<ul class="wp-block-list"><li>China stocks firm on higher-than-expected borrowing rate cut</li></ul>



<ul class="wp-block-list"><li>Turkish consumer conf in May edges up from record low</li></ul>



<ul class="wp-block-list"><li>EM stocks, FX eye weekly gains of 3% and 1% respectively</li></ul>



By Anisha Sircar and Bansari Mayur Kamdar



May 20 (Reuters)&nbsp;&#8211;&nbsp;China stocks led emerging market stocks higher on Friday after Beijing&#8217;s larger-than-expected cut to a key borrowing rate, while a softer dollar sent an index of currencies to their highest level in two weeks.



China&#8217;s main share indexes&nbsp;.CSI300,&nbsp;.SSEC&nbsp;added 1.6% and 2% after Beijing lowered the five-year loan prime rate&nbsp;CNYLPR5Y=CFXS&nbsp;by 15 basis points (bps) to 4.45% to aid the ailing economy, more than the five or 10 bps tipped by analysts in a Reuters poll.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XC033&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



That boosted MSCI&#8217;s index of stocks&nbsp;.MSCIEF&nbsp;up 2% and more than 3% on the week to track its best weekly performance since mid-March. Most other EM Asian indexes gained between 1% and 2.2% while those in Turkey&nbsp;.XU100&nbsp;and South Africa&nbsp;.JTOPI&nbsp;gained 0.4% and 0.5%.



Still, stocks have clocked losses every month in 2022 and were eyeing their fifth in May as investors remain fearful over the impact of surging inflation, China&#8217;s COVID-19 lockdowns and monetary tightening in developed economies.



&#8220;I&#8217;m not looking at a strong recovery from here &#8211; some stability in (China&#8217;s) renminbi has provided some temporary support this week, but the fact is we&#8217;ve got the strong dollar and concerns over European and Chinese growth very much still with us,&#8221; said Chris Turner, global head of FX Strategy at ING.



Meanwhile, EM currencies&nbsp;.MIEM00000CUS&nbsp;looked set for their first weekly gain in seven, lifted by a glum week for the dollar&nbsp;=USD&nbsp;which lost steam after a breathless 14-week surge and amid a retreat in U.S. Treasury yields.&nbsp;FRX/



Mexico&#8217;s peso&nbsp;MXN=&nbsp;and South Africa&#8217;s rand&nbsp;ZAR=&nbsp;were 0.9% and 2% stronger on the week, with the rand helped by a 50 basis point lending rate hike by the central bank on Thursday.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2XB4IH&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Turkey&#8217;s lira&nbsp;TRY=&nbsp;was the outlier, slipping 0.3% and down 11 sessions out of the last 12, with some upbeat data doing little to boost the struggling currency. Turkish consumer confidence was seen rising to 67.6 points in May from a record low in April.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AAPN0KU2M1&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;The strategy in place&#8230;is costing an arm to Turkey, which is why soft data like the consumer data isn&#8217;t fit to reverse the ugly mood or fears of seeing the lira crumble if the Turkish central bank were to let go,&#8221; said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.



Elsewhere, Russia&#8217;s rouble&nbsp;RUBUTSTN=MCX&nbsp;saw its fifth straight week in the black, boosted by capital controls and domestic tax payments that support demand for the currency, despite growing global sanctions after its invasion of Ukraine.&nbsp;RU/RUB



For GRAPHIC on emerging market FX performance in 2022, see&nbsp;<a href="http://tmsnrt.rs/2egbfVh" target="_blank" rel="noreferrer noopener">http://tmsnrt.rs/2egbfVh</a>



For GRAPHIC on MSCI emerging index performance in 2022, see&nbsp;<a href="https://tmsnrt.rs/2OusNdX" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/2OusNdX</a>



For TOP NEWS across emerging markets&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3ATOPEMRG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



For CENTRAL EUROPE market report, see&nbsp;CEE/



For TURKISH market report, see&nbsp;.IS



For RUSSIAN market report, see&nbsp;RU/RUB



(Reporting by Anisha Sircar in Bengaluru; Editing by Kim Coghill)

P7D3GU2BGZNHDCNT6DEA6AP3D4

EMERGING MARKETS-China rate cut boosts EM stocks; currencies recover as greenback eases￼

LONDON, May 19 (Reuters)&nbsp;&#8211;&nbsp;A new study by the&nbsp;central&nbsp;bank&nbsp;to the world&#8217;s&nbsp;central&nbsp;banks, the&nbsp;Bank&nbsp;of International Settlements (BIS), has called for&nbsp;urgent&nbsp;action to tackle&nbsp;rising&nbsp;wealth&nbsp;inequality, warning the problem was feeding a dangerous loop of recessions and poverty.



While government policies have largely been blamed for the rise in&nbsp;inequality&nbsp;since the 1980s,&nbsp;central&nbsp;bankers have also come under fire in recent years for fuelling huge stock market gains with ultra-low interest rates and asset buying schemes.



The&nbsp;BIS, looking at 182 recessions across 70 countries, found that even six years after a downturn, the income share of the bottom 50% of earners in an impacted economy remained 0.3% below the pre-recession level on average, whereas for those in the top 10% bracket it was still 0.7% higher.



Economies that are more unequal go through deeper recessions which in turn further increases&nbsp;inequality, its analysis showed. Less progressive taxes and social support programme in many countries have made the problems worse as well.



&#8220;It is increasingly apparent that&nbsp;inequality&nbsp;has evolved from being an academic issue to an&nbsp;urgent&nbsp;policy&nbsp;matter,&#8221; the&nbsp;<a href="https://www.bis.org/" target="_blank" rel="noreferrer noopener">BIS&nbsp;paper</a>&nbsp;said, adding that one of key risks for&nbsp;central&nbsp;banks was that their policy tools become less effective.



The&nbsp;BIS&nbsp;study showed that low-paid workers in some countries were over three time more likely to have lost their jobs during the COVID-19 pandemic, while surging inflation was&nbsp;now&nbsp;hitting poorer households disproportionately hard.



&#8220;Once&nbsp;inequality&nbsp;is left to grow unchecked, deeper and deeper recessions demand additional policy support,&#8221; it said.



&#8220;But at the same time monetary stimulus loses traction, so that the&nbsp;central&nbsp;bank&nbsp;needs to deploy bolder and bolder instruments, which can in turn produce undesirable side effects in terms of wealth&nbsp;inequality&#8221;.



Instead it recommended keeping inflation in check and that governments use &#8220;stabilisation policies&#8221; such as subsidies or support payments that help poorer people.



(Reporting by Marc Jones; Editing by Jan Harvey)

people-black-poverty-guinea-african-bissau-940174-pxhere.com_

Rising inequality now an urgent matter, BIS central bank group warns

<ul class="wp-block-list"><li>Digital rand at least a few years away, says deputy governor</li></ul>



<ul class="wp-block-list"><li>Cen bank digital currency likely only for wholesale purposes</li></ul>



<ul class="wp-block-list"><li>SARB hopes crypto assets could be regulated within 15 months</li></ul>



<ul class="wp-block-list"><li>Regulation to prevent theft, fraud, undermining SARB authority</li></ul>



By Rachel Savage and Promit Mukherjee



LONDON/JOHANNESBURG, May 18 (Reuters)&nbsp;&#8211;&nbsp;A digital rand in South Africa could cut the high cost of cross-border payments for banks but its introduction is still a few years away, a senior central bank official said.



However, regulation of crypto assets&nbsp;is in the offing and might come into force within nine to 15 months, South&nbsp;African&nbsp;Reserve Bank (SARB) Deputy Governor Kuben Naidoo told Reuters in an interview.



