.

“Going to the diattara now is like going to hell,” said Aminou Kane, vice president for the Association of Fishermen Anglers of Saint-Louis.

Since the area became inaccessible, fishermen are quitting, risking their lives migrating to Europe, or fishing illegally in neighboring Mauritania where they face arrest, he said.

Kane, 46, is in the last group. He used to earn more than $1,000 a week fishing in Senegal and now makes roughly half that fishing secretly across the border, he said.

The mother who described turning to prostitution said her husband, too, tried to fish in Mauritanian waters. He left home to seek work there one year ago and she hasn’t heard from him since.

Despite money coming in from prostitution, the women who spoke to the AP said they and others struggle to feed and shelter their families. Some have pulled children out of private school because they can’t pay tuition.

The women can earn about $40 per client. Most work several times per week, in hotels or at the men’s homes when wives are away. The women describe most clients as well-off Senegalese men, including business leaders and government officials, though some are from neighboring or Western countries.

They find the clients through local contacts. In some cases, the men are family friends to whom the women initially turned to for money or loans. But they say the men eventually insisted upon sex in return for the cash. Some of the men paid well at first, but not as much anymore.

In other cases, women go through intermediaries with established networks of men looking for prostitutes.

A woman who spoke to the AP on condition of anonymity said she’s been running a business in Saint-Louis connecting men with prostitutes for seven years. She uses the name Coumbista in her work to protect her identity from her family and said she’s seen her clientele drop in recent years, with young fishermen seeing a loss of income due to the gas project.

Simultaneously, she said, the number of women seeking sex work spiked, increasing her roster by half. She knows of nearly 30 women who started sex work because of gas-related financial woes, and because of general poverty. Most then do the work secretly, she said.

A 29-year-old who turned to her for help last year after her husband stopped fishing sneaks out of the house several times a week after putting their three children to bed. She tells her husband she’s going to see friends or family.

“I am always afraid that I’ll be seen by people who know me,” she told the AP in the backseat of a car turning onto a quiet downtown street as she pointed to a nondescript building, one of two hotels where she has had sex with more than 20 men since she started. “I never thought that one day I would be doing this.”

The local government admits there has been an increase in illegal prostitution in recent years in Saint-Louis. Officials attribute the rise not directly to the energy deal, but to economic troubles overall.

“It’s not only the fishermen population or the traders, but it’s poverty in general that forces women into prostitution,” said Lamine Ndiaye, deputy to the Saint-Louis mayor.

People’s grievances about the rig are overblown and the community needs to be patient as it will take time to see the dividends, at least until after production, he said.

 Fossil fuel extraction hits communities particularly hard when the local economy depends on natural resources, according to environmental experts.

“If the land or sea that farmers or fishers rely on is poisoned and out of bounds, then their jobs and access to food have been robbed, and their communities can fall apart,” said Dr. Aliou Ba, head of Greenpeace Africa’s oceans campaign and a Senegalese resident. “That has happened in several countries in Africa, including in the Niger Delta. Oil and gas came in, contaminated the water, killed the fish and ruined many fishers’ way of life.”

He said the process is already playing out in Saint-Louis, and the community is suffering: “If the authorities let this spread along our coast, hundreds of thousands of fisheries jobs will be at risk, and the millions of people in this region who depend on fish for protein will be threatened.”

Shortly after the gas deal was signed, the companies noted there could be problems in Saint-Louis. A 2019 environmental and social impact assessment by BP and its partners said there were “a lot of uncertainties around the consequences for Saint-Louis fishermen of losing access to potential fishing grounds.” Still, it considered the intensity of the impact low, according to the report.

To mitigate economic consequences, the gas companies are evaluating options for a sustainable artificial reef project in Senegal and supporting 47 national apprentice technicians on a multiyear training program in preparation to work offshore and create jobs and supply chain opportunities, BP said in statements.

The technicians have been provided with 16 months of university training at Scotland’s Glasgow Caledonian University and will gain internationally recognized qualifications, BP said.

BP did not respond to questions about whether it stood by the company’s initial risk assessment.

Papa Samba Ba, director of hydrocarbons for Senegal’s gas and energy ministry, said the objective is that by 2035 half of all gas projects will go to local jobs, companies and services.

Phase one of the project will invest about 8.5% of the gas into Senegal; however, the local gas market isn’t set up yet and could take up to two years to be operational, he said.

There’s also concern among industry experts that because Senegal doesn’t have a history of oil and gas drilling, it won’t have enough skilled laborers, despite the training.

Fossil liquified natural gas infrastructure provides few direct jobs, and those often go to experts from outside the community, not locals, said Andy Gheorghiu, a climate consultant and co-founder of the Climate Alliance against LNG, a German-based organization focused on the environment.

Some experts point to scenarios that have played out in the U.S. In the fishing village of Cameron in Louisiana, which operates gas export terminals, people haven’t benefited from promised jobs and fishermen have been displaced from the community, according to locals.

“If you drive around Cameron Parish, home of three of these export terminals, you would not believe that these terminals have benefited the community in any way,” said James Hiatt, who lives close to Cameron and is director of For a Better Bayou, an environmental organization. The gas companies promised a new marina, restaurant and fishing pier, none of which have opened, he said.

The AP emailed Venture Global, the gas terminal operator that residents say made the promises, multiple times but received no response.

Environmental watchdogs say it would make more sense to invest in renewable energy. Senegal could create more than five times as many jobs in that sector yearly until 2030, compared with jobs in the fossil fuel industry, according to the Climate Action Tracker, an independent project that tracks government climate action.

But despite the suffering the community attributes to the gas, most say they don’t want the companies to leave. What they want is for the situation to change.

“When I think of my former life and my life today, it’s hard,” said one 40-year-old woman, wiping away tears.

The mother of three said she had to resort to prostitution last year after her husband left the city and cut contact. She’s pulled two of her children out of private school and sent them to public school, where the teachers sometimes don’t show up for days.

“I hope someone can help me out of this situation,” she said. “One in which no one would ever want to live.”
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The U.S. Environmental Protection Agency this week released proposals for the most aggressive vehicle emission standards in the country’s history, with the expectation that electric cars will account for two of every three cars being produced in the U.S. by 2032. Keith Kocinski reports.
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A Biden administration proposal would force U.S. automakers to sharply increase their production of electric cars and trucks over the next decade, lending greater urgency to the effort to build raw material supply chains that reduce the industry’s dependence on China.

