Aurelia Butler

At least 12 fatalities have been reported from weather-related incidents in California in the past 10 days, Governor Gavin Newsom told a news conference.Forecasters with the National Weather Service warned that northern and central California were still in the path of a “relentless parade of cyclones”, promising little relief for the region until the middle of the week.In the last week, severe weather spawned violent wind gusts that toppled trucks, flooded the streets of small towns along northern California’s coast and churned up a storm surge that destroyed a pier in Santa Cruz.According to PowerOutage.us, the utility with the most outages was Pacific Gas and Electric Co (PG&E (NYSE:PCG)) with over 73,000 customers without power, followed by Sacramento Municipal Utility District at 50,000.PG&E is a unit of California energy company PG&E Corp. “More than 4,100 crews along with resources are staged throughout our service area, including regions most impacted by the storms,” PG&E said on its website on Sunday. More

European stocks and US futures rose on Monday, as investors bet that cooling inflation on either side of the Atlantic will allow central banks to slow the pace at which they raise interest rates early this year. The regional Stoxx Europe 600 climbed 0.4 per cent, adding to last week’s 4.2 per cent gain, while London’s FTSE 100 fell 0.1 per cent.Germany’s Dax gained 0.3 per cent after production in the country’s manufacturing, energy and construction sectors increased 0.2 per cent between October and November, according to figures by Destatis, the German statistics office.Contracts tracking Wall Street’s blue-chip S&P 500 and the tech-heavy Nasdaq 100 both rose 0.35 per cent ahead of the New York open. US equities rose sharply on Friday after US government data showed employees’ average hourly earnings rose 4.6 per cent year on year on a seasonally adjusted basis in December, compared with 4.8 per cent the previous month, easing upward pressure on inflation. The world’s biggest economy added 223,000 jobs in the final month of 2022 — more than economists had expected but fewer than the 256,000 increase in November. Federal Reserve officials would be “encouraged” by signs that wage growth is beginning to slow, said Mark Haefele, chief investment officer at UBS Global Wealth Management, though the labour market remains too “tight” for the central bank to pause its rate-rise cycle. The Fed last year lifted interest rates from close to zero to between 4.25 per cent and 4.5 per cent. Rates markets are pricing in a roughly 75 per cent chance that the Fed will lift rates by a quarter of a percentage point when it meets at the end of January, with US inflation data out on Thursday expected to show prices rose 6.6 per cent year on year in December — down from an increase of 7.1 per cent in November. That would mark the slowest pace since October 2021.A measure of the dollar’s strength against a basket of six peers fell 0.18 per cent on Monday. The currency has weakened more than 8 per cent over the past three months as traders continue to bet that the Federal Reserve will raise rates at a slower clip in the first few months of 2023. “The US economy remains resilient but on a downtrend,” said Florian Ielpo, head of macro at Lombard Odier Asset Management. Even so, slowing inflation in Europe and China’s relaxation of strict zero-Covid policies meant that for “most risk-on asset classes, the direction has been the same — globally up”, he added.Eurozone inflation fell back into single digits in December, with data published late last week showing the headline rate hitting 9.2 per cent after annual price growth exceeded 10 per cent for the previous two months. Figures out on Monday showed unemployment in the region fell to a 24-year low in November, however, adding to pressure on the European Central Bank to keep raising rates.In Asia, Hong Kong’s Hang Seng index gained 1.9 per cent and China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 0.8 per cent. Oil prices ticked higher, meanwhile, with Brent crude, the international oil benchmark, rising 2.9 per cent to $80.85 per barrel on expectations of higher demand. More

GENEVA (Reuters) -U.N. Secretary-General Antonio Guterres on Monday called for massive support to help Pakistan with a $16 billion rebuilding effort following devastating floods, saying the country had been the victim of climate chaos and the global financial system.Officials from some 40 countries as well as private donors and international financial institutions are gathering for a meeting in Geneva as Islamabad seeks support in what is expected to be a major test case for who pays for climate disasters.Last year’s floods caused by record monsoon rains and melting glaciers killed at least 1,700 people and displaced around 8 million. The waters are still receding.”We must match the heroic response of the people of Pakistan with our own efforts and massive investments to strengthen their communities for the future,” Guterres said in opening remarks, calling the floods “a climate disaster of monumental scale”.”Pakistan is doubly victimized by climate chaos and a morally bankrupt global financial system,” he added, calling for creative ways for developing countries to access debt relief and financing.Additional funding is crucial to Pakistan amid growing concerns about its ability to pay for imports such as energy and food and to meet sovereign debt obligations abroad. Pakistan’s finance minister will meet an International Monetary Fund delegation on the sidelines of the Geneva meeting.Pakistan’s Prime Minister Shehbaz Sharif called for a new “coalition of the willing”, saying it needed $8 billion over the next three years. Islamabad will provide the rest.”I am asking for a new lifeline for people who need to power our economy and re-enter the 21st century with a future that is protected from such extreme risks to human security,” he told the meeting.But big questions linger over where the rest of the funding will come from, with the initial emergency phase of the disaster response less than half funded, according to U.N. data. Pakistan was at the forefront of efforts that led to the establishment of a “loss and damage” fund to cover climate-related destruction at COP27 in Egypt, but it is not yet clear if it will be eligible.In a video message, France President Emmanuel Macron said Paris was ready to support Pakistan in talks with creditors and pledged $10 million in additional aid support.United Nations’ Development Programme Administrator Achim Steiner said the next phase of the Pakistan response represented a “monumental moment of reckoning for the entire world”. More

