<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-820x461.jpeg" alt="" class="wp-image-417738" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>The European Central Bank faces a tough balancing act, with inflation running at record highs while the war in Ukraine casts a shadow over the growth outlook. Thomas Lohnes | Getty Images News | Getty Images</figcaption></figure>



The European Central Bank on Thursday confirmed its intention to hike interest rates at its policy meeting next month and downgraded its growth forecasts.



Following its latest monetary policy meeting, the Governing Council announced that it intends to raise its key interest rates by 25 basis points at its July meeting.



The ECB expects a further hike at the September meeting, but said the scale of that increment would depend on the evolving trajectory of the medium-term inflation outlook.



For now, the interest rates on the main refinancing operations, marginal lending facility and deposit facility remain unchanged at 0.00%, 0.25% and -0.50% respectively.



“Beyond September, based on its current assessment, the Governing Council anticipates that a gradual but sustained path of further increases in interest rates will be appropriate,” the ECB said in a statement on Thursday.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/european-central-bank-poised-to-signal-july-rate-hike-as-inflation-jumps-to-fresh-record-high/">European Central Bank poised to signal July rate hike as inflation jumps to fresh record high</a></h3>



“In line with the Governing Council’s commitment to its 2% medium-term target, the pace at which the Governing Council adjusts its monetary policy will depend on the incoming data and how it assesses inflation to develop in the medium term.”



Annual consumer price inflation across the 19-member euro area hit a fresh record high of 8.1% in May, but the ECB in its previous guidance indicated that a first rate hike would only come following the formal end of its net asset purchases on July 1.



Markets had been eagerly awaiting the meeting in Amsterdam on Thursday, the Governing Council’s first outside of Frankfurt since the onset of the coronavirus pandemic, for signs of how aggressive the shift in interest rates will have to be in the coming months.



Policymakers face the challenge of reining in inflation without compounding the economic slowdown resulting from the war in Ukraine and the associated sanctions and embargoes imposed between the European Union and Russia, previously a key source of energy imports for the bloc.



Economists have been torn on whether to expect hikes of 25 basis points or 50 basis points at the July and September meetings, with the ECB broadly expected to climb out of negative rate territory by the end of September from its current historic low of -0.5%.



<h3 class="wp-block-heading" id="h-slowing-growth-higher-inflation">Slowing growth, higher inflation</h3>



The ECB also downgraded its growth forecasts and upwardly revised its inflation projections. Annual inflation is now expected to hit 6.8% in 2022, declining to 3.5% in 2023 and 2.1% in 2024. This marks a substantial increase from its March projections of 5.1% in 2022, 2.1% in 2023 and 1.9% in 2024.



Growth forecasts were revised down significantly to 2.8% in 2022 and 2.1% in 2023, and revised up slightly to 2.1% in 2024. This compares to projections at the ECB’s March meeting of 3.7% in 2022, 2.8% in 2023 and 1.6% in 2024.



Randall Kroszner, professor of economics at the University of Chicago and former governor of the Federal Reserve System, told CNBC ahead of Thursday’s meeting that it was “very important” that the ECB began to move on interest rates.



The U.S. Federal Reserve began hiking rates in March and implemented a 50 basis point hike in May, its largest in 22 years, with FOMC meeting minutes pointing to further aggressive hikes ahead. The Bank of England has hiked rates at four consecutive meetings to take the base interest rate to a 13-year high.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2021/the-fed-is-in-early-stages-of-a-campaign-to-prepare-markets-for-tapering-its-asset-purchases/">The Fed is in early stages of a campaign to prepare markets for tapering its asset purchases</a></h3>



“Inflation is very high, it has the potential to become entrenched unless [ECB policymakers] move, and they move aggressively and make it clear that they are going to be moving further,” Kroszner told CNBC’s “Squawk Box Europe” on Thursday.



“They run the risk of inflation becoming entrenched, inflation expectations becoming unanchored, and having to raise rates much higher than they otherwise would have to.”



However, Kroszner expressed empathy with the difficult position in which the Governing Council finds itself, given Europe’s proximity to the war in Ukraine, interdependence with Russia and therefore state of economic peril.



“The concern that they have is that there are so many negative shocks coming from the war, sanctions, uncertainty, that the economy is going to slow down even without raising rates, so the inflationary pressures are going to come off,” he said.



“But there is sufficient inflationary pressure and sufficient risk of inflation expectations becoming unanchored, that they have really got to get moving.”

107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c

European Central Bank confirms July rate hike plans, raises inflation projections significantly

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-820x461.jpeg" alt="" class="wp-image-417726" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Christine Lagarde, president of the European Central Bank, seen during a panel session at the World Economic Forum in Davos, Switzerland, on Wednesday, May 25, 2022. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



The European Central Bank is expected to confirm its intention to raise interest rates next month, as policymakers meet in Amsterdam Thursday for their first policy meeting outside of Frankfurt since the onset of the coronavirus pandemic.



While inflation for the 19-member euro area hit another record high in May, a rate hike would only come in July as the ECB first needs to formally end its net asset purchases, according to its forward guidance.



The key question is how aggressive the shift will be over the coming months — some analysts have moved their estimates for a larger hike in September at the latest.



“A handful of Governing Council members are already open to a 50bp hike,” said Mark Wall, a chief economist with Deutsche Bank, in a research note.



“We believe the ECB is continuing to underestimate inflation and we expect support for a 50bp hike will increase as the summer progresses.”



The ECB will also publish new staff projections for growth and inflation this week — and market participants are likely to closely monitor the 2024 inflation print as this constitutes the ECB’s medium-term price target.



The ECB is also expected to downgrade its growth forecasts and upwardly revise its inflation projections, with the 2024 inflation number probably hitting 2%, the medium-term target of the ECB.



<h3 class="wp-block-heading" id="h-read-more-the-fed-is-in-early-stages-of-a-campaign-to-prepare-markets-for-tapering-its-asset-purchases">Read more: <a href="https://www.cnbcafrica.com/2021/the-fed-is-in-early-stages-of-a-campaign-to-prepare-markets-for-tapering-its-asset-purchases/">The Fed is in early stages of a campaign to prepare markets for tapering its asset purchases</a></h3>



Persistently high inflation is the top concern for policymakers on the ECB’s Governing Council.



“Inflation is not only too high, but also too broad,” Francois Villeroy de Galhau, France’s central bank governor, said last week at a conference in Paris. “This requires a normalization of monetary policy — I say normalization and not tightening.”



While inflation, and the fight against it, is of course the core mandate of the ECB, the topic of fragmentation risk will most likely be addressed this week as well.



Bond markets have already reacted to the end of the asset purchases and reassessed the different risks associated with different euro zone countries.



