Economy

The fund said in a statement that even as key program targets were missed through the end of last year “due to severe policy setbacks,” it approved waivers of non-observance.”Program targets were modified, in line with the authorities’ initial actions and ambitious plans to bring the program back on track,” the fund said.The board also approved an extension of the program through Dec. 31, 2024, “along with some rephasing of planned disbursements within the existing envelope of the program.” The IMF did not supply more details on the changes.The government and IMF staff recently agreed on the seventh review of the program, which was delayed amid a change of government as President Javier Milei took office on Dec. 10.”The new administration is taking bold actions to restore macroeconomic stability and begin to address long-standing impediments to growth,” said IMF Managing Director Kristalina Georgieva in the statement.She said that “inconsistent policies of the previous government” had left a “difficult inheritance.” Earlier this week the IMF slashed its forecast for Argentina’s 2024 GDP to a 2.8% contraction from a previous view of a 2.8% expansion, mostly due to the expected effects of the new government’s proposed reforms.Wednesday’s approval brings disbursements within the $44 billion program to $40.6 billion, the fund said.The fund said following a recent devaluation and “exchange rate realignment,” the new policies should “continue to secure reserve accumulation goals.”According to the latest data reported by the central bank, Argentina’s reserves rose to $27.6 billion on Wednesday from $25.1 billion at the close of Tuesday. More

The Royal Institution of Chartered Surveyors (RICS) said the outlook for the year ahead was more upbeat, with its headline workloads measure climbing to 12% from 6%. It said that a net balance of 8% of survey respondents reported a fall in activity in the three months to December, less downbeat than the 10% reporting a decline in the three months before.”While the UK’s construction sector remained fairly subdued at the tail end of 2023, belief in a rate cut in 2024 appears to be supporting greater expectations for the future,” the report said.RICS said there was a “clear divergence” between sectors, with home-building contracting further while infrastructure activity continued to grow.Despite some optimism spurred by lower mortgage rates, Britain’s housing market has been slow to recover from the long run of interest rate increases by the BoE and the hit following the “mini-budget” crisis of late 2022.The BoE is expected to leave interest rates on hold at a 15-year high of 5.25% later on Thursday and possibly signal a change in its rate stance after 14 back-to-back increases between December 2021 and August 2023.Although pressures around skills shortages persisted in the fourth quarter, RICS said survey respondents were anticipating a rise in employment in the next 12 months.”Supported by the prospect of easing interest rates later this year, overall workloads are anticipated to rise, with respondents anticipating this pick-up will be accompanied by a rise in employment levels across the industry,” Tarrant Parsons (NYSE:PSN), senior economist at RICS said. The most recent official data showed construction output fell 0.2% in November. More

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WASHINGTON (Reuters) -The U.S. House of Representatives on Wednesday prepared to vote on a $78 billion bipartisan package of tax breaks for businesses and low-income families that was put on a fast track even as Congress remains deadlocked over broader fiscal issues.The temporary tax measure, which would increase the Child Tax Credit and reinstate deductions on business research and development and capital investments through 2025, was given a green light by House Speaker Mike Johnson after negotiations with some of his fellow Republicans who objected to its lack of tax relief for state and local taxes (SALT).Johnson agreed to continue working with members and House Ways and Means Committee Chairman Jason Smith “to find a path forward for legislation related to SALT,” Johnson spokesperson Athina Lawson said in a statement.The tax breaks measure is being considered under a suspension of House rules, which requires a two-thirds majority vote — a difficult threshold to meet, especially with defectors expected among both Republicans and Democrats.A floor vote was expected after 8 p.m. EST (0100 GMT).FAMILY, CORPORATE WELFARE? Hardline conservative Republicans voiced objection to the package during debate because it would increase the amount of that Child Tax Credit claimants can receive as cash payments, to up to $2,100 per child by 2025 at total cost of $33.5 billion.”This is not a tax bill, it is a welfare bill in drag,” said Republican Representative Matt Gaetz, who added that it also provided “corporate welfare.”Representative Rosa DeLauro, a progressive Democrat, said the bill would heap more tax breaks on corporations while failing to adequately address poverty.”I cannot vote for a deal that lopsidedly benefits big corporations,” DeLauro said. “The deal is inequitable.””This corporate tax windfall bill, thinly disguised as help for children, offers even more tax