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The outlook for the year ahead and beyond is not very promising. The International Labor Organization warns that the current global economic slowdown will force millions of workers to accept lower quality, poorly paid jobs.  

In its “World Employment and Social Outlook: Trends 2023” report, the ILO predicts global unemployment will rise by 3 million for a total of 208 million this year with similar projections for 2024. 

ILO director of work quality, Manuela Tomei, said both the quantity and quality of jobs will deteriorate, and that working conditions are expected to worsen while wages go down. 

“Workers in low- and middle-income countries are expected to be hardest hit,” Tomei explained. “And with the pandemic and the economic slowdown across the globe, the prospects of seeing a reduction in informality and poverty have and will deteriorate further.”  

The report warns the cost-of-living crisis will push more people into poverty, widening the gap between rich and poor. It also notes that about 2 billion people, mainly in developing countries, work in the informal economy.  

According to the report, the slowing global economy is likely to reverse the progress which has been made since 2004 in moving people out of the informal sector.  

In addition to the millions of reported unemployed, the ILO says 473 million people last year stopped actively searching for work. It explains they either were discouraged about prospects of finding a job or had other obligations such as care responsibilities. 

For the first time since the 1970s, Tomei said stagflation conditions— that is high inflation and low growth combined — are threatening productivity and labor market recovery. 

She added that, “The Ukrainian war, geopolitical tensions, disruption in supply chains, high inflation, the tightening of monetary policies, and great uncertainty overall are all contributing to depressing the prospects for labor markets.”   

The ILO reports young people aged 15 to 24 are facing severe difficulties in finding employment, and that they are three times more likely to be out of a job than adults. It adds young women are faring much worse than young men, and that only 47.4 percent of women participated in the global labor force last year compared with 72.3 percent for men. 
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The increase in U.S. consumer prices eased again in December, dropping for the sixth straight month after reaching a four-decade high in mid-2022, the government reported Thursday.  

The Bureau of Labor Statistics said its consumer price index rose at an annualized 6.5% pace last month, down from the 7.1% figure in November and off sharply from the peak of 9.1% last June. December prices edged down a tenth of a percentage point from November. 

While U.S. shoppers might notice some relief when they pay for their groceries and other purchases, inflation is still well above the normal 2% figure that policy makers at the Federal Reserve, the country’s central bank, strive for. 

Some U.S. economists are still predicting a recession in the U.S. economy, the world’s largest, later this year, but job growth has remained strong, with 233,000 new jobs added in December. 

On Thursday, the Labor Department reported that applications for unemployment benefits fell last week to their lowest level in 15 weeks, to a total of 205,000. Jobless claims are generally viewed as an indicator of layoffs. Some high-profile companies, like the Goldman Sachs investment banking company and Cable News Network, have laid off workers, but plenty of other companies are still looking to hire more employees.  

The U.S. unemployment rate is at 3.5%, a 53-year low. 

Inflation, however, remains the main point of concern for Federal Reserve policy makers.  

The central bank raised its benchmark interest rate seven times last year in an effort to slow job growth and increase the cost of borrowing for businesses and consumers alike, on the presumption that the higher loan costs would bring down inflation.  

The strategy appears to be working, but only slowly. 

The Fed has indicated it plans to raise rates another two or three times in the coming months before halting further increases but leaving the benchmark rate at a high level. 
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The World Bank slashed its 2023 growth forecasts on Tuesday to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies, Russia’s war in Ukraine continues, and the world’s major economic engines sputter.

The development lender said it now expected global GDP growth of 1.7% in 2023 — the slowest pace outside the 2009 and 2020 recessions in nearly three decades. In its previous Global Economic Prospects report, in June 2022, the bank had forecast 2023 global growth at 3.0%

The bank said major slowdowns in advanced economies, including sharp cuts to its forecast to 0.5% for both the United States and the euro zone, could foreshadow a new global recession less than three years after the last one.

“Given fragile economic conditions, any new adverse development — such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions — could push the global economy into recession,” the bank said in a statement accompanying the report.

The bleak outlook will be especially hard on emerging market and developing economies, the World Bank said, as they struggle with heavy debt burdens, weak currencies and income growth, and slowing business investment that is now forecast at a 3.5% annual growth rate over the next two years — less than half the pace of the past two decades.

“Weakness in growth and business investment will compound the already devastating reversals in education, health, poverty and infrastructure and the increasing demands from climate change,” World Bank President David Malpass said in a statement.

China’s growth in 2022 slumped to 2.7%, its second slowest pace since the mid-1970s after 2020, as zero-COVID restrictions, property market turmoil and drought hit consumption, production and investment, the World Bank report said. It predicted a rebound to 4.3% for 2023, but that is 0.9 percentage-point below the June forecast due to the severity of COVID disruptions and weakening external demand.

The World Bank noted that some inflationary pressures started to abate as 2022 drew to a close, with lower energy and commodity prices, but warned that risks of new supply disruptions were high, and elevated core inflation may persist. This could cause central banks to respond by raising policy rates by more than currently expected, worsening the global slowdown, it added.