As a result, the spread between German and Italian bonds has been widening. The 10-year spread was above 200 basis points on Monday, compared with less than 140 basis points at the start of the year



“Fragmentation makes life complicated for the ECB. This is not to say that these considerations will overrule whatever the inflation picture dictates in terms of policy tightening,” Dirk Schumacher, an ECB watcher with Natixis, said in a research note.



“But it is nevertheless an important implicit argument for gradualism,” he added.

107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022

European Central Bank poised to signal July rate hike as inflation jumps to fresh record high

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="517" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-820x517.jpg" alt="" class="wp-image-415106" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-820x517.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-300x189.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-143x90.jpg 143w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-768x484.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>A 3D-printed oil pump jack is seen in front of displayed OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/File Photo</figcaption></figure>



DEAD SEA, Jordan June 8 (Reuters)&nbsp;&#8211;&nbsp;Efforts by OPEC+ oil producers to boost output are &#8220;not encouraging&#8221;, UAE energy minister Suhail al-Mazrouei said on Wednesday, noting the group was currently 2.6 million barrels per day short of its target.



&#8220;According to last month&#8217;s report, we have seen the conformity (to output cuts) of the OPEC+ group and the conformity was more than 200%,&#8221; Mazrouei told an energy conference in Jordan.



Conformity above 100% means a country is producing less than what it is supposed to be as OPEC+ looks to gradually remove its production curbs.



&#8220;The risk is when China is back,&#8221; Mazrouei said in an apparent reference to Chinese demand.



Prospects for demand growth in China, which is relaxing lockdowns, have been buoying crude prices recently.



This is a developing story&#8230;



(Reporting by Suleiman Al-Khalidi and Nadine Awadalla; writing by Maha El Dahan; editing by Toby Chopra and Jason Neely)

GNZ4EKIZHBJMHAHGTKTLUHIQ54

OPEC+ efforts to boost oil output ‘not encouraging’, UAE minister says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-820x461.jpg" alt="" class="wp-image-417701" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>The Maersk Line freighter stands at sunset in the Mediterranean port of Limassol. Cyprus, Friday, April 10, 2020. Global shipping giant Maersk has suspended its 2020 full-year guidance on earnings citing the severe impact of COVID-19 on international transport market and supply chains. (Photo by Danil Shamkin/NurPhoto via Getty Images)</figcaption></figure>



The Organization for Economic Cooperation and Development has become the latest international institution to cut its predictions for global growth this year, but has downplayed the possibility of a prolonged period of so-called “stagflation.”



The OECD estimates that global GDP will hit 3% in 2022 — a 1.5 percentage point downgrade from a projection done in December.



“The invasion of Ukraine, along with shutdowns in major cities and ports in China due to the zero-COVID policy, has generated a new set of adverse shocks,” the Paris-based organization said in its latest economic outlook Wednesday.



Russia’s invasion of Ukraine is having massive ramifications on the global economy, but China’s zero-Covid policy — a strategy Beijing uses to control the virus with strict lockdowns — is also a drag on global growth given the importance of the country in international supply chains and overall consumption.



The World Bank said Tuesday that it had also turned more negative on global growth prospects. The institution said global GDP would reach 2.9% this year — an estimate lower from its 4.1% forecast in January.



The OECD said in its report Wednesday that the downgrade, in part, “reflects deep downturns in Russia and Ukraine.”



“But growth is set to be considerably weaker than expected in most economies, especially in Europe, where an embargo on oil and coal imports from Russia is incorporated in the projections for 2023,” it said.



The European Union in late May moved to impose an oil embargo on Russia, after agreeing the previous month to also stop coal purchases from the country. The bloc has been heavily dependent on Russian fossil fuels and cutting some of these supplies overnight will have a significant economic impact.



Nonetheless, the euro zone, the 19-nation region that shares the euro, and the United States do not differ much in terms of their economic outlook. The OECD said the former will grow 2.6% this year and the U.S. will expand by 2.5%.



For the United Kingdom, where the cost of living crisis is also an economic issue, GDP is seen at 3.6% this year before slumping to zero next year.



“Inflation [in the U.K.] will keep rising and peak at over 10% at the end of 2022 due to continuing labour and supply shortages and high energy prices, before gradually declining to 4.7% by the end of 2023,” the OECD said.



The global macro picture has darkened for emerging economies, notably because they are expected to be hurt the most from food supply shortages.



“In many emerging-market economies the risks of food shortages are high given the reliance on agricultural exports from Russia and Ukraine,” the OECD said. China is seen growing by 4.4% this year, India by 6.9% and Brazil by a marginal 0.6%.



<h2 class="wp-block-heading" id="h-no-stagflation"><a></a>No stagflation?</h2>



Mathias Cormann, secretary general of the OECD, said that despite the difficult economic environment, it’s unlikely that the global economy is heading into a period of stagflation — where an economy sees high inflation and high unemployment alongside stagnant demand as experienced in the 1970s.



“We do see some parallels with the experience in the 1970s but we do not use the term stagflation, we do not believe it is the right term to describe what we are observing in the global economy now,” he told CNBC’s Charlotte Reed.



“Essentially most countries have gone through four quarters of very strong growth and yes we have inflation, we expect elevated inflation to last for longer, but we do expect it to subside throughout the second half of 2022 to the end of 2023,” Cormann added.



The World Bank had said Tuesday that risks were growing on potential stagflation and warned that this would make the lives of those in middle and low-income economies even harder.

Cyprus Economy

OECD slashes global growth prediction on Ukraine war and China’s zero-Covid policy

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-820x547.jpg" alt="" class="wp-image-416491" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FILE PHOTO: British Prime Minister Boris Johnson takes questions in Parliament, in London, Britain June 23, 2021. UK Parliament/Jessica Taylor/Handout via REUTERS</figcaption></figure>



The U.K.’s Prime Minister Boris Johnson will face a vote of confidence later on Monday amid increasing dissatisfaction in his leadership.



To trigger a vote of confidence, 15% of Conservative lawmakers (or 54 of the current 360 Conservative Party MPs) are required to write letters to Graham Brady, chairman of the 1922 Committee which oversees the party’s leadership challenges.



On Monday, Brady announced that threshold had been exceeded.



The vote will take place Monday evening local time, and between 6 p.m. and 8 p.m. London time (1 p.m. and 3 p.m. ET.)



Last month a report into several high-profile Covid-19 lockdown-breaking parties at Johnson’s office and residence was released, sparking calls for a confidence vote.



Soon after the confidence vote was announced, a Downing Street spokesperson released a short statement saying that the vote tonight “is a chance to end months of speculation and allow the government to draw a line and move on, delivering on the people’s priorities,” Sky News reported.



The statement added that the prime minister welcomed the opportunity to make his case to lawmakers, and “will remind them that when they’re united and focused on the issues that matter to voters there is no more formidable political force.”



Some senior Conservative lawmakers have already thrown their support behind the prime minister. Foreign Secretary Liz Truss tweeted Monday that Johnson had her “100% backing” in the vote.