advantages to corporations that are paying a mere 7.8% tax rate,” Doggett said. “A working mother of two earning the average wage pays a federal effective rate of 20%.”DEDUCTIONS RESTOREDThe chairman of the House Ways and Means Committee, Republican Representative Jason Smith, who brokered the deal that combines tax priorities of both parties, emphasized the business benefits of restoring immediate deductions passed under former President Donald Trump which expired in 2022.The bill also would eliminate double taxation of business and workers that operate both in the U.S. and Taiwan, including semiconductor manufacturers building U.S. factories. Smith said these provisions, estimated to cost $34.3 billion over 10 years, would encourage over $470 billion in new research and development and small business capital investment and create over 900,000 jobs.Despite opposition from the far right and far left, the measure advanced by a 40-3 vote in the House Ways and Means Committee, indicating bipartisan support.The bill also faced some opposition over its lack of relief for state and local taxes and mortgage interest.The Republican-passed tax-cut bill passed in 2017 capped the individual deductions for mortgage interest and state and local tax payments to help pay for business tax cuts.Some lawmakers in New York and California have sought to remove the caps, which led to higher overall tax bills for many taxpayers despite lower tax rates.Johnson in a statement praised the tax breaks package as “important bipartisan legislation to revive conservative pro-growth tax reform.” More

WASHINGTON (Reuters) -The United States on Wednesday added more than a dozen Chinese companies to a list created by the Defense Department to highlight firms it says are allegedly working with Beijing’s military, as part of the broader effort to keep American technology from aiding China.New additions to the list, first reported by Reuters, were posted to the Department of Defense website and include memory chip maker YMTC, artificial intelligence company Megvii, lidar maker Hesai Technology and tech company NetPosa.Amid strained ties between the world’s two biggest economies, the updated list is one of numerous actions Washington has taken in recent years to highlight and restrict Chinese companies that is says may strengthen Beijing’s military.A spokesperson for the Chinese embassy in Washington said China opposed the move and called it an abuse of state power, adding that it ran counter to the U.S.’s “alleged commitment to market competition and international fair trade.”YMTC, Megvii and Hesai did not immediately respond to requests for comment. While being placed on the list doesn’t involve immediate bans, it can be a blow to designated companies’ reputations and represents a stark warning to U.S. entities and companies about the risks of conducting business with them. It could also add pressure on the Treasury Department to sanction the companies.In addition, the 2024 National Defense Authorization Act added some teeth to the “Section 1260H” list, prohibiting the Defense Department under Section 805 of the law in coming years from contracting with any of the designated companies.”The Defense Department’s updated 1260H list underscores China’s unwavering commitment to its military-civil fusion strategy,” said Craig Singleton, a senior fellow at the Foundation for Defense of Democracies.”Being listed on 1260H poses major reputational risks to Chinese companies,” he added, noting that some Chinese firms have tried to be removed from the list.Other firms added on Wednesday include China Three Gorges Corp, China Construction Technology Co and Yitu Network Technology, as well as publicly traded companies Chengdu JOUAV Automation Tech Co, Chengdu M&S Electronics Technology Co, Guizhou Aviation Technical Development Co, and ShenZhen Consys Science & Technology Co.They join previously listed aviation company AVIC, BGI Genomics Co, China Mobile (NYSE:CHL), energy company CNOOC (NYSE:CEO) and China Railway Construction Corp.Separately on Wednesday, senior U.S. officials, including FBI Director Christopher Wray, warned that hackers linked to China’s government are preparing to cause “real-world harm” by targeting critical U.S. infrastructure, such as water treatment plants, the electric grid, oil and natural gas pipelines, and transportation hubs. More

The insurance industry is typically considered ‘recession proof’ and enjoys steady demand irrespective of economic conditions as policies are often guaranteed by employers or mandated by the government.MetLife, however, reported a 63% drop in net income to $574 million in the quarter, primarily due to market risk benefit remeasurement losses of $431 million. Shares in MetLife were last down 2.9% in extended trading after the results. Premiums, fees and other revenues for the fourth quarter surged 26% to $13.69 billion.U.S. equity markets embarked on a strong rally in the last part of 2023, driven by the Federal Reserve’s indications of potential interest rate cuts in 2024. MetLife’s net investment income rose 20% to $5.37 billion in the quarter. On an adjusted basis, excluding total notable items, profit was $1.93 per share for the three months ended Dec. 31, compared with $1.59 a year earlier. