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BUENOS AIRES (Reuters) -Argentines began voting on Sunday in a national election that a far-right libertarian appears in pole position to win, propelled from radical outsider to front-runner by fallout from the country’s worst economic crisis in two decades.Polling stations opened at 8:00 am (1100 GMT) in a ballot that is likely to roil financial markets, set a new political and social path for the nation – a major grains exporter with huge reserves of lithium and shale gas – and impact its ties with trade partners including China and Brazil.Libertarian economist Javier Milei is one of three candidates likely to split the vote, and the man to beat after posting a shock win in open primaries in August.Centrist Peronist Economy Minister Sergio Massa and conservative Patricia Bullrich are tipped to trail him by a small margin, and pollsters expect no outright winner, meaning a runoff vote will be needed.Milei, pledging to “chainsaw” the economic and political status quo, has seen angry voters flock to his tear-it-all-down message, fed up with annual inflation at close to 140% and poverty affecting over two fifths of the population.”Milei is the incarnation of all society’s demands,” said Juan Luis González, who wrote a biography of him titled “El Loco”, meaning the crazy one. He thinks Milei, a brash former TV pundit likened to Donald Trump and former Brazilian President Jair Bolsonaro, will win despite being an “unstable” character who could damage Argentina further.”I see a very worrying situation,” González said.SHOCK THERAPYTo win outright on Sunday, a candidate will need over 45% of the vote or 40% and a 10-point lead over rivals. Polls will close around 6:00 p.m. (2100 GMT) and first results are expected at 9:00 p.m. (00:00 GMT).Any run-off would be held on Nov. 19. Whoever of the trio emerges victorious will have to deal with an economy on life support: central bank reserves are empty, recession is expected after a major drought, and a $44 billion program with the International Monetary Fund (IMF) is wobbling.Milei’s recipe of shock therapy includes pledges to dollarize the economy, shut the central bank, slash the size of government and privatize state entities. He has criticized China, favors looser gun laws, opposes abortion and is anti-feminist.”He is the only one who understands the situation in the country and understands how to save it,” said Buenos Aires student Nicolas Mercado, 22.Massa, current economy chief, is in the running despite overseeing inflation hitting triple digits for the first time since 1991. He has said he will cut the fiscal deficit, stick with the peso and defend the Peronist social welfare safety net.”Massa represents certain traditional guarantees with which I was raised: public health, state education, which is what I want to defend with my vote,” said astrologer Flavia Vázquez.Bullrich, a former security minister who is popular in business circles, has seen her support diluted by the unexpected emergence of Milei. Pollsters see her as the most likely of the top three runners to miss out on a second round.”I voted, I’m really happy. Democracy is the best system,” 69-year-old Emilio Betesh at a polling station in Buenos Aires on Sunday morning. “I think there will be a run-off, between Milei and someone. Who? I don’t know. Let’s see what happens.” More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.How will the ECB respond to bond market turmoil?The European Central Bank will meet in Athens this week as borrowing costs for eurozone governments reach their highest level since a debt crisis threatened to destroy the single currency more than a decade ago.The ECB was already widely considered likely to leave interest rates unchanged at Thursday’s meeting, halting what has been an unprecedented tightening of monetary policy to tackle the biggest surge in European inflation for a generation.The recent bond market sell-off, driven by stronger than expected US economic data and a belief that interest rates will stay higher for longer, has reinforced expectations of an ECB pause because it tightens financial conditions by an extra few notches.As ECB policymakers take a break from raising rates — at least for now — they are turning their attention to other matters, such as the €3.7tn of excess liquidity the central bank holds on deposit from commercial banks, an increasingly expensive liability given how much rates have risen.Several ideas have been floated to address this, from an earlier start to the process of shrinking the central bank’s balance sheet by reducing the size of its bond portfolio, to raising the minimum deposit requirements of commercial banks on which they receive no interest.However, given the turmoil in bond markets, some ECB governing council members have told the Financial Times this month that the former idea is unwise while the latter is