“He has delivered on covid recovery and supporting Ukraine in the face of Russian aggression. He has apologised for mistakes made. We must now focus on economic growth,” she said.



If Johnson wins the vote, he will be protected from another vote of confidence for another 12 months, although there are reports that these rules could be changed.



If Johnson loses the vote, he will be forced to step down and a Conservative leadership contest will begin. In that eventuality, Johnson, as an ousted leader, will not be allowed to stand.



Johnson could also resign of his own accord, but despite previous rumblings of discontent among Tory MPs over Johnson’s colorful, and often controversial leadership, he has shown no signs of intending to do so.

British Prime Minister Boris Johnson takes questions in Parliament, in London

UK Prime Minister Boris Johnson to face vote of confidence on Monday

KEY POINTS



<ul class="wp-block-list"><li>Oil prices jumped after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year.</li><li>The embargo is part of the European Union’s sixth sanctions package on Russia since it invaded Ukraine.</li></ul>



Oil prices jumped after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year.



During Asia hours on Tuesday,&nbsp;<a href="https://www.cnbc.com/quotes/@CL.1">U.S. crude futures</a>&nbsp;for July were up 3.53% to $119.12, while&nbsp;<a href="https://www.cnbc.com/quotes/@LCO.2">Brent crude futures</a>&nbsp;rose 1.87% to $123.95. At one point, U.S. crude rose to $119.42 per barrel — a 12-week high, according to Refinitiv data.



Contracts for August also traded higher: WTI crude jumped 3.66% to $116.34, and Brent was up nearly 2% to $119.96 per barrel.



The agreement resolves a deadlock after Hungary initially&nbsp;<a href="https://www.cnbc.com/2022/05/30/eu-to-discuss-watered-down-oil-embargo-on-russia-as-hungary-holds-firm.html">held up talks</a>. Hungary is a major user of Russian oil and its leader, Viktor Orban, has been on friendly terms with&nbsp;<a href="https://www.cnbc.com/vladimir-putin/">Russia’s Vladimir Putin</a>.



Charles Michel, president of the European Council, said the move would immediately hit 75% of Russian oil imports.



The embargo is part of the European Union’s sixth sanctions package on&nbsp;Russia&nbsp;since it invaded Ukraine. Talks to impose an oil embargo have been underway since the start of the month.



“The European Council agrees that the sixth package of sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia into Member States, with a temporary exception for crude oil delivered by pipeline,” according to a&nbsp;<a href="https://www.consilium.europa.eu/en/press/press-releases/2022/05/31/european-council-conclusions-on-ukraine-30-may-2022/" target="_blank" rel="noreferrer noopener">May 31 statement from</a>&nbsp;the European Council.



The European Council added that in case of “sudden interruptions” of supply, “emergency measures” will be introduced to ensure security of supply.



That temporary exception covers the remaining Russian oil not yet banned, European Commission President Ursula von der Leyen said in a press conference.



“We have agreed that the Council will revert to the topic as soon as possible in one way or the other. So this is a topic where we will come back to and where we will still have to work on, but this is a big step forward, what we did today,” she said, referring to the temporary exemption.



Von der Leyen explained that the temporary exemption was granted so that Hungary, along with Slovakia and the Czech Republic — all connected to the southern leg of the pipeline — have access which they cannot easily replace.



Roughly 36% of the EU’s oil imports come from Russia, a country that plays an outsized role in global oil markets.



The ban could exacerbate worries over an already-tight energy market. Energy prices have soared over the past year, contributing to a heated inflationary environment in many countries.



“While pipeline imports were not included in this agreement, an embargo on seaborne oil imports is still significant, accounting for around two thirds of the EU’s oil imports from Russia,” Vivek Dhar, director of mining and energy commodities research at the Commonwealth Bank of Australia, wrote in a note following the news.



“A further ban on Russian Crude delivered by shipments will tighten already strained supply amid rising demand due to onset of driving season in [the] United States,” wrote Avtar Sandu, senior manager of commodities at trading platform Philip Nova.



Meanwhile, OPEC+ is expected to stick to its original plan of a modest increase of 432,000 barrels a day for July, Sandu added.

107006470-1643191219978-gettyimages-1237968413-UKRAINE_ODESSA-1

Oil prices jump after EU leaders agree to ban most Russian crude imports

KEY POINTS



<ul class="wp-block-list"><li>“China and India are expected to become the world’s largest and third largest economies respectively in the next decade while their consumers will increasingly dictate global tastes and trends,” Bird said.</li><li>Abrdn – which has around $586.35 billion in assets under management as of most recent results – has observed that interest in sustainable investment among local investors is also on the rise.</li><li>Bird urged Asian governments to strengthen the credibility of their net zero commitments, offering investors greater surety in allocating capital to the region.</li></ul>



Indian and Chinese stock market capitalization may grow fourfold by 2050 as Asia turns from “laggard to leader” in the climate transition, according to&nbsp;<a href="https://www.cnbc.com/quotes/ABDN-GB" target="_blank" rel="noreferrer noopener">Abrdn</a>&nbsp;CEO Stephen Bird.



In a letter seen by CNBC marking the 30-year anniversary of the British investment company’s first Asian office opening in Singapore, Bird lauded the economic transformation over the last three decades that has seen more than a billion people lifted out of poverty.



He also noted that the region’s share of the global economy has become eight times larger than it was during the Asia Financial Crisis of 1997.



“Capital markets have also evolved and the region has switched from being mostly a destination for foreign investors to one where local investors dominate its markets,” Bird said.



He added that “the next 30 years looks to be every bit as exciting as the last,” and recommended investors remain calm during periods of volatility, keeping their “eye on the long game.”



Chinese stocks have endured a bruising year as&nbsp;<a href="https://www.cnbc.com/2022/05/26/china-holds-an-unprecedented-massive-videoconference-on-the-economy.html">President Xi Jinping’s “zero-Covid” strategy has stifled economic activity</a>&nbsp;and caused supply chain bottlenecks that have rippled through global markets.



<a href="https://www.cnbc.com/quotes/GS" target="_blank" rel="noreferrer noopener">Goldman Sachs</a> analysts recently said they were <a href="https://www.cnbc.com/2022/05/20/goldman-sachs-picks-chinese-stocks-set-to-benefit-from-covid-reopening.html">“seeing light at the end of the tunnel,”</a> and Bird supported the long-term view that Asian equities can transition from “laggards to leaders,” in terms of both performance and their role in tackling the climate crisis.



“China and India are expected to become the world’s largest and third largest economies respectively in the next decade while their consumers will increasingly dictate global tastes and trends. Capitalization of their equity markets could also increase by a factor of four or more by 2050,” Bird predicted.



“Other countries in the region present exciting opportunities too. Bangladesh, Indonesia and Vietnam have some of the highest potential growth rates in the world, while Japan and South Korea’s aging populations have built up significant savings that need to be put to better work. And, as the region’s most open global financial center, Singapore will be at the heart of all of it.”