It costs 13% of a transaction to remit money from South Africa to another country, more than double the average of the Group of 20 (G20) leading global economies, according to a 2021&nbsp;<a href="https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q421.pdf" target="_blank" rel="noreferrer noopener">World Bank report</a>.



Sending money to South Africa costs 6.2%.



Some countries are planning to introduce e-versions of traditional currency, known as central bank digital currencies (CBDCs) and are studying how the underlying technology could be used.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2X13EL&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL2N2W922S&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



China&#8217;s digital yuan project is the most advanced among large economies, though central banks from the&nbsp;euro zone&nbsp;to the United States are in varying stages of research into CBDCs.



Last year, Nigeria&#8217;s central bank introduced an eNaira for use by ordinary citizens.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2RL4J4&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



South Africa has conducted small-scale experiments with a wholesale CBDC and participated in a cross-border pilot with the central banks of Malaysia, Australia and Singapore.



The next stage is for regulators to test the digital rand at a bigger scale and develop rules for its use.



&#8220;We&#8217;re still learning, we&#8217;re still experimenting,&#8221; Naidoo said.



Meanwhile, Naidoo said the South&nbsp;African&nbsp;Reserve Bank wants regulation of crypto assets to prevent theft, money laundering and undermining of monetary policy and hopes it will be in place in the next 15 months.



&#8220;If crypto assets were to become a very ubiquitous currency, you could undermine the authority of the central bank,&#8221; he said.



(Reporting by Rachel Savage and Promit Mukherjee; Editing by Lisa Shumaker)

South African Economy As Inflation Rate Rises For First Time In 2017

S.African central bank eyes digital rand to cut cross-border payment costs

<ul class="wp-block-list"><li>Stocks slide as inflation scare drives uncertainty</li><li>UK inflation hits 9%, in Canada rises to 6.8%</li><li>German 2-year yield hits 2011 high on ECB rate hike bets</li></ul>



NEW YORK, May 18 (Reuters) &#8211; Global stocks plunged and the dollar strengthened for the first time in four sessions on Wednesday as concerns about rising inflation on economic growth soured sentiment.



The mood was underscored by a 9% surge in British consumer prices and a faster-than-expected acceleration in inflation in Canada.



British inflation surged to its highest annual rate since 1982 as energy bills soared, while Canadian inflation rose to 6.8% last month, largely driven by rising food and shelter prices, Statistics Canada data showed. <a href="https://www.reuters.com/markets/uk-inflation-hits-9-highest-since-modern-records-started-2022-05-18/">read more</a>



British inflation is now the highest among major economies in Europe, but prices are rapidly rising worldwide, forcing central banks around the globe to hike interest rates and tamp down growth as suggested by a modest decline in U.S. homebuilding in April.&nbsp;<a href="https://www.reuters.com/business/us-building-permits-dive-april-housing-starts-fall-2022-05-18/">read more</a>



Soaring prices and material shortages have already hit homebuilding, the sector of the economy most sensitive to rates. But the U.S. Commerce Department report also showed a record backlog of houses to be built, indicating a decline in homebuilding potentially might be marginal.



Adding to the gloom caused by inflation were earnings results from Target Corp&nbsp;<a href="https://www.reuters.com/companies/TGT.N" target="_blank" rel="noreferrer noopener">(TGT.N)</a>, whose quarterly profit halved as it warned of a bigger margin hit this year due to rising fuel and freight costs.&nbsp;<a href="https://www.reuters.com/business/retail-consumer/target-profit-halves-rising-costs-warns-bigger-margin-hit-2022-05-18/">read more</a>



Target shares plummeted 24.88%, its biggest one-day percentage drop since the &#8220;Black Monday&#8221; stock market crash on Oct. 19, 1987, a day after Walmart Inc <a href="https://www.reuters.com/companies/WMT.N" target="_blank" rel="noreferrer noopener">(WMT.N)</a> warned of similar margin squeezes and saw its stock drop 11.4% for its biggest one-day percentage fall since Oct. 16, 1987.



&#8220;It was Walmart yesterday and everybody thought it was a one-off,&#8221; said Dennis Dick, head of markets structure and a proprietary trader at Bright Trading LLC in Las Vegas. &#8220;Now that Target misses earning a lot more than Walmart even did, they&#8217;re scared that consumer is not as strong as everybody think it is.&#8221;



MSCI&#8217;s gauge of stocks across the globe&nbsp;<a href="https://www.reuters.com/quote/.MIWD00000PUS" target="_blank" rel="noreferrer noopener">(.MIWD00000PUS)</a>&nbsp;shed 2.74%, while in Europe, the pan-regional STOXX 600 index&nbsp;<a href="https://www.reuters.com/quote/.STOXX" target="_blank" rel="noreferrer noopener">(.STOXX)</a>&nbsp;closed down 1.14%.



On Wall Street, the Dow Jones Industrial Average&nbsp;<a href="https://www.reuters.com/quote/.DJI" target="_blank" rel="noreferrer noopener">(.DJI)</a>&nbsp;fell 3.56%, the S&amp;P 500&nbsp;<a href="https://www.reuters.com/quote/.SPX" target="_blank" rel="noreferrer noopener">(.SPX)</a>&nbsp;lost 4.03% and the Nasdaq Composite&nbsp;<a href="https://www.reuters.com/quote/.IXIC" target="_blank" rel="noreferrer noopener">(.IXIC)</a>&nbsp;dropped 4.73%.



The declines for the S&amp;P 500 and Dow marked their biggest one-day percentage declines since June 11, 2020.



Few analysts are willing to predict the end to selling after a bruising first five months of the year for risk assets given the magnitude of macroeconomic uncertainty, with many anticipating market volatility will be the norm for some time.



The U.S. dollar gained ground as the sell-off in risk assets boosted the safe-haven appeal of the greenback, which was on pace to snap a three-session losing streak, a day after Fed Chair Jerome Powell pledged the U.S. central bank would ratchet up rates as high as needed to combat rising inflation.



The dollar index rose 0.581%, with the euro down 0.8% to $1.0463. The Japanese yen strengthened 0.92% to 128.23 per dollar.



Treasury yields fell, although a steep path for rates remained the prevailing market consensus as the benchmark 10-year note yield hit a one-week high of 3.015% after Powell&#8217;s hawkish comments.



The yield fell 8.1 basis points to 2.890% on Wednesday after a soft U.S. housing starts number.



The German two-year government bond yield shot to 0.444%, its highest since November 2011 after more hawkish central banker comments, and last was up 1.6 basis points at 0.386%. The European Central Bank&#8217;s Klaas Knot said on Tuesday that a 50-basis-point rate hike in July was possible if inflation broadens.



Gold prices were little changed despite the risk-off environment as looming U.S. interest rate hikes and a resurgent dollar dimmed the metal&#8217;s shine.



Spot gold was up 0.1% at $1,816.06 an ounce.



Oil prices dipped in volatile trade, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output.&nbsp;<a href="https://www.reuters.com/markets/europe/oil-prices-climb-hopes-china-demand-recovery-2022-05-18/">read more</a>



U.S. crude settled down 2.5% at $109.59 per barrel and Brent settled at $109.11, down 2.52% on the day.



