Economy

GENEVA (Reuters) – Global employment growth will “deteriorate significantly” this quarter, hit by the economic turmoil caused by the Ukraine war and by the impact of tighter monetary policy on consumption, the International Labour Organization (ILO) said on Monday, There are already signs that a recovery in global hours worked that was seen in early 2022 went into reverse in the second and third quarters, the U.N. body said.Overall, there were 40 million fewer full-time jobs between July-September than in the fourth quarter of 2019, which is used as the benchmark level before the COVID pandemic, it added.”On current trends, global employment growth will deteriorate significantly in the fourth quarter of 2022,” the ILO said in its report on the World of Work.The ILO attributed the deterioration in the level of hours worked in mid-2022 to the reintroduction of public health restrictions and ensuing labour market disruptions in China as well as to the Ukraine conflict and resultant inflationary pressures from disruptions to energy and food exports.The report also said that excessive policy tightening could cause “undue damage to jobs and incomes in both advanced and developing countries”. The ILO warned of declining job vacancies ahead and rising unemployment in the final months of the year. There are already signs that the labour market has cooled considerably in advanced economies, with sharp declines in vacancy growth, it said. ILO Director-General Gilbert Houngbo called for a series of policies aimed at supporting the most vulnerable people and businesses, which might include channelling windfall corporate profits towards employment or income support.”We cannot insist enough on the need for social packages and the need to ensure that the monetary tightening to combat the inflation is really dovetailed with social measures,” he told a Geneva press briefing. More

The regulator charged with building a planned new EU benchmark for imported gas has admitted the ambitious project will be difficult to put into practice.Acer, the EU’s energy regulator, has joined traders and analysts casting doubt on a plan from Brussels for a new regional standard that would more accurately track the price of liquefied natural gas being shipped into the bloc.The European Commission wants to create an alternative to the benchmark formed by the Netherlands-based Title Transfer Facility and run by the US’s Intercontinental Exchange. Trades on this virtual hub for European gas buyers form the basis of the region’s reference benchmark, which has been volatile this year. Dwindling Russian supplies have stoked inflation and threatened to tip the eurozone economy into recession. The war in Ukraine and record temperatures in Europe over the summer pushed TTF prices to €349 per megawatt hour in late August, although prices have tumbled to around €100 MWh in recent days. But the commission says TTF does not truly reflect supply and demand in international gas markets. In proposals published last month, it suggested a “more representative” alternative that incorporated the extra LNG being shipped into the bloc to help replace the 155bn cubic metres it previously received through pipes from Russia. Unlike TTF, which is based entirely on real transactions, its price would be assessed by an administrator. “The new benchmark will provide for stable and predictable pricing for LNG,” the commission said last week. It would work “by collecting real-time information on all daily LNG transactions”.But Acer, which has been tasked with creating the new benchmark, admits it is difficult because many LNG deals are bespoke and negotiated privately. That means data from LNG contracts are harder to monitor and quantify than spot market prices for piped gas, according to the regulator.“We are analysing all sorts of possibilities to come up with methodologies,” said Iztok Zlatar, head of Acer’s market data analytics. He added that the creation of the new benchmark was beyond the scope of Acer’s normal remit and was “a demanding task operationally”.“It is quite a big task [and] so far we weren’t granted any additional resources for this activity. It is quite an undertaking,” he added.He also said that Acer “cannot tell” if the new benchmark would be accepted by the market. “It depends on the LNG market as it develops in Europe.”Traders and analysts say TTF reflects the reality of buying and selling gas on the open market.