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India hikes spending, shuns ‘outright populism’ in last pre-election budget

  • Capex to rise 33% to 10 trillion rupees in 2023/24
  • Govt targets gross borrowing of 15.43 trillion rupees
  • Eyes fiscal deficit of 5.9% in 2023/24, 4.5% by 2025/26

NEW DELHI, Feb 1 (Reuters) – India announced on Wednesday one of its biggest ever increases in capital spending for the next fiscal year to create jobs but targeted a narrower fiscal deficit in its last full budget ahead of a parliamentary election due in 2024.

Prime Minister Narendra Modi’s party has been under pressure to create jobs in the populous country where many have struggled to find employment, although the economy is now one of the world’s fastest-growing.

“After a subdued period of the pandemic, private investments are growing again,” Finance Minister Nirmala Sitharaman said as she presented the 2023/24 budget in parliament.

“The budget makes the need once again to ramp up the virtuous cycle of investment and job creation. Capital investment is being increased steeply for the third year in a row by 33% to 10 trillion rupees.”

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The capital spending increase to about $122.3 billion, which would amount to 3.3% of gross domestic product (GDP), will be the biggest such jump after an increase of more than 37% between 2020/21 and 2021/22.

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Total spending will rise 7.5% to 45.03 trillion rupees ($549.51 billion) in the next fiscal year starting on April 1.

Sitharaman said the government would target a fiscal deficit of 5.9% of GDP for 2023/24 compared with 6.4% for the current fiscal year and slightly lower than a Reuters poll of 6%. The aim is to lower the deficit to 4.5% by 2025/26.

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STEADY ‘MACRO BOAT’

Brokerage Nomura said the budget “prudently pushes for growth, without rocking the macro boat”.

“In the event, the government has presented a good budget. It has pushed for growth via public capex and continued on the path towards fiscal consolidation, without offering much in terms of outright populism.”

Capital Economics said the “absence of a fiscal blowout”, a recent drop in inflation and signs of moderating growth could convince India’s central bank to slow the pace of rate hikes next week.

It said there was still a chance of fiscal slippage as campaigning kicks off for the election, in which Modi is widely projected to win a third straight term.

The finance ministry’s annual Economic Survey, released on Tuesday, forecast the economy could grow 6% to 6.8% next fiscal year, down from 7% projected for the current year, while warning about the impact of cooling global demand on exports.

Sitharaman said India’s economy was “on the right track, and despite a time of challenges, heading towards a bright future”.

India’s real GDP is forecast to grow in the range of 6-6.8% in FY24

Her deficit plan will be aided by a 28% cut in subsidies on food, fertiliser and petroleum for the next fiscal year at 3.75 trillion rupees. The government cut spending on a key rural jobs guarantee programme to 600 billion rupees – the smallest in more than five years – from 894 billion rupees for this fiscal year.

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The government’s gross market borrowing is estimated to rise about 9% to 15.43 trillion rupees next fiscal year.

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CONSTRAINTS

Moody’s Investors Service said the narrower fiscal deficit projection pointed to the government’s commitment to longer-term fiscal sustainability, but that a “high debt burden and weak debt affordability remain key constraints that offset India’s fundamental strengths”.

Among other moves to stimulate consumption, the surcharge on annual income above 50 million rupees was cut to 25% from 37%.

Indian shares reversed earlier gains to close lower on Wednesday, led by a fall in insurance companies after the budget proposed to limit tax exemptions for insurance proceeds, while Adani Group shares tumbled again as it struggles to repel concerns raised by a U.S. short seller.

Since taking office in 2014, Modi has ramped up capital spending including on roads and energy, while wooing investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.

A lack of jobs for young people, and meagre wages for those who do find work, has been one of the main criticisms of Modi.

Sitharaman also said the government was allocating 350 billion rupees for energy transition, as Modi focuses on green hydrogen and other cleaner fuels to meet India’s climate goals.