unnecessary to bring inflation down to target and should be left to a wider operational framework review next year.Peter Schaffrik, global macro strategist at RBC Capital Markets, said the ECB was “unlikely to make changes to any of these measures at its meeting next week” — including the interest it pays on government deposits — but he is watching for any clues on its “future intentions”. Martin ArnoldDid US economic growth pick up in the third quarter? US economy growth is expected to have accelerated in the third quarter, despite the impact of the Federal Reserve’s aggressive interest rate raising campaign. The Bureau of Economic Analysis on Thursday is forecast to report that US gross domestic product grew at an annualised pace of 4.1 per cent in the three months to September, according to a Reuters poll of economists. That would mark a sharp increase from the 2.1 per cent in the second quarter.Economists and analysts have been betting for months that the Fed’s interest rate increases — which lifted the central bank’s key rate from near-zero to a range of 5.25 to 5 per cent in less than two years — would soon begin to curb growth. There has been little evidence of that so far, however, despite a slowdown in some segments of the economy such as the housing sector. Data from the commerce department this week showed that September retail sales data was far stronger than expected, increasing by 0.7 per cent. That is expected to have fed through to higher GDP, analysts say. Retail sales and recent higher-than-expected inflation data “has led us to raise our forecast for third-quarter real GDP growth to 5 per cent versus the second quarter’s 2.1 per cent”, wrote Tiffany Wilding, an economist at Pimco. “This fast pace underscores strength in the US economy, including in the labour market, reinforcing the challenge policymakers face as they look to cool the economy in their fight against sticky inflation.” Kate DuguidHow strong is the UK labour market?Investors will look at incoming UK jobs data to understand the extent of the impact of higher interest rates on the economy and price pressures. On Tuesday, the Office for National Statistics will publish employment figures after the publication was postponed last week on the back of quality concerns following diving participation rates in their survey.Economists polled by Reuters forecast that the unemployment rate will remain at its 22-month high of 4.3 per cent in the three months to August. Together with an easing in wage growth revealed by data published last week, the figure should reinforce the view that the tightness of the labour market — which has added to inflationary pressures — is waning.However, the Bank of England is putting less weight on the ONS’s earnings and labour market figures. At September’s meeting, BoE policymakers noted that alternative measures of pay were running at levels below the official data, and this was one factor that resulted in its narrow decision not to raise its benchmark interest rate from 5.25 per cent.The central could also be wary of business activity data for October which is also published on Tuesday. September’s preliminary figures suggested the UK was entering a deep recession, only to be revised to much healthier levels in the final reading. “[The figures] may now be taken with a pinch of salt,” said Sandra Horsfield, economist at Investec. She added that the BoE’s decision to keep rates unchanged in September was by a razor-thin majority of five to four and “one has to question whether the same decision would have been made had there not been such a gloomy flash services PMI estimate.”Horsfield expects the composite purchasing managers’ index to fall marginally to 48.3 in October, driven by a sharper slowdown in services activity as higher mortgage payments and rental costs hits consumer demand. Manufacturing is also expected to remain in contraction. Valentina Romei More

The Office for National Statistics (ONS) anticipates a 4.3% unemployment rate in the UK, following a delay in specific labor data due to reduced Labour Force Survey responses. The unemployment rate announcement will be closely watched by investors, given its potential impact on market sentiment.Global Purchasing Managers’ Indexes (PMIs), including those from Australia, Japan, Eurozone, UK, and the US across both manufacturing and services sectors, are also due to be released this week. Any unforeseen downturns in these PMIs could sway market reactions, particularly in light of rising long-term yields.Additionally, data on Australia’s Consumer Price Index (CPI) and Producer Price Index (PPI), as well as the German IFO business climate index, will provide further insight into the health of these economies. The United States will release its GDP data for Q3 along with Durable Goods Orders, Jobless Claims, and Core Personal Consumption Expenditures (PCE). These figures can have a significant effect on investor sentiment and market movements.Meanwhile, Tokyo’s CPI data and Eurozone’s Manufacturing PMI will also be released, providing additional context for global economic conditions. Overall, this week’s economic calendar presents several key events that could drive market activity and investor decisions.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