“The physical LNG market is extremely illiquid; you’re lucky if there are a handful of trades in a week,” said Neil Fleming, who leads global pricing and analysis at data company Argus. “By contrast, there are thousands of trades a day in TTF. There’s nothing structural that suggests a new LNG benchmark is cheaper or better to price gas,” he added.Even then, industry benchmarks and the futures contracts that are pegged to them usually take years to attract the depth and reliability that makes them indispensable to the market.Acer can start collecting data only once the proposal has approval from the EU’s 27 member states, which will not happen until November 24. Despite this, preparatory work has already begun, given the tight deadline set by the commission to have a new benchmark in place by March 31.However, the energy industry is worried that a new pricing measure would split already fragile liquidity and do little to tackle the fundamental issues of tight supply and rising demand that have forced prices to record highs.The price of TTF and spot LNG have diverged this year as the capacity to hold and process the cooled liquid fluctuates.“In such a thinly traded market, you don’t want to be dividing liquidity even more by creating a new benchmark,” said James Waddell, head of European gas and global LNG at Energy Aspects. “It’s really unclear what purpose that would serve.”Adding to the complexity, there is no single LNG price. ICE said last week it would launch two new LNG contracts to help users hedge the difference in prices in north-west and south-west Europe. The two regions have different infrastructure to handle LNG, and the north was priced $1.73 higher, at $18.562 per million British thermal units, on Thursday.“Stating that there would be development of a complementary LNG benchmark is laudable but whether it is actually a solution remains to be seen,” said Ben Wetherall, energy market development director at research company ICIS. More

The bird is free, and so is Swamp Notes! The newsletter will be free to read online over the next two weeks, through the US elections. Ed and I will be turning to the midterm contests across the country in our special daily Swamp Notes coverage next week, but in advance of that, I’d like to use this note to sound off on the amazing global events of the past week, and in particular the future trajectory of China.If we had any doubt about US-China tech decoupling, the past few days have cleared it up, as I explore in my column today, which also looks at what’s likely to come next in that process. Regionalisation of the global economy gained further steam as French president Emmanuel Macron took the opportunity to call for a Buy European Act “like the Americans”, as the EU needs “to reserve [our subsidies] for our European manufacturers”. I’m actually OK with that; I think the world would ultimately be an economically healthier and more politically balanced place if there were more regionalised and even localised hubs of production and consumption.In the short term, though, we all know that a new paradigm comes with bumps. One of the biggest may be regarding how China’s own economy will perform over the next few years. I was on a very interesting conference call about the economic future of China last week, and one participant noted something quite telling — during last week’s market rout, both foreign and domestic investors in China dumped a lot of short-term risk assets, but foreign fixed-income investors didn’t give up as many longer-dated Chinese bonds, while domestic investors dumped nearly everything.What does this tell us? For starters, richer Chinese are scared about the more authoritarian, top-down nature of President Xi Jinping’s regime. They are running for the hills, perhaps realising that the whole “to get rich is glorious” thing is now being tempered by a big dose of Chinese style populism (a topic I took on a while back, here). Not good for capitalists, even those with Chinese characteristics.Chinese investors may also believe that the lack of economic expertise in Xi’s new leadership team, coupled with his more reactionary, nationalistic approach, will lead to conflict in Taiwan sooner rather than later. That would be hugely costly for everyone, but particularly for China. At the same time, there are also massive short-term issues about to pop in the Chinese real estate story. As most people know, a credit bubble of unprecedented proportions built on the real estate sector is unravelling, and challenging the finances of provincial governments. The Chinese New Year is on January 22, and these governments will be under pressure to pay workers before they go home to see their families. That will add fuel to the fire.If Beijing starts allowing local government debt to go bust, it raises questions over the entire Belt and Road Initiative, which is built on lending for infrastructure development, in the hope that it will be profitable in the longer-term and pull countries into the Chinese economic orbit. But what if that debt, too, starts going bad? That’s a real possibility given the financial pressures for emerging markets of energy inflation and a stronger dollar. Then, you start to see the dominoes of the Chinese economic model collapse not just domestically, but internationally.There is, as always, a counter-case. China makes it through this period of turmoil, manages a kind of “soft” decoupling with the US (with lots of exemptions for various products) and then leverages