Reporting by Herbert Lash and Chuck Mikolajczak; additional reporting by Devik Jain in Bengaluru; editing by Jonathan Oatis



<a href="https://eb2.3lift.com/pass?tl_clickthrough=true&amp;redir=https%3A%2F%2Frtb-us-west.linkedin.com%2Flax%2Fclk%3Ftrk%3DCwEAAAGA219j8O5J_QPuGAn69j66GLwCHyGelZRBrDjyMVm7BsD6-jnV210a2QvMUKaeVQP366tqUx7nZnsNgg1q_Pk8Rs6R7b9eDmSVIvq2EIjXBx6a6iLhyJ8rpEs-fGvpmAH47UwNX1mg9n6pqbjowUTUik9jcDrXN7dh6juu8a2pa1yX2I1DFVOoPwJeVGOY69hl5VyJqX41IrJG-Wr_e8yGeSfaPkKqQ9daiJmUtHtTCJ0FKHcRswkAdh2WyRqKqSMyqYt8g1mdY7mQdsihXikCiHhI9lYqzpUVBX38rDy80CFcRSRc4d7V1sIvtxsQKO5iBf8lVnI4-ocVTPTrd05nUMe3W_TjS7NvC9FeYN9X0x7wvxPBaSga-QocRM8EOqMBN-mlirKdG64aJbsusHW3-1Ad5hh-GMHxRp5qMWUx0TMp7G0inPcBbeymeizCKu024cZjR0xJuy6SoYOlLkDUiyvc93dpu6tMTT4JdZRKfu_dllWVHra9RWKts-oNv4sEQk_UdRgZ4sdvbXyYTnmB9Gj4FEQDvxIM_e5ytenWcPW3bgf7C7f_J3xF_mOXMdNMRSs2udbLsi62UO-45af7ncdYaysxir-_9VQQBiiXVSo2GkQ7BPXkYtPnlqvPA3F09pr0N5CGCN98gAVg5xXVUXpiswH6HGS03MqDLD-krOTI-XHfIIZPpmg1bK692JpWo5fM5Fhm5XfjIXQCGj7Gm1mNqv5E5UlxyoSFy3Pkm93tm6dWmIpKJ2RG1zKjUazAu_GJypG6RGU8fsjc1CjLUG7pUYm1F1tfWaIlVxO9aUxvOADDFmko8vIOFezcDI6OuYN_Gnzf15qS3KtBrVivet1QadIvksRivupN6aIWlgzw_GlIDD8TEF6SxOr1Hf_SOvnBoBKOkzuum-Rb6dyyMHPpazLP5OYowiRQeZRTQBiu5ymdaPpRtNvRlnf8QdVPejrTxmImamGb7HVIU2CNHMj_suG3hVjWS1AyCfxv7S0sFgY8oEWFzhnalKkVY9PLYWVGXVR7OTRkSk9hZfoHKd0T6edKToABZRQGp486-1_Rbk-fCKYd8-Lj0NzfF8hNJaUZs2KcTYUrqJMZsI1o_Wtd6wx8OcOKutJdAzjVYfiW-peWKY-F6uRPqMmYWZS27X4AdXOi3Dd0nc4M7An-pAANfFei8iNjigrmUROSeCmOxGcGFubkfIyxn6oGlIfmRAyytzVLVaS8R2OX9yTpdajr3JJq59h8QOiaLxq67BOqAuMwZNxuHDT87xMZpBxsYeAb-zIgyptDSATW1wO1kD_UPb7dLVPXBus9uQ3it3n67W4P7DFoMeyFLRW7MKXWnqPWnEgQrEEZFMrdkrSc64Gvk54IuJWwpHikdpbTgut2rvgufF90RA0vX39NFfoZ38sdioILXyt6Je1rXHd-Ess3zHIbKiLt-2wTtkP0-IJtUjKLj-4c5sFy6_vtsENOH4EO05isy0CRL-WVeLR4qcaf9i3NJIzCz31oVoUJP5cn8W4%26action%3Dclick%26laxrid%3Dc06f007b-ef01-4607-ba8a-e26f46b14d2c%26laxbid%3D2%26eid%3D3%26crtype%3Dvid%26laxerid%3D12472029946156324700670%26adfmt%3D6%26urle%3DCwEAAAGA219j_FqDOJJoNIHnPGG0mad91_hcM9a4b2gEzdqU-VV-yAQjAfXbgeQyZ6mZBxfLCH5XLh5C6_zVaYNf4ReAKhscXzogY_sfjK4-equ9EYAO65RMMM1cf65vJ98JsfV3Sehbka-UJVMKNZxq_4sfyZ_2zsxx9KW13_dh2Y5TtCfdwB-NUKJZ5r3iq1-zBQyWjLpnwRKMZ4L_jdpIM5K9DAZ8hRR-kRTyLXxGsSGrPcL-favPxQo28qy16TFG3YC-%26urlhash%3Ddzgv&amp;pr=1.094&amp;bc=2.379&amp;aid=12472029946156324700670&amp;bmid=6250&amp;biid=6250&amp;sid=66552&amp;brid=556676&amp;adid=173662614&amp;crid=29572004&amp;ts=1652947903&amp;bcud=2379&amp;ss=12&amp;cb=64814" target="_blank" rel="noreferrer noopener"></a>

Trading Board Is Showing A Crash In Stok Exchange Market

Stocks pummeled by growth worries, U.S. dollar climbs

KEY POINTS



<ul class="wp-block-list"><li>Goldman Sachs analysts have cut their China GDP forecast to 4% from 4.5% after weak data in April.</li><li>The bank does not expect China will start fully easing Covid controls before the second quarter of 2023.</li><li>On Monday, Citi — which had one of the highest China GDP forecasts — cut its outlook for growth to 4.2% from 5.1%.</li></ul>



BEIJING — Goldman Sachs analysts on Wednesday cut their forecast for China’s GDP to 4% after&nbsp;<a href="https://www.cnbc.com/2022/05/16/china-economy-covid-lockdowns-weigh-on-retail-industrial-production-data.html">data for April showed a slump</a>&nbsp;in growth as Covid-19 controls restricted business activity.



The new forecast is even further below the&nbsp;<a href="https://www.cnbc.com/2022/03/05/china-on-deck-to-reveal-its-2022-gdp-target.html">“around 5.5%”</a>&nbsp;growth target the Chinese government announced for the year in March.



“Given the Q2 Covid-related damage to the economy, we now expect China’s growth to be 4% this year (vs. 4.5% previously),” Hui Shan and a team at Goldman wrote in a report Wednesday. That prediction assumes there will be significant government support, on top of measures to stabilize the property market and control Covid outbreaks.



Since March, mainland China has struggled to contain its worst Covid outbreak in two years. Notably, the metropolis of Shanghai only started this week to begin discussing the resumption of normal activity — with a goal of mid-June.



Among April’s weak data, the Goldman analysts pointed to a plunge in housing starts and sales, half the credit growth that markets expected and&nbsp;<a href="https://www.cnbc.com/2022/05/11/chinas-consumer-prices-climb-as-covid-prompts-food-stockpiling.html">a drop below 1% for the increase in consumer prices, excluding food and energy.</a>



Other data for April released Monday showed an <a href="https://www.cnbc.com/2022/05/16/china-economy-covid-lockdowns-weigh-on-retail-industrial-production-data.html">unexpected drop in industrial production</a> and a worse-than-expected 11.1% decline in retail sales from a year ago. Exports, a major driver of growth, rose <a href="https://www.cnbc.com/2022/05/09/china-economy-april-exports-slow-imports-unchanged-amid-virus-curbs.html">by 3.9% in April</a> from a year earlier, the slowest pace since a 0.18% increase in June 2020, according to official data accessed through Wind Information.



“The weak data highlight the tension between China’s growth target and zero-Covid policy which is at the core of China’s growth outlook,” the Goldman analysts said.



