Economy

WASHINGTON (Reuters) -The head of the International Monetary Fund on Sunday welcomed a long-awaited debt deal by Chad’s creditors and said it would reduce the African country’s risk of debt distress while guarding it against downside risks, including lower oil prices.”We have been waiting for this day,” IMF Managing Director Kristalina Georgieva said in a statement.She said the debt treatment agreed by the creditors was consistent with the objectives of Chad’s IMF-supported program, and should pave the way for completion of the first and second reviews that would enable disbursement of IMF funds.Chad on Friday said it had reached a debt agreement with Swiss commodities trader Glencore (OTC:GLNCY) Plc and other creditors. Sources said the deal called for some debt relief in 2024 in the form of a reprofiled debt service schedule, but added that it would not reduce Chad’s overall debt level.The announcement drew criticism from World Bank President David Malpass, who said he remained deeply concerned about Chad’s longer-term ability to pay its $3 billion in external debts, given the absence of actual debt reduction.Sources familiar with the agreement said it would protect Chad if oil prices dropped again, while restoring confidence and opening the door to fresh resources. But they agreed that Chad’s overall development needs were immense and eclipsed its external debt.Creditors, including Glencore, concluded there was no current financing gap, given a rise in oil prices that had buoyed the revenues of the oil-producing country, but agreed to reconvene if the price changed. They also agreed, contingent on oil prices and other factors, to stretch out debt-service payments beginning in 2024 to ensure that Chad’s debt-service-to-revenue ratio fell below 14% in 2024 from the current level of 20%. After 2025, the ratio would be required to drop to 12.4%, said the sources.The automatic mechanism would protect Chad if oil prices fell again, eroding revenues, they said. It was also needed to ensure continued IMF lending, which is possible only if a country is under the threshold for moderate risk for debt distress. The agreement should pave the way for Chad to receive $145 million in funding from its IMF program, once the board approves the first and second reviews, probably around Dec. 22.That should help unlock hundreds of millions of dollars of additional funds from the World Bank and bilateral lenders. More

LONDON (Reuters) – Asking prices for British residential properties are dropping and there are signs that the fallout from the “mini-budget” bond market rout is weighing on first-time buyers, property website Rightmove (OTC:RTMVY) said on Monday.Asking prices for homes dropped 1.1%, or by 4,159 pounds ($4,886.41) month-on-month in the Oct. 9 – Nov. 5 period, after a 0.9% rise over the previous month, Rightmove said.The decline – despite the “weight of financial uncertainty” – was in line with the average fall recorded in November during the pre-pandemic years of 2015-2019, it said.But Rightmove said former prime minister Liz Truss’s growth plan, which triggered a steep rise in borrowing costs when it was announced in September, accelerated Britain’s property market slowdown.Average two- and five-year fixed rate mortgages surpassed 6% in October for the first time since the global financial crash in 2008, according to data from website Moneyfacts.Rates have since eased back after the announcement of Rishi Sunak as prime minister calmed financial markets. “We’re now in another state of limbo as we wait for any surprises or help in Jeremy Hunt’s Autumn Statement on Thursday,” Tim Bannister, director of property science at Rightmove said.Finance minister Hunt is expected to announce spending cuts and tax increases to repair Britain’s public finances and restore its credibility among investors.”The frenzied market of the past two years has turned into a more normal market more abruptly and less smoothly than we were expecting,” Bannister said.First-time buyer homes continued to be the most affected category, with demand down by 26% compared with a year earlier but still up 7% on the same period in 2019.”The first-time buyer sector saw the biggest increase in activity during the market frenzy of the past two years, but is now facing the biggest challenges after the sudden jump in mortgage interest rates,” Rightmove said.In annual terms, property prices were up 7.2% in November, slowing from a rise of 7.8% the month before.($1 = 0.8511 pounds)The survey echoed other recent signs of a weakening of Britain’s housing market including a first fall in two years in the property price measure of the Royal Institution of Chartered Surveyors. More