the speed of decision-making inherent in authoritarian regimes to bolster its own technology needs and ultimately achieve regional supply chain independence. In this paradigm, more state control creates an executive, outcome-oriented system, well positioned to carry out a playbook for known economic needs. Meanwhile, the US and Europe have to stumble along and figure out the nuances of a new economic pathway that must be agreed upon by the electorate in a messy democratic process.I’m marginally inclined to think the former scenario is more likely (in part because so much business talent is leaving the country). But I’m not ruling out the latter. Ed, do you have strong feelings either way? What do you think about Buy Europe? Also, since you are an old India hand, I’d love to hear your thoughts about how India figures into the new regionalism at some point soon. Feel free to pick and choose what you want to answer here, and here’s hoping you get to rest up for the midterms!Recommended readingI’m doing an all-FT callout this week, since there are just so many great pieces to choose from.Matthew Garrahan wrote a great Lunch with the FT with American comedian Jon Stewart at one of my personal favourite pizza spots in NYC, John’s of Bleecker Street. The profile is both hilarious and extremely sharp.Gideon Rachman sums up the state of the new world order well in this column.Josh Chaffin does what must be the best profile yet of the likely Republican presidential contender for 2024, Ron DeSantis.Janan Ganesh is spot on that knowing what you want in life, not necessarily how to get it, is the most important skill. I found this column very moving, and also sobering — it’s amazing how many of us sort of stumble through life and let decisions happen, rather than actively taking them. I’m going to try to be more thoughtful and honest with myself about this in future.And finally, all Swampians should tune into our Swamp Notes Live event on Thursday November 10. We’ll remind you closer to the date, but you can register here. Edward Luce respondsRana, I don’t have a strong instinct on whether China’s growth is derailing or going through a period of managed slowdown. Whichever turns out to be the case, this is India’s chance to take the lead as the world’s fastest growing economy (a feat it did achieve once before, between 2013 and 2018). India has already taken a piece of the rejigged tech supply chains that are moving out of China. Much of iPhone 14 is now made in southern India for example (though Apple’s sales have so far been very disappointing). On paper, India is well positioned to supplant China. It has a much younger age profile than China, which is hitting a demographic middle-income trap. It has a far more impressive entrepreneurial base. It is worth noting that India’s domestic vaccine, Covaxin, produced by Bharat Biotech, is considered more effective than either of China’s indigenous vaccines. While Xi continues to impose stifling zero-Covid restrictions on much of China, India is operating as if the pandemic is in the past.All of which suggests that things are finally looking up for India. But you should never underestimate its capacity to screw up. As the world blindly grapples with what Adam Tooze calls the age of polycrisis (Swampians should read his Weekend FT piece on this), India’s vulnerabilities are becoming painfully apparent. One of these is its exposure to catastrophic climate change. Indians suffer from “web bulb” temperatures — the point at which combined heat and humidity becomes fatal — more than any other country. And that is set to get worse. Its politics is becoming ever more neo-fascist as time goes on, which takes explicit aim at India’s core strength — secular pluralism. And its current account looks shaky in a world of galloping energy and food prices. India is thankfully too big, and self-sufficient, to belong on the growing emerging market watch list. But it is surrounded by countries that are — notably Pakistan and Sri Lanka.In my view the world is reglobalising more than it is deglobalising. India should be a beneficiary of this, which is why I would go long on India and short on China. But without much conviction. Your feedback And now a word from our Swampians . . . In response to Why Democrats are still clueless about ‘Hispanics’:“The Democrats do seem unable to learn or break out of their entrenched positions. There was a report I saw that said that the Republicans have set up outreach centres in ‘minority’ communities, including ones in immigrant communities that provide help in obtaining citizenship. With steps like this, is it any wonder that segments of the Latino community have drifted towards the Republicans? As Will Rogers presciently noted: ‘I’m not a member of any organised political party; I’m a Democrat.’” — Gail Berney, Duchess County, New York More