MUMBAI (Reuters) – India’s nominal GDP growth is likely to fall in 2023-24, hurting tax collections and putting pressure on the federal government to reduce the budget gap by cutting expenses ahead of national elections in 2024.Nominal GDP growth, which includes inflation, is the benchmark used to estimate tax collections in the upcoming budget to be presented on Feb. 1. It is estimated to be around 15.4% for the current financial year.At least four leading economists expect nominal GDP growth to come in between 8% and 11% as inflation slows and real GDP growth eases from an estimated 7% this year, when pandemic-related distortions and pent-up demand pushed up growth rates.A lower tax revenue will limit the government’s ability to spend and support the economy as the country heads to national elections in 2024. It will also strain efforts to bring down the fiscal deficit towards the medium-term target of 4.5% of GDP by 2025/26.Nominal GDP Growth Seen At 15.4% In 2022/23 https://www.reuters.com/graphics/INDIA-ECONOMY/jnpwywgmwpw/chart_eikon.jpg”Higher nominal GDP growth has not only helped in lowering public debt and fiscal ratios, but has also resulted in pushing up credit growth to 16%-17% year-on-year in FY23,” Deutsche Bank (ETR:DBKGn)’s chief India economist Kaushik Das wrote in a note on Monday.Das said he expects nominal GDP growth of 8%-9% in FY24, with inflation and real GDP growth seen declining. A growth of 8-9% would bring that number close to the 7.6% nominal growth seen in 2019/20, before the Covid crisis hit.As of November 2022, the federal government’s net tax collection stood at 12.24 trillion rupees ($148.61 billion), 63% of the annual target.State Bank of India and rating agency ICRA estimate the nominal GDP growth at around 10% for next financial year. This, according to ICRA Chief Economist Aditi Nayar, could translate into a growth of 9.4% in tax collections. “We are slightly cautious on tax collections next year because we expect lower growth in collections of excise and customs duties,” she said.Bank of Baroda’s chief economist, Madan Sabnavis, pegs nominal growth slightly higher at 11%-12% but still materially lower than the 15.4% this year. “The tax buoyancy seen this year due to inflation and pent-up demand will be missing this year,” Sabnavis said.Fiscal deficit seen at 6.4% of GDP despite higher nominal growth https://www.reuters.com/graphics/INDIA-ECONOMY/klpygzexlpg/chart_eikon.jpgBUDGET MATHThe Indian government had projected nominal GDP growth of 11.1% in the budget for 2022/23, significantly lower than the 15.4% now estimated by the statistical office in its first advance estimates released on Friday.This, according to BofA Global Research, could mean that the federal government’s net tax collections surpass budget estimates by 1.15 trillion rupees.Non-tax revenues, including proceeds from disinvestment, will be lower though and spending will be higher by 1.35 trillion rupees. “Higher-than-budgeted nominal GDP growth,(will help) to keep fiscal deficit as a percentage of GDP at 6.4%, with downside risks,” it said.Economists at Kotak Institutional Equities, however, said the higher-than-budgeted nominal GDP growth could have allowed for fiscal deficit to reduce to 6.1% of GDP, but higher spending will likely mean that the deficit stays at close to 6.4%.”For FY24, fiscal consolidation should remain limited to 30-40 bps from the current fiscal,” said Soumya Kanti Ghosh, chief economist at State Bank of India.Other economists see scope for a quicker reduction of the fiscal deficit next year.ICRA’s Nayar pegs it at 5.8%, while Bank of Baroda’s Sabnavis sees it at 5.75-6% of GDP.”While nominal GDP growth rate is expected to be lower vs FY23, higher tax buoyancy, lower subsidy bill and targeted expenditure approach should pave way for lower fiscal deficit,” said BofA Global Research, which also sees next year’s deficit at 5.8% of GDP.($1 = 82.3650 Indian rupees) More