($1 = 81.7725 Indian rupees)

Reporting by Shubham Batra, Nikunj Ohri, Shivangi Acharya, Sarita Singh, Nigam Prusty, Manoj Kumar, Rupam Jain and Indian bureaux; Writing by Krishna N. Das; Editing by Kim Coghill, Jacqueline Wong and Gareth Jones

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Exclusive: Top U.S. Treasury official to warn UAE, Turkey over sanctions evasion

WASHINGTON, Jan 28 (Reuters) – The U.S. Treasury Department’s top sanctions official on a trip to Turkey and the Middle East next week will warn countries and businesses that they could lose U.S. market access if they do business with entities subject to U.S. curbs as Washington cracks down on Russian attempts to evade sanctions imposed over its war in Ukraine.

Brian Nelson, undersecretary for terrorism and financial intelligence, will travel to Oman, the United Arab Emirates and Turkey from Jan. 29 to Feb. 3 and meet with government officials as well as businesses and financial institutions to reiterate that Washington will continue to aggressively enforce its sanctions, a Treasury spokesperson told Reuters.

“Individuals and institutions operating in permissive jurisdictions risk potentially losing access to U.S. markets on account of doing business with sanctioned entities or not conducting appropriate due diligence,” the spokesperson said.

While in the region, Nelson will discuss Treasury’s efforts to crack down on Russian efforts to evade sanctions and export controls imposed over its brutal war against Ukraine, Iran’s destabilizing activity in the region, illicit finance risks undermining economic growth, and foreign investment.

The trip marks the latest visit to Turkey by a senior Treasury official to discuss sanctions, following a string of warnings last year by Treasury and Commerce Department officials, as Washington ramped up pressure on Ankara to ensure enforcement of U.S. curbs on Russia.

STRAINED RELATIONS

Nelson’s trip coincides with a period of strained ties between the United States and Turkey as the two NATO allies disagree over a host of issues.

Most recently, Turkey’s refusal to green-light the NATO bids of Sweden and Finland has troubled Washington, while Ankara is frustrated that its request to buy F-16 fighter jets is increasingly linked to whether the two Nordic countries can join the alliance.

Nelson will visit Ankara, the Turkish capital, and financial hub Istanbul on Feb. 2-3. He will warn businesses and banks that they should avoid transactions related to potential dual-use technology transfers, which could ultimately be used by Russia’s military, the spokesperson said.

Dual-use items can have both commercial and military applications.

Washington and its allies have imposed several rounds of sanctions targeting Moscow since the invasion, which has killed and wounded thousands and reduced Ukrainian cities to rubble.

Turkey has condemned Russia’s invasion and sent armed drones to Ukraine. At the same time, it opposes Western sanctions on Russia and has close ties with both Moscow and Kyiv, its Black Sea neighbors.

It has also ramped up trade and tourism with Russia. Some Turkish firms have purchased or sought to buy Russian assets from Western partners pulling back due to the sanctions, while others maintain large assets in the country.

But Ankara has pledged that international sanctions will not be circumvented in Turkey.

Washington is also concerned about evasion of U.S. sanctions on Iran.

The United States last month imposed sanctions on prominent Turkish businessman Sitki Ayan and his network of firms, accusing him of acting as a facilitator for oil sales and money laundering on behalf of Iran’s Revolutionary Guard Corps.

While in the United Arab Emirates, Nelson will note the “poor sanctions compliance” in the country, the spokesperson said.

Washington has imposed a series of sanctions on United Arab Emirates-based companies over Iran-related sanctions evasion and on Thursday designated a UAE-based aviation firm over support to Russian mercenary company the Wagner Group, which is fighting in Ukraine.

(This story has been corrected to change headline to UAE, Turkey, not Middle East; adds Turkey in paragraph 1)

Reporting by Daphne Psaledakis and Humeyra Pamuk
Editing by Don Durfee and Leslie Adler

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Ex-FBI official worked for sanctioned Russian oligarch, prosecutors say

NEW YORK, Jan 23 (Reuters) – A former top FBI official was charged on Monday with working for sanctioned Russian oligarch Oleg Deripaska, as U.S. prosecutors ramp up efforts to enforce sanctions on Russian officials and police their alleged enablers.

Charles McGonigal, who led the FBI’s counterintelligence division in New York before retiring in 2018, pleaded not guilty to four criminal counts including sanctions violations and money laundering at a hearing in Manhattan federal court.

He was released on $500,000 bond, following his arrest over the weekend.