Investing.com — Tesla eyes radical steps to lock in supplies of key battery metals, while Apple’s main supplier is scrambling to relocate staff away from its biggest iPhone assembly plant in China due to a COVID-19 outbreak. The euro falls as Eurozone inflation surges past expectations yet again, while GDP growth fell short in the third quarter. Stocks are set to open with a mild consolidation after Friday’s rally. Grain prices rise as Russia pulls out of a UN-sponsored deal to guarantee the safety of Ukrainian exports, and the Brazilian real strengthens as Luiz Inácio Lula da Silva defeats Jair Bolsonaro in a close-fought run-off for the presidency. Here’s what you need to know in financial markets on Monday, 31st October1. Tesla’s radical metals plan and FoxConn’s radical relocationsTesla (NASDAQ:TSLA) held talks to take a stake in Glencore (LON:GLEN), one of the world’s largest mining groups, in an effort to lock in supplies of key battery metals, according to the Financial Times.The talks, which took place earlier in the year, ended without any concrete results. Despite its recent selloff, Tesla still trades at a value of over 10 times Glencore’s, a skew that arguably flatters the EV maker’s market power over a key supplier that can just as easily sell to Tesla’s Chinese and European challengers.Another mega-cap making headlines early on Monday was Apple (NASDAQ:AAPL), after its key supplier Foxconn (TW:2354) was forced to relocate staff away from its biggest iPhone assembly plant in Zhengzhou due to a worsening COVID-19 outbreak. Foxconn stock fell 0.7% in Taiwan, while Apple was down 0.6% in premarket on concerns that the outbreak may affect iPhone shipments during the key holiday period.2. Eurozone CPI blows past expectations, dashing ECB pivot hopesEurozone inflation surged again to a new record high, casting doubt on the European Central Bank’s ability to ease off with its interest rate hikes.Eurostat said prices rose 1.5% in October alone, pushing the annual rate of inflation up to 10.7%, well ahead of the 10.2% forecast. Even stripping out more volatile elements such as food and energy, core price inflation accelerated to 5.0% on the year, more than twice the ECB’s target.At the same time, Eurostat said Eurozone GDP likely rose by only 0.2% in the third quarter, a sharp slowdown from 0.8% in the second quarter. That was despite a better-than-expected 0.5% gain in Italy. The euro fell 0.3% to $0.9937.3. Stocks set to consolidate at opening; Dallas Fed survey, Berkshire earnings eyedU.S. stock markets are set to open a touch lower, consolidating after a blistering rally on Friday on hopes of an early end to Federal Reserve interest rate hikes.By 06:30 ET (10:30 GMT), Dow Jones futures were down 156 points, or 0.5%, while S&P 500 futures were down 0.6%, and Nasdaq 100 futures were down 0.7%. The Dow had finished at its highest in over two months on Friday, fuelled by massive profits at Big Oil.The Dallas Fed business survey, due later, may have more to say about the oil sector’s resurgence. Stryker (NYSE:SYK) and Mondelez (NASDAQ:MDLZ) report earnings later, along with Vornado (NYSE:VNO) and Avis (NASDAQ:CAR).4. Grain prices rise as Russia pulls out of UN deal World grain prices rose after Russia pulled out of a UN-sponsored deal that allows safe passage of exports from Ukraine’s ports. The agreement had been instrumental in bringing down grain prices by nearly 30% since May, when expectations of a deal had first risen.U.S. wheat futures rose as much as 9% before paring gains, while corn futures rose as much as 3%, on fears that Ukraine will once again be unable to ship its surpluses to world markets.Russia’s actions came in response to a Ukrainian military strike against the Russian Black Sea Fleet’s base in Sevastopol, Crimea. Ukrainian sources claimed that the strike, using seaborne drones, had severely damaged the BSF’s new flagship, Admiral Makarov. Moscow denied the claims.5. Real edges higher as Lula completes remarkable comebackBrazil’s Luiz Inácio Lula da Silva completed a remarkable political comeback, regaining the presidency after beating incumbent Jair Bolsonaro in a close head-to-head contest on Sunday.Lula, who had been jailed for corruption after leaving office in 2010, received 50.9% of the vote, with Bolsonaro getting 49.1%. Bolsonaro did not, initially, acknowledge defeat, leaving some room for doubt as to whether he would leave office.Lula promised in his speech to unite a deeply divided country, which has suffered from the corruption of both the main political blocs since the start of the commodities supercycle at the turn of the millennium.The Brazilian real strengthened a little in response to the news, which promises a rapprochement with Brazil’s trading partners in the U.S. and Europe. More