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Jay Powell moved to cool speculation that the Federal Reserve would begin cutting interest rates as soon as March, saying that was not the “base case” as the US central bank considers easing monetary policy this year. Falling inflation in recent months had fuelled market bets that the Fed could begin cutting rates from their 23-year high at its next meeting this spring. But the Fed chair said the central bank still needed “greater confidence” that inflation was “sustainably” lower.“I don’t think it’s likely that we’ll reach a level of confidence by the time of the March meeting . . . I don’t think that’s the base case,” Powell said in comments that prompted traders to slash their bets on a cut this spring and sent stocks sharply lower.Powell was speaking on Wednesday after Federal Open Market Committee rate-setters agreed unanimously for the fourth straight month to keep the benchmark federal funds rate at between 5.25 per cent and 5.5 per cent. The US economy and labour market have remained stronger than many economists predicted, defying forecasts that the Fed’s campaign to snuff out rampant inflation with steep rises in interest rates would eventually end in recession and job losses.That resilience and a steady fall in inflation over recent months have raised hopes that the Fed is close to engineering a so-called soft landing for the world’s biggest economy.Powell hailed the benign economic backdrop — but insisted that the Fed still needed more evidence that inflation would keep falling. “We’re not declaring victory,” he said.The US economy had surprised forecasters since the coronavirus pandemic, Powell added — but the economic outlook remained “uncertain” and bringing inflation back to the central bank’s 2 per cent target was “not assured”. “We are prepared to maintain the current target range for the federal funds rate for longer if appropriate,” the Fed chair added.Stocks fell after Powell’s comments, with the S&P 500 ending the day down 1.6 per cent, its worst day in four months, and the Nasdaq Composite down 2.2 per cent, its worst day in three months. Traders in the futures market reduced bets on a rate cut in March, slashing the odds from 60 per cent before the Fed released its statement to 37 per cent after Powell’s comments.“Powell made it abundantly clear that the Fed will not cut in March unless there is a scary crack in the labour market,” said Krishna Guha of Evercore ISI. “Strong growth and a strong labour market allow the Fed the luxury of making sure that inflation is properly nailed down.”While Powell’s comments stressed the central bank’s caution on inflation, a change in the language in the committee’s statement removed a bias towards further rate rises. “The committee judges the risks to achieving its employment and inflation goals are moving into better balance,” it said. Stephen Stanley, chief US economist at Santander, described the Fed’s statement as a “nice balance between getting rid of the hiking bias but adding that they are not close to easing yet”.Wednesday’s FOMC decision to hold rates steady was expected by traders, who have been more focused in recent weeks on when the Fed would begin making the 75 basis points worth of cuts its officials had predicted for this year. The decision comes after data published earlier on Wednesday indicated wage growth was moderating.Workers received an extra 4.2 per cent in their pay packets over the course of 2023, according to figures from the US Bureau of Labor Statistics, down from 4.4 per cent in the 12 months to September.The 4.2 per cent figure was higher than the latest readings of inflation in the consumer price index and as measured by personal consumption expenditures, which were 3.4 per cent and 2.9 per cent, respectively.The Employment Cost index also showed salaries were up by 0.9 per cent between September and December, compared with a rise of 1.1 per cent over the previous quarter. Powell said that the latest readings showed low unemployment was posing less of a threat to the Fed’s 2 per cent inflation goal. “It’s still a good labour market, but it’s getting back into balance,” he said.“The further slowdown in wage growth evident in the fourth quarter employment cost index illustrates that easing labour market conditions are helping to push inflation down,” said Andrew Hunter, deputy chief US economist at research firm Capital Economics, adding that the latest data was likely to “reassure” Fed officials that they were on course to hit 2 per cent. More