Prosecutors said McGonigal, 54, in 2021 received concealed payments from Deripaska, who was sanctioned in 2018, in exchange for investigating a rival oligarch.

McGonigal was also charged with unsuccessfully pushing in 2019 to lift sanctions against Deripaska.

Sanctions “must be enforced equally against all U.S. citizens in order to be successful,” FBI Assistant Director in Charge Michael Driscoll said in a statement. “There are no exceptions for anyone, including a former FBI official.”

Separately on Monday, federal prosecutors in Washington said McGonigal received $225,000 in cash from a former member of Albania’s intelligence service, who had been a source in an investigation into foreign political lobbying that McGonigal was supervising.

McGonigal faces nine counts in that case, including making false statements to conceal from the FBI the nature of his relationship with the person.

“This is obviously a distressing day for Mr McGonigal and his family,” the defendant’s lawyer Seth DuCharme told reporters after the Manhattan hearing. “We’ll review the evidence, we’ll closely scrutinize it, and we have a lot of confidence in Mr McGonigal.”

Deripaska, the founder of Russian aluminum company Rusal (RUAL.MM), was among two dozen Russian oligarchs and government officials blacklisted by Washington in 2018 in reaction to Russia’s alleged meddling in the 2016 U.S. election.

He and the Kremlin have denied any election interference.

Also charged in the Manhattan case was Sergey Shestakov, a former Soviet diplomat who later became an American citizen and Russian language interpreter for U.S. courts and government agencies.

Prosecutors said Shestakov he worked with McGonigal to help Deripaska, and made false statements to investigators.

Shestakov pleaded not guilty on Monday and was released on $200,000 bond.

The enforcement of sanctions are part of U.S. efforts to pressure Moscow to stop its war in Ukraine, which the Kremlin calls a “special military operation.”

Deripaska was charged last September with violating the sanctions against him by arranging to have his children born in the United States.

The following month, British businessman Graham Bonham-Carter was charged with conspiring to violate sanctions by trying to move Deripaska’s artwork out of the United States.

Deripaska is at large, and Bonham-Carter is contesting extradition to the United States.

Reporting by Luc Cohen in New York; Editing by Rosalba O’Brien, Bill Berkrot, Jonathan Oatis and Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

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Erdogan to Sweden: Don’t expect Turkish support for NATO bid after Stockholm protest

ANKARA, Jan 23 (Reuters) – Sweden should not expect Turkey’s support for its NATO membership after a protest near the Turkish embassy in Stockholm at the weekend including the burning of a copy of the Koran, President Tayyip Erdogan said on Monday.

Protests in Stockholm on Saturday against Turkey and against Sweden’s bid to join the North Atlantic Treaty Organization (NATO) have heightened tensions with Turkey, whose backing Sweden needs to gain entry to the military alliance.

“Those who allow such blasphemy in front of our embassy can no longer expect our support for their NATO membership,” Erdogan said in a speech after a Cabinet meeting.

“If you love members of terrorist organisations and enemies of Islam so much and protect them, then we advise you to seek their support for your countries’ security,” he said.

Swedish Foreign Minister Tobias Billstrom declined to immediately comment on Erdogan’s remarks, telling Reuters in a written statement he wanted to understand exactly what had been said.

“But Sweden will respect the agreement that exists between Sweden, Finland and Turkey regarding our NATO membership,” he added.

Sweden and Finland applied last year to join NATO following Russia’s invasion of Ukraine but all 30 member states must approve their bids. Ankara has previously said Sweden in particular must first take a clearer stance against what it sees as terrorists, mainly Kurdish militants and a group it blames for a 2016 coup attempt in Turkey.

U.S. State Department spokesperson Ned Price said Finland and Sweden are ready to join the alliance, but declined to comment on whether Washington thought Erdogan’s comments meant a definitive shutting of the door to them.

“Ultimately, this is a decision and consensus that Finland and Sweden are going to have to reach with Turkey,” Price said.

Price told reporters that burning books that are holy to many is a deeply disrespectful act, adding that the United States is cognizant that those who may be behind what took place in Sweden may be intentionally trying to weaken unity across the Atlantic and among Washington’s European allies.

“We have a saying in this country – something can be lawful but awful. I think in this case, what we’ve seen in the context of Sweden falls into that category,” Price said.