Finance minister Jeremy Hunt is due to set out a raft of spending cuts and tax rises at a budget statement on Thursday as he seeks to show Britain can fix a hole in its public finances.The CBI said not matching those with measures to tackle labour shortages and productivity, at a time when many businesses are drawing up their 2023 budgets, would likely be damaging in the short and long term. “Changes to immigration, regulation and planning are now critical levers to get firms to invest but will require the government to make political sacrifices,” the CBI said, setting out a series of policy proposals which it acknowledged many in the governing Conservatives would find hard to support.These include being more flexible on immigration including for occupations dogged by labour shortages, and adding student and graduate visa routes and visas linked to specific economic projects.It also called on the government to streamline “the slow and inconsistent planning system”, and speed-up decision-making for major developments. Hunt’s predecessor Kwasi Kwarteng and former prime minister Liz Truss had promised supply-side reforms to boost growth but did not manage to set them out before being forced from office by financial market turmoil sparked by their package of unfunded tax cuts and new public spending.”All of us need to accept now that with fiscal and monetary policy tightening, we need many more pro-growth policies for our economy, if we’re to avoid a decade of no growth,” CBI Director-General Tony Danker said in a statement.Danker said that if Hunt’s plan for growth was only “warm words and aspirations” it wouldn’t stop businesses pulling back from investment. “It must tackle the real barriers we face right now,” he said. “We need to make the UK an attractive place to invest.” More

A U.S. free trade deal was touted as the one of the biggest prizes for Britain leaving the European Union. But hopes of a quick agreement were dashed when the incoming Biden administration put all free trade talks on ice.Badenoch’s office said she would emphasise the need to promote strong trading alliances to challenge the threat of authoritarian states. She will also say Britain and the United States should work together on issues such as protecting long-term energy security and strengthening supply chains.”Both the UK and the U.S. know we cannot have security at home without security abroad, and we need to make the global economy resilient to future shocks,” Badenoch said in a statement.The British trade department said Badenoch was due to meet with politicians, including U.S. Treasury Deputy Secretary Wally Adeyemo, and speak at a business roundtable event.In the absence of a broader trade deal with the United States, Britain has been working to secure memorandums of understanding with individual states.Agreements were signed with Indiana and North Carolina earlier this year and talks are ongoing with several other states including Oklahoma, South Carolina, Texas and Washington.The state-level MOUs have been criticised by the opposition Labour Party as being no substitute for a full U.S.-UK trade deal. More

The writer is senior economist for emerging Asia at Natixis Corporate & Investment BankingFrom Joe Biden to Xi Jinping, global leaders are being drawn to south-east Asia for three large international events: the G20 summit in Indonesia, the Asean meeting in Cambodia and the Apec gathering in Thailand.Pressing global issues such as climate change and inflation are on the agenda but building ties to south-east Asia is in itself very much a prize for competing global superpowers and even middle ranking ones such as South Korea and Australia. South-east Asia is the diplomatic and business friend that everyone needs. This is not just to diversify supply chains, but also to seek out growth opportunities as hurdles that range from tariffs to investment curbs affect business between the US and China. Investors should take note and follow suit.The 10-member, 680mn-people association together accounts for 3.4 per cent of global gross domestic product and 7.7 per cent of global export share. The six largest economies in Asean — Indonesia, Thailand, the Philippines, Singapore, Malaysia and Vietnam — are far from fragile from shocks such as the global energy crisis, a higher dollar and weakening Chinese demand. They are seeing strong economic growth and foreign direct investment inflows are surging in a difficult global environment. Singapore is gaining ground in financial services and high-tech, Vietnam and Malaysia are receiving more FDI inflows into manufacturing, and Indonesia is receiving record-high investments to tap into its mineral resources, especially nickel. Beyond greenfield investment, south-east Asia was the largest recipient of completed mergers and acquisitions in Asia in the first half of 2022, receiving 56 per cent of total inbound flows. Inbound transactions in Indonesia alone were two times greater than for mainland China. Interestingly, it is not just the west that is deploying more capital to Asean, but also China, which has reduced offshore M&A deals elsewhere.With Cambodia’s GDP per capita as low as $1,612 in 2021 and Singapore as high as $64,840, the region’s diversity in not just economic development and capital markets but also governance, language, culture and natural resources have traditionally been seen as a weakness. But Asean’s humility