They noted how Chinese leaders have&nbsp;<a href="https://www.cnbc.com/2022/05/12/chinese-official-on-chinas-economy-amid-covid-pandemic.html">emphasized their “dynamic zero-Covid” policy,</a>&nbsp;and how news that China will not host the Asian Cup next summer due to Covid reflects Beijing’s conservative mindset.



“We now expect reopening does not start before 2023Q2 and the process to be more gradual and controlled than previously assumed,” the Goldman analysts said.



“This is why our 2023 GDP growth forecast only increases by a quarter point to 5.3% (vs. 5.0% previously) despite the half a point downward revision to 2022 full-year growth forecast.”



<h2 class="wp-block-heading" id="h-other-banks-cut-forecasts"><a></a>Other banks cut forecasts</h2>



On Monday, Citi — which&nbsp;<a href="https://www.cnbc.com/2022/04/26/investment-banks-slash-china-growth-outlook-one-puts-gdp-below-4percent.html">had one of the highest China GDP forecasts</a>&nbsp;— cut its outlook for growth to 4.2% from 5.1%.



A few days earlier, JPMorgan had reduced its estimate to 4.3% from 4.6%. Morgan Stanley cut its target in late April to 4.2% from 4.6%.

106910593-1626253221629-gettyimages-83781196-aa19b85a-38be-43ab-8727-5b1a7a5aae1e

Goldman Sachs cuts its China GDP forecast to 4% on Covid controls

<ul class="wp-block-list"><li>Food makes up 40% of CPI baskets in low income countries</li></ul>



<ul class="wp-block-list"><li>UN food price index hits record in February, March</li></ul>



<ul class="wp-block-list"><li>More governments opt to introduce support measures</li></ul>



<ul class="wp-block-list"><li>Risk of social unrest is on the rise over food, fuel price rises</li></ul>



By Karin Strohecker, Ezgi Erkoyun and Sarah El Safty



LONDON/ISTANBUL/CAIRO, May 17 (Reuters)&nbsp;&#8211;&nbsp;Like for millions of people in developing&nbsp;and emerging market&nbsp;countries around the world, shopping for staple foods has turned from a necessity into a luxury for Selcuk Gemici.



The 49-year-old, who works in an auto repair shop in Turkey&#8217;s largest city Istanbul and lives with his wife and two children in his father&#8217;s house, says fresh produce is often out of reach with his family living on pasta, bulgur and beans.



&#8220;Everything became so expensive, we cannot buy and eat what we want &#8211; we only buy what we can afford now,&#8221; said Gemici. &#8220;My children are not properly nourished.&#8221;



Global food prices have climbed for two years, fuelled by COVID-19 disruptions and weather woes. Supply shocks to grains and oils from Russia&#8217;s invasion of Ukraine saw them hit an all-time record in February, and again in March.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2WY26Q&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Inflation rates have soared, with energy price rises adding to pressure. Turkey or Argentina with annual inflation of 70% and around 60% might be outliers, but readings are into double-digits in countries from Brazil to Hungary. It makes U.S. inflation at 8.3% look modest in comparison.



Rising food prices are a hot topic in emerging market, raising the risk of civil unrest with echoes of the Arab spring and putting policy makers in a bind between stepping in with fiscal support to ease the pain on their population or preserve government finances.



Food is the single largest category in inflation baskets &#8211; the selection of goods used to calculate the cost of living &#8211; in many developing nations, accounting for around half in countries like India or Pakistan and on average for some 40% in low-income countries, International Monetary Fund data shows.



Food producers have become more protective: India on the weekend announcing a ban on wheat exports while Indonesia halted exports of palm oil to control soaring prices at home in late April.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2X80FF&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL2N2X30P4&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



And with the war in Ukraine not only disrupting food but also fertilizer supplies, food inflation could be more longer-lasting, Marcelo Carvalho, head of global emerging markets research at BNP Paribas told Reuters.



&#8220;This is here to stay,&#8221; said Carvalho. &#8220;Food is very salient &#8211; when there is a change in food prices, the perception about inflation is magnified &#8211; that feeds into inflation expectations that are more easily unanchored.&#8221;



HOT SPOT



For Um Ibrahim, a 60-year-old widow and street vendor selling headscarves in front of a mosque in the middle-class district of Madinet Nasr in Egypt&#8217;s capital Cairo, feeding her four children has become much harder.



&#8220;All prices rose &#8211; clothes, vegetables, poultry, eggs &#8211; what am I going do?&#8221; she asked, laying out her ware on a cloth.



Egypt, one of the world&#8217;s biggest wheat importers, has seen inflation soar more than 13% in April, and is expected to hike interest rates again at a meeting this week after it devalued the currency by 14% in mid-March.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2VR0S1&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Emerging market policy makers, having jacked up interest rates by hundreds of basis points cumulatively since 2020 to curb price pressures and ensure a bond premium to rising U.S. yields for investors, have to perform a balancing act between taming inflation and keeping fragile growth alive at a time of rising global interest rates.



Emerging economies may expand just 4.6% this year, the World Bank forecasts, compared with an earlier 6.3% prediction.



Polina Kurdyavko, head of EM debt at BlueBay Asset Management, says governments have three options: Provide bigger subsidies to consumers or bite the bullet that is to let prices rise and face inflation and social unrest, or do something in between.



&#8220;There are no easy solutions,&#8221; Kurdyavko said.



A raft of countries have introduced measures: Turkey has raised the minimum wage by 50% in December to address a currency crash and inflation spike.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2T14KZ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>&nbsp;Chile will up minimum pay this year as well.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL3N2WO37U&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



South Africa&#8217;s government is debating whether to increase a social relief grant launched in 2020 and make the scheme permanent.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2VC5HD&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Economists fear emerging economies are facing a fresh wave of unrest on the back of the latest increases in food prices. North Africa, where food inflation was a contributor to the Arab Spring revolts a decade ago, looked particularly vulnerable, said Beata Javorcic, chief economist at the European Bank for Reconstruction and Development.



&#8220;The irony of this war is that while everybody expected Russia to have a crisis, it is actually North African countries that are closer to having an emergency situation due to high food prices,&#8221; she said.



But pain is expected to stretch further: Three quarters of nations expected to be at high-risk or extreme risk of civil unrest by the fourth quarter of 2022 were middle-income countries, risk consultancy Verisk Maplecroft said last week.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2X276O&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Appeasing inflation pressures through spending will come at a fiscal cost that could spell trouble further down the line, said BNP&#8217;s Carvalho.



&#8220;In emerging markets, fiscal sins are forgiven but not forgotten,&#8221; he said. &#8220;Over the last couple of years, everybody felt like they have a blank cheque &#8230; in part because rates were so low. Now that interest rates are rising, it gets a bit trickier.&#8221;



(Reporting by Karin Strohecker; Additional reporting by Jorgelina do Rosario; Editing by David Evans)

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Food inflation pain puts emerging markets between rock and hard place

By Vuyani Ndaba



JOHANNESBURG, May 13 (Reuters)&nbsp;&#8211;&nbsp;South Africa&#8217;s Reserve Bank is set to make its first 50 basis point hike to its repo rate in more than six years next week, taking it to 4.75%, to prevent potential second-round effects from higher consumer prices, a Reuters poll forecast on Friday.



Despite a cost of living crisis expected to have a severe impact on growth, 16 of 24 economists in the May 9-12 survey concluded the central bank would raise its repo rate by 50 basis points (bps) on May 19. The remaining eight opted for a 25 bps increase.



Last month only four of 17 economists thought a 50 bps hike was likely, against 13 who said 25 basis points.



A median of 16 economists showed an almost 60% probability the SARB would hike interest rates by 50 bps this month.