NEW YORK (Reuters) – Next time you are visiting the National Archives Museum in Washington, D.C., check out the 1297 copy of the Magna Carta, essentially the first written constitution in European history.It may have been drawn up under England’s King John, but these days it belongs to David M. Rubenstein.Rubenstein, the co-founder of private equity giant The Carlyle Group (NASDAQ:CG), not only bought that document, but copies of the Declaration of Independence and the Emancipation Proclamation besides – all of which he gives to institutions for public display.To learn how Rubenstein amassed those kind of resources, look no further than his new book, “How To Invest: Masters on the Craft.” In it, Rubenstein includes not only what he has learned over the years, but insights from other boldfaced names in the investing universe – such as Bridgewater Associates’ Ray Dalio, BlackRock’s Larry Fink, Renaissance Technologies’ Jim Simons, John Paulson of Paulson & Co. and more.That crowd is a long way from his Baltimore childhood. At that time, there was not a whole lot of investing going on, with his father working a blue-collar existence for the Post Office, living paycheck-to-paycheck.Starting from there and making it to the ranks of billionaires is no small feat, but Rubenstein is bracingly honest about both his investing misses as well as his hits. His biggest home run, of course, was starting Carlyle, raising an initial $5 million that has turned into a behemoth with $376 billion in assets under management, sitting astride the world of private equity.His whiffs, meanwhile, include passing on little startups like Meta’s Facebook (NASDAQ:META) and Amazon (NASDAQ:AMZN), going so far back that he remembers when Amazon CEO Jeff Bezos used to hand-deliver every book order to the Post Office himself.“The best investors have an ability to forget their mistakes and go onto the next thing, but I don’t have that,” Rubenstein told Reuters. “I think about that all the time. How could I have been so stupid?”Nevertheless, Rubenstein seems to have done alright, with a net worth currently estimated by Forbes at $3.2 billion. His family office steers his personal investments and sticks not to more traditional asset classes like publicly-traded stocks or fixed income, but the area he knows best – private equity.A couple of investments he singles out: Healthcare firm Redesign Health, which has grown to a valuation of well over $1 billion. He was also involved in the purchase of ticketseller StubHub shortly before the COVID-19 pandemic, labeled by Forbes at the time as the “Worst Deal Ever” because of the unfortunate timing, although prospects have rebounded nicely since then.RUBENSTEIN’S ADVICE TO INVESTORS BIG AND SMALLWhen it comes to philanthropy, Rubenstein takes a surprisingly hands-on approach – no foundation, no staff, just him. He does not take pleasure in having to turn people down, but he does enjoy following his own rules, including starting something that would not get started otherwise; something he is intellectually interested in, in which he can be involved beyond just writing a check; and something which will see real progress in his lifetime.Rubenstein is also one of the early signatories of the Giving Pledge, the Bill Gates-led initiative encouraging America’s wealthiest to give away at least half their fortunes – a roster that has since grown to over 230 people.But for mom-and-pop investors out there, Rubenstein has guidance as well, especially in this current downturn, which has so many people on edge looking at their cratered 401(k)s. “The most common mistake investors make is that they get out of the market at the wrong time,” Rubenstein says. “When markets are depressed, that’s the time to actually invest. They shouldn’t panic and sell everything when the market goes down.”For most retail investors, Rubenstein suggests an approach that hews to the fundamentals: Index funds, diversification, low fees, transparency and realistic expectations about rates of return. In other words, do not think of yourself as a genius who can beat the market, because realistically that is just not going to happen.And do not think this book is going to turn you into Warren Buffett, either. “It won’t automatically make you a great investor,” Rubenstein says. “But it can give you insight into some of the greatest investors in America, and how they became great – and how you can do a better job managing your own money.” More

NEW YORK (Reuters) – Opening statements are set for Monday in the criminal case accusing former President Donald Trump’s real estate company of a 15-year tax fraud. The case is among the mounting legal troubles facing the 76-year-old Trump, a Republican, as he considers another bid for the presidency after losing in 2020. The Trump Organization is accused of defrauding tax authorities between at least 2005 and 2021 by providing “off the books” benefits to company executives and paying bonuses as non-employee compensation. If convicted, the company – which operates hotels, golf courses and other real estate around the world – could face up to $1.6 million in fines. It could also further complicate the real estate firm’s ability to do business.Trump himself has not been charged in the case.A