The Environmental Protection Agency on Wednesday announced a proposed rule that would place stricter limits on the average tailpipe emissions of vehicles built in the United States. The proposal would reduce the allowable limit by so much that automakers would have no way to comply unless about two-thirds of the vehicles they produce by 2032 are emission-free electric vehicles.

Automakers have generally recognized that EVs represent the future of the industry, but Wednesday’s proposal would greatly accelerate the trend. The proposal, which will be open to public comment before it is finalized, would greatly reduce a leading cause of air pollution in the U.S., as well as the greenhouse gases that contribute to global warming.

“By proposing the most ambitious pollution standards ever for cars and trucks, we are delivering on the Biden-Harris administration’s promise to protect people and the planet, securing critical reductions in dangerous air and climate pollution, and ensuring significant economic benefits like lower fuel and maintenance costs for families,” said EPA Administrator Michael Regan.

The proposal, which would apply to new light-duty vehicles made in 2027 and beyond, would be the strictest environmental standard the federal government has ever applied to automobiles. If it does force the industry to make EVs account for two-thirds of production, it could also exceed President Joe Biden’s previously articulated target of making 50% of new cars either plug-in hybrids or completely emission-free by 2030.

Supply chain questions

Well before the EPA released its proposed rule Wednesday, the Biden administration had been moving to strengthen the EV market in the U.S. and to build a pipeline for raw materials that would reduce the auto industry’s reliance on China for key raw materials.

Accomplishing that reduction will be no small task. According to an analysis by the International Energy Agency last year, China produced three-quarters of the world’s lithium-ion batteries, the key component in the majority of EVs on the road.

China also has a dominant hold on much of the market for the components of those batteries, including lithium, cobalt and graphite. According to the IEA, more than half of the world’s capacity for processing and refining those materials is located in China.

According to the IEA, as of last year, the U.S. accounted for only 10% of EV production worldwide, and just 7% of production capacity for batteries.

Infrastructure projects

Last year’s passage of the Inflation Reduction Act, which contained hundreds of billions of dollars in climate-related spending, included the creation of large tax breaks restricted to EVs made at least partly in the U.S. The tax breaks are meant to extend over several years, but the restrictions become tighter as time goes on, creating incentives for manufacturers to “onshore” production to the U.S.

Tax breaks specific to the batteries used in EVs require that the raw materials used to assemble them come from domestic sources or from countries with which the U.S. has existing trade agreements.

Other pieces of legislation meant to spur investment in the U.S., including a major bipartisan infrastructure bill and the CHIPS and Science Act, also contain money and incentives that will help build out electric infrastructure in the U.S.

Achievable goals

Luke Tonachel, senior director for clean vehicles and buildings with the Natural Resources Defense Council, told VOA that building an EV supply chain centered on domestic production and imports from friendly countries is ambitious, but achievable.

Tonachel said the necessary raw materials are available from U.S. allies, but that the capacity for processing them needs to be built domestically. He said the creation of that capacity is already underway.

“There are robust incentives for building out that battery manufacturing and supply chain here in the U.S.,” he said, adding that he believes the administration’s time frame is feasible, especially now that the new standards have created certainty about future demand for EVs.

“It is realistic,” he said. “These are technologies that are known. We can certainly get more economies of scale as we ramp up production.”

Automakers tentative

Industry representatives said achieving the administration’s goal will require that a lot of disparate efforts be successful at the same time, not all of which are under their control. For example, a nationwide network of charging stations and the increased capacity to meet new demand for power will be essential to driving customer demand.

“It’s aggressive, and a lot of pieces have to work perfectly together,” Genevieve Cullen, president of the Electric Drive Transportation Association, told VOA. “Aside from the technology piece, the market piece has to work, and supply chain speed is part of that. Consumer incentives are working to help bring them into the equation, and we need to keep expanding infrastructure at a pace that meets, and perhaps exceeds, the needs in the beginning so that people feel the confidence that they need to switch to battery electric.”

John Bozzella, president of the trade group Alliance for Automotive Innovation, said in a blog post Wednesday that the administration’s plan is “aggressive by any measure” and that its success would depend on more than just automakers being able to ramp up production.

“To some extent, the baseline policy framework for the transition has come into focus,” Bozzella said. “But it remains to be seen whether the refueling infrastructure incentives and supply-side provisions of the Inflation Reduction Act, the bipartisan infrastructure law, and the CHIPS and Science Act are sufficient to support electrification at the levels envisioned by the proposed standards over the coming years.”
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U.S. consumer inflation eased in March, with less expensive gas and food providing some relief to households that have struggled under the weight of surging prices. Yet prices are still rising fast enough to keep the Federal Reserve on track to raise interest rates at least once more, beginning in May.

The government said Wednesday that consumer prices rose just 0.1% from February to March, down from 0.4% from January to February and the smallest increase since December.

Measured from a year earlier, prices were up just 5% in March, down sharply from February’s 6% year-over-year increase and the mildest such rise in nearly two years. Much of the drop resulted from price declines for such goods as gas, used cars and furniture, which had soared a year ago after Russia’s invasion of Ukraine.

Excluding volatile food and energy costs, though, so-called core inflation is still stubbornly high. Core prices rose 0.4% from February to March and 5.6% from a year earlier. The Fed and many private economists regard core prices as a better measure of underlying inflation. The year-over-year figure edged up for the first time in six months.

As goods prices have risen more slowly, helping cool inflation, costs in the nation’s services sector — everything from rents and restaurant meals to haircuts and auto insurance — have jumped, keeping core prices elevated.

“It’s comforting that headline inflation is coming down, but the inflation story has had some shifts under the hood in the last couple of years,” said Sonia Meskin, head of U.S. economics at BNY Mellon’s investment division. “Overall inflation still remains much too strong.”

Even so, the March data offered some signs that suggest inflation is slowly but steadily headed lower. Rental costs, which have been one of the main drivers of core inflation, rose at the slowest pace in a year. And grocery prices fell for the first time in 2 1/2 years.

