Aurelia Butler

TOKYO (Reuters) – U.S. Treasury Secretary Janet Yellen will discuss ways to further strengthen Western sanctions against Russia over its war in Ukraine when she meets with Japanese Finance Minister Shunichi Suzuki on Tuesday, the Treasury Department said.Yellen’s meeting will also focus on working with Japan and other trusted partners to build stronger and more resilient supply chains to help lower prices for consumers in the United States, where inflation is running at 40-year highs, it said.A comprehensive agenda will also include currencies, a Japanese official said, as the yen hit a fresh 24-year low beyond 137 yen to the dollar on Monday amid worry about the rising cost of living.”Currencies will be discussed as one of various issues,” the official said.Authorities will keep close watch on currencies with a sense of urgency, the official said. What matters most in judging any response to currencies is not their levels but the velocity of their moves, whether they are up or down.The U.S. Treasury secretary paid her respects to slain former Prime Minister Shinzo Abe, Japan’s longest serving modern leader at a private wake on Monday evening, lauding his work to increase Japan’s prosperity and advance the status of women. She canceled a public speech at the Port of Yokohama out of deference to Abe’s death, but will still meet privately with Japanese business leaders to discuss how improved supply chain resiliency and greater use of “friend-shoring” can help ease inflationary pressures and address the bottlenecks.Yellen will also continue talks with Japan about setting a price cap on Russian oil to limit Moscow’s profits and help lower energy prices.The two sides will likely affirm conformity to a price cap but stop short of reaching any concrete agreement on a scheme, a Japanese official said.On Wednesday, Yellen will travel to Indonesia to meet with Suzuki and other Group of 20 finance officials for their July 15-16 gatherings. More

“The data that came in the last several months really pointed to a need for us to get closer to that neutral stance faster,” Bostic said in comments to reporters, noting that the current federal funds rate, set in a range of between 1.5% and 1.75%, is still in his view “accommodative” and encouraging economic activity.Following the expected increase at the July meeting, “we will have to see how the economy evolves. … I am not putting too much weight on probabilities for what we will do two, three, four meetings from now.”Bostic in late May said he wanted to avoid “recklessness” in raising interest rates and supported sticking with the half-point rate increases that Fed officials seemed to broadly back at that point.But when data showed inflation jumped in May, foiling hopes it had reached a peak, Bostic supported a larger three-quarter-point increase at the Fed’s June meeting, and has now backed another at the session upcoming on July 27-28. Bostic said he was “comfortable” the U.S. economy is strong enough to weather another large rate increase, and pointed to continued strong job gains even as higher interest rates begin to cool parts of the economy like housing.The current situation “does not feel like a recession,” Bostic said.Actions beyond the Fed’s July meeting, however, will depend on how the economy evolves.”If demand comes down much faster than we expected or supply comes back, I will be comfortable pulling off” further rate increases, Bostic said. Inflation data to be released on Wednesday is expected to show consumer prices continued rising in June at a more than 8% annual rate, but “what I am looking for … is signs that the month-to-month shift is narrowing in terms of the pace,” Bostic said. More

The global population grew by less than 1 per cent a year for the first time since the aftermath of the second world war in 2020 and 2021 with Europe’s total population actually falling during the coronavirus pandemic, according to a UN report. The populations of 61 countries are forecast to decrease by at least 1 per cent between 2022 and 2050, and the associated low fertility rates will also combine with better healthcare to accelerate the ageing of societies.As the figures were released in the UN’s World Population Prospects report, António Guterres, UN secretary-general, focused on the benefits of healthcare rather than declining fertility and hailed the “advancements in health that have extended lifespans and dramatically reduced maternal and child mortality rates”.However, the rising proportion of older people in many countries is predicted to hit economic growth and public finances and is already posing growing political challenges.Despite the slowing growth, the global population is still poised this year to reach the milestone of 8bn people, while next year India is projected to surpass China as the most populous country. The world population is expected to peak in the 2080s at 10.4bn and will then begin to fall — the first decline to be forecast in the annual UN report. Europe’s population shrank by 744,000 in 2020 and by 1.4mn last year — the largest fall of any continent since records began in 1950, reflecting a surge in deaths, a fall in births and lower net migration linked to the pandemic. However, the pandemic “is not the main factor”, said John Wilmoth, director of the population division of the UN’s economic and social affairs department. The fertility rate “has been quite low in almost all European countries for many decades and that means there aren’t lots of young people”, he said. Europe’s population is expected to continue to contract until 2100, with Germany and other countries joining a trend already established in eastern and southern European countries such as Poland and Italy.

