Aurelia Butler

It urged nations to offer global financial support on job creation and social protection to help narrow the gap.While global unemployment is expected to fall below pre-pandemic levels to 191 million this year, a rate of 5.3%, low-income countries lag in the recovery process, said the ILO’s 11th edition of the Monitor on the World Of Work. Low-income countries in Africa and the Arab region are unlikely to recover to pre-pandemic levels of unemployment this year, with the jobless rate in North Africa expected to be 11.2% compared to 10.9% in 2019, said the report. Rising debt levels compound challenges facing developing states, making policy intervention more difficult, said the ILO, which is launching a Global Coalition for Social Justice to push social justice as a national, regional and global policy.”Investing in people through jobs and social protection will help narrow the gap between rich and poor nations and people,” said ILO Director-General Gilbert F. Houngbo. More

The figure for this month slumped to 91 points from 101.5 in April, falling below the 100 reading that signals a neutral underlying level of economic activity. “The decline in economic output in the winter has been greater than expected and the recovery is also likely to be more timid than previously assumed,” says Timm Boenke, co-head of the economic team at DIW Berlin. Stubbornly high inflation and interest rate hikes by the European Central Bank are dampening purchasing power and lending, said Geraldine Dany-Knedlik, co-head of DIW’s economic team.While the economy has weathered the energy price crisis “surprisingly well so far,” a strong recovery is not in sight, added another DIW economic expert, Guido Baldi. German industry had a strong first quarter, benefiting from the easing of supply chain constraints and a backlog in orders. However, incoming orders have recently declined, the experts said. “Many companies are unsettled and are currently limiting themselves to maintaining their business activities at the current level rather than expanding them,” said DIW’s economic expert Laura Pagenhardt. In the services sector, persistently strong price increases continue to massively reduce household purchasing power and inhibit consumption, clouding over the expectations of service providers, DIW experts said. High employment levels are providing support, though wage increases have barely kept pace with inflation, the DIW added. More

Former economy chief Mehmet Simsek, who is highly regarded by financial markets for his orthodox policy credentials, is almost certain to be included in the cabinet, either as finance minister or as a vice president, four senior officials said.A key role for Simsek could signal a departure from Erdogan’s years-long unorthodox policy, underpinned by interest rate cuts in the face of high inflation, which has led to the lira’s persistent decline.In its third successive day of losses, the lira weakened nearly 1.6% to a record low of 20.75 against the U.S. currency, taking its losses this year to nearly 10%.It later firmed slightly, standing at 20.7150 at 1149 GMT.The currency’s implied volatility gauges climbed on Wednesday with the one-year measure rising to 45.46% – its highest in at least a decade and a half, data from Fenics showed.The focus now is on Erdogan’s announcement of the new cabinet appointments, including top economic policy management, which is expected to come by Saturday at the latest.”I don’t know whether he will be the new finance minister or not, but any credible name is important to give a signal to the market that there will be change. Action speaks more than intention,” said Cagri Kutman of KNG Securities.”If you have Mehmet Simsek or a similar person in charge that is a big move. But then the market will be curious about the first move of the economic team – will there be more orthodox policies or will they do something worse or will they do something to buy time and see how it goes?”First-quarter economic growth stayed buoyant, with gross domestic product expanding 4.0%, despite the impact of February’s earthquakes, high inflation and a cost of living crisis. GDP also grew 0.3% from the previous quarter.Turkey’s main stock index BIST100 was up about 0.3% at 1148 GMT, while the banking index rose 0.26%. More

