Aurelia Butler

GAZA (Reuters) – Gaza’s students began their new school term on Sunday, but it is unclear if they will be able to complete the year uninterrupted due to a funding crisis at the United Nations’ Palestinian refugee agency.The U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) runs 288 schools in the Palestinian territory, among 700 across parts of the Middle East region that it funds alongside 140 medical clinics. But it is short of nearly $200 million needed to pay for staff salaries and keep the services running until the end of 2023.“We haven’t secured all the funding we need to ensure that our schools can remain operational until the end of this year, so we are working on securing the funds needed to keep schools in Gaza open,” said Thomas White, Gaza director of UNRWA’s affairs.White said some donor countries would hold discussion about funding for UNRWA in September.”In the event we don’t get the funding, it is 298,000 students who might not be going to school. In Gaza, it is 1.2 million people who may not have access to health care,” White told Reuters during a visit to one U.N.-run school in Gaza City.In addition to the $200 million to support its operational budget in the wider region, UNRWA also needs $75 million for food aid in Gaza.Around two thirds of Gaza’s 2.3 million population are refugees, mainly the descendants of those who fled or had been forced to flee their hometowns and villages around the 1948 war which saw the birth of the state of Israel.The UNRWA schools educate a little under half of Gaza’s young people, with around 300,000 students at government-run schools and others at privately owned schools. In Nusseirat refugee camp in the central Gaza Strip, Palestinian refugee Sami Abu Mallouh, 47, said his family of 12 depended on UNRWA for education, medical treatment and food aid.”Without UNRWA we are worth nothing,” Mallouh said. (Reporting and Writing by Nidal Almughrabi; Editing by Alison Williams) More

HONG KONG (Reuters) -China Evergrande Group, the world’s most-indebted property developer, on Sunday reported a narrower net loss for the first half of the year, thanks to a rise in revenue.Evergrande said its January-June loss was 33 billion yuan ($4.53 billion) versus a 66.4 billion yuan loss in the same period a year earlier.The developer is at the centre of a crisis in China’s property sector that since late 2021 has seen a string of debt defaults, unfinished homes and unpaid suppliers, shattering consumer confidence in the world’s second-largest economy.This month, missed U.S. dollar coupon payments by China’s largest private developer, Country Garden, fanned concern of contagion in an economy already weakened by tepid domestic and foreign demand, faltering factory activity and rising unemployment.In a filing on Sunday, Evergrande said first-half revenue rose 44% from a year earlier to 128.2 billion yuan, as it “actively planned for the resumption of sales and successfully seized the short boom of the property market that emerged at the beginning of the year”. Cash fell by 6.3% to 13.4 billion yuan. Liabilities slightly dropped to 2.39 trillion yuan from 2.44 trillion yuan at the end of 2022, while total assets also shrank to 1.74 trillion yuan from 1.84 trillion yuan.The developer posted a combined net loss of $81 billion for 2021 and 2022 in a long-overdue earnings report last month, versus an 8.1 billion yuan profit in 2020.As with Evergrande’s previous two annual financial statements, auditor Prism Hong Kong and Shanghai has not issued a conclusion on this report, citing multiple uncertainties relating to the business as a going concern, including future cashflow.Evergrande said its ability to continue will depend on a successful implementation of an offshore debt restructuring plan, and successful negotiations with the rest of the lenders on repayment extensions. On Friday, Evergrande said it had “adequately” fulfilled exchange guidance for trading of its Hong Kong-listed stock to resume and had applied for resumption on Aug. 28.Trading of the stock has been halted since March last year pending the 2021 and 2022 results and the outcome of matters including an investigation into 13.4 billion yuan of deposits seized from a subsidiary.Evergrande filed for U.S. bankruptcy protection earlier this month as part of one of the world’s biggest debt restructuring operations.Courts in Hong Kong and the Cayman Islands will decide in early September whether to approve an offshore debt restructuring plan involving $31.7 billion worth of instruments including bonds, collateral and repurchase obligations. Creditors voted on the plan last week and the developer has yet to disclose the result.($1 = 7.2890 Chinese yuan renminbi) More