not just in respecting each other’s sovereignty but also in global affairs has become an advantage in an age of global power competition.Asean is also receiving geopolitical support to expand market access. Vietnam’s signing of a free trade agreement with the EU in 2019 catapulted the country’s attractiveness further — not just for EU companies but also Chinese groups wanting access to reduced tariffs. Singapore also has an EU FTA and others are under negotiation with countries such as Thailand. But it is not just the EU. From South Korea to Japan and the US to China, countries are increasing exposure to Asean.That is not to say Asean itself cannot be a source of risk for investors, from messy domestic politics in Thailand and Malaysia to Covid-19 lockdowns in the third quarter of 2021 that shook global footwear, electronic and semiconductor supply chains. There are also longstanding challenges such as the South China Sea, the protection of natural resources along the Mekong River and the deteriorating situation in Myanmar. However, the region’s resilience is improving. The Asian financial crisis and market turmoil over a rise in US interest rates in 2013 taught Asean to beef up its defences. Exposure to foreign ownership of portfolio flows has largely been reduced, especially by Indonesia. The country is now emerging as the most resilient economy in Asia-Pacific, facing global shocks with one of the best currency and equity performances in the year to date. Vietnam, having learnt lessons from its 2011 banking crisis, is reining in real estate excesses. While this will probably lead to a downturn of the sector, it will boost sustainability down the road. Thailand is trying to diversify its economy away from tourism. Major Asean economies are now led by more competent technocrats in finance ministries and central banks, helping the region navigate this present crisis better than other emerging markets. Yet, despite this new resilience, the aftershock of higher interest rates, weaker global demand and the energy crisis will still push 2023 growth rates down from higher levels in 2022. Nonetheless, even with a cyclical downturn expected in 2023, south-east Asia is emerging as both a winner and a prize in the geopolitical contest for investment and trade. More

Markets should now pay attention to the “endpoint” of rate increases, not the pace of each move, and that endpoint is likely still “a ways off,” Waller said in response to a series of questions on monetary policy at an economic conference organized by UBS in Australia. “It depends on inflation.””We’re at a point we can start thinking maybe of going to a slower pace,” Waller said, but “we’re not softening…Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there.”A report released last week showing slower than expected inflation in October was “good news,” but was “just one data point” that would have to be followed with other similar readings to show convincingly that inflation is slowing, he said.The 7.7% annualized increase in inflation recorded in October is still “enormous,” Waller said, noting that even if the Fed scaled back from three quarter point increases to a half point increase at its next meeting, “you’re still going up.””We’re going to need to see a continued run of this kind of behavior and inflation slowly starting to come down before we really start thinking about taking our foot off the brakes,” Waller said, adding that he has been further convinced the Fed is on the right path because its rates increases so far have not “broken anything.”The Fed has raised rates a total of 3.75 percentage points this year beginning in March, including four three quarter point increases, a rapid shift in monetary policy aimed to cool the worst surge of inflation since the 1980s. “For all the talk of crashing the economy and breaking the financial markets. It hasn’t done that,” Waller said.Analysts and economists have warned that the monetary tightening will further the risk of recession, impacting employment. U.S. Senate Banking Committee Chair Sherrod Brown last month urged the Federal Reserve to be careful about tightening monetary policy so much that millions of Americans already suffering from high inflation also lose their jobs. More

Expal is a subsidiary of Spanish company Maxam, owned by private equity firm Rhone Capital. The deal, expected to close in 2023, is subject to approval by the competition authorities and other regulatory checks and is likely to face strong scrutiny.Expal is a provider of weapons to the Spanish army, and the Spanish government in 2020 introduced an authorization process for the acquisition by a foreign company, including EU-based companies, of stakes larger than 10% in companies considered to be strategic. With the acquisition, Rheinmetall said it aims to bolster its core weapon, ammunition and propellants business.Rheinmetall said Expal Systems expects sales in 2023 of around 400 million euros.A spokesperson for Expal confirmed the deal but gave no further comment. Expal has a workforce of more than 1,000 employees and 11 production sites and is present in over 60 countries. ($1 = 0.9660 euros) More

