Economy

In response to the minister’s statement, there was a noticeable increase in the value of Ghana’s dollar-denominated bonds today. Notably, the 2027 Eurobond experienced a rise of 0.71 cents, reaching 42.93 cents on the dollar in London trading. Similarly, the 2051 notes also gained ground, climbing by 0.74 cents to 42.13 cents.The signing of this debt restructuring agreement is anticipated to be a key milestone for Ghana, setting in motion the release of a second tranche of $600 million from the IMF under its extended credit facility. This disbursement forms part of an overarching strategy by the Ghanaian government to achieve debt sustainability. The plan involves reorganizing nearly all of the country’s estimated $50 billion debt in line with the conditions stipulated by the IMF program initiated in May.Investors have reacted positively to this development, as evidenced by the uptick in bond prices, signaling renewed confidence in Ghana’s commitment to stabilizing its economy and addressing its debt challenges.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

“Looking ahead, we will soon issue policy recommendations to address liquidity mismatches in open ended funds,” Klaas Knot, the head of the FSB and the governor of the Dutch central bank said in a speech on Thursday.Open-ended investment funds tend to sit on long term assets but their investors often have the option for short-term redemptions, creating a liquidity mismatch in periods of high stress.Many open-ended funds, particularly those with higher exposures to credit risk, faced substantial redemption pressures in early 2020, when the financial system was struggling to cope with the impact of the pandemic. FSB recommendations are not binding but serve as vital guidelines for local regulators and supervisors setting ground rules. More

“The economic outlook remains favourable. While growth is projected to slow down this year to 1.3 percent due to OPEC+ related oil production cuts, it is set to rebound starting in 2024, supported by higher hydrocarbon production and stronger non-hydrocarbon growth,” the Fund added. More