&#8220;We expect the SARB to step up the pace of policy normalisation in its May MPC meeting, delivering a 50 bps rate hike to 4.75%,&#8221; said Jeffrey Schultz, economist at BNP Paribas.



The Reserve Bank has not used 50 bps hikes in its policy toolkit since January 2016. It was the norm prior to the 2008/09 global recession.



Still, the Bank was expected to return to 25 bps hikes in every quarter until 6.00% was reached in the third quarter of next year.



Schultz added there were growing concerns over materialising upside risks to inflation &#8211; both core and non-core &#8211; a weaker currency and what was likely to be a faster frontloading of U.S. Federal Reserve hikes over coming months.



The poll suggested inflation would average 5.9% this year and slow to 4.7% next year, slightly higher than last month&#8217;s 5.7% and 4.6% respective forecasts.



Any further upward revision could breach the SARB&#8217;s 3-6% upper comfort level for 2022.



Some governments have responded to rising prices by cutting fuel taxes or granting subsidies.



In South Africa, the temporary cut to the fuel levy by 1.50 rand ($0.0924) per litre of petrol will come to an end late this month, setting the scene for much higher fuel price increases at gas stations next month.



Independent economist Elize Kruger said the sheer extent of such a hefty fuel price increase in a single month would result in a higher probability of a severe indirect negative effect on prices (second round effects) as every product that has to be transported would become more expensive.



&#8220;Workers will demand higher wages to compensate for higher living costs, also adding to the production costs in the economy and in this process prices in most of the CPI basket will show increases. The SARB would be very uncomfortable if second round effects start to appear in a meaningful way,&#8221; said Kruger.



South African economic growth was expected to slow to 1.8% this year from a 4.9% expansion last year and stay at that rate across the forecast horizon.



Ten of 14 economists expected a &#8220;severe impact&#8221; from the cost of living crisis on economic growth this year, while the other four suggested a &#8220;mild effect&#8221; owing to the Reserve Bank&#8217;s credibility in monetary policy.



Apart from rising prices across the world, South Africans have had to deal with rotational power disruptions that constrain growth in Africa&#8217;s most developed economy and undermine job creation. ($1 = 16.2372 rand)



(Reporting by Vuyani Ndaba; Editing by Alex Richardson)

South African Reserve Bank Rate Announcement Ahead Of Stimulus Plan

S.Africa’s central bank to hike by 50bps on May 19 for first time since 2016

WINDHOEK, May 12 (Reuters)&nbsp;&#8211;&nbsp;Namibia on Thursday launched a sovereign wealth fund, months after oil discoveries by TotalEnergies&nbsp;TTEF.PA&nbsp;and Shell&nbsp;SHEL.L&nbsp;off its coast.



President Hage Geingob said at the launch the Welwitschia Fund would get an initial injection of 262 million Namibian dollars ($16.15 million) and invest 2.5% of its portfolio locally to bridge the country&#8217;s infrastructure financing gap.



The fund will collect some of the royalties from all mineral resources sold as well as some tax revenues and money raised by the government divesting from its investment holdings.



&#8220;We are looking forward to the prospects and opportunities that will emanate from the recent discoveries of oil and the green hydrogen energy, which have the potential to further boost the fund&#8217;s capital,&#8221; Geingob said.



Other resource-rich African countries that have sovereign funds include Angola, Botswana, Libya and Nigeria.



TotalEnergies said in February its Venus prospect offshore Namibia had found a good quality reservoir, which one source told Reuters was more than 1 billion barrels of oil equivalent. That find was the second major discovery in a month after Shell also announced a significant find.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2UZ0ND&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Known for its gem-quality diamonds, gold and uranium, Namibia has considered creating a sovereign fund since 2009.



It is aiming to become a green hydrogen player by 2026 and has selected a preferred bidder for a multi-billion dollar project.



($1 = 16.2180 Namibian dollars)



(Reporting by Nyasha Nyaungwa, Editing by Alexander Winning and Angus MacSwan)

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Namibia launches sovereign wealth fund following oil discoveries

EM FX, stocks down amid broader risk-off



Indian rupee at record low; inflation data due 1200 GMT



Yuan at 20-month low



Czech crown bounces from eight-week lows



S. Africa gold, mining March data due 0930 GMT



By Anisha Sircar



May 12 (Reuters)&nbsp;&#8211;&nbsp;Emerging market currencies slipped on Thursday as the greenback hit its highest&nbsp;level in two decades&nbsp;after hotter U.S. inflation data, while regional shares tumbled to&nbsp;fresh 22-month lows on pressure from&nbsp;stock markets in India and China.



MSCI&#8217;s index of emerging market (EM) currencies&nbsp;.MIEM00000CUS&nbsp;resumed a descent that began in&nbsp;early-April, falling 0.6% to return to its weakest level since November 2020 after a breather in its last two sessions.



Inflation pressures in parts of EM are rising, even though U.S. inflation might have peaked, said Natalia Gurushina, EM Fixed Income economist at VanEck.



Data on Wednesday&nbsp;showed U.S. consumer price growth is likely to stay hot for a while. Higher-than-expected inflation lifted&nbsp;the dollar&nbsp;=USD&nbsp;and dragged stocks as it suggests a more robust Federal Reserve response this year.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2X315F&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;Some EM central banks will have to keep on hiking – in a sense &#8216;matching&#8217; the Fed&#8217;s hikes – even though EM inflation is driven by exogenous factors, but the problem is that global supply shocks are feeding into core inflation, and this passthrough might be higher than in normal pre-COVID years,&#8221; Gurushina added.



Stocks&nbsp;.MSCIEF&nbsp;plunged 2.3% to a 22-month low, dropping eight out of its nine previous sessions.



Indian shares&nbsp;.NSEI,&nbsp;.BSESN&nbsp;dropped nearly 2% and the rupee&nbsp;INR=IN&nbsp;hit an all-time low for a second time this week ahead of domestic retail inflation numbers, with a Reuters poll expecting it to surge to an 18-month high.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL3N2X40XW&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL3N2WY21A&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



China stocks&nbsp;.SSEC,&nbsp;.CSI300&nbsp;pared gains to close upto 0.4% lower, while the yuan&nbsp;CNY=&nbsp;slipped 0.9% to a 20-month low.



The South African rand&nbsp;ZAR=&nbsp;fell 0.8%, ahead&nbsp;of mining data and after new COVID-19&nbsp;cases crossed 10,000 for first time since January, stoking fears of a fifth wave.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AJ8N2WE008&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



In Central Europe, the Czech crown&nbsp;EURCZK=&nbsp;bounced 0.2% a day after plumbing two-month lows after Czech Republic President Milos Zeman appointed Ales Michl, a central bank board member who has opposed policy tightening, as the bank&#8217;s new governor, signalling a likely end to rate hikes.&nbsp;CEE/



For GRAPHIC on emerging market FX performance in 2022, see&nbsp;<a href="http://tmsnrt.rs/2egbfVh" target="_blank" rel="noreferrer noopener">http://tmsnrt.rs/2egbfVh</a>



For GRAPHIC on MSCI emerging index performance in 2022, see&nbsp;<a href="https://tmsnrt.rs/2OusNdX" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/2OusNdX</a>



For TOP NEWS across emerging markets&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3ATOPEMRG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



For CENTRAL EUROPE market report, see&nbsp;CEE/



For TURKISH market report, see&nbsp;.IS



For RUSSIAN market report, see&nbsp;RU/RUB



(Reporting by Anisha Sircar and Lisa Pauline Mattackal in Bengaluru; editing by Uttaresh.V)

Stock market exchange graph price drop with red numbers investment lose of business financial digital background – Candle stick charts stock crash crisis fall risk decreasing arrow down trend sell

EMERGING MARKETS – FX returns to 18-month lows as dollar gallops higher

ACCRA, May 11 (Reuters)&nbsp;&#8211;&nbsp;Ghana&#8217;s consumer price inflation accelerated to 23.6% year-on-year in April from 19.4% in March, the statistics service said on Wednesday, a recent record one economist said was &#8220;shocking&#8221;.