The Koran-burning was carried out by Rasmus Paludan, leader of Danish far-right political party Hard Line. Paludan, who also has Swedish citizenship, has staged a number of demonstrations in the past where he burned the Koran.

Several Arab countries including Saudi Arabia, Jordan and Kuwait denounced the event. Turkey had already summoned Sweden’s ambassador and cancelled a planned visit by the Swedish defence minister to Ankara.

Reporting by Ece Toksabay and Huseyin Hayatsever; Additional reporting by Niklas Pollard in Stockholm and Humeyra Pamuk in Washington; Editing by Hugh Lawson and Grant McCool

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EU imposes new Iran sanctions, won’t brand Guards ‘terrorists’ for now

BRUSSELS, Jan 23 (Reuters) – The European Union on Monday imposed sanctions on more than 30 Iranian officials and organisations, including units of the powerful Revolutionary Guards, blaming them for a “brutal” crackdown on protesters and other human rights abuses.

The United States and Britain have also issued new sanctions against Iran, reflecting a deterioration in the West’s already dire relations with Tehran in recent months.

Foreign ministers from the EU’s 27 member countries agreed the measures at a meeting in Brussels.

The sanctions targeted units and senior officials of the Islamic Revolutionary Guard Corps (IRGC) across Iran, including in Sunni-populated areas where the state crackdown has been intense, a list published in the EU’s Official Journal showed.

Some EU governments and the European Parliament have made clear they want the IRGC as a whole added to the bloc’s list of terrorist organisations. But the EU’s foreign policy chief, Josep Borrell, noted that could only happen if a court in an EU country determined the IRGC was guilty of terrorism.

“You cannot say ‘I consider you a terrorist because I don’t like you’,” he told reporters ahead of the Brussels talks.

The new sanctions were imposed on 18 people and 19 entities. Those targeted cannot travel to the EU and any assets they hold inside the EU can be frozen.

Relations between the EU and Tehran have spiralled downwards during stalled efforts to revive talks on its nuclear programme and as Iran has moved to detain several European nationals.

The bloc has also become increasingly critical of the continuing violent treatment of protesters in Iran, including executions, and the transfer of Iranian drones to Russia.

Sweden, which currently holds the EU’s rotating presidency, said the new sanctions targeted “those driving the repression.”

“The EU strongly condemns the brutal and disproportionate use of force by the Iranian authorities against peaceful protesters,” Sweden’s Foreign Minister Tobias Billstrom said in a Twitter post by the country’s EU diplomatic mission.

The IRGC was set up shortly after the 1979 Islamic Revolution to protect the Shi’ite clerical ruling system. It has an estimated 125,000-strong military with army, navy and air units, and commands the Basij religious militia often used in crackdowns.

“The Iranian regime, the Revolutionary Guards terrorise their own population day after day,” German Foreign Minister Annalena Baerbock told Monday’s meeting.

The day before the Brussels meeting, over a thousand people took to the streets of the city to protest against the detention in Iran of Belgian aid worker Olivier Vandecasteele.

Iran earlier warned the EU against designating the IRGC as a terrorist entity.

Reporting by Andrew Gray, Bart Meijer Philip Blenkinsop and Parisa Hafezi, Writing by Ingrid Melander and Gabriela Baczynska, Editing by Peter Graff, Timothy Heritage and John Stonestreet

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Brazil and Argentina to discuss common currency

BUENOS AIRES, Jan 22 (Reuters) – Brazil and Argentina aim for greater economic integration, including the development of a common currency, Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said in a joint article they penned.

“We intend to overcome the barriers to our exchanges, simplify and modernize the rules and encourage the use of local currencies,” says the text published on the Argentine website Perfil.

“We also decided to advance discussions on a common South American currency that can be used for both financial and commercial flows, reducing costs operations and our external vulnerability,” the article said.

The idea of a common currency was raised originally in an article written last year by Fernando Haddad and Gabriel Galipolo, now Brazil’s finance minister and his executive secretary, respectively, and was mentioned by Lula during the campaign.

Lula chose Argentina for his inaugural international trip since taking office, keeping with the tradition of first visiting Brazil’s largest trading partner in the region. That follows four years of tense relations during the government of former Brazilian right-wing President Jair Bolsonaro.