panel of 12 jurors and six alternates were chosen last week for the case, which will be heard in New York state court in Manhattan.The trial is expected to last over a month. A unanimous verdict is required for conviction on each count of tax fraud, scheming to defraud, and falsifying business records.Allen Weisselberg, the Trump Organization’s longtime chief financial officer, agreed to testify as a prosecution witness at trial as part of a plea agreement for him to receive a sentence of five months in jail.Weisselberg, who was charged along with the company last year, admitted in August to scheming with the Trump Organization and others not to report or to misreport substantial amounts of his and other employees’ income. Weisselberg avoided taxes on $1.76 million in personal income himself through luxury perks, such as rent for a Manhattan apartment.A prosecutor told potential jurors last week Weisselberg worked for the defendants and may be “reluctant” to answer questions. Weisselberg stepped down as CFO when he was indicted but remained on the payroll as a senior advisor. After his guilty plea, he went on paid leave, a source has told Reuters.The day he pleaded guilty, the Trump Organization called Weisselberg a “fine and honorable man” who had been harassed by law enforcement in a “politically motivated quest” to get Trump.But in a pretrial hearing this month, a Trump Organization lawyer accused Weisselberg of lying, an indication of the bind the company finds itself in. Justice Juan Merchan, the judge overseeing the case, has rejected the argument that the Trump Organization was targeted for selective prosecution.Two top prosecutors on the case resigned in February, with one saying felony charges against Trump were warranted but that Manhattan District Attorney Alvin Bragg indicated doubts. Bragg, a Democrat, has said the investigation is ongoing.The case is separate from a $250 million civil lawsuit filed by New York’s attorney general against Trump, three of his adult children and his company in September, accusing them of lying to banks and insurers by overvaluing his real estate assets and Trump’s net worth.While that case is pending, the attorney general is seeking to appoint a monitor to oversee the company’s financial practices, a move the company is challenging.Trump also faces a federal criminal investigation into the removal of government documents from the White House when he left office last year. More

The rise in consumer prices hit another record in October, with more than half of the countries that use the euro registering double-digit increases.Consumer prices in the countries that use the euro as their currency rose at a stunning annual rate of 10.7 percent in October, the European Commission reported on Monday, while economic growth across the continent grew by 0.2 percent over the quarter that spanned July, August and September.Prices have been on an relentless upward march since last year, as painfully high energy and food prices continued to push inflation to record levels. Over the past 12 months, energy prices rose by 41.9 percent while food prices increased by 13.1 percent.More than half of the 19 countries in the eurozone recorded double-digit inflation rates in the year through October, including Germany (11.6 percent), the Netherlands (16.8 percent), Italy (12.8 percent) and Slovakia (14.5 percent), with the Baltic countries at the highest end of the spectrum with rates over 21 percent.In September, the inflation rate across the eurozone was 9.9 percent. Twelve months ago, it was 4.1 percent.“This is a significant acceleration,” said Lucrezia Reichlin, an economist at the London Business School. “Inflation is becoming broad-based.”Although economic growth overall slowed from 0.8 percent in the second quarter — April, May and June — some countries registered bigger expansions than analysts anticipated. Germany, Europe’s largest economy, grew by 0.3 percent during the third quarter, driven in part by consumer spending. Italy’s economy grew by 0.5 percent and Sweden’s by 0.7 percent. Elsewhere, growth slowed. In France and Spain, growth increased by just 0.2 percent. Austria and Belgium saw their economies shrink by 0.1 percent.In the larger bloc of 27 countries that make up the European Union, third-quarter growth also increased by 0.2 percent.The International Monetary Fund has warned that “European policymakers face severe trade-offs and tough policy choices as they address a toxic mix of weak growth and high inflation that could worsen.”Inflation is vexing many of the world’s economies and may worsen, particularly in the wake of Russia’s withdrawal from an agreement that allowed grain exports from Ukraine that is likely to push up food prices.Last week, the United States announced that consumer prices rose by 6.2 percent in the year through September, by one measure. Britain’s inflation rate was 8.8 percent over the same period.Central banks appear resolutely determined