The West African nation&#8217;s latest inflation reading was the highest in 18 years and more than double government&#8217;s targeted band of 6% to 10%.



Prices for 295 of the 307 items analysed by the statistics service rose in April. Prices for imported items accelerated faster than locally produced items for the first time in 29 months, except in the case of locally produced food.



Transport costs, which include fuel prices, saw the largest increases, up to 33.5% from 17.4% in March. Diesel costs alone were up 90.9%.



&#8220;We were all expecting the diesel increases, and these are imported items,&#8221; government statistician Samuel Kobina Annim told a news conference.



&#8220;But we need to look at it from the food and non-food perspective if we want policy to get a hold of the challenges we are having,&#8221; he added.



Food prices were up 26.6% from the previous month and nearly double the category&#8217;s 12-month average of 13.5%. Cereal prices were among the greatest contributors, continuing a trend that began with Russia&#8217;s invasion of Ukraine in February.



Razia Khan, Standard Chartered Bank&#8217;s chief economist for Africa and the Middle East, said the spike was &#8220;shocking&#8221; and may pressure the central bank to further tighten interest rates.



&#8220;Failure to act soon could have far reaching implications, putting at risk any hopes for quick macroeconomic stabilisation,&#8221; she said.



Ghana&#8217;s central bank raised its main lending rate by a record 250 basis points in March, fearing that runaway inflation, compounded by a depreciating local currency and mounting national debt, could ignite a full-blown economic crisis.



The central bank&#8217;s monetary policy committee will meet from May 18 to March 23 to discuss further adjustments.



(Reporting by Cooper Inveen; Editing by Estelle Shirbon and Alex Richardson)

Ghana lifts lockdown on key regions as COVID-19 cases reach 1,042

Ghana lifts lockdown on key regions as COVID-19 cases reach 1,042. shutterstock_422422516

Ghana’s consumer inflation spikes to ‘shocking’ 23.6% in April

CHICAGO, May 10 (Reuters)&nbsp;&#8211;&nbsp;Why are food prices rising?



Global food prices started to rise in mid-2020 when businesses shut down due to the COVID-19 pandemic, straining supply chains. Farmers dumped out milk and let fruits and vegetables rot due to a lack of available truckers to transport goods to supermarkets, where prices spiked as consumers stockpiled food. A shortage of migrant labor as lockdowns restricted movement impacted crops worldwide.



Since then, there have been problems with key crops in many parts of the world. Brazil, the world&#8217;s top soybean exporter, suffered from severe drought in 2021. China&#8217;s wheat crop has been among the worst ever this year. Concerns about food security, heightened during the pandemic, have led some countries to hoard staples to ward off future shortages, limiting supplies on the global market.



Russia&#8217;s invasion of Ukraine in late February dramatically worsened the outlook for food prices. The U.N. food agency said prices hit an all-time record in February and again in March. Russia and Ukraine account for nearly a third of global wheat and barley, and two-thirds of the world&#8217;s export of sunflower oil used for cooking. Ukraine is the world&#8217;s No. 4 corn exporter. The conflict has damaged Ukraine&#8217;s ports and agricultural infrastructure and that is likely to limit the country&#8217;s agricultural production for years.



Some buyers are avoiding buying grains from Russia due to Western sanctions.



Indonesia banned most exports of palm oil in late April to ensure domestic supplies of cooking oil, cutting off supplies from the world&#8217;s largest producer of the edible oil used in everything from cakes to margarine.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2WK0MX&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



What food prices are rising the most?



Throughout the pandemic, high vegetable oil prices have helped drive up broader food costs. Cereal prices also hit a record in March, a result of limited shipments of corn and wheat during the Ukraine war.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2W60EX&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Dairy and meat prices reached a record in April, according to the U.N. food agency, reflecting continually increasing global demand for protein and high prices for animal feed – mainly corn and soybeans. In addition, bird flu in Europe and North America impacted egg and poultry prices.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2WY2BD&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL2N2WA1YB&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



In U.S. inflation data for March, the index for meats, poultry, fish and eggs increased 14% from a year ago while beef rose 16%.



When will food prices come down?



It is hard to say, given that agricultural production depends on hard-to-predict factors like weather. U.N. Secretary-General Antonio Guterres said in early May the problem of global food security could not be solved without restoring Ukrainian agricultural production and Russian food and fertilizer output to the world market.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2WW202&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The World Bank forecasts wheat prices could rise more than 40% in 2022. The Bank expects agricultural prices to fall in 2023 versus 2022. But that depends on increased crop supplies from Argentina, Brazil and the United States &#8211; by no means guaranteed.



The sharp rise in fertilizer prices, as countries avoid buying from major producers Russia and its ally Belarus, could discourage farmers from applying adequate crop nutrients to their fields. That could bring down yields and result in lower production, prolonging the crisis. As the climate warms, extreme weather is becoming more common &#8211; posing another risk to crop production.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2VI30O&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL1N2V30V8&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Who is most affected?



Food prices in March accounted for the greatest share of U.S. inflation since 1981, according to Fitch Ratings, while shop prices in Britain surged in April at the fastest rate in more than a decade. But the people most impacted by higher food prices live in the developing world, where a larger percentage of incomes is spent on food.



The Global Network Against Food Crises, set up by the United Nations and the European Union, said in an annual report that Russia&#8217;s invasion of Ukraine poses serious risks to global food security, especially in countries facing a food crisis including Afghanistan, Ethiopia, Haiti, Somalia, South Sudan, Syria and Yemen.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2WW0JG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Caroline Stauffer in ChicagoEditing by Matthew Lewis)

Concept of healthy food- fresh vegetables

Why are food prices going up? Key questions answered￼

LONDON, May 11 (Reuters)&nbsp;&#8211;&nbsp;Rising fuel and food prices look set to stoke an &#8220;inevitable&#8221; rise in civil unrest, with developing middle-income countries such as Brazil or Egypt particularly at risk, a report by a risk consultancy said.



Three quarters of nations expected to be at high-risk or extreme risk of civil unrest by the fourth quarter of 2022 were middle-income countries, as defined by the World Bank, Verisk Maplecroft said in an update to its political risk monitor.



&#8220;Unlike low-income countries, they were rich enough to offer social protection during the pandemic, but now struggle to maintain high social spending that is vital to the living standards of large sections of their populations,&#8221;&nbsp;<a href="https://www.maplecroft.com/insights/analysis/cost-of-living-crisis-inflames-civil-unrest-risks-in-emerging-markets" target="_blank" rel="noreferrer noopener">the report found</a>.



Argentina, Tunisia, Pakistan and Philippines were also among the countries to watch in the next six months, the authors said, pointing to their high dependency on food and energy imports.



Russia&#8217;s war in Ukraine has accelerated a rise in food prices, which hit an all-time record in February and again in March. Energy prices also rose sharply.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2X12RV&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>O/R



&#8220;With no resolution of the conflict in sight, the global cost of living crisis will continue deep into 2023,&#8221; the report said.



Lebanon, Senegal, Kenya and Bangladesh face similar pressures.