However, Bird acknowledged that progress is unlikely to be linear, with the globalization that has driven Asia’s economic growth in danger of fizzling out and climate change posing an “acute challenge” for the region.



“A by-product of Asia’s growth is that it has accounted for the lion’s share of the increase in global carbon emissions over the past three decades. This increased human footprint is also evident in rising air pollution and biodiversity loss,” he said.



While Asia alone cannot solve the climate crisis, its major economies must find ways to decouple their economic growth from fossil fuels, Bird suggested. Most major economies in the region have now adopted net-zero targets, while Asia is also playing a role in developing technological solutions to climate change.



“Whether in the form of solar panels, batteries for electric vehicles or green hydrogen, decarbonisation is dependent on Asian innovation,” Bird said.



Abrdn – which has around £464 billion ($586.35 billion) in assets under management as of most recent results – has observed that interest in sustainable investment among local investors is also on the rise, along with active engagement between asset managers and companies, creating potential opportunities for new forms of “sustainability-linked loans and bonds.”



<h3 class="wp-block-heading" id="h-taking-action">Taking action</h3>



Bird – who took the reins of Abrdn in September 2020 after a 21-year career with Citigroup’s Asian and Latin American operations – urged Asian governments to strengthen the credibility of their net zero commitments, offering investors greater surety in allocating capital to the region.



“More countries should follow China’s lead and establish carbon pricing which would bring certainty and encourage investment in low-carbon technologies and infrastructure. The revenue generated could be recycled into ensuring that the zero-carbon transition is a just one,” he said.



“We would also encourage the greater use of dedicated climate-related instruments such as green bonds; this would help align the interests of capital markets participants while the increased issuance would also encourage portfolio diversification.”



The continent’s political, trade and economic forums should be an opportunity to harmonize climate and sustainability standards, Bird said, suggesting a continent-wide common framework could strengthen financial flows into Asia.



“This century is Asia’s century. It must also be the century in which economic objectives are reconciled with sustainability goals,” Bird concluded. “The financial industry can and must play a pivotal role in converging these two priorities, guiding investment to support both outcomes.”

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Indian and Chinese stock markets could grow fourfold by 2050, Abrdn CEO says

GENEVA, May 24 (Reuters)&nbsp;&#8211;&nbsp;The World Health Organization&#8217;s (WHO) members re-elected Tedros Adhanom Ghebreyesus as Director General by a strong majority for another five years, the president of the World Health Assembly said on Tuesday.



The vote by secret ballot, announced by Ahmed Robleh Abdilleh from Djibouti at a major annual meeting, was seen as a formality since Tedros was the only candidate running.



Ministers and delegates took turns to shake hands and hug Tedros, a former health minister from Ethiopia, who has steered the UN agency through a turbulent period dominated by the COVID-19 pandemic. The president had to use a gavel several times to interrupt the applause.



Addressing the assembly soon after his re-election, Tedros said the WHO&#8217;s focus will be on emergency preparedness and improvement of the agency.



&#8220;This pandemic has been very unprecedented and many lessons that we should learn and we are learning. But, at the same time we cannot just pause, learn and implement&#8230;instead of pausing to learn, we&#8217;re saying while learning let&#8217;s implement.&#8221;



The newly re-elected WHO head teared up while talking about the current Ukraine crisis and the death of his younger brother from a childhood disease amidst war and poverty decades ago.



&#8220;When I visited Ukraine when I saw especially the kids..It was the image from more than 50 years ago that came to my mind, so visible, so hounding. The smell, sound and image of war. That is what I don&#8217;t want to happen to anyone.&#8221;



Several countries including Germany and the United States were quick to offer their congratulations.



German Health Minister Karl Lauterbach tweeted that Tedros got 155 of 160 votes, calling it a spectacular result. &#8220;Congratulations, fully deserved.&#8221;



Germany recently overtook the United States as the UN health agency&#8217;s top donor.



However, Tedros’ second-term candidacy did not receive the support of his native Ethiopia due to friction over the Tigray conflict. Ethiopia&#8217;s envoy to the assembly made it clear that Botswana&#8217;s statement congratulating Tedros did not represent all 47 countries of the African group.



&#8220;The established working method of the African group is to work by consensus. I would like to point out that there was no consensus. Hence, the distinguished representative of Botswana cannot deliver the statement on behalf of the African group.&#8221;



(Reporting by Jennifer Rigby, Emma Farge and Mrinalika Roy; Additional reporting by Paul Carrel; Editing by Catherine Evans)VIEW LESS

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Tedros re-elected as head of World Health Organization

LONDON, May 24 (Reuters)&nbsp;&#8211;&nbsp;Rising borrowing costs and the worldwide fallout from the Russia-Ukraine war could see up to 10% of riskier &#8216;junk&#8217;-rated emerging market countries suffer debt crises this year, analysts at U.S. investment bank JPMorgan have warned.



More acute balance of payment pressures and larger fiscal deficits are now compounding problems for heavily-indebted countries that import most of their energy and food.



Sri Lanka has just suffered its first ever sovereign default, joining a list that already included Lebanon, Suriname, Venezuela and Zambia. Russia and Ukraine are both teetering too and the worry is the numbers globally will soon balloon.



&#8220;Nearly half of the (52) country sample is classified as carrying high repayment risk in our assessment. Of these, eight are at risk of reserve depletion by the end of 2023, signalling high default risks. These are Sri Lanka, Maldives, Bahamas, Belize, Senegal, Rwanda, Grenada, and Ethiopia,&#8221; said the note led by strategist Trang Nguyen on Tuesday.



A jump in world interest rates in response to fast-rising inflation also means many countries are facing the reality of rising borrowing costs, a departure from over a decade of so-called &#8220;easy money&#8221;.



&#8220;Accounting for risks of a potential default in Russia and restructuring in Ukraine&#8230;the EM sovereign HY default rate could reach 10% this year,&#8221; JP Morgan&#8217;s note added, also pointing out how Ethiopia was moving towards a G20-led restructuring of its debts.



The International Monetary Fund too has said that nearly 60% of low income countries are either in, or at high risk of, debt distress.



Analysts at investment firm Tellimer this week highlighted how a record 27 emerging market countries now have eurobond yields above 10%.



Those yields are a proxy for what a government has to pay to borrow in the international capital markets and anything above 10% is generally seen as a sign of trouble.



JP Morgan said that in addition to the eight countries flagged as in immediate default danger, larger economies such as Egypt, Ghana and Pakistan were also highly vulnerable from fiscal and debt standpoints over the slightly longer term.