BERLIN (Reuters) – On Berlin’s broad avenues, posters put up by desperate would-be tenants seeking accommodation have become a common sight. Home viewings draw long lines of hopefuls, despite rent rises that have far outstripped salaries in recent years. The German capital, where cheap and abundant apartments were a magnet for artists and young professionals as recently as a decade ago, now has a vacancy rate of less than 1%. The cost and difficulty of renting is making it hard to attract talent and forcing some residents to leave, even though businesses are desperate for skilled labour. And while the local government says Berlin has sufficient space to build over 100,000 apartments, there is no sign the housing crisis gripping the city will ease. Rolf Buch, chief executive of Vonovia, Europe’s largest landlord, cited factors including record-high interest rates and rent controls to explain the chronic mismatch between housing supply and demand. “New construction hardly makes sense for many projects these days, because with 5,000 euros per square metre and 4% interest, someone has to finance it,” he told Reuters. “When I go to the bank, they tell me, Mr. Buch, come back when you’ve done the calculations again, because you can’t even earn interest on the rent.” The surge in borrowing costs has already tipped some German property developers into insolvency. It is also keeping potential home buyers in the rental market, despite a recent easing in house prices after years of rapid growth. With construction projects on hold, the government has announced a 45 billion euro ($47 billion) support package for the sector and measures to encourage house building including tax incentives. But as Europe’s largest economy teeters near recession, economists warn that high rents will feed inflation and reduce household consumption. “Rent increases lead to redistribution of incomes, as the poor pay more and the rich earn more,” said Konstantin Kholodilin of the DIW economic institute.In Berlin, local opposition has frustrated plans to build, while regulation creates a two-tier rental market that is cheap for some long-term tenants and expensive for new renters. Marwa was excited to move from San Francisco to Berlin with her husband and daughter after being offered a job in July as a corporate strategist at a tech company. She backed out after finding that renting a two-bedroom apartment would swallow up more than half her six-figure salary – high in Berlin but less than she was earning in California.”Ninety percent of the reason for not taking the job was how hard it is to find an apartment and the high cost of rentals,” Marwa told Reuters. DIVISIONAbout 85% of Berliners rent their homes, according to the International Union of Tenants – far more than Eurostat’s figures of 53% for Germany as a whole and a European Union average of 30%.In the last seven years, Berlin rents have jumped 44% while the average wage in the city has increased only 30%, federal and local data shows. It hasn’t always been like this. After the 1989 fall of the Berlin Wall the city had a housing glut that lasted decades, the legacy of its division following World War Two. Both West and East German governments poured money into building accommodation, reflecting the city’s place at the centre of competing Cold War systems. “It was a divided city and the whole of Berlin was subsidised,” Buch said. Expectations that a unified Germany’s new capital would grow rapidly saw more building in the 1990s, “but not as many people came as we thought”, said Monika Neugebauer of residential cooperatives association Berlin Wohngenossenschafts. In 2004, the City of Berlin sold its indebted GSW social housing unit and more than 65,000 apartments, many vacant or needing renovation, to Goldman Sachs and private equity firm Cerberus. The city’s population started growing again in 2005, as birth rates and life expectancy rose and migration increased. Foreigners now make up 24% of residents, their numbers having almost doubled between 2011 and 2023, Berlin statistics office data shows. Rising property demand saw private companies develop luxury apartments that offered a higher yield – in part, Buch said, because government permissioning for more affordable housing projects was so slow.Sales of land to the highest bidder further narrowed the scope to build social housing, Neugebauer said. OPPOSITION Some building projects have since faced local opposition while a recent attempt to curb rent increases backfired. In 2014, plans to build 4,700 flats and commercial buildings at the former Tempelhof airport, which closed in 2008 and is now mainly a public park, were rejected in a local referendum. Housing cooperatives, which offer some of Berlin’s most affordable apartments, scrapped two-thirds of their new building projects after the city’s government announced a rent cap, saying it made them unviable. Introduced in February 2020, the cap was declared unconstitutional and scrapped 14 months later. In that time, it lowered rents by 7.8%, data from real estate portal ImmoScout24 shows – but the number of available apartments fell by 30%. “Competition for the flats on offer thus intensified significantly,” ImmoScout24 managing director Gesa Crockford said. A German law that limits how often a landlord can increase prices keeps rents low for long-term tenants compared with new arrivals and gives them little incentive to move. “The asking rents in Berlin are sometimes twice as high, and in some cases three times as high as the existing rents, due to the very limited supply,” said Martin Pallgen, a housing spokesperson for the Berlin government.That in turn means the housing stock is used inefficiently, with growing families squeezed into small apartments and less downsizing by people whose children have left home. Anna Hohnrath, a 27-year-old account manager from Valencia, Spain, moved into her boyfriend’s 36 square metre flat in April as a stop-gap until they could find a bigger space. Their search took eight months, after applying to view more than 100 apartments and having offers rejected on eight. “You start wondering if you are doing anything wrong,” Hohnrath said. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Now that inflation is slowing sharply — even in the UK! — the theory that it was at least partly driven by greedy companies price-gouging customers has faded a little. But some Bank of England staffers have now dug into the UK and European numbers to find out if there is any truth to the “greedflation” narrative.If you can get over Gabja Zemaityte and Danny Walker calling corporate accounts “a novel data source”, there are some interesting bits in the post on the BoE’s Bank Underground blog, based on their sample of over 1,000 large UK and European companies up to the end of 2022. Such as (with Alphaville’s emphasis below):Consistent with previous analysis of aggregate incomes, price indices and business surveys, we find no evidence of a rise in overall profits in the UK — prices have gone up alongside wages, salaries and other input costs. Companies in the euro area are in a similar position. However, companies in the oil, gas and mining sectors have bucked the trend, and there is lots of variation within sectors too — some companies have been much more profitable than others.Here’s what that looks like charted (NB the size of the bubble is proportional to the industry’s economic contribution):In the UK . . .  . . . and in Europe It should be noted that the energy industry’s profitability increase is not massively out of whack with historical norms (and has made little difference to the overall profitability picture in Europe at least).However, as the University of Massachusetts’ Isabella Weber and others have noted, there is something special about energy inflation, given how energy is an input in virtually every other industry. In a 2022 paper she and Jesús Lara Jauregui, Lucas Texeira and Luiza Nassif Pires showed that things like oil, gas, utilities, housing and agricultural prices were “systemically significant” for their ability push up the prices of everything else. And of these, energy prices were by far the most powerful.So it’s possible that most companies are innocent of the “greedflation” charge, but somewhat higher profit margins of oil and gas companies (on top of the huge run-up caused by Russia invading Ukraine) rippled through the entire economy? More

The global economy is forecast to grow 2.9% this year, a Reuters poll showed, with next year’s growth seen slowing to 2.6%.Most economists expect the global economy to avoid a recession, but have flagged possibilities of “mild recessions” in Europe and the UK.A soft-landing for the United States is still on the cards, although uncertainty around the Federal Reserve’s monetary tightening path clouds the outlook. China’s growth is seen weakening, exacerbated by companies seeking alternative cost-efficient production destinations.Following are forecasts from major global banks:Real GDP growth forecasts for 2024 GLOBAL U.S. CHINA EURO UK INDIA AREA 2.60% 2.10% 4.80% 0.90% 0.6% 6.3% Goldman Sachs 2.80% 1.90% 4.20% 0.50% 6.4% Morgan -0.1% Stanley UBS 2.60% 1.10% 4.40% 0.60% 0.6% 6.2% Barclays 2.60% 1.20% 0.1% 0.30% 4.40% 6.2% U.S. inflation (annual Federal funds Y/Y for 2024) target rate (Dec ’24) Headline CPI Core PCE Goldman Sachs 2.40% 2.60% 5.13% Morgan Stanley 2.10% 2.70% 4.375% UBS 2.70% 2.75% Wells Fargo 2.50% 2.60% 4.75%-5.00% Barclays 2.70% 5.25%-5.50% The Fed’s main rate currently stands at 5.25%-5.50% S&P 500 US 10-year EUR/USD USD/JPY USD/C target yield NY target Goldman Sachs 4700 4.55% 1.10 150.00 7.15 Morgan Stanley 4500 1 140 7.5 UBS 4600 3.60% 1.15 130 7.15 Wells Fargo 4600-480 1.08-1.1 136-140 0 4.75%-5.2 2 5% Barclays 4.25% 1.09 145 7.20 As of 1040 GMT on Nov. 16, 2023:S&P 500: 4502.88US 10-year yield: 4.5019%EUR/USD: 1.084USD/CNY: 7.248USD/JPY: 151.27 More