The writer is professor of the practice in the Department of Economics at Georgetown University and a nonresident fellow at BruegelDaily headlines documenting the accelerating pace of climate change remind us of the imperative of action to arrest the catastrophe being wreaked on our planet. The critical actors here are governments whose job it is to implement effective climate policies. Yet, despite the need for accelerated efforts, the hesitancy of politicians is remarkable.This often reflects the political dimension of policymaking. In July, for instance, European parliament president Roberta Metsola urged lawmakers to refrain from crossing “an invisible line” between ambitious green policies and public support for the changes to people’s lives that these will require. She warned that if insufficient attention was paid to the economic and social impact of environmental policies, this could come back to bite politicians as they headed into next year’s elections to the parliament. Political inaction often reflects the fear of being blamed by special interest groups for green policies that create economic hardship. Losses from addressing climate risk tend to be concentrated and immediate, while benefits are diffuse and lie a long way in the future. Opposition to net zero policies is mounting worldwide, mainly reflecting the massive distributional consequences of the phasing out of the fuel-driven car and traditional domestic heating systems.Economists have long studied the status quo bias in policymaking, the hesitancy that worried Machiavelli when he warned about the perilousness of “tak[ing] the lead in the introduction of a new order of things”. In some recent work, my colleagues and I investigated the salience of status quo bias to the conduct of climate change policies (CCPs).Do governments implementing such policies see an erosion in popular support? Is the fear of implementing them rational and is there a way to mitigate or overcome the political fallout? Economists often subordinate political considerations to the altar of economic efficiency. They will advocate the efficient solution (in this case, taxing carbon), even if a small reduction in efficiency markedly increases the chance of political feasibility. Politicians may thus be more dismissive of economic policy advice that they regard as politically naive.There are four lessons to draw here.First, the hesitancy of governments over CCPs is rational. More stringent policies are strongly associated with lower popular support, at least on average across the different CCP instruments. So Machiavelli’s worry is an enduring one.Second, the scale of the political hit depends on policy design. Market-based instruments (such as emission taxes) are entirely responsible for the damage to popular support; regulations, such as emission limits, seem far more innocuous from an electoral perspective.Taxing carbon has long been economists’ preferred measure on efficiency grounds, but slightly less efficient instruments also merit consideration if the political economy is more favourable. Market-based measures, such as emission taxes, trading schemes and feed-in tariffs, and non-market measures, such as emission limits and research and development subsidies, have measurably different political impacts.Third, the distributional consequences of CCPs loom large in the likely electoral effects. The economic burden they impose is concentrated among groups with less resilience, so redistributive instruments targeted to those who experience higher economic insecurity is of the essence.When CCPs are implemented in environments in which economic inequality is rising, the political hit is very large. But when inequality is falling, the electoral impact is benign. Likewise, provision of social insurance against the effects of CCPs on certain groups is critical in reducing the political fallout. This should include direct transfers to households, unemployment benefits to workers who lose their jobs when companies and sectors shut down as a result of CCPs, and active labour market policies to reallocate workers to key sectors in the green transition.Finally, the electoral cycle is important for the timing of all this. The damage is much larger when CCPs are enacted close to looming elections, and largely benign when introduced early in the cycle.Climate change policymaking involves much more than choosing the most economically efficient measure, therefore. Economists need to take account of social and political dimensions in their recommendations, even if that comes at some small cost to economic efficiency. They must, in short, avoid letting the perfect be the enemy of the good. More

Another solid month of US job creation could help keep alive investor hopes that the world’s largest economy is headed for a so-called soft landing, even as the Federal Reserve maintains its hawkish bias towards inflation.Economists are predicting that employment figures on Friday will show non-farm payrolls grew by about 170,000 in August. If correct, that would mark the slowest rate of job creation since January 2021, but still roughly at the level needed to absorb most new entrants to the jobs market. “We expect further signs of gradual labour market moderation, but not outright weakness,” Credit Suisse’s economics team said in a note to clients.On Friday, Fed chair Jay Powell noted in a speech the unusual jobs market conditions where the number of new openings was falling but unemployment remained very low. “There is evidence that inflation has become more responsive to labour market tightness than was the case,” he added. “These changing dynamics may or may not persist, and this uncertainty underscores the need for agile policymaking.”The US economy grew by 2.4 per cent in the three months to June, according to a first estimate of gross domestic product. A second, fuller report on Wednesday is expected to show little change to that. Jennifer HughesWhere is China’s economy headed?This year has been a grim one for the Chinese economy. With the country’s long-awaited post-pandemic rebound fizzling out, metrics such as industrial output, retail sales and inflation have repeatedly underperformed already-lean