(Reporting by Marc Jones, editing by Jorgelina do Rosario, Kirsten Donovan)

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JPMorgan warns 10% of junk-rated emerging markets facing debt crises this year

KEY POINTS



<ul class="wp-block-list"><li>Speaking to CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland, on Tuesday, Herbert Diess said alleviating supply chain issues would likely help create some momentum for the German auto giant over the coming months.</li><li>“Markets are always about the future,” Diess said when asked why investors valued Tesla at such a premium to other traditional carmakers.</li><li>“We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales,” Diess said.</li></ul>



The chief executive of&nbsp;<a href="https://www.cnbc.com/quotes/VOW3-DE">Volkswagen</a>&nbsp;believes Europe’s biggest carmaker can overtake&nbsp;<a href="https://www.cnbc.com/quotes/TSLA" target="_blank" rel="noreferrer noopener">Tesla</a>&nbsp;to become the world’s largest seller of electric vehicles by 2025.



Speaking to CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland, on Tuesday, Herbert Diess said alleviating supply chain issues would likely help create some momentum for the German auto giant over the coming months.



“Markets are always about the future,” Diess said when asked why investors valued Tesla at such a premium to other traditional carmakers, such as Volkswagen.



“Tesla currently is in the lead when it comes to EVs, probably also it is the most digital car company already and they have some advantages,” he continued. “We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales.”



Diess said Tesla has been able to demonstrate good results and high returns with a credible business model. However, he reaffirmed his belief that Volkswagen could soon close the gap when it comes to EV sales.



“I think for Tesla, also, ramping up now will probably be a bit more challenging. They are opening up new plants and we are trying to keep up speed. We think in the second half of the year, we are going to create some momentum,” Diess said.



Volkswagen’s Frankfurt-listed shares traded around 0.9% lower on Tuesday morning, roughly in line with losses in the autos sector on the pan-European Stoxx 600.



<h2 class="wp-block-heading" id="h-supply-chain-crisis-to-alleviate"><a></a>Supply chain crisis to alleviate</h2>



More than two years into the coronavirus pandemic, the auto industry continues to grapple with the challenge of obtaining crucial parts and building enough vehicles to meet demand.



Shortages of critical supplies, particularly when it comes to battery production, are expected to be an ongoing constraint for the growth of electric vehicle sales in the years ahead.



Nonetheless, Diess said there are some positive signs on the horizon. He expects to see some relief from the semiconductor supply market from the middle of the year.



“I would say that we would see an alleviation of this situation towards mid-year and second half we should be in better shape — if the situation is not getting any worse, which I don’t think so,” Diess said.



When asked whether this means he expects the semiconductor crisis could end in the second half of the year, Diess replied: “I wouldn’t say end but we see a much-improved situation. I think supply chains are getting in order again.&#8221;

Volkswagen chief says German car giant will overtake Tesla on electric vehicle sales by 2025

WASHINGTON, May 23 (Reuters)&nbsp;&#8211;&nbsp;The United States issued an advisory on Monday warning U.S. companies of growing reputational risks of doing business with state-owned enterprises and military-controlled firms in Sudan.



&#8220;These risks arise from, among other things, recent actions undertaken by Sudan&#8217;s Sovereign Council and security forces under the military&#8217;s command, including and especially serious human rights abuse against protesters,&#8221; State Department spokesperson Ned Price said in a statement.



The African country has been racked by protests since a military coup in October, and lawyers say dozens of political prisoners remain in detention.



&#8220;Businesses and individuals operating in Sudan should undertake increased due diligence related to human rights issues and be aware of the potential reputational risks of conducting business activities and/or transactions with SOEs and military-controlled companies,&#8221; Price said.



The advisory was issued by the U.S. departments of State, Treasury, Commerce and Labor, he said.



(Reporting by Eric Beech; Editing by Tim Ahmann, Bernard Orr)

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U.S. warns companies of ‘reputational risks’ of doing business in Sudan

KEY POINTS



<ul class="wp-block-list"><li>In a blog post ahead of this week’s World Economic Forum, IMF Managing Director Kristalina Georgieva said the global economy faces its “biggest test since the Second World War.”</li><li>In combining the Russia-Ukraine war, the Covid-19 pandemic and the spike in volatility in financial markets and persistent threat from climate change, the IMF said the world faces a “potential confluence of calamities.”</li></ul>



The International Monetary Fund has warned against “geoeconomic fragmentation” as policymakers and business leaders gather at the World Economic Forum in Davos, Switzerland.



In a blog post ahead of this week’s event, IMF Managing Director Kristalina Georgieva said the global economy faces its “biggest test since the Second World War,” with Russia’s invasion of Ukraine compounding the residual economic effects of Covid-19 crisis, dragging down growth and driving inflation to multi-decade highs.



Spiraling food and energy prices are squeezing households around the world, while central banks are tightening monetary policy to rein in inflation, exerting further pressure on indebted nations, companies and families.



When combined with the spike in volatility in financial markets and persistent threat from climate change, the IMF said the world faces a “potential confluence of calamities.”



“Yet our ability to respond is hampered by another consequence of the war in Ukraine—the sharply increased risk of geoeconomic fragmentation,” Georgieva said.



“Tensions over trade, technology standards, and security have been growing for many years, undermining growth—and trust in the current global economic system.”



She added that uncertainty around trade policies alone cut global GDP by almost 1% in 2019, according to IMF research, and the D.C.-based institution’s monitoring also indicates that around 30 countries have restricted trade in food, energy and other key commodities.



Georgieva warned that further disintegration would have enormous global costs, harming people across the socio-economic spectrum, and said technological fragmentation alone could lead to losses of 5% of GDP for many countries.



Carmine Di Sibio, global chairman and CEO of consultancy giant EY, told CNBC on Monday that the economy has “taken center stage” in discussions among big business leaders at Davos.



“The economy is the top conversation – inflation is a big concern and you do see some leading indicators starting to slow,” he said.



Although corporate deal volumes have slowed, Di Sibio said EY was still seeing signs of “pretty robust activity” and business leaders were still looking at options to transform their businesses, with pricing in the sector coming down of late amid resolute demand.



“The transformation that companies are going through – the transformation in terms of technology, in terms of supply chain and location of supply chain, and de-risking of supply chains – that is still going on and we do a lot around that as well,” Di Sibio said.



<h3 class="wp-block-heading" id="h-solutions">Solutions</h3>



In order to address the growing fragmentation, the IMF has firstly called for governments to lower trade barriers to alleviate shortages and reduce the prices of food and other commodities, while diversifying exports to improve economic resilience.



“Not only countries but also companies need to diversify imports—to secure supply chains and preserve the tremendous benefits to business of global integration,” Georgieva said.



“While geostrategic considerations will drive some sourcing decisions, this need not lead to disintegration. Business leaders have an important role to play in this regard.”



Secondly, the IMF urged collaborative efforts to deal with debt, as roughly 60% of low-income countries currently have significant debt vulnerabilities and will need restructuring.



“Without decisive cooperation to ease their burdens, both they and their creditors will be worse off, but a return to debt sustainability will draw new investment and spur inclusive growth,” Georgieva said.



