Economy

The expansion of the H-2B visas, used to employ landscapers, housekeepers, hotel employees and construction and carnival workers, among others, for the busy summer vacation season comes amid record job growth and a U.S. labor crunch despite worries over some economic headwinds. Businesses have been bracing for summer travelers following two years of the pandemic, with rising demand leading to worries about potentially long lines and other strains.The notice by the Homeland Security and Labor departments is for U.S. employers that face “irreparable harm” if they cannot get additional workers and aims to “provide temporary portability flexibility.”Officials in January had granted an additional 20,000 visas – also for H-2B workers who tend to be temporary and in non-agricultural jobs – amid reduced labor force participation.U.S. policy makers have been focused on trying to get more Americans to enter the workforce as they grapple with high inflation, rising gas prices and other issues two years after the COVID-19 outbreak began. More

MADRID (Reuters) -The Spanish economy could grow around 4% in 2022, half a percentage point less than expected in April, as rising inflation hurts consumer confidence and international trade slows, the Bank of Spain said on Wednesday.The lower envisaged growth rate would bring it in line with the downwards revision this week from the European Commission. It had previously forecast a 5.6% GDP rise for Spain.In April, the Spanish central bank had already lowered its economic growth outlook for this year and next due to the impact of inflation stoked by Russia’s invasion of Ukraine and forecast inflation would soar to 7.5% in 2022.Prices rose 8.3% year-on-year in April. [“New information following the publication of these projections, including lower-than-expected GDP growth in the first quarter, would point to a further downward revision in the expected GDP growth rate for this year as a whole,” Governor Pablo Hernandez de Cos said on Wednesday.In its annual report the Bank of Spain added that “in the absence of any additional considerations, this would lead to a mechanical downgrading of about half a percentage point in the average GDP growth rate in 2022”.Spain’s growth slowed sharply to a weaker-than-expected 0.3% in the first quarter from the previous quarter, leading the government to slash its growth outlook for this year to 4.3% from 7%. Still, De Cos said the possible new revision of the projections, subject to “extraordinarily high uncertainty”, would remain consistent with the path of gradual economic recovery.Spain would not reach pre-pandemic GDP levels until the end of 2023, with inflation rates that would remain high in the coming months, before moderating thereafter, De Cos said.”In coming months the Iberian mechanism to limit gas prices and lower electricity prices – recently approved in Spain and Portugal, in agreement with the European Commission – will foreseeably put downward pressure on energy prices in Spain,” he said. More

ISLAMABAD (Reuters) – Pakistan opened long-delayed talks with the International Monetary Fund on Wednesday, seeking the release of more funds from a $6 billion rescue package agreed in 2019 to help shore up the South Asian nation’s battered economy.Pakistan has already asked the IMF to increase the size and duration of its $6 billion programme, with foreign reserves falling as low as $10.3 billion so that they cover less than two months of imports, a widening current account deficit, surging inflation and a plunging currency.”Talks with the IMF mission started today,” the Finance Ministry said in a statement, adding that Finance Minister Miftah Ismail and the acting central bank governor would join the talks virtually. A finance team has already headed to Doha for consultations with the IMF that are due to last until May 25 before the lender takes a decision, the ministry said.The rupee weakened to about 198.39 to the dollar on Wednesday, the central bank said, a historic low that means it has lost almost a quarter of its value in the past year.The finance minister requested a bigger IMF package on a visit to Washington last month. Following that request, the IMF said Islamabad had agreed to roll back unfunded subsidies to the oil and power sectors.From March to June, Pakistan is expected to spend about $2 billion on subsidies which have yet to be withdrawn.The government that took over in April after the collapse of Prime Minister Imran Khan’s administration fears a public backlash if it withdraws the subsidies on which many Pakistanis rely.About half of the existing package of $6 billion has been disbursed so far, but more recent payments were delayed several times due to IMF concerns about fiscal policy measures.If the current review is successful, Pakistan will receive more than $900 million, which will help unlock other external financing. More