to halt the rise. “Inflation remains far too high and will stay above the target for an extended period,” Christine Lagarde, the president of the European Central Bank, said last week after announcing the bank was raising interest rates by three-quarters of a percentage point for the second time in a row.The International Monetary Fund has also urged central bankers to stay the course possibly through next year. It noted that “almost half the recent surge in European core inflation remains unexplained by its usual drivers,” suggesting that the war in Ukraine and aftershocks of the coronavirus pandemic were contributing to a new inflationary dynamic.The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point when policymakers meet on Wednesday. It would be the sixth increase this year. The Bank of England, meeting on Thursday, is also expected to raise rates by the same amount.However painful higher interest rates may be for consumers and borrowers in the United States, the sting is even sharper in other regions around the world. Higher interest rates attract investors, which pushes up the value of the dollar. For emerging nations with high debt bills denominated in dollars, though, their already heavy burden grows even larger. At the same time, nations that have to import American goods or essentials like energy and food that are often priced in dollars, get much more expensive. Those countries get poorer.While most economists have urged a hard line on inflation, there are an increasing number of voices questioning whether central bankers are going too far, too fast. Higher interest rates are not going to suddenly increase the supply of oil, wheat and microchips, and may even exacerbate shortages by stunting investment.There is also fear that efforts to corral inflation will accelerate countries’ slide into recession by choking off investment and raising unemployment. Several analysts said on Monday that they expected growth in the final three months of the year to deteriorate.Andrew Kenningham, the chief Europe economist at Capital Economics, warned in a report that the eurozone “is heading for a deeper recession and higher inflation than most expect.” More

Apple’s main iPhone assembler Foxconn is preparing to shift production to other parts of China after masses of workers began fleeing its main hub to escape a worsening Covid-19 outbreak.City officials on Monday bussed workers away from the Zhengzhou plant, where staff say the company has failed to provide adequate food and a safe working environment during the outbreak, which is testing Apple’s supply chains. Analysts say the factory complex represents about 60 per cent of Foxconn’s iPhone assembly capacity.“We’re in peak production season right now so we need a lot of assembly-line workers . . . our company is co-ordinating back-up production capacity at other sites,” a spokesperson for the Foxconn plant told Chinese state media. Shares in Hon Hai Precision Industry, Foxconn’s Taiwan-listed entity, fell 1.4 per cent on Monday. “With the current pandemic situation it is a protracted war to do a good job keeping more than 200,000 employees safe,” Foxconn said in a stock exchange filing on Sunday evening. Apple has based most of its supply chain in China, leaving the US tech group exposed to Beijing’s rigid zero-Covid strategy. Ming-chi Kuo, an analyst at TF International Securities, estimated that the situation in Zhengzhou affected “more than 10 per cent of global iPhone production capacity”. But Kuo said the Covid outbreak was not yet denting forecasts for Apple’s iPhone shipments in the current quarter. “It’s expected that Foxconn’s production capacity will gradually improve within a few weeks, and there should be a limited impact on the 4Q22 iPhone shipments,” he said.Local Chinese authorities on Sunday tasked Foxconn with helping employees return home and improving conditions at the factory after photos and videos of hundreds of workers leaving the campus on foot went viral on social media.Two Foxconn workers in self-quarantine in buildings around the factory complex said their assembly lines were short-staffed on Monday. “No one at my station said they were working,” said one of the Foxconn employees, who asked not to be named.A third employee said he was debating whether to report for duty on Monday night. “The pandemic frightens me . . . but I need to make money,” he said, adding that assembly lines were already strained from worker shortages last week.

Analysts at Morgan Stanley said they were monitoring the situation with the fourth quarter “peak season for iPhone shipments”.“Zhengzhou is one of Foxconn’s major production sites, particularly for iPhone assembly,” they said in a report.Authorities have locked down swaths of Zhengzhou in an attempt to control the city’s latest Covid outbreak. The city of more than 10mn people on Monday reported 40 new Covid cases.Foxconn and Apple did not immediately respond to requests for comment. More