Grocery prices dropped 0.3% from February to March. The cost of beef fell 0.3%, milk 1% and fresh fruits and vegetables 1.3%. Egg prices, which had soared after an outbreak of avian flu, plunged nearly 11% just in March, though they remain 36% more expensive than a year ago.

Despite last month’s decline, food costs are still up more than 8% in the past year. And restaurant prices, up 0.6% from February to March, have risen nearly 9% from a year ago.

Paul Saginaw, who owns Saginaw’s deli in Las Vegas, said nearly all the costs of a Reuben sandwich — his most popular — including corned beef, cheese and bread, have soared. He charges 10% more for a Reuben than he did 2 1/2 years ago, although he said “our costs have gone up a lot more” than that.

Saginaw is also paying more for paper goods and packaging, just as takeout and delivery orders have become a much bigger part of his business. One clamshell-style food container has jumped from 43 cents apiece to 98 cents.

“Everything we use has gone up,” he said.

Rich Pierson, a semi-retired owner of a financial planning business who was shopping this week at Doris Italian Market and Bakery in North Palm Beach, Florida, said high restaurant prices have led him and his wife to eat much more at home.

“We cook more at home than we ever have due to the rising costs,” he said. “You do look for the occasional deals and add value when you can — that’s for sure.”

Gas prices fell 4.6% just from February to March, a drop that partly reflected seasonal factors: Prices at the pump usually rise during spring. Gas costs have tumbled 17% over the past year.

Yet price increases in the service sector are keeping core inflation high, at least for now. That trend is widely expected to lead the Fed to raise its benchmark interest rate for a 10th straight time when it meets in May.

Travel costs are still rising as Americans make up for lost vacation time during the pandemic. Airline fares rose 4% from February to March and are up nearly 18% in the past year. Hotel prices jumped 2.7% last month and are up 7.3% from a year ago.

Among the biggest drivers of inflation has been rental costs, which make up one-third of the government’s consumer price index. Rental costs rose 0.5% from February to March. Though still high, that was the smallest such increase in a year.

According to Wednesday’s government report, rents have risen by about 9% from a year ago. Yet Apartment List, which tracks real-time changes in new leases, shows rents rising at a 2.6% annual pace. As more apartments reset with those smaller increases, the government’s inflation data should show milder increases in coming months.

“It’s something that’s certainly coming, there has been some moderation in rents,” said Mark Vitner, chief economist at Piedmont Crescent Capital.

Fed officials have projected that after one additional quarter-point hike next month — which would raise their benchmark rate to about 5.1%, its highest point in 16 years — they will pause their hikes but leave their key rate unchanged through 2023. But officials have cautioned that they could raise rates further if they deem it necessary to curb inflation.

When the Fed tightens credit with the goal of cooling the economy and inflation, it typically leads to higher rates on mortgages, auto loans, credit card borrowing and many business loans. The risk is that ever-higher borrowing rates can weaken the economy so much as to cause a recession.

On Tuesday, the International Monetary Fund, a 190-nation lending organization, warned that persistently high inflation around the world — and efforts by central banks, including the Fed, to fight it — would likely slow global growth this year and next.

There are other signs that inflation pressures are easing. The Fed’s year-long streak of rate hikes are also starting to cool a hot labor market, with recent data showing that companies are advertising fewer openings and that wage growth has been slowing from historically elevated levels.

A more worrisome trend is the possibility that banks will pull sharply back on lending to conserve funds, after two large banks collapsed last month, igniting turmoil in the United States and overseas. Many smaller banks have lost customer deposits to huge global banks that are perceived to be too big to fail. The loss of those deposits will likely mean that those banks will extend fewer loans to companies and individuals.

Some small businesses say they are already having trouble getting loans, according to a survey by the National Federation for Independent Business. The IMF said Tuesday that pullbacks in lending could slow growth by nearly a half-percentage point over the next 12 months.

A slowdown in the economy could cool inflation and as a result would help the Fed achieve its objectives. But the blow to the economy might prove larger than expected. Under the worst-case scenario, it could mean a full-blown recession with the loss of millions of jobs.

 
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Billionaire Elon Musk has told the BBC that running Twitter has been “quite painful” but that the social media company is now roughly breaking even after he acquired it late last year.

In an interview also streamed live late Tuesday on Twitter Spaces, Musk discussed his ownership of the online platform, including layoffs, misinformation and his work style.

“It’s not been boring. It’s quite a rollercoaster,” he told the U.K. broadcaster at Twitter’s San Francisco headquarters.

It was a rare chance for a mainstream news outlet to interview Musk, who also owns Tesla and SpaceX. After buying Twitter for $44 billion last year, Musk’s changes included eliminating the company’s communications department.

Reporters who email the company to seek comment now receive an auto-reply with a poop emoji.

The interview was sometimes tense, with Musk challenging the reporter to back up assertions about rising levels of hate speech on the platform. At other times, Musk laughed at his own jokes, mentioning more than once that he wasn’t the CEO but his dog Floki was.

He also revealed that he sometimes sleeps on a couch at Twitter’s San Francisco office.

Advertisers who had shunned the platform in the wake of Musk’s tumultuous acquisition have mostly returned, the billionaire said, without providing details.

Musk predicted that Twitter could become “cash flow positive” in the current quarter “if current trends continue.” Because Twitter is a private company, information about its finances can’t be verified.

After acquiring the platform, Musk carried out mass layoffs as part of cost-cutting efforts. He said Twitter’s workforce has been slashed to about 1,500 employees from about 8,000 previously, describing it as something that had to be done.

“It’s not fun at all,” Musk said. “The company’s going to go bankrupt if we don’t cut costs immediately. This is not a caring-uncaring situation. It’s like if the whole ship sinks, then nobody’s got a job.”

Asked if he regretted buying the company, he said it was something that “needed to be done.”

“The pain level of Twitter has been extremely high. This hasn’t been some sort of party,” Musk said.
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With Turkey in the grip of soaring food prices, the Islamic holy month of Ramadan offers respite for some with free meals offered to break the day of fasting. Analysts say inflation now poses the biggest threat to President Recep Tayyip Erdogan’s bid for reelection. Dorian Jones reports from Istanbul.
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Many Americans aren’t yet sold on going electric for their next cars, a new poll shows, with high prices and too few charging stations the main deterrents. About 4 in 10 U.S. adults are at least somewhat likely to switch, but the history-making shift from the country’s century-plus love affair with gas-driven vehicles still has a ways to travel.