The bank called for increased support from the international community to help low-income countries deal with food and energy shocks, people displaced by conflicts, and a growing risk of debt crises. It said new concessional financing and grants are needed along with the leveraging of private capital and domestic resources to help boost investment in climate adaptation, human capital and health, the report said.

The report comes as the World Bank’s board this week is expected to consider a new “evolution road map” for the institution to vastly expand its lending capacity to address climate change and other global crises. The plan will guide negotiations with shareholders, led by the United States, for the biggest revamp in the bank’s business model since its creation at the end of World War II.
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Ant Group’s founder Jack Ma will give up control of the Chinese fintech giant in an overhaul that seeks to draw a line under a regulatory crackdown that was triggered soon after its mammoth stock market debut was scuppered two years ago.

Ant’s $37 billion IPO, which would have been the world’s largest, was cancelled at the last minute in November 2020, leading to a forced restructuring of the financial technology firm and speculation the Chinese billionaire would have to cede control.

While some analysts have said a relinquishing of control could clear the way for the company to revive its IPO, the changes announced by the group on Saturday, however, are likely to result in a further delay due to listing regulations.

China’s domestic A-share market requires companies to wait three years after a change in control to list. The wait is two years on Shanghai’s Nasdaq-style STAR market, and one year in Hong Kong.

A former English teacher, Ma previously possessed more than 50% of voting rights at Ant but the changes will mean that his share falls to 6.2%, according to Reuters calculations.

Ma only owns a 10% stake in Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd (9988.HK), but has exercised control over the company through related entities, according to Ant’s IPO prospectus filed with the exchanges in 2020.

Hangzhou Yunbo, an investment vehicle for Ma, had control over two other entities that own a combined 50.5% stake of Ant, the prospectus showed.

Ma’s ceding of control comes as Ant is nearing the completion of its two-year regulatory-driven restructuring, with Chinese authorities poised to impose a fine of more than $1 billion on the firm, Reuters reported in November.

The expected penalty is part of Beijing’s sweeping and unprecedented crackdown on the country’s technology titans over the past two years that has sliced hundreds of billions of dollars off their values and shrunk revenues and profits.

But Chinese authorities have in recent months softened their tone on the tech crackdown amid efforts to bolster a $17-trillion economy that has been badly hurt by the COVID-19 pandemic.

“With the Chinese economy in a very febrile state, the government is looking to signal its commitment to growth, and the tech, private sectors are key to that as we know,” said Duncan Clark, chairman of investment advisory firm BDA China.

“At least Ant investors can (now) have some timetable for an exit after a long period of uncertainty,” said Clark, who is also an author of a book on Alibaba and Ma.

REGULATORY SCRUTINY

Ant operates China’s ubiquitous mobile payment app Alipay, the world’s largest, which has more than 1 billion users.

Ant, whose businesses also span consumer lending and insurance products distribution, said Ma and nine of its other major shareholders had agreed to no longer act in concert when exercising voting rights, and would only vote independently.

It added that the shareholders’ economic interests in Ant will not change as a result of the adjustments.

Ant also said it would add a fifth independent director to its board so that independent directors will comprise a majority of the company’s board. It currently has eight board directors.

“As a result, there will no longer be a situation where a direct or indirect shareholder will have sole or joint control over Ant Group,” it said in its statement.

Reuters reported in April 2021 that Ant was exploring options for Ma, one of China’s most successful and influential businessmen, to divest his stake in Ant and give up control.

The Wall Street Journal reported in July last year, citing unnamed sources, that Ma could cede control by transferring some of his voting power to Ant officials including Chief Executive Officer Eric Jing.

Ant’s market listing in Hong Kong and Shanghai was derailed days after Ma publicly criticized regulators in a speech in October 2020. Since then, his sprawling empire has been under regulatory scrutiny and going through a restructuring.

Once outspoken, Ma has largely remained out of public view since the regulatory crackdown that has reined in the country’s technology giants and did away with a laissez-faire approach that drove breakneck growth.

“Jack Ma’s departure from Ant Financial, a company he founded, shows the determination of the Chinese leadership to reduce the influence of large private investors,” said Andrew Collier, managing director of Orient Capital Research.

“This trend will continue the erosion of the most productive parts of the Chinese economy.”

As Chinese regulators frown on monopolies and unfair competition, Ant and Alibaba have been untangling their operations from each other and independently seeking new business, Reuters reported last year.

Ant said on Saturday that its management would no longer serve in the Alibaba Partnership, a body that can nominate the majority of the e-commerce giant’s board, affirming a change that started mid-last year.
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For much of the global economy, 2023 is going to be a tough year as the main engines of global growth – the United States, Europe and China – all experienced weakening activity, the head of the International Monetary Fund said Sunday.

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

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

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

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

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

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

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

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

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

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

US economy ‘most resilient’

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

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

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

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

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

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

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

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

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

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

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

‘Elite club’

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

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

Use of the euro is already widespread in Croatia.

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

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

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

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

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

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

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

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

Borders gone

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Economic boost

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

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

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

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

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

US holiday travel

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The new cash withdrawal limits take effect January 9. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“As we are now, I in my personal opinion do not see it happening soon – which worries me because, as I said, each day of delay is costing the country millions and millions and costs the people pain and misery,” Salam told Reuters.
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