“That is why the Group of Twenty’s Common Framework for Debt Treatment must be improved without delay.”



Thirdly, the IMF called for a modernization of cross-border payments, with inefficient payment systems posing a barrier to inclusive economic growth. The institution estimates that the 6.3% average cost of an international remittance payment means around $45 billion annually is diverted toward intermediaries and away from lower-income households.



“Countries could work together to develop a global public digital platform—a new piece of payment infrastructure with clear rules—so that everyone can send money at minimal cost and maximum speed and safety. It could also connect various forms of money, including central bank digital currencies,” Georgieva said.



Finally, the IMF called for an urgent closing of the “gap between ambition and policy” on climate change, arguing for a comprehensive approach to the green transition that combines carbon pricing and renewable energy investment with compensation for those adversely affected by climate change.

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IMF says global economy faces ‘confluence of calamities’ in biggest test since World War II

GENEVA, May 23 (Reuters)&nbsp;&#8211;&nbsp;The head of the World Health Organization said on Monday that it must be &#8220;at the centre&#8221; of a global healthcare system, while also acknowledging the need for internal reforms.



The World Health Assembly from May 22-28 is seen as one of the most important in the UN health agency&#8217;s 75-year history, as it seeks to define its future role in global health policy and get approval for a funding overhaul.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XC0VG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL5N2X96B0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;We need a stronger and sustainably financed WHO, at the centre of the global health security architecture,&#8221; Director-General Tedros Adhanom Ghebreyesus said in a major speech at the WHO&#8217;s annual assembly.



But he added: &#8220;There have been many calls for WHO to change. And there is no question that more change is needed.&#8221;



The WHO is under scrutiny after an independent panel described it as &#8220;underpowered&#8221; when COVID-19 struck, with limited powers to investigate outbreaks and coordinate containment measures.



However, its 194 member states are seen as split over whether it deserves new powers after its handling of COVID.



&#8220;Some members are saying the WHO did what it could during the pandemic and want to strengthen its authority and others are very disillusioned with the WHO and &#8230; are very divided on whether it should be given more powers,&#8221; said Adam Kamradt-Scott, a professor of Global Health at the School of Transnational Governance.



In the same speech, Tedros said COVID is far from over and that the world was not ready for the next pandemic, echoing the findings of a major report last week.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XA0VC&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;It&#8217;s clear that the world was and remains unprepared for a pandemic,&#8221; he said.



(Reporting by Emma Farge and Mrinalika Roy; Editing by Catherine Evans)

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WHO chief says it must take central role in global health

BERLIN, May 22 (Reuters)&nbsp;&#8211;&nbsp;Russia&#8217;s impact on energy and food prices and security will provide the backdrop to Olaf Scholz&#8217;s first trip to Africa as German Chancellor, a three-day tour of Senegal, Niger and South Africa kicking off on Sunday.



The first stop on Scholz&#8217;s trip is Senegal, which has billions of cubic metres of gas reserves and is expected to become a major gas producer in the region.



Germany is seeking to reduce its heavy reliance on Russia for gas following the Kremlin&#8217;s invasion of Ukraine. It could help explore a gas field in Senegal, a government official said on Friday.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS8N2WV04P&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The source said Scholz also wanted to discuss possible cooperation on the development of renewable energy. In Senegal, he will visit a solar power plant after meeting and holding a joint news conference with the country&#8217;s President Macky Sall.



Germany has invited both Senegal, which currently holds the rotating chairmanship of the African Union, and South Africa to attend the G7 summit it is hosting in June as guest countries.



Both countries abstained from voting on a United Nations resolution against Russia&#8217;s invasion of Ukraine, which Moscow calls a special military operation to demilitarize a neighbor it says threatened its security.



Ukraine and Western allies say the war is an unprovoked act of aggression.



The conflict has triggered supply disruptions that have pushed up food and energy prices in Africa. Russia&#8217;s military has blocked exports from ports in Ukraine, a major grains and food supplier to the region. The Kremlin blames Western sanctions for the rising prices.



SECURITY IN THE SAHEL



Scholz will travel later on Sunday to Niger. The country has taken on a bigger role hosting European special forces to stem a jihadist insurgency across the Sahel since European relations with the military junta ruling neighboring Mali have deteriorated.



The European Union suspended its military training mission in Mali due to a lack of guarantees from Malian authorities that military contractors from Russia&#8217;s Wagner Group would not interfere in the work. The group is under EU sanctions accused of human rights abuses.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2X95FS&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Russia denies any wrongdoing in Mali or in any other country where Wagner operates. Both Mali and Russia have previously said Wagner Group is not made up of mercenaries but trainers helping local troops with equipment bought from Russia.



Scholz will visit German troops in Niger and discuss the lengthy battle against insurgents linked to al Qaeda and Islamic State that have killed thousands and made swathes of territory ungovernable in the Sahel, south of the Sahara.



On Monday evening Scholz is set to travel to Johannesburg for the final leg of his tour.



(Reporting by Andreas Rinke and Sarah Marsh; Editing by Frank Jack Daniel)

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Russia looms large on Scholz’s first Africa tour as chancellor￼

KEY POINTS



<ul class="wp-block-list"><li>Nearly 2,500 global leaders from business, politics and civil society are expected to take part in a rare springtime version of Davos this week.</li><li>Organizers of the event had postponed the meeting from its traditional January slot over safety concerns amid the coronavirus pandemic. However, in a welcome boost to local residents, the forum’s first in-person event has now returned after a two-year hiatus.</li><li>That’s not to say everyone is happy to see the return of the world’s business and political elite to the Swiss Alps.</li></ul>



The World Economic Forum is trying to fix an image problem.



Nearly 2,500 global leaders from business, politics and civil society are expected to take part in a rare springtime version of Davos this week.



The annual meeting will see movers and shakers convene in Switzerland’s luxury Alpine ski resort of Davos for five days of conversation on issues including Covid-19, Russia’s war in Ukraine and the climate crisis.



Organizers of the event had&nbsp;<a href="https://www.cnbc.com/2021/12/20/davos-world-economic-forum-postpones-meeting-due-to-covid.html">postponed the meeting</a>&nbsp;from its traditional January slot over safety concerns amid the coronavirus pandemic. However, in a welcome boost to local residents, the forum’s first in-person event has now returned after a two-year hiatus.



The&nbsp;<a href="https://www.weforum.org/agenda/2022/05/davos-2022-whos-coming-and-everything-else-you-need-to-know/" target="_blank" rel="noreferrer noopener">theme</a>&nbsp;of this year’s event is “History at a Turning Point: Government Policies and Business Strategies.”



“It means a lot to us. It means a lot to the whole of Switzerland,” Samuel Rosenast, a spokesperson for the local tourism board, said in an interview with CNBC’s&nbsp;<a href="https://www.cnbc.com/tom-chitty/">Tom Chitty</a>.