The poll by The Associated Press-NORC Center for Public Affairs Research and the Energy Policy Institute at the University of Chicago shows that the Biden administration’s plans to dramatically raise U.S. EV sales could run into resistance from consumers. Only 8% of U.S. adults say they or someone in their household owns or leases an electric vehicle, and just 8% say their household has a plug-in hybrid vehicle.

Even with tax credits of up to $7,500 to buy a new EV, it could be difficult to persuade drivers to ditch their gas-burning cars and trucks for vehicles without tailpipe emissions.

Auto companies are investing billions in factories and battery technology in an effort to speed up the switch to EVs to cut pollution and fight climate change. Under a greenhouse gas emissions proposal from the Environmental Protection Agency, about two-thirds of all new vehicle sales could have to be EVs by 2032. President Joe Biden has set a goal that up to half of all new vehicle sales be electric by 2030 to cut emissions and fight climate change.

But only 19% of U.S. adults say it’s “very” or “extremely” likely they would purchase an electric vehicle the next time they buy a car, according to the poll, and 22% say it’s somewhat likely. About half — 47% — say it’s not likely they would go electric.

Six in 10 said the high cost is a major reason they wouldn’t and about a quarter cited it as a minor reason. Only 16% said the high cost would not be a factor in rejecting the EV.

New electric vehicles now cost an average of more than $58,000, according to Kelley Blue Book, a price that’s beyond the reach of many U.S. households. (The average vehicle sold in the U.S. costs just under $46,000.) Tax credits approved under last year’s Inflation Reduction Act are designed to bring EV prices down and attract more buyers.

But new rules proposed by the U.S. Treasury Department could result in fewer electric vehicles qualifying for a full $7,500 federal tax credit later.

Many vehicles will only be eligible for half the full credit, $3,750, an amount that may not be enough to entice them away from less-costly gasoline-powered vehicles.

About three-quarters say too few charging stations is a reason they wouldn’t go electric, including half who call it a major reason. Two-thirds cite a preference for gasoline vehicles as a major or minor reason they won’t go electric.

“I’m an internal combustion engine kind of guy,” said Robert Piascik, 65, a musician who lives in Westerville, Ohio, a Columbus suburb. “I can’t see myself spending a premium to buy something that I don’t like as much as the lower-priced option.”

Although he has nothing against EVs and would consider buying one as the technology improves and prices fall, Piascik said the shorter traveling range, lack of places to charge and long refueling times would make it harder for him to go on trips.

In his 2017 BMW 3-Series, all he has to do is pull into a gas station and fill up in minutes, Piascik said. “The early adopters have to put up with a lack of infrastructure,” he said.

Biden has set a goal of 500,000 EV charging stations nationwide, and $5 billion from the 2021 infrastructure law has been set aside to install or upgrade chargers along 75,000 miles (120,000 kilometers) of highway from coast to coast.

Electric car giant Tesla will, for the first time, make some of its charging stations available to all U.S. electric vehicles by the end of next year, under a plan announced in February by the White House. The plan to open the nation’s largest and most reliable charging network to all drivers is a potential game-changer in promoting EV use, experts say.

High prices and a lack of available chargers are cited by at least half of Democrats and Republicans as main reasons for not buying an EV, but there’s a partisan divide in how Americans view electric vehicles. About half of Republicans, 54%, say a preference for gasoline-powered vehicles is a major reason for not buying an EV, while only 29% of Democrats say that.

James Rogers of Sacramento, California, a Democrat who voted for Biden, calls climate change an urgent problem, and he supports Biden’s overall approach. Still, he does not own an EV and isn’t planning to buy one, saying the price must come down and the charging infrastructure upgraded.

Even with a tax credit that could put the average price for a new EV close to $50,000, “it’s too much” money, said Rogers, 62, a retired customer service representative. He’s willing to pay as much as $42,000 for an EV and hopes the market will soon drive prices down, Rogers said.

In an encouraging finding for EV proponents, the poll shows 55% of adults under 30 say they are at least somewhat likely they will get an electric vehicle next time, as do 49% of adults ages 30 to 44, compared with just 31% of those 45 and older.

And people in the U.S. do see the benefits to an EV. Saving money on gasoline is the main factor cited by those who want to buy an EV, with about three-quarters of U.S. adults calling it a major or minor reason.

Making an impact on climate change is another big reason many would buy an EV, with 35% saying that reducing their personal impact on the climate is a major reason and 31% saying it’s a minor reason.
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The World Bank and International Monetary Fund’s spring meetings kick off this week with an ambitious reform and fundraising agenda likely to be overshadowed by concerns over high inflation, rising geopolitical tension and financial stability.

“Despite the remarkable resilience of consumer spending in the United States, in Europe, despite the uplift from China’s reopening, global growth would remain below 3%” in 2023, IMF managing director Kristalina Georgieva told a press conference on Monday.

The fund now expects global growth to remain at close to 3% for the next half decade — its lowest medium-term prediction since the 1990s.

Close to 90% of the world’s advanced economies will experience slowing growth this year, while Asia’s emerging markets are expected to see a substantial rise in economic output — with India and China predicted to account for half of all growth, Georgieva said last week.

Low-income countries are expected to suffer a double shock from higher borrowing costs and a decline in demand for their exports, which Georgieva said could fuel poverty and hunger.

Updated growth projections published in the IMF’s World Economic Outlook on Tuesday will provide a broader look at how different countries are coping, with additional publications to detail fiscal and financial challenges to the global economy.

The World Bank, which forecast a gloomier economic picture than the IMF earlier this year, is slightly raising its prediction for global growth in 2023, from 1.7 in January to 2%, spurred by China’s economic reopening, the bank’s president David Malpass said at a press conference on Monday.

Tackling inflation remains a priority

This year’s spring meeting will be held amid high inflation and ongoing concerns about the health of the banking sector following the dramatic collapse of Silicon Valley Bank.

Georgieva said last week that central banks should continue battling high inflation through interest-rate hikes, despite concerns that it could further inflame the banking sector.

“We don’t envisage, at this point, central banks stepping back from fighting inflation,” she told AFP in an interview.