Lula’s trip to neighboring Argentina also marks the return of Brazil to the Community of Latin American and Caribbean States (CELAC), which Brazil left in 2019 under order from Bolsonaro, who refused to participate in the regional group due to the presence of Cuba and Venezuela.

Both presidents emphasized the need for a good relationship between Argentina and Brazil to strengthen regional integration, according to the article.

The leaders also emphasized strengthening the Mercosur trade bloc, which includes Argentina, Brazil, Paraguay and Uruguay, and which Brazilian Finance Minister Haddad recently lamented has been abandoned in recent years.

“Together with our partners, we want Mercosur to constitute a platform for our effective integration into the world, through the joint negotiation of balanced trade agreements that respond to our strategic development objectives,” both presidents said.

Earlier in the day, the Financial Times reported the neighboring nations will announce this week they are starting preparatory work on a common currency.

The plan, set to be discussed at a summit in Buenos Aires this week, will focus on how a new currency which Brazil suggests calling the “sur” (south) could boost regional trade and reduce reliance on the U.S. dollar, FT reported citing officials.

Politicians from both countries have discussed the idea already in 2019, but met with pushback from Brazil’s central bank at the time.

Initially starting as a bilateral project, the initiative would later be extended to invite other Latin American nations, the report said, adding an official announcement was expected during Lula’s visit to Argentina that starts on Sunday night.

Reporting by Lisandra Paraguassu; Additional reporting by Jyoti Narayan in Bengaluru; Editing by Tomasz Janowski, Diane Craft and Chris Reese

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Protests in Stockholm, including Koran-burning, draw strong condemnation from Turkey

STOCKHOLM, Jan 21 (Reuters) – Protests in Stockholm on Saturday against Turkey and Sweden’s bid to join NATO, including the burning of a copy of the Koran, sharply heightened tensions with Turkey at a time when the Nordic country needs Ankara’s backing to gain entry to the military alliance.

“We condemn in the strongest possible terms the vile attack on our holy book … Permitting this anti-Islam act, which targets Muslims and insults our sacred values, under the guise of freedom of expression is completely unacceptable,” the Turkish Foreign Ministry said.

Its statement was issued after an anti-immigrant politician from the far-right fringe burned a copy of the Koran near the Turkish Embassy. The Turkish ministry urged Sweden to take necessary actions against the perpetrators and invited all countries to take concrete steps against Islamophobia.

A separate protest took place in the city supporting Kurds and against Sweden’s bid to join NATO. A group of pro-Turkish demonstrators also held a rally outside the embassy. All three events had police permits.

Swedish Foreign Minister Tobias Billstrom said that Islamophobic provocations were appalling.

“Sweden has a far-reaching freedom of expression, but it does not imply that the Swedish Government, or myself, support the opinions expressed,” Billstrom said on Twitter.

The Koran-burning was carried out by Rasmus Paludan, leader of Danish far-right political party Hard Line. Paludan, who also has Swedish citizenship, has held a number of demonstrations in the past where he has burned the Koran.

Paludan could not immediately be reached by email for a comment. In the permit he obtained from police, it says his protest was held against Islam and what it called Turkish President Tayyip Erdogan’s attempt to influence freedom of expression in Sweden.

Several Arab countries including Saudi Arabia, Jordan and Kuwait denounced the Koran-burning. “Saudi Arabia calls for spreading the values of dialogue, tolerance, and coexistence, and rejects hatred and extremism,” the Saudi Foreign Ministry said in a statement.

Sweden and Finland applied last year to join NATO following Russia’s invasion of Ukraine but all 30 member states must approve their bids. Turkey has said Sweden in particular must first take a clearer stance against what it sees as terrorists, mainly Kurdish militants and a group it blames for a 2016 coup attempt.

At the demonstration to protest Sweden’s NATO bid and to show support for Kurds, speakers stood in front of a large red banner reading “We are all PKK”, referring to the Kurdistan Workers Party that is outlawed in Turkey, Sweden, and the United States among other countries, and addressed several hundred pro-Kurdish and left-wing supporters.