Rosenast said the event was “unbelievably important” to those residing in Europe’s highest town, estimating that the resort could see a windfall of approximately 70 million Swiss francs ($72 million) in just this week alone.



“Every business is in contact with the World Economic Forum. The people know how important it is,” Rosenast said. “Most people here are looking forward to the World Economic Forum. They are happy that it takes place here again this year.”



<h2 class="wp-block-heading" id="h-a-symbol-of-a-failed-era"><a></a>‘A symbol of a failed era’</h2>



That’s not to say everyone is pleased to see the return of the world’s business and political elite to the Swiss Alps. The event has been sharply criticized in recent years for being&nbsp;<a href="https://fortune.com/2015/01/22/davos-out-of-touch/" target="_blank" rel="noreferrer noopener">out of touch</a>,&nbsp;<a href="https://www.cnbc.com/2018/01/18/is-davos-nothing-more-than-an-overpriced-ineffective-talking-shop.html">ineffective</a>&nbsp;and&nbsp;<a href="https://www.fnlondon.com/articles/davos-is-broadly-irrelevant-there-is-no-case-for-guzzling-jets-and-gallons-of-dom-perignon-20220516" target="_blank" rel="noreferrer noopener">irrelevant</a>.



Three years ago, Dutch historian Rutger Bregman went viral at a Davos panel&nbsp;<a href="https://www.cnbc.com/2019/03/19/rutger-bregman-historian-who-confronted-davos-elite-on-higher-taxes.html">when he called out billionaires for tax avoidance</a>. In a clip that has now been viewed nearly 11 million times, Bregman said that a global failure to effectively tackle tax avoidance was the primary cause of inequality.



“It feels like I’m at a firefighters conference and no one’s allowed to speak about water,” Bregman said at the time. “This is not rocket science … we have got to be talking about taxes. That’s it. Taxes, taxes, taxes.”



More recently, protestors, activists and people on the frontlines of inequality have sought to challenge the WEF over its “<a href="https://inequality.org/research/global-inequality-protest-davos/" target="_blank" rel="noreferrer noopener">empty rhetoric</a>,” accusing Davos of representing “a symbol of a failed era” that should be left behind.



A report published Monday by global charity Oxfam found that 573 people became new billionaires during the coronavirus pandemic — at a rate of one every 30 hours. The brief, entitled “Profiting from Pain,” expects that 263 million additional people will fall into extreme poverty this year at a rate of 1 million people every 33 hours.



“Billionaires are arriving in Davos to celebrate an incredible surge in their fortunes. The pandemic and now the steep increases in food and energy prices have, simply put, been a bonanza for them,” said Gabriela Bucher, executive director of Oxfam International.



“Meanwhile, decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the cost of simply staying alive.”



In his youth, Philipp Wilhelm was one of those protesting the annual gathering of billionaires and political leaders in the town where he was born. Now, however, Wilhelm is the mayor of Davos, and his goal is to deliver a successful meeting.



“I protested during the annual meeting because, for me, it was important to express that it’s really crucial that we solve this climate crisis. And we need to make the world a more just place,” Wilhelm said.



Wilhelm said that he had taken part in protests because he felt it was essential to ensure that everyone arriving in Davos “gets the message that it’s really important to solve these issues.”



Wilhelm said he — and WEF — had changed their positions since his protesting days, adding that he believes he can influence policy more effectively in his current role.



When asked whether it was a concern that criticism of WEF had become too closely associated with Davos given that the town itself has become largely interchangeable with the forum, Wilhelm replied: “No it doesn’t bother me at all.”



“I think it is interesting that people know Davos as a place where people meet and discuss — and I mean it should be controversial. There should be a discussion about what is the right way to improve the state of the world,” Wilhelm said.



<h2 class="wp-block-heading"><a></a>Davos 2022 is ‘one marker in time’</h2>



“The forum’s work is ongoing. The meeting is one marker in time,” said Saadia Zahidi, managing director at the World Economic Forum.



“What we’ve been doing over the last two and a half years — while it hasn’t been visible through a particular meeting — is a set of work that is trying to make a dent on inequality and at the same time also make changes towards addressing one of the biggest existential risks we all face which is climate change.”



When asked whether rising income inequality had become a particular problem for the forum, Zahidi replied: “Inequality is a problem for the world. I think we know that societies that do not combat inequality will have slower growth.”



“And so there has to be an effort that addresses inequality. Now, what does that? Better education, better skills, better jobs, addressing issues like taxation and changing the nature of our economies so that they actually work for people and not just for the few,” Zahidi said. “That is going to be front and center on next week’s agenda.”

Stefan Wermuth | Bloomberg | Getty Images

How Davos became the anti-establishment’s punching bag

KEY POINTS



<ul class="wp-block-list"><li>A document outlining the European Commission’s aims for the REPowerEU plan was published on Wednesday.</li><li>It highlighted the importance of energy savings, the diversification of energy imports and speeding up what it called “Europe’s clean energy transition.”</li><li>The EU’s desire to wean itself off Russian hydrocarbons means it will need to find oil and gas from other parts of the world to plug supply gaps.</li></ul>



The European Commission has fleshed out details of a plan to ramp up the EU’s renewable energy capacity and reduce its reliance on Russian fossil fuels, at the same time acknowledging that existing coal facilities may have to be used for “longer than initially expected.”



A document outlining the Commission’s aims for the REPowerEU plan was published on Wednesday, highlighting the importance of energy savings, the diversification of energy imports and speeding up what it called “Europe’s clean energy transition.”



In total, it envisages extra investment of 210 billion euros ($220.87 billion) between 2022 and 2027. When it comes to renewables’ share in the EU’s energy mix, the Commission has proposed that the current target of 40% by 2030 should be increased to 45%.



The Commission’s proposals came on the same day the governments of Denmark, Germany, the Netherlands and Belgium said they would aim for a combined target of at least 65 gigawatts of offshore wind capacity by 2030. By the middle of the century, they are aiming for 150 GW of capacity.



On the fossil fuel front, the situation is a challenging one. Russia was the biggest supplier of both petroleum oils and natural gas to the EU last year,&nbsp;<a href="https://ec.europa.eu/eurostat/statistics-explained/index.php?title=EU_imports_of_energy_products_-_recent_developments#:~:text=Russia%20was%20the%20largest%20supplier,and%2C%20at%20some%20distance%20Algeria" target="_blank" rel="noreferrer noopener">according to Eurostat</a>.



The EU’s desire to wean itself off Russian hydrocarbons&nbsp;following the latter’s invasion of Ukraine&nbsp;means it will need to find oil and gas from other parts of the world to plug supply gaps.



The Commission said as much as 1.5 to 2 billion euros of investment would be needed to secure oil supply. To import enough liquefied natural gas and pipeline gas from other sources, an estimated 10 billion euros will be needed by 2030.