The report pointed to Sri Lanka and Kazakhstan as examples of middle income countries that have already suffered unrest this year. The former saw rising food and fuel prices contribute to escalating tensions, while an attempt to cut fuel subsidies sparked protests in Kazakhstan.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS0N2VC00E&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Civil unrest could hamper a potential economic recovery but also deter investors focused on environmental, social and governance (ESG) factors, it said.



&#8220;Some countries risk falling into a vicious cycle, whereby worsening governance and social indicators make them ESG investment pariahs, impeding the inflows needed to improve economic performance and address societal needs.&#8221;



The report found that more than 50% of the almost 200 countries covered by the index have experienced an increase in civil unrest since the COVID-19 pandemic hit.



(Reporting by Jorgelina do Rosario; Editing by Karin Strohecker and Richard Pullin)

RWANDA, KIGALI: A big market in the capital offers everything: food, clothes, kitchen equipment, herbal medicine.

Soaring food, fuel ramp up social unrest risk for emerging markets -report￼

May 9 (Reuters)&nbsp;&#8211;&nbsp;The International Monetary Fund&#8217;s executive board on Monday approved a three-year, $456 million extended credit facility arrangement for Mozambique, with about $91 million available for immediate disbursement, the Fund said.



The facility is the southeast African nation&#8217;s first program since the global lender suspended support six years ago.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2VV4W0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The IMF said the three-year arrangement will help support economic recovery and policies to reduce public debt and financing vulnerabilities, while creating space for public investments in human capital, climate adaptation and infrastructure.



The Fund said the program will support a reform agenda centered on establishing a sovereign wealth fund to manage the country&#8217;s liquefied natural gas wealth, mobilizing tax revenue and strengthening public finances.



&#8220;Mozambique has managed the COVID pandemic relatively well, maintaining macroeconomic stability and reform momentum even as the country has weathered a series of shocks, culminating with the effects of the war in Ukraine,&#8221; IMF&nbsp;Deputy&nbsp;Managing&nbsp;Director Bo Li said in a statement. &#8220;With policy space now limited, sustaining the economic recovery underway and tackling debt vulnerabilities are priorities.&#8221;



(Reporting by Rami Ayyub and David Lawder; Editing by Sandra Maler and Christopher Cushing)

BE2FA7DW6VJP3AYQ5S5CUCMQO4

IMF board approves $456 mln program for Mozambique

NEW YORK, May 9 (Reuters)&nbsp;&#8211;&nbsp;Economic growth in emerging markets is set to slow &#8220;sharply&#8221; this quarter weighed by China, Russia and the spread of tighter monetary conditions, JPMorgan analysts said on Monday.



&#8220;China’s adherence to its zero-COVID policy, Russia&#8217;s recession and tightening global financial conditions are set to pull EM growth sharply lower this quarter,&#8221; wrote Luis Oganes, head of currencies, commodities and EM research, and Jonny Goulden, head of EM local markets and sovereign debt strategy at JPMorgan.



Emerging market currencies are likely to underperform as U.S. dollar strength continues and there is risk to EM economic growth, they said.



The dollar on Monday hit a 20-year high against a basket of developed market currencies&nbsp;=USD&nbsp;and an index of EM currencies&nbsp;.MIEM00000CUS&nbsp;touched its lowest since November 2020.



On local market debt the U.S. bank retains an underweight as inflation in the region is revised higher, as are expectations for higher rates as central banks continue to focus on inflation.



They remain neutral on foreign debt with a market weight on the EMBI global diversified index &#8220;as EM sovereigns remain at the mercy of rates but cushioned by a combination of front-loaded pain and cleaner technicals.&#8221;



On EM corporate credit, they keep a market weight on the CEMBI as &#8220;the uncertain market environment and macro risks are mitigated by strong standalone fundamentals and supportive technicals.&#8221;



(Reporting by Rodrigo Campos; Editing by Andrea Ricci)

(Photo: Flickr/QuoteInspector.com)

EM economic growth to slow sharply this quarter -JPMorgan

KEY POINTS



<ul class="wp-block-list"><li>The euro zone faces concurrent economic shocks from the war in Ukraine and a surge in food and energy prices exacerbated by the conflict, along with a supply shock from China’s zero-Covid policy.</li><li>Stefan Hartung, CEO of German engineering and technology giant Bosch, told CNBC that the company sees “a big recession in the making.”</li></ul>



LONDON — The CEOs of several European blue chip companies have told CNBC that they see a significant recession coming down the pike in Europe.



The continent is particularly vulnerable to the fallout from the Russia-Ukraine war,&nbsp;<a href="https://www.cnbc.com/2022/04/28/europe-faces-recession-if-putin-fully-shuts-off-the-gas-taps.html">associated economic sanctions and energy supply concerns</a>, and economists have been downgrading growth forecasts for the euro zone in recent weeks.



The euro zone faces concurrent economic shocks from the war in Ukraine and a surge in food and energy prices exacerbated by the conflict, along with a supply shock arising from China’s zero-Covid policy. That has prompted concerns about “stagflation” — an environment of low economic growth and high inflation — and eventual recession.



“For sure, we see a big recession in the making, but that’s exactly what we see — it’s in the making. There is still an overhanging demand because of the Covid crisis we just are about to leave,” said Stefan Hartung, CEO of German engineering and technology giant&nbsp;<a href="https://www.cnbc.com/quotes/BOSCHLTD-IN" target="_blank" rel="noreferrer noopener">Bosch</a>.



“It’s still there and you see it heavily hitting us in China, but you see that in a lot of areas in the world, the demand of consumers has already even been increased in some areas.”



In particular, Hartung noted lingering consumer demand for household appliances, power tools and vehicles, but suggested this would dissipate.



“That means for a certain amount of time, this demand will still be there, even while we see the interest increase and we see the pricing increase, but at some point in time, it won’t be just a supply crisis, it will also be a demand crisis, and then for sure, we are in a deep recession,” he added.



Inflation in the euro zone hit a record high of 7.5% in March. So far, the&nbsp;<a href="https://www.cnbc.com/european-central-bank/">European Central Bank</a>&nbsp;has remained more dovish than its peers, such as the Bank of England and the U.S. Federal Reserve, both of which have begun hiking interest rates in a bid to rein in inflation.



However, the ECB now expects to conclude net asset purchases under its APP (asset purchase program) in the third quarter, after which it will have room to begin monetary tightening, depending on the economic outlook.



Berenberg Chief Economist Holger Schmieding said in a note Friday that near-term risks to economic growth are tilted to the downside in Europe.



“Worsening Chinese lockdowns and cautious consumer spending in reaction to high energy and food prices could easily cause a temporary contraction in Eurozone GDP in Q2,” Schmieding said.



“An immediate embargo on gas imports from Russia (highly unlikely) could turn that into a more serious recession. If the Fed gets it badly wrong and catapults the U.S. straight from boom to bust (unlikely but not fully impossible), such a recession could last well into next year.”



Yet Schmieding suggested that the euro zone is likely to enter recession only “if worse came to worst,” and that it isn’t a base expectation.



Mark Branson, president of German financial regulator BaFin, said any military escalation in Ukraine or further energy supply disruption could pose serious risks to growth in Europe’s largest economy, with industrial sectors particularly vulnerable.



“We’re already seeing that growth is down to around zero in many jurisdictions, including here, and it’s vulnerable. It’s also vulnerable from the ongoing Covid-related shocks,” he said.



“We’ve got inflation that’s going to need to be tackled, and it’s going to need to be tackled now, so that’s a cocktail which is difficult for the economy.”