“We will continue our opposition to the Swedish NATO application,” Thomas Pettersson, spokesperson for Alliance Against NATO and one of organizers of the demonstration, told Reuters.

Police said the situation was calm at all three demonstrations.

DEFENCE MINISTER’S VISIT CANCELLED

Earlier on Saturday, Turkey said that due to lack of measures to restrict protests, it had cancelled a planned visit to Ankara by the Swedish defence minister.

“At this point, the visit of Swedish Defense Minister Pal Jonson to Turkey on January 27 has become meaningless. So we cancelled the visit,” Defence Minister Hulusi Akar said.

Jonson said separately that he and Akar had met on Friday during a gathering of Western allies in Germany and had decided to postpone the planned meeting.

Akar said he had discussed with Erdogan the lack of measures to restrict protests in Sweden against Turkey and had conveyed Ankara’s reaction to Jonson on the sidelines of a meeting of the Ukraine Defence Contact Group.

“It is unacceptable not to make a move or react to these (protests). The necessary things needed to be done, measures should have been taken,” Akar said, according to a statement by Turkish Defence Ministry.

Turkey’s Foreign Ministry had already summoned Sweden’s ambassador on Friday over the planned protests.

Finland and Sweden signed a three-way agreement with Turkey in 2022 aimed at overcoming Ankara’s objections to their membership of NATO. Sweden says it has fulfilled its part of the memorandum but Turkey is demanding more, including extradition of 130 people it deems to be terrorists.

(This story has been corrected to remove the erroneous reference to Morocco in the ninth paragraph)

Reporting by Omer Berberoglu in Istanbul and Niklas Pollard and Simon Johnson in Stockholm
Additional reporting by Moaz Abd-Alaziz in Cairo
Writing by Ezgi Erkoyun and Niklas Pollard
Editing by Toby Chopra and Frances Kerry

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Davos 2023: Recession casts long shadow over opening of WEF summit

DAVOS, Switzerland, Jan 16 (Reuters) – The prospect of imminent global recession cast a long shadow over Davos on Monday as participants gathering for the opening of the World Economic Forum’s annual meeting counted the likely cost for their economies and businesses.

Two-thirds of private and public sector chief economists surveyed by the WEF expect a global recession this year, with some 18% considering it “extremely likely” – more than twice as many as in the previous survey conducted in September 2022.

“The current high inflation, low growth, high debt and high fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world’s most vulnerable,” WEF Managing Director Saadia Zahidi said in a statement accompanying the survey results.

The WEF’s survey was based on 22 responses from a group of senior economists drawn from international agencies including the International Monetary Fund, investment banks, multinationals and reinsurance groups.

Meanwhile, a survey of CEO attitudes by PwC released in Davos on Monday was the gloomiest since the “Big Four” auditor launched the poll a decade ago, marking a significant shift from optimistic outlooks in 2021 and 2022.

The World Bank last week slashed its 2023 growth forecasts to levels close to recession for many countries as the impact of central bank rate hikes intensifies, Russia’s war in Ukraine continues, and the world’s major economic engines sputter.

Definitions of what constitutes recession differ around the world but generally include the prospect of shrinking economies, possibly with high inflation in a “stagflation” scenario.

On inflation, the WEF survey saw large regional variations: the proportion expecting high inflation in 2023 ranged from just 5% for China to 57% for Europe, where the impact of last year’s rise in energy prices has spread to the wider economy.

A majority of the economists see further monetary policy tightening in Europe and the United States (59% and 55%, respectively), with policy-makers caught between the risks of tightening too much or too little.

“It is clear that there is a massive drop in demand, inventories are not clearing up, the orders are not coming through,” Yuvraj Narayan, deputy chief executive and chief financial officer of Dubai-based global logistics company DP World told Reuters.

“There are far too many constraints imposed. It is no longer a free-flowing global economy and unless they find the right solutions it will only get worse,” he said, adding the group expects freight rates to drop by between 15% and 20% in 2023.

AVOIDING LAY-OFFS

Few sectors expect to be totally immune.

Matthew Prince, chief executive of cloud services company Cloudflare Inc (NET.N), said internet activity was pointing to an economic slowdown.

“Since New Year’s, when I catch up with other tech company CEOs, they’re like, ‘have you noticed the sky is falling?'” he told Reuters.