All the above comes at a time when the EU has said it wants to be carbon neutral by 2050. In the medium term, it wants net greenhouse gas emissions to be cut by at least 55% by 2030, which the EU calls its “Fit for 55” plan.



The Commission said REPowerEU could not work without what it called “a fast implementation of all Fit for 55 proposals and higher targets for renewables and energy efficiency.”



In this new reality, gas consumption in the EU would “reduce at a faster pace, limiting the role of gas as a transitional fuel,” the Commission said.



“However, shifting away from Russian fossil fuels will also require targeted investments for security of supply in gas infrastructure and very limited changes to oil infrastructure alongside large-scale investments in the electricity grid and an EU-wide hydrogen backbone,” it added.



“In parallel, some of the existing coal capacities might also be used longer than initially expected, with a role for nuclear power and domestic gas resources too,” the Commission said.



During a press conference on Wednesday the EU’s climate chief, Frans Timmermans, admitted that using less natural gas in a transitional phase would mean “you might use coal a bit longer — that has a negative impact on your emissions.”



“But if at the same time, as we propose, you rapidly speed up the introduction of renewables — solar, wind, biomethane — you then have the opposite movement,” he said.



Timmermans, who is the European Commission’s executive vice president for the European Green Deal, went on to stress the importance of finding a middle ground.



“If we can actually do what I say — reduce our energy consumption in combination with a speedier introduction of renewables — we will bring down our emissions even quicker than before,” he said.



“And then, of course we will have slightly higher emissions if people stick a bit longer to coal, but we need to strike the balance so that, on balance, we do not increase our emissions — we hopefully even decrease them more.”



Coal has a substantial effect on the environment, with Greenpeace describing it as “the dirtiest, most polluting way of producing energy.”



Elsewhere, the U.S. Energy Information Administration lists a range of emissions from coal combustion, including carbon dioxide, sulfur dioxide, particulates and nitrogen oxides.



The European Commission announcement drew criticism from a number of environmental organizations.



“These plans are supposed to fast-track the clean energy transition — but the European Commission’s latest strategy gives with one hand and takes with the other,” Eilidh Robb, an anti-fossil fuels campaigner at Friends of the Earth Europe, said.



“So-called REPowerEU contains useful and necessary strides towards renewable solutions but it simultaneously enables almost 50 fossil fuel infrastructure projects and expansions,” Robb said.

6P3A4A5Y3FPCBIXZTKFUXZLSHM

Europe admits it’ll have to burn more coal as it tries to wean itself off Russian energy

By Mohi Narayan and Scott DiSavino



May 20 (Reuters)&nbsp;&#8211;&nbsp;Oil&nbsp;prices fell on Friday as investors worried that weakening global economic growth and tighter central bank monetary policy could curb a recovery in&nbsp;fuel&nbsp;demand.



Brent&nbsp;LCOc1&nbsp;futures for July fell 59 cents, or 0.53%, to $111.45 a barrel by 0648 GMT, while U.S. West Texas Intermediate (WTI) crude for June&nbsp;CLc1&nbsp;fell 56 cents, or 0.5%, to $111.65 on its last day as the front-month.



The more actively traded WTI contract for July&nbsp;CLN2&nbsp;was down 0.8% at $109.01 a barrel.



The International Monetary Fund (IMF) urged Asian economies to be mindful of spillover&nbsp;risks from monetary tightening.



Asian economies faced a choice between supporting growth with more stimulus and withdrawing it to stabilise debt and inflation, IMF Deputy Managing Director Kenji Okamura said.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL3N2XB2VQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



While Bank of Japan policy runs counter to a global shift towards monetary tightening, central banks in the United States, Britain and Australia raised interest rates recently.



Crude gains have been limited this week, with Brent and WTI mostly trading in a range due to the uncertain path of&nbsp;demand. Investors, worried about rising inflation and more aggressive action from central banks, have been reducing exposure to riskier assets.



Open interest in WTI futures fell to 1.722 million contracts on May 18, the lowest since July 2016.



&#8220;If U.S. growth data continues to sour,&nbsp;oil&nbsp;prices could get caught up in the negative stock market feedback loop,&#8221; SPI Asset Management Managing Director Stephen Innes said in a client note.



In the United States, Americans were getting back behind the wheel, despite higher&nbsp;fuel&nbsp;prices, according to a report from the Federal Highway Administration on vehicle miles.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XB2RM&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



On the gasoline supply side, South Korea&#8217;s third-largest refiner S-Oil&nbsp;halted production at its No. 2 alkylation unit and related processes at its Onsan refinery due to a blast.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XB31C&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The shutdown following Thursday night&#8217;s blast that killed one person is expected to affect already tight gasoline supplies in Asia.



Citi analysts expect S-Oil&#8217;s gasoline output to be &#8220;severely impacted&#8221; in the near term, although it could buy alkylate to maintain production.



Iran, meanwhile, is having a tougher time selling its crude now that more Russian barrels are available.



Iran&#8217;s crude exports to China have fallen sharply since the start of the Ukraine war as Beijing favoured heavily discounted Russian barrels, leaving almost 40 million barrels of Iranian&nbsp;oil&nbsp;stored on tankers at sea in Asia and seeking buyers.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XB1O9&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Scott DiSavino; Editing by Kim Coghill and Frank Jack Daniel)

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IMF says global economy faces ‘confluence of calamities’ in biggest test since World War II

WHO chief says it must take central role in global health

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How Davos became the anti-establishment’s punching bag

Europe admits it’ll have to burn more coal as it tries to wean itself off Russian energy

Oil falls on uncertainty over fuel demand recovery

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International

European Central Bank confirms July rate hike plans, raises inflation projections significantly

European Central Bank poised to signal July rate hike as inflation jumps to fresh record high

OPEC+ efforts to boost oil output ‘not encouraging’, UAE minister says

OECD slashes global growth prediction on Ukraine war and China’s zero-Covid policy

UK Prime Minister Boris Johnson to face vote of confidence on Monday

Oil prices jump after EU leaders agree to ban most Russian crude imports

Indian and Chinese stock markets could grow fourfold by 2050, Abrdn CEO says

Tedros re-elected as head of World Health Organization

JPMorgan warns 10% of junk-rated emerging markets facing debt crises this year

Volkswagen chief says German car giant will overtake Tesla on electric vehicle sales by 2025

U.S. warns companies of ‘reputational risks’ of doing business in Sudan

IMF says global economy faces ‘confluence of calamities’ in biggest test since World War II

WHO chief says it must take central role in global health

Russia looms large on Scholz’s first Africa tour as chancellor￼

How Davos became the anti-establishment’s punching bag

Europe admits it’ll have to burn more coal as it tries to wean itself off Russian energy

Oil falls on uncertainty over fuel demand recovery

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Russia looms large on Scholz’s first Africa tour as chancellor