The bank considers this would be the worst case scenario, which included Ukraine losing access to the Black Sea in the south. The bank’s base case scenario is a 39% GDP contraction in 2022, factoring a prolonged conflict “with fading intensity.””While the external balance deterioration should be limited due to a major imports drop, fiscal and more broadly funding needs are a major challenge” wrote Morgan Stanley economists in a note.Ukraine’s sovereign international bonds are currently pricing in a “light” debt restructuring with “all payments cleared until 2026 yet no haircut, at a conservative exit yield of 14%”, the note added. On Wednesday, Ukraine’s $1 billion bond due in September 2022 traded at just under 70 cents in the dollar while most of the remaining issues were bid between 34 cents and 47 cents, Refinitiv data showed. Morgan Stanley sees Ukraine financial needs at $4.7 billion a month and said how the country will use international aid for reconstruction will play a key role in the economy’s long-term outlook. More

LISBON (Reuters) – Portugal’s central bank has opened up its heavily guarded vaults in a small commuter town near Lisbon, giving a rare glimpse of where some of the country’s gold reserves are kept.The 67,000 square metre compound in Carregado houses an ultra-secure vault where 45% the Bank of Portugal stores 382.6 tonnes of gold. The remaining 55% is abroad, mostly in the Bank of England in London.”Gold is an important asset for central banks as it is a refuge asset and has no credit risks,” said Bank of Portugal board member Helder Rosalino on Tuesday during the rare media visit to the facility, guarded by armed police officers. The compound, which opened in 1995, is protected by alarms and surveillance cameras, and its multiple doors have keypad lock systems that have become more sophisticated over the years. The gold bars, which weigh 12 kilograms (26.46 lb) each, are stacked on hundreds of shelves in a vault behind armoured doors. Only three staff members can open them by using a code on a rotary knob, by turning two keys and then waiting for a fourth person to enter another code remotely from a control room.Rosalino said that since 1999, when the euro currency was officially created, the value of Portuguese gold reserves has increased by 16.8 billion euros. It rose 4.3% to around 19.8 billion euros last year alone.He said 2021’s increase was due to the appreciation of the U.S. dollar against the euro. Gold is priced in U.S. dollars.Portugal has the world’s 14th largest gold reserve, with its value representing the equivalent of nearly 10% of the country’s gross domestic product. More

BELGRADE (Reuters) – Serbia’s central bank on Wednesday cut its 2022 growth forecast to 3%-4% from 3.5%-4.5% due to the conflict in Ukraine. The bank said in its Inflation Report that if the “geopolitical situation” worsened, the forecast could be cut again.The bank said rising fuel, food and commodity prices, domestically and internationally, would result in slower-than-expected growth in manufacturing and construction “and to a smaller extent in services.” More

The move, if confirmed, may be the final straw in Russia’s debt saga after almost three months of war in Ukraine, pushing the country into its first foreign default in a century.Insurance on Russian sovereign debt — used to protect investors against non-payment — jumped on Wednesday, signalling a 90% chance of a default within one year. That probability rose from 77% on Tuesday, according to ICE Data Services.The heightened risk is linked to a decision by the Treasury Department’s Office of Foreign Assets Control, which is expected to let a temporary exemption lapse once it expires on May 25, according to people familiar with the matter. The waiver, issued shortly after the US levied sanctions on Russia, has given Moscow room to pay coupons, and ending it would create a major hurdle for future payments.Trading on credit-default swaps skyrocketed earlier this year as investors wagered on Russia defaulting due to payments being made in rubles rather than the currencies specified in bond documents, or because of money getting held up in the banking system.But Russia has managed to meet all its debt obligations so far, weaving through the tangle of sanctions that closed off some avenues. That includes an 11th-hour escape earlier this month, when blocked payments were eventually allowed through after Moscow tapped its domestic dollar reserves. Russian corporations haven’t been so fortunate, with billions of dollars of debt now in technical default.Finance Minister Anton Siluanov reiterated on Wednesday that Russia has no intention of defaulting on the almost $20 billion of sovereign debt it owes to foreign investors, and will pay in rubles if transfers are blocked, according to the Tass news service.In April, Siluanov pledged to sue if Russia is forced to break its obligations.Moscow’s next debt transfers are due May 27, on foreign bonds maturing in 2026 and 2036. The 2026 note was down by 33% on Wednesday at 16 cents on the dollar, according to CBBT data compiled by Bloomberg. It’s at its lowest level since mid-March, when Russia succeeded in making the first external debt payment since the invasion of Ukraine thanks to the OFAC carveout. The bond maturing in 2036 was little changed.©2022 Bloomberg L.P. More