“Central banks still have to prioritize fighting inflation and then supporting, through different instruments, financial stability,” she said.

Ahead of the spring meetings, the IMF and World Bank also called on wealthier countries to help plug a $1.6 billion hole in a concessional lending facility for low-income countries that was heavily used during the COVID-19 pandemic.

Many low-income countries are now facing mounting debt burdens due in part to the higher interest-rate environment, which is also leading to capital outflows from many of the countries most in need of investment.

“For many of the developing countries it looks like they’re in a phase of decapitalization rather than recapitalization,” Malpass said on Monday. “That’s gravely concerning.”

US pushes for World Bank reforms

Malpass and Georgieva will use this year’s spring meetings to try and make progress on stalled debt restructuring reforms.

“The goal is to share information earlier in the debt restructuring process and work toward comparable burden sharing,” Malpass said.

There will also be a meeting on Wednesday to address war-torn Ukraine’s recovery and reconstruction needs, with the World Bank estimating the country faces an “additional” $11 billion funding shortfall this year.

The spring meetings also provide an opportunity to make progress on an ambitious U.S.-backed agenda to reform the World Bank, so it is better prepared to tackle long-term issues like climate change.

U.S. Treasury Secretary Janet Yellen told AFP she expects member states will agree to update the World Bank’s mission statement to include “building resilience against climate change, pandemics and conflict and fragility,” to its core goals.

Yellen said she also expects an agreement to “significantly” stretch the World Bank’s financial capacity, which “could result in an additional $50 billion in extra lending capacity over the next decade.”

The changes will likely fall to the bank’s next president to implement, with Malpass due to step down early from a tenure marked by concerns over his position on climate change.

He is widely expected to be replaced by U.S.-backed former Mastercard chief executive officer Ajay Banga, who was the only person nominated for the position.
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California officials want federal disaster aid for the state’s salmon fishing industry, they said Friday following the closure of recreational and commercial king salmon fishing seasons along much of the West Coast due to near-record low numbers of the iconic fish returning to their spawning grounds.

Dealing a blow to the salmon fishing industry, the Pacific Fishery Management Council unanimously approved the closure Thursday for fall-run chinook fishing from Cape Falcon in northern Oregon to the California-Mexico border. Limited recreational salmon fishing will be allowed off southern Oregon in fall.

Much of the salmon caught off Oregon originate in California’s Klamath and Sacramento rivers. After hatching in freshwater, they spend an average of three years maturing in the Pacific, where many are snagged by commercial fishermen, before migrating back to their spawning grounds, where conditions are more ideal to give birth. After laying eggs, they die.

“The forecasts for chinook returning to California rivers this year are near record lows,” Council Chair Marc Gorelnik said after the vote in a news release. “The poor conditions in the freshwater environment that contributed to these low forecasted returns are unfortunately not something that the council can or has authority to control.”

Decline follows droughts

Biologists say the chinook population has declined dramatically after years of drought. Many in the fishing industry say a rollback of federal protections for endangered salmon under the Trump administration allowed more water to be diverted from the Sacramento River Basin to agriculture, causing even more harm.

“The fact is that just too many salmon eggs and juvenile salmon died in the rivers in 2020 as a direct result of politically driven, short-sighted water management policies, under the prior federal administration, to ‘maximize’ irrigation river water deliveries during a major drought,” said Glen Spain, acting executive director of the Pacific Coast Federation of Fishermen’s Associations. “Unfortunately, this purely politically driven mistake will cost our fishing-dependent coastal communities dearly.”

California fishing industry representatives and elected leaders said federal aid must be released quickly and efforts need to be ramped up to restore salmon habitat in California rivers with better water management and the removal of dams and other barriers.

“We have to make sure that the policies and practices and the rest are not such that they are defying the evolutionary progress of salmon,” U.S. Rep. Nancy Pelosi said Friday, speaking in San Francisco, California, in the rain, surrounded by fishers who spoke of their concerns about making ends meet during the closure.

The Democratic congresswoman, whose district includes the San Francisco Bay area, pledged to push for the Biden administration to act quickly on the state’s request to declare the situation a fishery resource disaster, the first step toward a disaster assistance bill that must be approved by Congress.

In a letter to U.S. Secretary of Commerce Gina Raimondo seeking the declaration, the California governor’s office stated that the projected loss of the 2023 season is more than $45 million — and that does not include the full impact to coastal communities and inland salmon fisheries.

‘A lot of fear and panic’

California’s salmon industry is valued at $1.4 billion in economic activity and 23,000 jobs annually in a normal season and contributes about $700 million to the economy and supports more than 10,000 jobs in Oregon, according to the Golden State Salmon Association.

“There’s a lot of fear and panic all up and down the coast with families trying to figure out how they’re going to pay the bills this year,” said John McManus, the group’s senior policy director.

Experts fear native California salmon are in a spiral toward extinction. Already, California’s spring-run chinook are listed as threatened under the Endangered Species Act, while winter-run chinook are endangered along with the Central California Coast coho salmon, which has been off-limits to California commercial fishers since the 1990s.

Recreational fishing is expected to be allowed in Oregon only for coho salmon during the summer and for chinook after Sept. 1. Salmon season is expected to open as usual north of Cape Falcon, including in the Columbia River and off Washington’s coast.

There’s some hope that the unusually wet winter in California, which has mostly freed the state of drought, will bring relief. An unprecedented series of powerful storms has replenished most of California’s reservoirs, dumping record amounts of rain and snow and busting a severe three-year drought. But too much water running through the rivers could also kill eggs and young hatchlings.
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America’s employers added a solid 236,000 jobs in March, reflecting a resilient labor market and suggesting that the Federal Reserve may see the need to keep raising interest rates in the coming months. 

The unemployment rate fell to 3.5%, not far above the 53-year low of 3.4% set in January. Last month’s job growth was down from February’s sizzling gain of 326,000. 

Friday’s government report suggested that the economy and the job market remain on solid footing despite nine rate hikes imposed over the past year by the Fed. The March jobs gain may lead the Fed to conclude that the pace of hiring is still putting upward pressure on wages and inflation and that further rate hikes are necessary. When the central bank tightens credit, it typically leads to higher rates on mortgages, auto loans, credit card borrowing and many business loans. 