PwC’s survey found confidence among companies in their growth prospects dropped the most since the 2007-08 global financial crisis, although a majority of CEOs had no plans to cut the size of their workforce in the next 12 months or to slash remuneration as they try to retain talent.

“They’re trying to do cost reduction without human capital changes and large layoffs,” said PwC global chairman Bob Moritz.

Jenni Hibbert, a partner at Heidrick & Struggles in London, said activity was normalising and the executive search firm was seeing “a little less flow” after two years of strong growth.

“We are hearing the same mixed picture from most of our clients. People expect a market that’s going to be more challenged,” Hibbert told Reuters.

AID CUTS

Nowhere is the real-world impact of recession more tangible than in efforts to tackle global poverty.

Peter Sands, executive director of the Global Fund to fight AIDS, Tuberculosis and Malaria, said overseas development aid was being cut in budgets as donors started to feel the pinch, while recession would hit local health provision hard.

A common concern among many Davos participants was the sheer level of uncertainty for the year ahead – from the duration and intensity of the Ukraine war through to the next moves of top central banks looking to lower inflation with deep rate hikes.

The chief financial officer of one U.S. publicly traded company told Reuters he was preparing widely-varying scenarios for 2023 in light of economic uncertainty – in large part related to how interest rates will trend this year.

While there were few silver linings on the horizon, some noted that an all-out recession could give pause to the policy-tightening plans of the U.S. Federal Reserve and other major central banks that is making borrowing increasingly dear.

“I want the outlook to become a little weaker so that the Fed rates start going down and that whole sucking-out of liquidity by global central banks eases,” Sumant Sinha, chairman and CEO of Indian clean energy group ReNew Power, told Reuters.

“That will benefit not just India but globally,” he said, adding the current round of rate hikes was making it dearer for clean energy companies to fund their capital-intensive projects.

Reporting by Mark John, Maha El Dahan, Jeffrey Daskins, Leela de Kretser, Divya Chowdhury and Paritosh Bansal; Editing by Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.

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U.S. strongly committed to Japan defense, Biden tells Kishida, hails military boost

WASHINGTON, Jan 13 (Reuters) – President Joe Biden told Japanese Prime Minister Fumio Kishida on Friday the United States was “fully, thoroughly, completely” committed Japan’s defense and praised Tokyo’s security build up, saying the nations had never been closer.

Kishida is in Washington on the last stop in a tour of the G7 industrial powers and has been seeking to bolster long-standing alliances amid rising concern in Japan, and the United States, about mounting regional security threats from China, North Korea and Russia.

In a meeting at the White House, Biden called it a “remarkable moment” in the U.S.-Japan alliance. He said the two countries had never been closer.

“Let me be crystal clear: The United States is fully, thoroughly, completely committed to the alliance, and importantly … to the defense of Japan,” he said, while also thanking Kishida for strong leadership in working closely on technology and economic issues.

“We are modernizing our military alliances, building on Japan’s historic increase in defense spending, and new national security strategy,” Biden said.

Kishida thanked Biden for U.S. work on regional security and said: “Japan and the United States are currently facing the most challenging and complex security environment in recent history.” He said Tokyo had formulated its new defense strategy released last month “to ensure peace and prosperity in the region.”

He said the two countries shared fundamental values of democracy and the rule of law “and the role that we are to play is becoming even greater.”

Kishida said he looked forward to a “candid” exchange of views on issues including “a free and open Indo-Pacific” – language the two sides use to describe efforts to push back against China – the G7, which Japan’s currently chairs, and climate change.

In a later speech at Washington’s Johns Hopkins School of Advanced International Studies, Kishida called China the “central challenge” for both Japan and the United States and said they and Europe must act in unison in dealing with the country.

DRAMATIC MILITARY CHANGE

Japan last month announced its biggest military build-up since World War Two – a dramatic departure from seven decades of pacifism, largely fueled by concerns about Chinese actions in the region.

“Biden commended Japan’s bold leadership in fundamentally reinforcing its defense capabilities and strengthening diplomatic efforts,” according to a joint U.S.-Japan statement issued after the meeting.