<h3 class="wp-block-heading" id="h-challenging-business-environment">‘Challenging business environment’</h3>



Slawomir Krupa, deputy CEO at&nbsp;<a href="https://www.cnbc.com/quotes/GLE-FR" target="_blank" rel="noreferrer noopener">Societe Generale</a>, told CNBC on Thursday that the French lender is monitoring the macroeconomic picture closely.



“It’s obviously a fundamental piece of news for the macroeconomic context and the triggered inflation feedback loop between the energy shock – which was already going on before the war in Ukraine – you have the inflation expectation rising and the risk of a final, fundamental impact on the macroeconomy into a recession,” he said, adding that this would potentially affect “the entire system, and (SocGen) as well.”



Ola Kallenius, CEO of <a href="https://www.cnbc.com/quotes/MBG-DE" target="_blank" rel="noreferrer noopener">Mercedes-Benz</a>, also told CNBC last week that the situation in China and the Ukraine war are making for a “challenging business environment” for the German luxury automaker in three distinct ways.



“On the one hand, we have the ongoing shortages mainly associated with semiconductors. On top of that, there are now new lockdowns in China, our biggest market, which will affect us in China but also can affect supply chains across the world, and in addition to that, of course, the Ukraine war, so the business environment is challenging,” he explained.



His comments were echoed by&nbsp;<a href="https://www.cnbc.com/quotes/VOW3-DE" target="_blank" rel="noreferrer noopener">Volkswagen</a>&nbsp;CEO Herbert Diess, who told CNBC on Thursday that the company also faced a “challenging environment” from Covid, the chip shortage and the war in Ukraine in the first quarter.



<a href="https://www.cnbc.com/quotes/MAERSK.B-DK" target="_blank" rel="noreferrer noopener">Maersk</a>&nbsp;CEO Soren Skou said Thursday that the world’s largest shipping company is also keeping an eye on recession risks, particularly in the United States, but does not expect those to come to the fore until late 2022 or early 2023.

KGJLDHJ75ZNCHLECJOATMMUGCY

‘We see a big recession in the making’: Top CEOs are fearing the worst in Europe

LONDON, May 4 (Reuters)&nbsp;&#8211;&nbsp;Inflation in South Africa is set to rise to 8% this year, overshooting the central bank&#8217;s target amid the global impact of the Ukraine conflict and rising U.S. interest rates, credit rating agency Moody&#8217;s forecast in a report on Wednesday.



Moody&#8217;s said inflation was set to be higher than the South African Reserve Bank&#8217;s 3-6% target range this year, before falling in 2023 and 2024, with the central bank likely to continue to tighten monetary policy after it raised interest rates in March.<a href="https://www.reutersconnect.com/all?search=all%3AL5N2VR4YO&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



South Africa&#8217;s finances were already under strain before the COVID-19 pandemic and worsened during&nbsp;successive waves of the virus, but have improved thanks to bumper prices for the country&#8217;s&nbsp;mineral&nbsp;commodity exports. But South Africa&#8217;s finance minister warned last month that the negative impact of high energy prices could outweigh this.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2WK4WG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Moody&#8217;s cited risks to the country&#8217;s economy from&nbsp;highly indebted&nbsp;state-owned companies&nbsp;such as power utility Eskom, a rigid labour market and high social spending.



&#8220;The electricity sector poses the greatest risks to economic growth prospects, with generation capacity already insufficient to cover the economy&#8217;s needs,&#8221; Moody&#8217;s said in the report.



Power outages implemented by state-owned Eskom have constrained economic growth in Africa&#8217;s most industrialised country for more than a decade.



Moody&#8217;s upgraded South Africa&#8217;s outlook from &#8220;negative&#8221; to &#8220;stable&#8221; in April, keeping the government&#8217;s Ba2 rating and stating high commodity prices and fiscal consolidation would help to stabilise debt at around 80% of GDP in the&nbsp;medium term.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL3N2VZ3E2&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Rachel Savage. Editing by Jane Merriman)

Moody’s expects South Africa’s inflation to hit 8% in 2022￼

KEY POINTS



<ul class="wp-block-list"><li>Imposing measures that could reduce, or fully cut, Russian energy supplies to the EU have been a complicated task for the bloc.</li><li>This is because the region is reliant on Russia for several sources of energy, including oil.</li><li>In 2020, Russian oil imports accounted for about 25% of the bloc’s crude purchases, according to the region’s statistics office.</li></ul>



The European Commission, the executive arm of the EU, on Wednesday put forward new sanctions against the Kremlin which will include a&nbsp;six-month&nbsp;phase out of Russian crude imports.



<a href="https://www.cnbc.com/2022/05/04/russia-ukraine-live-updateshtml.html">Russia’s unprovoked invasion of Ukraine</a>, and evidence of war crimes, has pushed the EU to take bolder steps on energy sanctions. But imposing measures that could reduce, or fully cut, Russian energy supplies to the EU have been a complicated task for the bloc.



This is because the region is reliant on Russia for several sources of energy, including oil. In 2020, Russian oil imports accounted for about 25% of the bloc’s crude purchases, according to the&nbsp;<a href="https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Extra_EU_imports_of_petroleum_oil_from_main_trading_partners,_2020_and_first_semester_2021.png" target="_blank" rel="noreferrer noopener">region’s statistics office.</a>



“Let us be clear: it will not be easy,” European Commission President Ursula von der Leyen said during a speech at the European Parliament Wednesday.



“Some member states are strongly dependent on Russian oil. But we simply have to work on it. We now propose a ban on Russian oil. This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined.”



<h2 class="wp-block-heading" id="h-exemptions"><a></a>Exemptions</h2>



The ban had been a highly controversial topic within the EU, but the move gained more momentum after Germany backed the idea. Two EU nations —&nbsp;<a href="https://www.cnbc.com/2022/05/03/russia-sanctions-eu-nears-oil-embargo-hungary-and-slovakia-want-exemptions.html">Slovakia and Hungary which are both highly dependent on Russian energy — have been demanding exemptions</a>.



Von der Leyen chose not to give any details on exemptions during her speech, but three EU officials, who did not want to be named due to the sensitive nature of the issue, confirmed to CNBC that the commission’s proposal includes this flexibility — giving Hungary and Slovakia a longer period of time to phase out Russian oil.

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Economy

EMERGING MARKETS-China rate cut boosts EM stocks; currencies recover as greenback eases￼

Rising inequality now an urgent matter, BIS central bank group warns

S.African central bank eyes digital rand to cut cross-border payment costs

Stocks pummeled by growth worries, U.S. dollar climbs

Goldman Sachs cuts its China GDP forecast to 4% on Covid controls

Food inflation pain puts emerging markets between rock and hard place

S.Africa’s central bank to hike by 50bps on May 19 for first time since 2016

Namibia launches sovereign wealth fund following oil discoveries

EMERGING MARKETS – FX returns to 18-month lows as dollar gallops higher

Ghana’s consumer inflation spikes to ‘shocking’ 23.6% in April

Why are food prices going up? Key questions answered￼

Soaring food, fuel ramp up social unrest risk for emerging markets -report￼

IMF board approves $456 mln program for Mozambique

EM economic growth to slow sharply this quarter -JPMorgan

‘We see a big recession in the making’: Top CEOs are fearing the worst in Europe

Moody’s expects South Africa’s inflation to hit 8% in 2022￼

EU proposes gradual ban on Russian oil in sixth round of sanctions against Moscow

News Tips

Advertise With Us

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EMERGING MARKETS-China rate cut boosts EM stocks; currencies recover as greenback eases

Why are food prices going up? Key questions answered

Soaring food, fuel ramp up social unrest risk for emerging markets -report

Moody’s expects South Africa’s inflation to hit 8% in 2022