Despite last month’s brisk job growth, the latest economic signs increasingly suggest that an economic slowdown may be upon us. Manufacturing is weakening. America’s trade with the rest of the world is declining. And, though restaurants, retailers and other services companies are still growing, they are doing so more slowly. 

For Fed officials, taming inflation is job one. They were slow to respond after consumer prices started surging in the spring of 2021, concluding that it was only a temporary consequence of supply bottlenecks caused by the economy’s surprisingly explosive rebound from the pandemic recession. 

Only in March 2022 did the Fed begin raising its benchmark rate from near zero. In the past year, though, it has raised rates more aggressively than it had since the 1980s to attack the worst inflation bout since then. 

And as borrowing costs have risen, inflation has steadily eased. The latest year-over-year consumer inflation rate — 6% — is well below the 9.1% rate it reached last June. But it’s still considerably above the Fed’s 2% target. 

Complicating matters is turmoil in the financial system. Two big American banks failed in March, and higher rates and tighter credit conditions could further destabilize banks and depress borrowing and spending by consumers and businesses. 

The Fed is aiming to achieve a so-called soft landing — slowing growth just enough to tame inflation without causing the world’s biggest economy to tumble into recession. Most economists doubt it will work; they expect a recession later this year. 

So far, the economy has proved resilient in the face of ever-higher borrowing costs. America’s gross domestic product — the economy’s total output of goods and services — expanded at a healthy pace in the second half of 2022. Yet recent data suggests that the economy is losing momentum. 

On Monday, the Institute for Supply Management, an association of purchasing managers, reported that U.S. manufacturing activity contracted in March for a fifth straight month. Two days later, the ISM said that growth in services, which accounts for the vast majority of U.S. employment, had slowed sharply last month. 

On Wednesday, the Commerce Department reported that U.S. exports and imports both fell in February in another sign that the global economy is weakening. 

The Labor Department on Thursday said it had adjusted the way it calculates how many Americans are filing for unemployment benefits. The tweak added nearly 100,000 claims to its figures for the past two weeks and might explain why heavy layoffs in the tech industry this year had yet to show up on the unemployment rolls. 

The Labor Department also reported this week that employers posted 9.9 million job openings in February, the fewest since May 2021 but still far higher than anything seen before 2021. 

In its quest for a soft landing, the Fed has expressed hope that employers would ease wage pressures by advertising fewer vacancies rather than by cutting many existing jobs. The Fed also hopes that more Americans will start looking for work, thereby adding to the supply of labor and reducing pressure on employers to raise wages. 
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Nigeria has secured an $800 million relief package from the World Bank to help cushion the impact of a plan to remove in June a long-held fuel subsidy. 

Nigeria’s finance minister, Zainab Ahmed, on Wednesday said the money would be disbursed to 10 million households as cash. She said authorities would also develop a mass transit system to ease the cost of daily commutes. 

Ahmed made the announcement to journalists at the state house after a weekly Cabinet meeting with officials.

She said the money was ready to be disbursed but did not provide details on how much beneficiaries would receive.

“We’re on course,” she told the local station TVC News. “We made that provision to enable us [an] exit fuel subsidy by June 2023. We’ve secured some funding from the World Bank. That is the first tranche of the palliatives that would enable us to give cash transfers to the most vulnerable in our society.”

Ahmed said authorities were also working with the incoming government to deploy non-cash interventions, including a mass transportation system to ease daily commutes for workers.

The ruling party candidate Bola Ahmed Tinubu was declared the winner of February’s presidential election and will be sworn in next month.

It is unclear if the new administration will discontinue the subsidy program. 

The country spends more than $850 million each month on fuel subsidies, according to the Nigerian National Petroleum Company Limited. 

And the past government’s decision to halt the costly venture has sparked mass protests and unrest across the country. 

“How much will each household be getting? Let’s say roughly around 60,000 [naira],” said Emmanuel Afimia, the head of Enermics Consulting Limited, an oil and gas consulting firm. “But then once that is exhausted, what’s next? How do they intend to select the 10 million households? Who’s sure that the10 million households will receive this package? I just don’t believe it.”

Nigeria is one of Africa’s leading producers of crude oil, but Nigeria has been struggling to stem oil theft and revive local refineries.

The Independent Petroleum Marketers Association of Nigeria said this week that Nigeria must commence local refining before removing subsidies to keep costs of petroleum products within reach.

But Afimia said citizens have already gotten used to fuel shortages and price hikes.

“People have bought fuel at ridiculous prices in December and January. So, if [the] subsidy is finally removed by June and then the price goes up, Nigerians may actually frown, but it won’t be as bad.”

Nigeria is reeling from controversial elections and a cash crunch resulting from the country’s currency reform policy that took effect in January.

This week, the World Bank said the incoming government faces weak growth and multiple policy challenges.
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The Biden administration is pressing its case for a new approach to global trade, arguing that America’s traditional reliance on promoting free trade pacts failed to anticipate China’s brass-knuckled brand of capitalism and the possibility a major power like Russia would go to war against one of its trading partners.

In a speech Wednesday at American University, U.S. Trade Representative Katherine Tai called for a strategy of what’s known as “friend-shoring” — building up supply chains among allied countries and reducing dependence on geopolitical rivals such as China. Rising tension with Beijing and supply-chain bottlenecks arising from the COVID-19 pandemic have highlighted the risks of relying too heavily on Chinese suppliers.

“Trade policy cannot solve all the wrongs in the world, but it can help more people both at home and abroad share the benefits of increasing economic growth,” Tai said. “Let us not be content with reruns of the old. Let us write a new script for a brighter tomorrow.”

The rethinking of trade goes beyond the simple issue of lowering tariffs and signing broad pacts. In her speech, Tai noted the elimination of regulatory barriers last year that allowed U.S. farmers to export potatoes to Mexico, ongoing talks to form an Indo-Pacific Economic Framework that could possibly counter China in Asia, and the recent agreement on critical minerals with Japan.

Tai said that the Biden administration settled “long-standing disputes” with the European Union to focus on shared goals such as a 2021 agreement to put tariffs on “dirty” steel and aluminum produced by China, while supporting the mills in Europe and North America.