U.S. and Japanese foreign and defense ministers met on Wednesday and announced increased security cooperation following nearly two years of talks and the U.S. officials praised Tokyo’s military buildup plans.

Japan’s military reform plan will see it double defense spending to 2% of GDP and procure missiles that can strike ships or land-based targets 1,000 km (600 miles) away.

Before the meeting, a senior U.S. official said Biden and Kishida were expected to discuss security issues and the global economy and that their talks are likely to include control of semiconductor-related exports to China after Washington announced strict curbs last year.

SEMICONDUCTORS

The joint statement said the United States and Japan “will sharpen our shared edge on economic security, including protection and promotion of critical and emerging technologies, including semiconductors.”

Kishida, Japan’s Foreign Minister Hayashi and U.S. Secretary of State Antony Blinken later signed an agreement on peaceful space exploration at NASA’s headquarters in Washington.

Blinken said this would take space cooperation “to new heights” and strengthen the partnership in areas including research into space technology and transportation, robotic lunar surface missions, climate-related missions, and “our shared ambition to see a Japanese astronaut on the lunar surface.”

At the ceremony, Kishida said the U.S.-Japan alliance was “stronger than ever.”

As well as chairing the G7, Japan took up a two-year term on the U.N. Security Council on Jan. 1 and holds the rotating monthly presidency of the 15-member body for January.

Kishida has said he backs Biden’s attempt to limit China’s access to advanced semiconductors with export restrictions. Still, he has not agreed to match sweeping curbs on exports of chip-manufacturing equipment that Washington imposed in October.

The U.S. official said Washington was working closely with Japan on the issue and believes they share a similar vision even if their legal structures are different. He said the more countries and significant players that backed the controls, the more effective they would be.

A Japanese official said economic security, including semiconductors, was likely to be discussed, but that no announcement was expected on that from the meeting.

Biden and Kishida committed to “strengthening vital trilateral cooperation” among the United States, Japan and South Korea, said the joint statement, which follows North Korea’s decision to exponentially increase its nuclear force and codify its right to a first strike.

Kishida’s visit follows one by Biden to Tokyo in May and a meeting between the two at a November regional summit in Cambodia.

(This story has been refiled to delete the extra word ‘defense’ in paragraph 1)

Reporting by Jeff Mason, Andrea Shalal, David Brunnstrom, Michael Martina, Tim Ahmann and Eric Beech; Editing by Don Durfee, Alistair Bell and Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

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Taiwan to give cash payouts to citizens in ‘New Year blessing’

TAIPEI, Jan 4 (Reuters) – Taiwan plans to give cash payouts of nearly $200 to every citizen this year, Premier Su Tseng-chang announced on Wednesday, saying the island’s economic growth will be shared by everyone.

The export-reliant economy, a global tech powerhouse for products including semiconductor chips, grew 6.45% in 2021, the fastest rate since it expanded 10.25% in 2010.

While economic growth is expected to slow in 2022 and 2023, the government has made plans to plough an extra T$380 billion ($12.4 billion) in tax revenue from last year back into the economy to help protect the island from global economic shocks, including subsidies for electricity prices and labour and health insurance.

Su said a total of T$140 billion, part of the tax revenue, would be spent as cash payouts and each citizen would get T$6,000 ($195.61).

“The fruit of economic achievements will be shared by all citizens, from young to old,” Su told reporters, adding the potential payout requires approval from parliament, where the ruling Democratic Progressive Party has a majority.

“We wish to give all citizens a New Year blessing after the beginning of the Lunar New Year,” Su told reporters, referring to the week-long holiday that starts on Jan. 20.

He did not give details of how the government would deliver the payouts.

Taiwan is a major producer of semiconductors used in everything from cars and smartphones to fighter jets. Its economy continued to grow stably during the COVID-19 pandemic in recent years helped by strong chip demand for consumer electronics as more people worked from home.

Taiwan’s central bank in December cut its 2022 estimate for gross domestic product (GDP) growth to 2.91% from its previous forecast of 3.51% in September.

For 2023, it projected GDP would grow 2.53%. The economy grew 4.01% in the third quarter from a year earlier.

$1 = 30.6740 Taiwan dollars)

Reporting By Yimou Lee and Jeanny Kao; Editing by Jacqueline Wong

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