forecasts. Separate figures showed youth unemployment surging to a record, before the measure was suspended entirely.August was a particularly busy month for gloomy headlines. The economy sank into two separate measures of deflation for the first time since November 2020, a property sector liquidity crisis returned and a cut to the one-year loan prime rate, designed to stimulate lending, fell short of market expectations.Output from China’s factories, a source of growth during previous economic cycles, has lagged while an initially-strong services sector rebound has lost momentum.Analysts at ING expect August’s Caixin China General Manufacturing purchasing managers’ index, a private survey of activity, to slip to 49.1 next Friday, which would be its lowest reading this year. They expect a similar reading for the official PMI, which places a greater emphasis on larger, state-owned companies and is set for publication on Thursday.“We expect these figures to show a further deterioration, as we await more substantial support from the government to boost domestic demand while global demand remains weak,” the analysts wrote, adding that China’s slowdown could drag on the economies of trading partners such as Japan, South Korea and Taiwan.The consensus forecast for the official non-manufacturing PMI, which covers sectors including services, construction and agriculture, is 51.3, which would also be the weakest reading this year. William LangleyWill eurozone inflation ease the pressure on the ECB?Eurozone inflation has halved from last year’s peak of 10.6 per cent and is expected to drop further when August data is released on Thursday. The key question is whether it will slow enough to convince the European Central Bank to stop raising interest rates.Recent business surveys indicate the single currency bloc is heading for a fresh downturn, prompting investors to hedge their bets on the ECB raising rates for a tenth consecutive time when it meets on September 14. But much of this hinges on inflation.Economists polled by Reuters forecast eurozone inflation to decline from 5.3 per cent in the year to July to 5 per cent in the year to August, despite a recent rebound in oil prices.Angel Talavera, head of European economics at consultants Oxford Economics, said the ECB’s decision “still looks a coin toss”, while predicting a “small decline” in inflation would be enough for the central bank to pause its hiking cycle.But he warned: “If the annual figure fails to decline, this could be enough for ECB hawks to gain the upper hand and push ahead with another rate hike in September.”A rebound in European tourism this summer could keep services inflation high. This would complicate matters for the ECB, which has said underlying inflation — of which services are a big driver — needs to fall sustainably before it will stop raising rates.“Given sticky core inflation — with our forecast for 5.3 per cent year-on-year in August and continued firm services inflation — we maintain our baseline for a final hike [by the ECB] in September,” said Sven Jari Stehn, head of European economics at Goldman Sachs. Martin Arnold More

JACKSON HOLE, Wyoming (Reuters) – U.S. economic growth, still racing at a potentially inflationary pace as other key parts of the world slow, could pose global risks if it forces Federal Reserve officials to raise interest rates higher than currently expected.The Fed’s aggressive rate increases last year had the potential to stress the global financial system as the U.S. dollar soared, but the impact was muted by largely synchronized central bank rate hikes and other actions taken by monetary authorities to prevent widespread dollar funding problems for companies and offset the impact of weakening currencies.Now Brazil, Chile and China have begun cutting interest rates, with others expected to follow, actions that international officials and central bankers at last week’s Jackson Hole conference said are largely tuned to an expectation the Fed won’t raise its rate more than an additional quarter percentage point.While U.S. inflation has fallen and policymakers largely agree they are nearing the end of rate hikes, economic growth has remained unexpectedly strong, something Fed Chair Jerome Powell noted in remarks on Friday could potentially lead progress on inflation to stall and trigger a central bank response.That sort of policy shock, at a moment of U.S. economic divergence with the rest of the world, could have significant ripple effects.”If we get to a point where there is a need for … doing more than what’s already priced in, at some point markets might start getting nervous … Then you see a big increase in the risk premia in different asset classes including emerging markets, including the rest of the world,” said International Monetary Fund chief economist Pierre-Olivier Gourinchas. “The risk of a financial tightening, a very sharp financial tightening, I think we cannot rule that out.”After the pandemic shock and the inflationary rebound that had most countries raising rates together, it’s normal now for policies to diverge, Cleveland Fed President Loretta Mester told Reuters on the sidelines of the Jackson Hole conference on Saturday.But a lot rides on the Fed getting it right. “The economy is a global economy, right? It’s an interconnected economy,” Mester said. “What we do with our policy – if we can get back to 2% in a timely way, in a sustainable way, if we have a strong labor market – that’s