WTO reform

The administration is also seeking to work with allies to reform the World Trade Organization, the Geneva-based agency that enforces global trade rules. The WTO has been crippled for more than three years: Its top appeals court hasn’t functioned since the United States blocked the appointment of new judges to the panel. The U.S. and others had argued that the WTO was ill-equipped to deal with China’s unconventional blend of capitalism and state control of the economy.

“We did not anticipate that China would end up being so globally dominant in so many ways,” Tai said in an interview Tuesday ahead of her speech.

When China joined the WTO in 2001, many in the U.S. assumed that it would open its economy and even allow for more political freedom. Instead, China ran up huge trade surpluses with the United States as it became a leading center of manufacturing and the world’s second-largest economy. The Chinese government took advantage of its access to the U.S. market while often discriminating against U.S. and other foreign firms. And China has continued to crack down on political dissent.

Russian invasion

For decades after World War II, U.S. trade policy was based partly on the idea that increased global trade would reduce tensions among countries, that nations that did business with each other would not go to war. But Russian President Vladimir “Putin’s decision to invade Ukraine flies in the face of how we thought things would work,” Tai said.

The Biden administration has upset many of its traditional allies, especially in Europe, by keeping some of former President Donald Trump’s protectionist policies and by aggressively promoting Made-in-America manufacturing.

But Tai insisted the United States wanted to work with allies to build a better, fairer world trading system. The problem, she told reporters, is that U.S. allies are only offering criticisms, instead of putting together their own plans to overhaul the trade system

“We’re the only ones who are out there putting forward an affirmative vision,” she said.
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In a grim report issued last week, the World Bank warned of a slow-growth crisis in the global economy that could persist over the coming decade unless governments worldwide adopt what it calls “sustainable, growth-oriented policies.”

The World Bank report says that global growth in gross domestic product between 2022 and 2030 is on track to decline to about 2.2%, down one-third from the rate that applied between 2000 and 2010. Although the growth rate in developing economies will be higher, it will also likely decline by one-third, from 6% to 4%, according to the document titled “Failing Long-Term Growth Prospects.”

The report says that a number of factors are depressing long-term growth prospects, including an aging workforce, slower population growth and lower rates of productivity-enhancing investment. The negative effects are exacerbated by global shocks to the economy, including the lingering effects of the COVID-19 pandemic and the ongoing war in Ukraine.

“A lost decade could be in the making for the global economy,” said Indermit Gill, the World Bank’s chief economist, in a release accompanying the report. “The ongoing decline in potential growth has serious implications for the world’s ability to tackle the expanding array of challenges unique to our times — stubborn poverty, diverging incomes, and climate change. But this decline is reversible. The global economy’s speed limit can be raised — through policies that incentivize work, increase productivity, and accelerate investment.”

Growth strategies

The World Bank report includes specific recommendations that, according to its own estimates, would boost the average predicted global economic growth rate to 2.9% from 2.2% through the remainder of the decade.

The report urges governments worldwide to lower inflation and assure stability in the financial sector. The report also recommends reducing sovereign debt levels, which would free up funds for investment in productivity-enhancing infrastructure.

Recommended infrastructure investments include upgraded transportations systems and environmentally sustainable improvements to agriculture, manufacturing, and land and water management systems.

The report also calls on countries to lower barriers to international trade, focus on ways to globalize service economy growth and increase labor force participation.

Social progress slowed

Macroeconomists generally agree with much of the World Bank’s assessment, saying that concerns about global growth have been on the rise for several years, and warn that the consequences of a sustained decline — especially in emerging economies — might be severe.

Liliana Rojas-Suarez, a senior fellow at the Center for Global Development and director of its Latin American Initiative, told VOA that growth began to slow several years ago in Latin America.

“A period of high growth in Latin America occurred in 2000 to 2014,” she said. “That was a period when commodity prices were very high and the region was really growing. But the important thing is that social indicators improved dramatically. Poverty declined, income inequality improved, food security, educational health — name any indicators, they were all improving.”

Since then, she said, much of that progress has reversed.

“Growth is not the only thing,” she said. “You need many more things to actually improve poverty and inequality, but growth is an important component. After [2014], it stopped, and now the social indicators are reverting.”

Impacts unevenly distributed

In a news briefing last week, Adam Posen, president of the Peterson Institute for International Economics, said the World Bank was correct to warn of a difficult period ahead but that the effects were not likely to be evenly distributed.

“If you look at the last couple years, not only was there surprising resilience in Europe, but a big surprise — a positive surprise — has been the sustained growth in India, Brazil, Mexico, Indonesia, as well as China, once you take out COVID. Indonesia plus India plus Brazil plus Mexico is an awful lot of human beings and an awful lot of global GDP.”

He said that all of those economies had weathered a year of Federal Reserve interest rate hikes without apparent damage to their own domestic currencies, and that most appear well-positioned to continue growing. However, he noted, the same thing cannot be said about many other regions of the globe.

“The World Bank, I think, is right to draw concern to the possibility of a lost decade in sub-Saharan Africa and Central America and South Asia,” Posen said. “An awful lot of human beings are at risk or are facing very grim situations. But from a global GDP outlook, or even a global population outlook, most of the major [emerging markets] along with most of the G20, essentially, are doing pretty well. I think it should be a concern for the poor people of the world but not for the world in general.”

New database

As part of the report, the World Bank announced that it is now using a new public database to assess global GDP growth, with data currently extending from 1981 to 2021. The database, according to the World Bank, is the first to track the way in which temporary economic disruptions, including “recessions and systemic banking crises,” affect economic growth over time.

The latter has particular relevance today, given the recent failures of several U.S. banks and the forced takeover of Swiss financial services giant Credit Suisse by UBS.

“Recessions tend to lower potential growth,” Franziska Ohnsorge, a lead author of the report and manager of the World Bank’s Prospects Group, said in a statement. “Systemic banking crises do greater immediate harm than recessions, but their impact tends to ease over time.”

Rojas-Suarez of the Center for Global Development praised the creation of the new database, saying that it “could be very useful, not only for future research but also for monitoring countries moving forward, and for international comparisons.”
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McDonald’s announced Monday plans to lay off a number of corporate employees and closed U.S. offices through Wednesday as the company prepares to deliver the notifications as part of a larger restructuring plan.