BUCHAREST (Reuters) – Romania’s economy is set to outpace its stagnating neighbours this year, helped by European Union funding, currency stability and foreign investment driven in part by reshoring from Russia and Ukraine.The International Monetary Fund expects a 3.1% expansion, while even the European Commission’s 1.8% growth forecast would place it well ahead of Poland – seen growing 0.7% – and Hungary, grappling with a slowdown and sky-high inflation. That follows a decade in which Romania – long one of Europe’s poorest countries, and burdened with a reputation for corruption – has quietly closed in on its peers to become eastern Europe’s second-largest economy after Poland.According to most recent figures from Eurostat, GDP per capita expressed in terms of purchasing power was 74% of the EU average in 2021, a 21 percentage point gain since 2010.An average Romanian would spend about 20 months’ net income to buy a new Dacia Jogger car, the same as a counterpart in traditionally richer Hungary.The transformation has been achieved despite Romania’s history of political instability, most recently a government collapse in 2021. Romania’s prospects are underpinned by its EU membership and good relations with Brussels. While Budapest and Warsaw are haggling with the bloc over rule-of-law strings attached to billions worth of pandemic recovery funds, Romania has already drawn down over 6 billion euros in grants and cheap loans.Prime Minister Nicolae Ciuca has said the government aims to tap more than 10 billion euros a year, equivalent to about 4% of GDP, of about 90 billion euros of EU funding available to Bucharest through to 2027.Some progress with justice reforms led the European Commission to recommend in November the lifting of a special justice monitoring mechanism Romania has been under since it joined the bloc in 2007. “Provided that all the anti-corruption measures in the (recovery funds) plan are correctly implemented, Romania could become an example of good governance in the region,” an unnamed EU official said.S&P, which like other ratings agencies has Romania on its lowest investment grade pending reductions in the fiscal deficit, has said it expects Bucharest to make progress on reforms agreed to secure the pivotal recovery funds.RELATIVE STABILITYThe stability of the leu currency is another factor, especially compared with Hungary’s forint, which hit multiple record lows last year. Higher salaries across the border have already led some Hungarians to take jobs in industrialised western Romania.”This is an entirely new development, and I would caution anyone (in Hungary) against weakening the forint further, or not raising the minimum wage,” said Sandor Baja, Managing Director for the Czech Republic, Hungary and Romania at staffing company Randstad.A recent Reuters poll of economists saw the forint sliding again in 2023, with the leu weakening slightly.Zoltan Dio, a theatre set designer who lives near Hungary’s second-biggest city Debrecen, has been working across the border for years. He keeps a Romanian bank account to shield against swings in the forint, which lost 8% against the leu last year. “If I get an assignment in Hungary, then after much haggling I can charge about two-thirds of what I get in Romania with no questions asked,” said Dio.RESHORINGCompanies reshoring from Russia and Ukraine to nearby low-cost manufacturing hubs partially helped push foreign direct investment to 9.39 billion euros in January-October, the largest 10-month figure since Romania joined the EU.A 2022 survey by Ernst&Young showed more than half of 101 foreign companies planned to set up or expand operations in Romania, primarily in supply chains and logistics, ranking it fourth in Europe by intention to invest.”We are optimistic that investment will rise in coming years, also encouraged by EU funds,” said Alex Milcev, head of Tax and Legal at E&Y Romania. While Romania does not have a unified investment agency, the ministry for small firms and entrepreneurship told Reuters it was overseeing five possible relocation projects from Russia, Belarus and Ukraine worth an estimated 705 million euros.Among them, Finnish Nokian Tyres plans to invest 650 million euros by 2024 in a factory in northwest Romania’s Oradea, an affluent region bordering poor parts of Hungary.”It was clear that Oradea was the best choice for our new factory,” Päivi Antola, Nokian’s head of investor relations told Reuters. She said Nokian had reviewed over 40 relocation targets, looking at skilled workforce availability, logistical advantages, green energy sources and railway access.Hurdles remain for the economy, including Romania’s big current account deficit, ageing population and chronic red-tape that has frustrated infrastructure development. Cutting the fiscal deficit could be tricky ahead of 2024 elections. And relations with the EU are not always smooth: in December, Austrian opposition over unauthorised immigration kept Romania out of Europe’s borderless Schengen area. Bucharest says access would add half a percentage point to annual growth.Regional disparities are huge, with some rural areas still off the power grid while in bustling Bucharest living standards exceed those in former East Germany.But that is changing, according to Mugur Isarescu, Romania’s central bank governor for over three decades.”I’ve been in the country recently: bumper to bumper traffic on both sides. So it’s not just in Bucharest,” Isarescu said in November. “It doesn’t really look like recession or poverty.” More