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Two-thirds of global citizens live in a country where the fertility rate is less than 2.1 births per woman, roughly the level required for populations to remain stable if mortality rates are low. In countries with a falling population “unless you get a productivity miracle, overall economic growth will fall”, said Charles Goodhart, emeritus professor at the London School of Economics and co-author of The Great Demographic Reversal.In Asia, Japan’s population has been shrinking since 2010, South Korea’s fell in 2020, and China’s is forecast to do the same this year. China’s population is forecast to decline by about 6mn annually in the mid-2040s and by 12mn a year by the late 2050s — the world’s largest-ever drop.“If you look at a map of the world of countries that are going to decrease in population size, it basically starts in central Europe and goes east all the way to Japan across Russia and China,” said Wilmoth.

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Africa overtook Asia in 2020 to become the main source of population growth. The UN reports that more than half of the projected increase up to 2050 will be concentrated in just eight countries, mostly in Africa, with the rapid growth threatening their development goals. By mid-century Nigeria is projected to be as populous as the US, closing the current 121mn gap between the countries. More production “could and should” move to Africa, said Goodhart, “because the alternative, of mass emigration into other countries where the population is falling, is politically not going to be viable”. “It is primarily the ageing and shrinking of the working-age population that affects a country’s economic development,” said Martina Lizarazo López at Bertelsmann Stiftung, a German-based think-tank. Increased productivity, automation and longer working lives can help reduce the impact of an ageing population, experts said.

Globally more than 1bn people will be aged over 65 in 2030 with 210mn aged over 80, about double the numbers in 2010. Older people already account for about a quarter of the population in many countries including Japan, Italy and Germany. Joshua Wilde, research scientist at Germany’s Max Planck Institute for Demographic Research, said that if fertility rates dropped to a rate at which the population declined, “it’s actually great because you have a higher fraction of the population in working-age groups”. But “in the long run”, he pointed out, “all those workers who are providing a boost to income per capita are going to retire and they will need pensions, they will need healthcare”. More

Good evening,Another week, another round of reminders of the headwinds facing global business as it battles against surging inflation, rising interest rates, the energy crisis and another message from China that coronavirus is not yet done. Chinese stocks fell this morning on news of more Omicron-driven infections in several cities, fuelling fears that damaging lockdowns could return and snag global supply chains in the process. Shanghai has discovered its first case of the BA.5 sub-variant, raising fears of further restrictions in China’s most commercially important city just weeks after a two-month shutdown had caused chaos in global markets. Eleven cities are now under full or partial lockdowns, including a week-long closure of all non-essential businesses in Macau.Meanwhile, Omicron is also driving up hospitalisations in Europe and the US. Investors are also expecting a more aggressive tightening of monetary policy in the US after Friday’s unexpectedly strong jobs data. But they are also concerned about the flow of gas to Europe after Russia shut its Nordstream 1 pipeline for 10 days of maintenance, adding to fears that Moscow may use the opportunity to stop or trim its exports.In the UK, companies are starting to “war game” for a recession as consumer demand slows and costs continue to rise. One supermarket boss described September as the “come to Jesus” month — when the penny drops for households that they need to shell out on new school kit just as holiday spending ends and energy costs ratchet up.Those businesses reliant on discretionary spending, such as travel and leisure groups, are likely to be hit especially hard as the post-pandemic spending splurge dries up. The effect of higher interest rates, lower savings and higher energy costs on company finances is likely to become much clearer around Christmas. “The first-quarter results season was good. The second quarter will probably be fine too. The real hit will be more likely in the third quarter or fourth quarter this year,” said one analyst. New UK retail data for June tomorrow will also be closely watched after falls in sales volumes in April and May.One of the few bright spots is pet care. “Most consumers prioritise their pets over spending on themselves,” said investment bank Peel Hunt. “We have always thought that the last three things to ‘go’ in a recession are the Sky Sports subscription, the monthly new pair of trainers and the dog.”Even those companies that are meant to flourish during tough times are coming unstuck. Sweden’s Klarna, the buy now, pay later company that was once Europe’s most valuable private fintech, had its valuation slashed today in the clearest sign of the struggles facing the sector as inflation surges and consumers retrench.Cutbacks in discretionary spending are also likely to damage big US retailers. Amazon is hoping its Prime Day promotional jamboree tomorrow can rejuvenate slowing sales growth, while bricks-and-mortar stores such as Target and Walmart have already issued profit warnings.Latest newsUK puts plan for windfall levy on electricity generators on holdErdoğan urges Putin to agree to UN plan for safe passage of Ukrainian grain OECD sets deadline for key part of global tax dealFor up-to-the-minute news updates, visit our live blogNeed to know: the economyChief economics commentator Martin Wolf does a deep dive into the faltering UK economy. What is most important is simple to describe and hard to solve: the long-term stagnation in productivity and real incomes. The breakdown in relations with the EU meanwhile was highlighted by Financial Times revelations that the ministerial body that governs Britain’s trade deal with Brussels has not met for over 13 months.Latest for the UK and EuropeCuts of 30 per cent in funds for England’s bus network as pandemic subsidies end could mean unprofitable routes being slashed and communities isolated.Eurozone finance ministers meeting in Brussels today have the task of mitigating households’ pain from soaring energy prices while not adding to upward pressures on inflation, reports our Europe Express newsletter. Hungary made concessions to Brussels in the stand-off over the rule of law and transparency as it tried to unlock €15bn in pandemic recovery funds.If history is any guide, the $750bn price tag for rebuilding Ukraine’s economy is likely to be wide of the mark, says the Lex column. America set the tone with its Marshall Plan for Europe after the second world war came in at an inflation-adjusted $156bn, but modern wars are far more costlier, it notes.Global latestUS president Joe Biden heads to the Middle East hoping to reset strained relations with Saudi Arabia and make some headway in tackling soaring oil prices. Rising petrol costs have led to a record fall in Americans visiting national parks.Abortion bans across the US will hit the most economically vulnerable women who are already under pressure from the rising cost of living. “People with resources can travel . . . [and] will figure out how to order pills online . . . It’s very likely that wealthier people will be able to circumvent their state laws and poor people will not,” says one expert.