The UK government on Wednesday published its plan to convince Northern Ireland’s biggest unionist party to return to the Stormont power-sharing executive following a bitter two-year stand-off over the trade border in the Irish Sea created by Brexit. The package will be enacted via legislation due to be voted on at Westminster on Thursday. It is designed to build on the Windsor framework agreed by the UK and EU last year. This eased many post-Brexit problems but many unionists demanded further changes, arguing that it treated Northern Ireland differently to the rest of the UK by leaving unacceptable trade barriers between the region and Great Britain. Nearly 12 months later, Democratic Unionist Party leader Sir Jeffrey Donaldson now says his party will return to the executive that it has been boycotting since 2022, having secured supplementary assurances set out in Wednesday’s 76-page Command Paper entitled “Safeguarding the Union”. The main points are below. Guaranteeing N Ireland’s place in the Union Brexit created a trade border in the Irish Sea to avoid the return of a north-south border on the island of Ireland, which would have destabilised the 1998 Good Friday Agreement, the peace deal that ended three decades of conflict in Northern Ireland known as the Troubles.As a result, Northern Ireland remains part of the United Kingdom internal market but must also follow EU rules for goods trade when any article is at risk of going over the border to Ireland and on into the EU single market.The DUP argued that this hybrid arrangement diminished Northern Ireland’s place in the United Kingdom by creating red tape for companies in Great Britain that send goods to Northern Ireland, deterring them from trading with the region.The new proposals, which include reducing checks on the Irish Sea border, passing new laws and creating new bodies to boost ties between the region and the rest of the UK would collectively “affirm Northern Ireland’s place in the Union”. The command paper also promised new laws to prohibit future UK governments from signing international treaties that exclude Northern Ireland, as well as legislative commitments that would “copper-fasten” the region’s place in the Union.Reaction to the proposals was mixed. One senior former UK official said the measures amounted to a “rhetorical repetition” of assurances already in place in the Windsor framework.However Lisa Claire Whitten, a research fellow at Queen’s University in Belfast described the proposals as “quite a significant reframing” of the post-Brexit constitutional arrangement for Northern Ireland.Reducing friction in the Irish SeaUnder the Windsor framework the paperwork required to send goods to Northern Ireland from Great Britain was simplified, with companies that joined a UK trusted trader scheme able to use a “green lane” that required minimal paperwork. Goods destined for Ireland and the EU were required to use a “red lane” that required full EU customs paperwork and other regulatory documents.Under the new proposals, the UK will now replace the narrow “green lane” with a broader internal market system that the government says will mean that 80 per cent of goods travelling from Great Britain to Northern Ireland will require minimal paperwork. This means that companies wanting to send goods to Belfast will still need more paperwork than when sending them to, say, Birmingham, because they will still be required to join the UK trusted trade scheme. But UK government officials say that since some 7,000 companies have already signed up to the scheme, the border will in practice now be negligible. “It’s true it’s not exactly the same as sending goods inside Britain, but the reality is the work has already been done,” a UK official added.A new independent monitoring panel will be established to check whether the 80 per cent target is being achieved.The Command Paper is also explicit that since the UK is now phasing in full border checks on imports from the EU, Irish businesses will face the full panoply of checks and paperwork when sending goods to the UK. By contrast, Northern Ireland’s businesses will face no such checks and continue to have “unfettered access” to the rest of the UK, as set out in the original Windsor framework.Ensuring equality in the internal marketThe document contains a number of measures that are designed to cement Northern Ireland’s place in the UK internal market.These include insisting that UK food producers label all products that are not destined for the EU single market as “Not for EU” — even if they are being sold in Great Britain.The food industry has lobbied hard against this measure, with trade body the Food and Drink Federation warning the costs could run into “hundreds of millions of pounds”. However the government argues it is necessary to ensure that “no incentive arises” for British businesses to stop trading with Northern Ireland.Other proposals include the establishment of a new body, the UK East-West Council to boost trade, transport, education and cultural links between Northern Ireland and the rest of the UK, with a specific body, Intertrade UK, to focus on trade ties.The government will also require any public body introducing new regulations in the UK to assess whether they will have any negative impact on Northern Ireland’s place in the UK internal market.Unfinished businessThe Command Paper sets out measures that build on the foundations laid in the Windsor framework in order to cement Northern Ireland’s place in the UK, both economically and politically.However officials said the deal does not completely resolve the challenges created by Northern Ireland existing in a dual regulatory environment.Future bones of contention identified in the paper include resolving a disagreement over whether veterinary medicines used in Northern Ireland must be tested in the EU, and whether the EU’s new carbon border taxes will apply to the region. 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