The international fast-food company closed its U.S. offices and some international ones “out of respect,” and to “provide dignity, confidentiality, and comfort to our colleagues,” said an anonymous Reuters source who is familiar with the company and was not authorized to speak to the media.

According to the source, McDonald’s will have more employees beginning new roles or receiving promotions this week than being laid off. The company has more than 150,000 employees globally, with about 70% based outside of the United States.

The layoffs do not include the more than 2 million workers in franchised McDonald’s restaurants around the world.

Several tech-industry companies, including Amazon, Meta, Twitter and Microsoft have announced layoffs in recent months too. McDonald’s competitor Wendy’s also announced restructuring and possible corporate layoffs in January.

At the start of 2023, McDonald’s warned employees that layoffs were coming as it reorganized the company to increase efficiency and set April 3 as the date by which they would share more details with employees. 

“We have a clear opportunity ahead of us to get faster and more effective at solving problems for our customers and people, and to globally scale our successful market innovations at speed,” the company said in a memo to workers, reported by The Associated Press.

The Wall Street Journal reported that McDonald’s declined to comment on how many employees would be affected by the layoffs, but the Reuters source said the number will tally in the hundreds.

Some information from this report came from Reuters and The Associated Press. 
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Major oil-producing countries led by Saudi Arabia said they’re cutting supplies of crude — again. This time, the decision was a surprise and is underlining worries about where the global economy might be headed.

Russia is joining in by extending its own cuts for the rest of the year. In theory, less oil flowing to refineries should mean higher gasoline prices for drivers and could boost the inflation hitting the U.S. and Europe. And that may also help Russia weather Western sanctions over its invasion of Ukraine at the expense of the U.S.

The decision by oil producers, many of them in the OPEC oil cartel, to cut production by more than 1 million barrels a day comes after prices for international benchmark crude slumped amid a slowing global economy that needs less fuel for travel and industry.

It adds to a cut of 2 million barrels per day announced in October. Between the two cuts, that’s about 3% of the world’s oil suppl

Here are key things to know about the cutbacks:

Why are oil producers cutting back?

Saudi Arabia, OPEC’s dominant member, said Sunday that the move is “precautionary” to avoid a deeper slide in oil prices.

Saudi Energy Minister Abdulaziz bin Salman has consistently taken a cautious approach to future demand and favored being proactive in adjusting supply ahead of a possible downturn in oil needs.

That stance seemed to be borne out as oil prices fell from highs of over $120 per barrel last summer to $73 last month. Prices jumped after Sunday’s announcement, with international benchmark Brent crude trading at about $85 on Monday, up 6%.

With fears of a U.S. recession exacerbated by bank collapses, a lack of European economic growth and China’s rebound from COVID-19 taking longer than many expected, oil producers are wary of a sudden collapse in prices like during the pandemic and the global financial crisis in 2008-2009.

Capital markets analyst Mohammed Ali Yasin said most people had been waiting for the June 4 meeting of the OPEC+ alliance of OPEC members and allied producers, most prominently Russia. The decision underlined the urgency felt by producers.

“It was a surprise to all, I think, watchers and the market followers,” he said. “The swiftness of the move, the timing of the move and the size of the move were all significant.”

The aim now is to ward off “a continuous slide of the oil price” to levels below $70 per barrel, which would be “very negative” for producer economies, Yasin said.

Part of the October cut of 2 million barrels per day was on paper only as some OPEC+ countries aren’t able to produce their share. The new cut of 1.15 million barrels per day is distributed among countries that are hitting their quotas — so it amounts to roughly the same size cut as in October.

Governments announced the decision outside the usual OPEC+ framework. The Saudis are taking the lead with 500,000 barrels per day, with the United Arab Emirates, Kuwait, Iraq, Oman, Algeria and Kazakhstan contributing smaller cuts.

Will the production cut make inflation worse?

It certainly could. Analysts say supply and demand are relatively well balanced, which means production cuts could push prices higher in coming months.

The refineries that turn crude into gasoline, diesel and jet fuel are getting ready for their summer production surge to meet the annual increase in travel demand.

In the U.S., gasoline prices are highly dependent on crude, which makes up about half of the price per gallon. Lower oil prices have meant U.S. drivers have seen the average price fall from records of over $5 per gallon in mid-2022 to $3.50 per gallon this week, according to motor club AAA.

The cuts, if fully implemented, “would further tighten an already fundamentally tight oil market,” Jorge Leon, senior vice president at Rystad Energy, said in a research note. The cut could boost oil prices by around $10 per barrel and push international Brent to around $110 per barrel by this summer.

Those higher prices could fuel global inflation in a cycle that forces central banks to keep raising interest rates, which crimp economic growth, he said.

Given the fears about the overall economy, “the market may interpret the cuts as a vote of no confidence in the recovery of oil demand and could even carry a downside price risk — but that will only be for the very short term,” Leon said.

What will this mean for Russia?

Moscow says it will extend a cut of 500,000 barrels per day through the rest of the year. It needs oil revenue to support its economy and state budget hit by wide-ranging sanctions from the U.S., European Union and other allies of Ukraine.

Analysts think, however, that Russia’s cut may simply be putting the best face on reduced demand for its oil. The West shunned Russian barrels even before sanctions were imposed, with Moscow managing to reroute much of its oil to India, China and Turkey.

But the Group of Seven major democracies imposed a price cap of $60 per barrel on Russian shipments, enforced by bans on Western companies that dominate shipping or insurance. Russia is selling oil at a discount, with revenue sagging at the start of this year.

What does the White House say?

White House National Security Council spokesperson Adrienne Watson, said, “We don’t think cuts are advisable at this moment given market uncertainty — and we’ve made that clear.”

She noted, “Prices have come down significantly since last year, more than $1.50 per gallon from their peak last summer” and, “We will continue to work with all producers and consumers to ensure energy markets support economic growth and lower prices for American consumers.”

The initial White House response was milder than in October, when cuts came on the eve of U.S. midterm elections where soaring gas prices were a major issue. President Joe Biden vowed at the time that there would be “consequences,” and Democratic lawmakers called for freezing cooperation with the Saudis.

Caroline Bain, chief commodities economist at Capital Economics, said the cutback shows “the group’s support for Russia and flies in the face of the Biden administration’s efforts to lower oil prices.”
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