(Reuters) -Running out of petrol, medicines and foreign reserves, once-booming Sri Lanka is in a mess. And the measures needed to pull its economy out of the unparalleled crisis are likely to bring even more pain.The dire assessment by new Prime Minister Ranil Wickremesinghe this week of the island nation’s economic plight was a necessary first step, economists said. His proposed solution to bring back some stability includes selling the loss-making national airline, printing more money and possibly raising taxes as well as energy and utility prices.Wickremesinghe said the “unpleasant and terrifying” facts facing the country included a fiscal deficit that was 13% of gross domestic product (GDP), virtually no foreign reserves and shortages of petrol, gas, furnace oil and cancer and anti-rabies medications.The country has suspended sovereign debt payments and ratings agencies are expected to place it in default. In addition, the chronic foreign exchange shortage has led to rampant inflation, bringing thousands of anti-government protesters onto the streets of the Indian Ocean nation, over which China and India jostle for influence.In Colombo, the commercial capital, no petrol was to be found at most service stations on Wednesday. Long lines of auto-rickshaws, the city’s most popular mode of transport, and other vehicles were parked in front, waiting for supplies.”Any petrol station you go, there is no fuel, and people (are) lined up for kilometres and kilometres,” said Mohammad, a delivery driver who only gave one name. “So, how can you run a vehicle, right? How can you do your daily…day-to-day activities?”Sri Lanka has no dollars to pay for petrol shipments, Power and Energy Minister Kanchana Wijesekera told parliament, appealing to people to stop queuing for the next two days.Economists said most of the prime minister’s proposals made sense.However, the decision to print money was concerning and would raise fiscal and external imbalances, said Patrick Curran, senior economist at London-based Tellimer.”The policies announced are a necessary first step to resolve Sri Lanka’s economic crisis, but will entail significant short-term pain via higher inflation and currency depreciation and will necessitate further rate hikes from the CBSL (Central Bank of Sri Lanka) to contain the pressure,” he said.S&P said printing money would have “significant inflationary implications”.The central bank holds a rate meeting on Thursday and is likely to raise rates for a fourth consecutive time this year, according to a Reuters poll. It increased the key lending rate by a historic 7 percentage points to 14.5% in April and is likely to decide on a further increase of up to 2 percentage points this week, most analysts said.SUBSIDIES, FERTILISER BANSri Lanka’s economic crisis, unparalleled since its independence in 1948, has come from the confluence of the COVID-19 pandemic battering the tourism-reliant economy, rising oil prices and populist tax cuts by the government of President Gotabaya Rajapaksa and his brother, Mahinda, who resigned as prime minister last week.Other factors have included heavily subsidised domestic prices of fuel and a decision to ban the import of chemical fertilisers, which devastated the agriculture sector.Sri Lanka was a model for emerging market economies and grew at an average rate of 6.2% between 2010 and 2016, according to World Bank figures. In the next three years, the figure had dropped to 3.1%.The World Bank has forecast the economy will grow 2.4% this year from 3.5% in 2021 but has said the outlook is highly uncertain.Charles Robertson, global chief economist at Renaissance Capital in London, said the removal of electricity and fuel price subsidies was essential.These and other reforms would form the starting point for discussions with the International Monetary Fund for a crucial bail-out, other economists have said.”We will also have to see massive tax hikes, probably a doubling of VAT from 8% to at least back to the 15% we saw in 2019,” Robertson said. “It was the cut in those VAT rates which contributed to this crisis.”The sale of SriLankan Airlines is not likely to fetch much money in the current environment, the experts said. “Not a bad thing to sell it but that is a drop in the bucket vs their USD financing needs,” said Nathalie Marshik, head of emerging market sovereign research at Stifel Financial (NYSE:SF) Corp.The worry is that fuel and utility price increases will add to public anger against the government at a time when the administration is in deep disarray. The new prime minister has to convince the people that the measures are necessary to restore stability, economists said.Inflation hit 29.8% in April, with food prices sky-rocketing by 46.6% year-on-year.”Overall, it seems that corporates and individuals are preparing for more tax measures,” said Trisha Peries, head of research at CAL Securities in Colombo. “Further, expectations are being set for electricity tariff hikes to come as well.”In a sense he was preparing the minds of the public for the economic pain that is to come,” Peries said of Wickremesinghe. More