Morgan Stanley’s upgrade comes as India’s economic growth, primarily driven by its burgeoning manufacturing sector, continues to garner attention from international economists and brokerages. Amidst the evolving dynamics of a multipolar world, India has emerged as Morgan Stanley’s top pick among emerging markets.This upgrade has sparked a surge in domestic capital inflows, stimulating both Foreign Direct Investment (FDI) and portfolio investments. Furthermore, Indian equities have earned the highest spot in Morgan Stanley’s global equity investment ranking with a score of 68, outpacing Singapore, Greece, Mexico, and Poland.From 2021 to October 2022, India has led the MSCI Emerging Markets index by 45.5% in USD terms. This performance is indicative of India’s strong position within the global economy and its potential for continued growth.Looking ahead, Morgan Stanley predicts that India’s relative Earnings Per Share (EPS) will substantially outperform other emerging markets. This forecast is based on India’s low correlation and revenue dependence on the US and China. The firm’s assessment suggests that India’s economic trajectory is on an upward trend, bolstered by its robust macro-stability setup capable of sustaining a higher real rate environment.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

ROME (Reuters) – Weak economic growth and high interest on the country’s huge debt are the main problems facing Italian Prime Minister Giorgia Meloni after her first year in power, an anniversary marked by an abrupt announcement she was leaving her long-time partner.Meloni’s coalition, the first led by a woman in Italy’s history, was sworn in a year ago after a sweeping election victory and will soon cruise past the 14-month average postwar term life for Italian governments.It was seen on taking power as the country’s most right-wing since wartime dictator Benito Mussolini, as Meloni’s Brothers of Italy party traces its roots to the post-fascist Italian Social Movement (MSI).Yet Meloni, 46, set about quelling foreign concerns of possible extremism, forging good ties with allies by adopting a strongly pro-Western, EU-friendly stance and pledging staunch support to Ukraine in its war with Russia.At home she pleased her rightist grassroots through measures to defend the traditional family, protect Italy’s cultural heritage and try to stem migrant arrivals.”We have worked tirelessly to repay the trust and to demonstrate with facts that it was possible to build a different Italy,” she said in a video message this week.However, an economic rebound from the COVID-19 pandemic has ground to a halt, with gross domestic product contracting by 0.4% in the second quarter, and analysts forecast Italian growth will be among the lowest in the euro zone next year.That makes it harder for Meloni to keep her tax-cutting promises and makes Italy’s debt, equal to 140% of national output, vulnerable to market sell-offs.”The economy is probably the toughest subject. The government has low margins in which to operate,” said Valentina Meliciani, an economics professor at LUISS university in Rome.Last week Meloni weathered the first of several reviews on Italy’s debt when S&P Global Ratings confirmed the country’s BBB rating with a stable outlook.However, the prevailing view among analysts is that the rating agencies will worsen Rome’s outlook while avoiding outright downgrades.Meloni also has personal problems to deal with. She announced on Friday she was separating from her long-time partner, TV presenter Andrea Giambruno, after he repeatedly sparked outrage for sexist comments made on and off-air.TAX CUTSThis month the government approved a 2024 budget with around 24 billion euros ($25.3 billion) of tax cuts and increased spending, despite a public debt that is proportionally the second highest in the euro zone after Greece’s.The budget has not impressed investors, and exacerbated a long-running rise in Italian bond spreads. The gap between yields on Italian 10-year bonds and the German equivalent is hovering around 2 percentage points (200 basis points), far higher than for any other euro zone country.Meliciani said Italy’s hopes of reviving its economy and cutting debt were strongly dependent on effective implementation of investment plans financed through EU post-COVID funds.So far Rome has struggled to meet Brussels’ policy conditions and to spend the money it has received.On the international front, as well as her backing for Ukraine Meloni has largely avoided confrontation with Brussels despite her