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More than 1bn Covid-19 vaccines — more than 10 per cent of all shots produced — have been wasted because of lopsided distribution, vaccine hesitancy and storage problems, according to a new analysis. European health agencies have backed a second Covid booster for the over-60s.Sri Lanka’s president Gotabaya Rajapaksa is to step down after mass protests at the weekend over rising prices and shortages that sent him into hiding. The crisis is one of the most acute among emerging market economies struggling to service debt as food and commodity prices soar while interest rates ratchet upwards.Quantitative easing is being replaced by quantitative tightening as central banks start to shrink their balance sheets. Fund managers however say they have no idea how it will play out.The “perfect storm” of soaring inflation, tightening monetary policy and the war in Ukraine has led to investors pulling $50bn from emerging market bond funds this year, the most severe outflow in at least 17 years. Existing emerging markets could soon be joined by the US, argues columnist Rana Foroohar, as political risk and volatility rises and the country declares war on itself.Need to know: businessSecond-quarter reporting season for the big US banks begins this week, with analysts expecting earnings boosts for JPMorgan Chase, Bank of America and Citigroup. “Main Street banking has been incredibly pressured for the past decade, due to zero interest rates during most of that time. So now it’s finally going back directionally to a more normal interest rate environment,” said one analyst.Wizz Air is the latest airline to cut flights as disruption continues at London Heathrow airport. The Hungary-based carrier reported an operating loss of €285mn in the latest quarter and became one of the first airlines in Europe to quantify the financial impact of this summer’s disruption, which it said had cost €50mn. In better news for the aviation sector, Airbus revised up its estimate for global jet demand over the next 20 years, although it said passenger numbers would not grow as fast as previously thought.STMicroelectronics and GlobalFoundries are building a semiconductor manufacturing factory in France, a project that will receive significant government support as part of EU efforts to secure supplies and overcome reliance on Asian supplies. “This is the biggest industrial investment in recent decades outside of the nuclear sector and a big step for our industrial sovereignty,” said French finance minister Bruno Le Maire.Many of the financial innovations of the past decade — with names such as back-leverage, NAV financing and subscription financing — are about to be tested for the first time in a “down market” as lawyers gear up for a series of bankruptcy cases. The most novel resolutions will almost certainly be in the crypto world, writes US Lex editor Sujeet Indap. Cut through the crypto jargon and get the latest news and analysis with our new weekly Cryptofinance newsletter, which launches on Friday.Oil companies are ramping up spending on social media to burnish their image during the energy crisis and push for expansion of domestic capacity.The World of WorkDespite a welter of laws and guidelines, the gender pay gap persists. Is it time for salaries to become more public? And how is a scheme to get more women in UK boardrooms faring 10 years on?The Lex column looks at how low pay and inflation have fuelled the search for a second job since the pandemic began.Despite the smooth transition to working from home by London’s insurance industry, Lloyd’s of London has decided to stay in its landmark City building, a vote of confidence in centuries-old face to face trading.Covid cases and vaccinationsGet the latest worldwide picture with our vaccine trackerAnd finally . . . Whether you work in London or are lucky enough to snag the occasional business trip, don’t miss the opportunity to sip a pint in one of the City’s historic boozers. Here’s FT Globetrotter’s top 10.© © Marco Kessele More