LONDON (Reuters) – A decline in labour growth and expected fall in the working age population will be a drag on emerging economies already suffering from fading growth prospects, BlackRock (NYSE:BLK)’s Global Head of Emerging Markets Amer Bisat told Reuters. Global population growth over the past five decades fuelled a surge in labour and a rapid increase in gross domestic product in many emerging economies but Bisat said demographics were no longer a boon for the countries. The changing demographics come against a backdrop of higher global interest rates and levels of debt which add to pressure on developing economies, with capital accumulation in emerging markets set to be “tough”, said Bisat, who leads a team managing approximately $35 billion at the world’s largest asset manager.”Demographic used to be a tailwind in emerging markets. Now, it’s a headwind,” Bisat said in an interview during the launch of BlackRock’s latest report he co-authored with director Karen Leiton on the outlook for emerging market investors. “Labor growth in EM is already turning downward with the demographic dividend enjoyed by most EM countries running out of steam.”For instance, emerging economies were growing at an almost 8% pace at their peak before the financial crisis, but by the time the COVID-19 pandemic hit in early 2020 that growth rate had fallen to just over 3%. “The deceleration was not concentrated in just one or two areas but cut across all EM regions,” the report added.Chinese economic growth also started to slow from double digits in 2010 to 5% more recently. “Our judgment is that over the next decade we are more likely to see a gradual (though slight) worsening in EM’s growth potential than to see a favorable reversal,” the report said.The golden age for emerging markets, which started at the turn of the century, had come to a swift end after the 2008 financial crisis, Bisat said. While the asset class remained “investable and interesting”, the days of putting money to work in all emerging markets assets are over. The strategy “isn’t buying all Mexico or buying all Brazil anymore. It is about the good names in Mexico, the good names in Brazil. Quality can be found anywhere; we are going to use research to find it,” said Bisat.This meant his team was investing aggressively in AI tools to manage emerging market portfolios, he said, declining to provide any further details as its development was still at an “early stage.” Bisat also said BlackRock’s emerging markets team was focused on building a research library, to include both better data and models on how to use and analyse it. More

LONDON (Reuters) – The Bank of England will be far more aggressive in policy tightening than previously thought as it battles to contain stubbornly-high inflation running at the joint-highest rate among Group of Seven advanced economies, a Reuters poll found.Consumer prices rose 8.7% in annual terms last month, down from 10.1% in March but faster than the 8.2% predicted in a Reuters poll, while a closely-watched measure of core price rises surged to a 31-year high, official data showed before the poll was conducted.British government bond prices tumbled in the days after the data was released as investors added to bets high inflation will force the BoE to carry on raising interest rates, while lenders have been withdrawing mortgage deals.”The UK’s April inflation print was a shocker. That calls for action. Given a data-dependent Bank of England, we now expect two more 25bp rate rises (in August and September) on top of the one we already expected in June,” wrote Simon Wells at HSBC.While markets are pricing in a peak of 5.50%, median forecasts in the May 25-31 poll were less punchy, putting Bank Rate 25 basis points higher than its current level at 4.75% following the June 22 meeting and topping out at 5.00% by end-Q3.Forty-eight of the 50 economists surveyed expected a 25 basis point lift next month, with two expecting a bigger 50 basis point increase. Meanwhile, 27 of 47 saw Bank Rate at 5.00% or higher by end-September.Bank Rate was seen sitting at 5.00% until early next year, hitting the wallets of indebted consumers already feeling the pinch from a cost of living crisis. It was seen ending next year at 4.00%, higher than the 3.50% predicted earlier.That marks a sharp upturn from a poll published May 5 which said the BoE would be done after it raised rates to 4.50% on May 11. All but three of 39 common contributors to this poll and the last one lifted their year-end prediction.Asked about the bigger risk to their forecast, 25 of 27 respondents to an extra question said it was that the peak rate would be higher than they expect rather than lower. “The risks are skewed to the upside just because the BoE is still quite hawkish and for the past four months in a row near term inflation data have come in above the Bank’s own forecast which has been the main justification for raising interest rates,” said Kallum Pickering at Berenberg.The Bank needs to push back against the risk high inflation proves unexpectedly sticky, and may need to raise interest rates further, Monetary Policy Committee member Jonathan Haskel said last week.Since December 2021 the Bank has made 12 consecutive increases, adding 4.4 percentage points in the sharpest increase in rates since 1989, but had been expected to pause following this month’s move – like many of its global peers.(For other stories from the Reuters global long-term economic outlook polls package:) More