Hello and welcome to the working week.It is not often that two heads of western powers celebrate a birthday in the same week. Even more rare that both are in their eighth decade. Should we celebrate that age is clearly now no barrier to such leadership jobs? King Charles III turns 74 on Monday, and will be honoured with a 41-gun salute and a rendition of “Happy Birthday” at Buckingham Palace’s changing of the guard. But US president Joe Biden passes a more significant milestone, turning 80 on Sunday. He also has a more pressing week of international diplomacy and national politics to deal with before blowing out the candles on his cake.First, there is the G20 summit in Bali, or what one FT colleague labelled the first global government gathering of the second cold war. Russian president Vladimir Putin is not attending, but China’s Xi Jinping is expected to, so there will be pressure for Biden to speak with him.At home, there is the small matter of Donald Trump’s widely trailed “very big announcement” on Tuesday from his Mar-a-Lago estate in Florida.This is also the week for the Asia-Pacific Economic Cooperation (Apec) summit in Thailand, bringing together 21 countries in the region, the first such face-to-face gathering since 2018. Again the US, China and Russia are invited, and again Putin will not be there. France’s President Emmanuel Macron will be in attendance, however, as he has been invited to speak on global trade ties.Fixing a holeAcross the Atlantic in the UK, where potential festive roasts are having a particularly miserable season, the most important diary date is chancellor Jeremy Hunt’s financial statement on Thursday. The country is in a “fiscal hole” (not my phrase, Hunt’s) and the chancellor’s plan is to find about half the required £55bn shortfall in public spending cuts, with measures including a delay on social care reforms, a freeze in income tax thresholds and a stealth raid on inheritance tax.The FT’s parliamentary and economics team will be on hand to translate the politicians’ words and find the key points buried in the Treasury documents. Read this explainer to understand why the UK needs to act urgently. And if you think you can do a better job than the chancellor, knock yourself out with our “fill the black hole” interactive.Sticking with UK politics, Nicola Sturgeon will on Monday complete eight years as leader of the Scottish National party. She got the job when her predecessor and mentor Alex Salmond resigned in the wake of the 2014 independence referendum. While Westminster is cutting central government spending, Holyrood is enacting its own austerity drive. Will Sturgeon’s milestone spur an assessment of her record as first minister at Holyrood?The UN climate change conference COP27 draws to a close on Friday, but then (on Sunday) we have the start of something that will most likely grab world news as well as sports page headlines for the next month — the Fifa World Cup Qatar 2022. To say this is likely to be a contentious tournament would be something of an understatement — read our magazine reportage here. The FT will be on hand to provide comprehensive coverage. Finally, we have more elections. Malaysia goes to the polls on Saturday. The Nepalese will vote for parliamentary and provincial government seats on Sunday and the FT’s sister title Nikkei Asia has produced this handy guide to the key points. Kazakhstan’s general election on Sunday is worthy of note because it represents the most significant constitutional change for the oil rich central Asian country since it declared independence from the former Soviet Union.How is your week looking? Need more information? Hit reply or email me at [email protected] dataThere are some potentially important data releases next week from the US, namely producer price index inflation rate numbers, retail sales figures and further updates on the wobbling US housing market.The UK’s big economic event is the Autumn Statement, but before that, UK unemployment data will be updated on Tuesday. The British government has been focusing attention on their record here because it’s one of the only good news stories for them. However, it’s not that great. The UK will be the only developed economy with employment still below pre-pandemic levels at the start of 2023, according to new analysis. Another “winter of discontent” is also looming as a range of workers — nurses are the latest — demand pay rises in line with inflation.Then on Wednesday comes more inflation data with concern that the consumer price index measure will remain in double digits. The week will end for the UK with an update on retail sales, although hopes are not high given gloomy predictions of the country entering recession.The cost of living will also be a focus for the EU this week, with inflation data out on Thursday. There will also be a third-quarter gross domestic product estimate on Tuesday.CompaniesThe words “Elon Musk is due to grab headlines again