good for the global economy.”GLOBAL DIVERGENCE Fed policymakers will deliver a crucial update to their economic outlook at a Sept. 19-20 meeting, when they are expected to leave their policy rate unchanged at 5.25% to 5.5%.If inflation and labor market data continue showing an easing of price and wage pressures, the current forecast for just one more quarter-point increase may hold.Yet Fed officials remain puzzled, and somewhat concerned, over conflicting signals in the incoming data.Some point to weakening in manufacturing, slowing consumer spending, and tightening credit, all consistent with the impact of strict monetary policy and cooling price pressures. But gross domestic product is still expanding at a pace well above what Fed officials regard as the non-inflationary growth rate of around 1.8%. U.S. GDP expanded at a 2.4% annualized rate in the second quarter, and some estimates put the current quarter’s pace at more than twice that.The contrast with other key global economies is sharp. The euro area grew at an annualized 0.3% in the second quarter, essentially stall speed. Difficulties in China, meanwhile, may drag down global growth the longer they fester. Quizzed about the divergence after a speech here, European Central Bank President Christine Lagarde noted after the Russian invasion of Ukraine last year, the outlook was for a euro-area recession, and a potentially deep one in parts of it.Growth, albeit slow, has continued, and inflation has fallen, an overall dynamic not dissimilar to that of the U.S.”We expected all that to be a lot worse. It has turned out to be much more robust, much more resilient,” Lagarde said.U.S. fiscal policy is driving some of the difference with $6 trillion in pandemic-era aid still bolstering consumer spending. A recent investment push from the Biden administration is supporting manufacturing and construction.China may also play a role, economists say. Its slowdown after a short-lived growth burst earlier this year could pinch Germany’s exports and slow Europe’s growth, for instance.But, Citigroup (NYSE:C) Chief Economist Nathan Sheets said, “when you hear economists give you three or four reasons for something, that’s usually because we really don’t know.”TOO STRONG FOR COMFORT? The longer the U.S. economy outperforms, the more Fed officials wonder if they understand what’s happening.A recent improvement in productivity, for example, could explain how inflation continues falling even as growth remains strong.Under current Fed thinking a period of below-trend growth is needed to drive inflation sustainably back to the 2% target. Key inflation measures are currently more than twice that.Most officials do think the economy will slow, as tight policy and stringent credit are more fully felt and pandemic-era savings are spent down. Consumer loan delinquencies are starting to rise, and the restart of student loan payments could upend services spending less affected by Fed actions so far.”There may be significant further drag in the pipeline,” Powell said on Friday, a reason to hold off on further hikes and study how the economy evolves.But he added the Fed was “attentive to signs that the economy may not be cooling as expected,” with recent consumer spending “especially robust,” and a housing sector “showing signs of picking back up.” Any significant surge in home prices or rents would undermine the Fed’s view that easing shelter costs would be key in helping to slow the overall pace of price increases.While the focus is on inflation data, topline economic growth that remains above trend could undermine faith that inflation will fall, and increase concerns that it might rise — an outcome Fed officials view as particularly pernicious and have pledged to avoid.”Evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell said. That’s the moment other countries need to watch and prepare for, Gourinchas said. “The rest of the world has to make sure that they are ready for the potential risk that we’re not there yet in terms of the U.S. disinflation.” More

The finance ministry said in a brief statement on Sunday it was reducing the 0.1% duty on stock trades “in order to invigorate the capital market and boost investor confidence”.Reuters reported on Friday that the authorities were planning to cut the duty by up to half after a key share index fell to nine-month lows.”Such a policy will likely give a short-term boost to the market but won’t have much effect over the long run,” Xie Chen, a fund manager at Shanghai Jianwen Investment Management Co, said before the announcement. “The rebound could last for just two to three days, or even shorter.”China’s leaders vowed late last month to reinvigorate the stock market, also the world’s second-largest, which has been reeling as the post-pandemic recovery flags and a debt crisis in the property market deepens.Beijing has taken a series of measures, including a smaller-than-expected cut in a key lending benchmark last week. But investors are demanding a stronger policy response including massive government spending.In the latest sign of economic weakness, data on Sunday showed profits at China’s industrial firms extended this year’s slump to a seventh month, with weak demand squeezing companies.Regulators including the Ministry of Finance, under the guidance of the State Council, submitted a draft proposal for the cut in the stamp duty to the cabinet this month, people with knowledge of the matter have told Reuters. More