eurosceptic past.She has also dropped the calls she used to make in opposition for a naval blockade to prevent boats leaving north Africa, despite her inability to halt the influx of migrants.Arrivals on Italy’s coasts have surged to more than 140,000 so far in 2023, nearly double the same period last year.”We expected Italy to be very tough (on immigration) at the EU level but we have seen a conciliatory attitude overall, they are working to find a common line,” said Enzo Moavero Milanesi, a former foreign affairs minister.COMMANDING POSITIONAt home Meloni has so far avoided the domestic political chaos that dogged so many of her predecessors.A divided opposition has helped her tighten her grip on power and keep her party at the top of the polls, with nearly 30% of voter support, against around 18.5% for the centre-left Democratic Party (PD) and 17% for the maverick 5-Star Movement.Her party dominates its coalition allies, the League and Forza Italia, whose combined score remains below 20%.Analysts believe a slice of centre-right voters switched to Meloni from the other two parties and are unlikely to shake the balance of power within the coalition by changing back again.”Meloni came after a decade of political instability and voters floating across the party spectrum. The country looks now tired of this,” said historian and politics expert Giovanni Orsina. ($1 = 0.9476 euros) More

“When you give roses to others, their fragrance lingers on your hand,” Xi Jinping told guests at the 10th anniversary celebration of his Belt and Road Initiative in Beijing last week. “Helping others is also helping oneself.” Even as China’s president played the exuberant host, welcoming world leaders from Russia’s Vladimir Putin to Indonesia’s Joko Widodo at the Great Hall of the People, an undercurrent of geopolitical animosity directed at the US was evident. He did not mention Washington by name, but when he said that “ideological confrontation, geopolitical rivalry and bloc politics are not a choice for us”, the target of his comment was clear.  For Xi, the two-day forum to celebrate the flagship $1tn global infrastructure initiative — the biggest multilateral development programme ever undertaken by a single country — was a chance to further embed China’s influence across the developing world. Dignitaries from countries that have received investment under the programme also lavished praise upon it. “The Americans spent $6tn on the so-called war on terror and the Chinese in the last 10 years spent $1tn on 3,000 projects all over the world,” says Mushahid Hussain Sayed, chair of Pakistan’s senate defence committee. “So that’s the difference,” he adds. “They [the Americans] were security-centric, military-oriented. The Chinese are economic centric, development-oriented.”Wang Yi, China’s foreign minister, also threw down the gauntlet to the west. Namechecking supposed alternatives to the BRI, the US “Partnership for Global Infrastructure” and the EU’s Global Gateway programme, Wang said he was confident in Beijing’s abilities.“Some say that these . . . initiatives can compete,” he told reporters. “Maybe we could have a competition globally about who can build more roads, railways and bridges for developing countries, who can build more schools, hospitals and sports stadiums for the ordinary people in low-income countries,” Wang said.“We have the confidence that we are able to deliver,” he added.Yet over the course of a decade, China’s initiative to finance and build infrastructure in mostly poorer countries has attracted a chorus of criticism. Many projects have been mothballed, others have resulted in developing countries building up unsustainable debts and corruption has besmirched the programme’s image.China’s capacity to deliver large infrastructure projects has never been in doubt. But the questions that critics of the BRI, who are mostly outside China, are asking is whether the project has been worth the tremendous cost and whether it can continue to operate as it has in years to come.The BRI scorecardFor China, the BRI has won valuable overseas business for its large state-owned enterprises and strengthened diplomatic ties with the countries in the so-called global south. Those links have in turn increased China’s influence within other international organisations such as the UN and allowed it to advance Xi’s political vision for the world.Recipient countries such as Pakistan find themselves able to finance projects they could never have dreamt of under old-style foreign bilateral or multilateral aid programmes, from power plants to high-speed data networks. But critics say the projects can become a debt trap and increase the economic dependency of many states on Beijing. Xi Jinping and Vladimir Putin wave with other leaders as they take part in an international forum on China’s Belt and Road Initiative at the Great Hall of the People in Beijing last week More