this week” could be written here any time of the year, but this week an outburst is in the diary. This time it is over his $56bn pay package at Tesla. A court in Delaware, where the electric vehicle maker is registered, will hear the complaint brought by a shareholder. Vodafone, which reports interim results on Tuesday, has been under pressure to overhaul its operations. Shareholders will be looking at the amount the company has been able to cut debt after the announcement of the sale of a stake in its mast business Vantage last week.Fashions change and so do senior management teams as British brand Burberry has discovered this year. Investors will be eager to see what newish chief executive Jonathan Akeroyd has come up with to boost growth when the company reports first-half figures on Thursday. Analysts expect he will focus on improving profit margins, which have historically lagged behind those of larger French and Italian rivals.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayEU, monthly eurozone industrial production dataIndia, October consumer price index (CPI) inflation rate figuresJapan, flash Q3 GDP figuresUK, Rightmove monthly house price indexResults: Embraer Q3, Tyson Foods Q4TuesdayChina, October retail sales and industrial production dataEU, Q3 GDP figuresFrance, October CPI and Harmonised Index of Consumer Prices (HICP) dataGermany, Zew economic sentiment surveyUK, September unemployment rate, plus October insolvency data.US, October producer price index (PPI) inflation rate dataResults: BAE Systems trading statement, Home Depot Q3, Imperial Brands FY, Infineon Technologies Q4, Land Securities H1, Melrose trading update, ProSiebenSat. 1 Q3, Vodafone H1, Walmart Q3WednesdayCanada, October CPI inflation rate dataJapan, October trade balance dataUK, October CPI, PPI and other inflation rate figuresUS, October retail sales and industrial production figuresResults: Alcon Q3, Bridgepoint trading update, British Land H1, CMC Markets H1, Experian H1, Hill & Smith trading update, Premier Foods H1, Sage FY, SSE H1, Tencent Q3ThursdayEU, October HICP inflation rate dataJapan, October CPI inflation rate figuresResults: Alibaba Q3, Burberry H1, Fuller, Smith & Turner H1, International Distributions Services H1, Investec H1, Kier trading update, Mitie H1, Siemens Q4FridayUK, GfK consumer confidence survey and October retail sales figuresResults: Nationwide H1World eventsFinally, here is a rundown of other events and milestones this week. MondayUK, 100th anniversary of the BBC’s first radio broadcastUK, King Charles celebrates his 74th birthdayUS, trial begins in Delaware Chancery Court over Elon Musk’s $56bn remuneration at Tesla. A shareholder claims that the amount paid to the co-founder and chief executive is an excessive payout.TuesdayIndonesia, the summit for G20 heads of state and government begins in BaliUK, foreign secretary James Cleverly answers questions at a parliamentary committee on the UK’s future relationship with the EUUS, announcement by Donald Trump from his home in Mar-a-Lago, expected to be about his intention to run in the 2024 presidential election. A less than successful performance by candidates he endorsed in the midterm elections has been seen as a setback to his ambitions to run again.WednesdayUK, Bank of England governor Andrew Bailey gives evidence to the Treasury Committee in WestminsterUS, Nasa hopes to launch the Artemis I test flight mission around the moon from its Kennedy Space Center, subject to local unsettled weather. The longer-term plan is to create a permanent moon base to support missions to Mars.ThursdayChina, third anniversary of the first person to be confirmed to be suffering from the ailment that would later be responsible for the Covid-19 pandemicSpain, Nato parliamentary assembly’s annual session begins in MadridUK, chancellor Jeremy Hunt presents his Autumn Statement to parliament as the Office for Budget Responsibility publishes its economic and fiscal outlookUK, Bank of England chief economist Huw Pill speaks at the What Next for Central Banks? panel event, part of the Bristol Festival of EconomicsFridayEgypt, the UN’s COP27 global climate change conference closes in Sharm el-SheikhThailand, the 29th Asia-Pacific Economic Cooperation Economic Leaders’ Meeting begins with 21 heads of state invited to attend in Bangkok. The theme is Open. Connect. Balance.US, Theranos founder Elizabeth Holmes, who was found guilty in January of conspiring to defraud her investors, is due to be sentenced in a California court. Holmes faces decades in jail.SaturdayMalaysia, general electionMonaco, National DayUK, 2021 Rugby League World Cup men’s and women’s finals staged at Old Trafford, ManchesterSundayEquatorial Guinea, presidential, parliamentary and local electionsItaly, the Nitto ATP Finals tennis tournament concludes in Turin with the finals of the singles and doubles contestsKazakhstan, snap general election called in SeptemberNepal, parliamentary and provincial electionsQatar, Fifa World Cup Qatar 2022 beginsUS, Joe Biden’s 80th birthday More