BUENOS AIRES (Reuters) – Argentina’s Peronist Economy Minister Sergio Massa may be about to pull off a political miracle: win a presidential election despite being at the helm of the country’s worst economic crisis in decades and with inflation nearing 150%.The 51-year-old political wheeler-dealer pulled off an unexpected first place in the South American country’s first-round vote in October and is neck-and-neck with libertarian rival Javier Milei ahead of Sunday’s run-off, something unthinkable just months ago when the government looked dead and buried.The lawyer, a moderate who is seeking to revive and reshape the Peronists from the ashes of crisis, has been on an all-out charm offensive, luring voters with tax cuts and reaching out across the political aisle, pledging a unity government.”He is a tireless worker, in dialogue with everyone,” said Malena Galmarini, president of state water utility AySA, a Peronist activist and Massa’s wife.”He knows the state like few others and that is why he is the most qualified to govern a new stage for Argentina.”Massa does, however, have major baggage. Some 40% of the population is in poverty, a $44 billion program with the International Monetary Fund (IMF) is on the rocks and a recession is looming.Economy minister since last year, Massa has also been unable to tame inflation – now at its highest since 1991, and still rising – but has played up the Peronists’ track record of protecting welfare payments and subsidies that keep utilities and transport costs low, while warning prices could jump further under Milei.That tactic helped him come top in the October first round by almost seven points, beating pollster predictions, and could help him again on Sunday despite Milei winning the support of some key conservative backers.Graciela Roldan, 40, an administrative employee in Buenos Aires, said that she would vote for Massa and that he offered protection from “an evil being that is threatening our rights”.”If he manages to position himself as a defender of the people and the middle class, as he has been doing with his latest measures, he can be a icon and Peronist leader in the search for social equality,” she said.POLITICAL CHAMELEON?Massa’s biggest win so far has been to unite a Peronist coalition that was on the verge of falling apart, as supporters of moderate President Alberto Fernandez fought with the leftist wing around powerful Vice President Cristina Fernandez de Kirchner.He got the backing of the full coalition, but has distanced himself from unpopular Fernandez and divisive former two-term leader Kirchner, pledging something new to angry voters.”Massa is the least Peronist of the Peronists,” said analyst Julio Burdman from the Electoral Observatory, adding his “malleability” was his biggest strength to win moderate votes.Massa’s critics contend he is a “pancake” – easily flipped.A career politician, Massa was chief of staff in the first Kirchner term, but then clashed with her and left to set up his own political party. He later returned to Peronism, although his back-and-forth has led some in the movement to distrust him.Argentine Foreign Minister Santiago Cafiero told Reuters Massa would establish his own style of leadership if elected, and for now had unified the coalition to face the election.ECONOMY ON VERGE OF COLLAPSEThe son of Italian immigrants, Massa studied at a Catholic school in the suburbs of Buenos Aires, where he became active in Peronism after spending time in a conservative political party.He was elected as a provincial deputy when he was only 27 years old, before going onto roles including as mayor of Tigre, an important suburb north of Buenos Aires.Those who know him highlight his ability to achieve consensus.”He is a person who works a lot on the relationships. He doesn’t just talk to his own people, but also to those who think differently, he talks to practically the entire opposition,” said an adviser who has worked with him for decades and asked to remain anonymous.Agustin Rossi, running for vice president on Massa’s ticket, previously told Reuters Massa had shown guts by taking on the economy role and “steering the ship” at a very tough time. “In Peronism, that is highly valued, not running away from difficulties,” he said.The economic malaise, nonetheless, could hurt him at the polls – and afterwards, if he were to triumph. “The economy is on the verge of collapse,” said Benjamin Gedan, director of the Wilson Center’s Latin America Program. “Massa’s charm is no match for hyperinflation.” More

The findings, issued today, underscore the urgent need for financial institutions to enhance their IT and cybersecurity frameworks. The ECB’s report highlighted not only the sharp rise in losses but also a notable increase in IT spending on outsourced cloud services, which jumped by 56% last year, now representing 3.1% of the total IT expenditure.This financial upheaval is attributed to high-volume events that exposed significant vulnerabilities in the banks’ risk management with service providers. The ECB’s inspection revealed that many banks failed to meet IT security expectations, often falling short in identifying potential risks or establishing adequate incident response systems.The ECB’s stern warning signals a financial reckoning for the sector and emphasizes the need for an immediate and comprehensive overhaul of cybersecurity strategies. The central bank has issued recommendations for immediate improvement to meet supervisory expectations, urging banks to take swift action to rectify these fundamental shortcomings.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More