Economy

Losses totalled 160 million hryvnias ($5.42 million) in January-March compared with a profit of 10.9 billion hryvnias in the same period last year, it said in a statement.”The general decline in business activity and falling demand for loans and banking services will continue to have a negative impact on banks’ profitability,” it said.It said 44 out of 69 active lenders had remained profitable while the other 25 had posted losses of 6 billion hryvnias.Russia’s ongoing war on Ukraine could cause the Ukrainian economy to contract by at least one third in 2022 and drive up inflation to over 20%, according to the central bank’s forecast.($1 = 29.5000 hryvnias) More

The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged 1.1% last month. Data for February was revised higher to show outlays advancing 0.6% instead of 0.2% as previously reported. Economists polled by Reuters had forecast consumer spending increasing 0.7%. Part of the rise in spending was due to higher prices. Still, consumer spending is heading into the second quarter with strong momentum, which showcases the economy’s underlying strength. The data was included in the advance first-quarter gross domestic product report on Thursday, which showed the economy contracting at a 1.4% annualized rate because of a wider trade deficit. This was due to surging imports, and a slower pace of inventory accumulation relative to the fourth quarter’s robust rate.Consumer spending picked up last quarter, combining with business investment to boost domestic demand.The personal consumption expenditures (PCE) price index shot up 0.9% in March, the largest gain since 2005, after climbing 0.5% in February. In the 12 months through March, the PCE price index jumped 6.6%. That was the largest annual gain since 1982 and followed a 6.3% year-on-year increase in February. March, however, likely marked the peak in the PCE price index. Economists expect the increase in the annual PCE price index to start slowing in the coming months as last year’s large gains drop out of the calculation. In addition, the shift in spending back to services from goods is also seen easing pressure on supply chains.Excluding the volatile food and energy components, the PCE price index rose 0.3% after a similar gain in February. The so-called core PCE price index increased 5.2% year-on-year in March. The core PCE price index accelerated 5.3% in the 12 months through February. Annual inflation by all measures has overshot the Federal Reserve’s 2% target and the U.S. central bank is expected to hike interest rates by 50 basis points next Wednesday. The Fed raised its policy interest rate by 25 basis points in March, and is soon likely to start trimming its asset holdings. More

BEIJING (Reuters) -China will take steps to support its economy, including embattled internet platforms, as risks grow from its COVID-19 outbreaks and conflict in Ukraine, a top decision-making body of the ruling Communist Party said on Friday, lifting markets.The coronavirus and conflict in Ukraine have contributed to economic headwinds in a crucial year for China and President Xi Jinping, who is expected to secure a precedent-breaking third leadership term in the autumn.Private economists have said Beijing’s target for economic growth of about 5.5% this year will be hard to achieve without significant stimulus, as lockdowns and other tough curbs to battle the pandemic create havoc for supply chains.Friday’s Politburo meeting chaired by Xi said it would support COVID-hit industries and small firms, speed work on infrastructure, and stabilise transport, logistics, and supply chains, according to a statement on the central government’s website.”We will strengthen macroeconomic policy adjustments to stabilise the economy, and strive to achieve the expected economic and social development goals for the full year,” the statement quoted the Politburo as saying. Top leaders conceded that efforts to stabilise growth, employment and prices were facing new challenges.Chinese share prices surged in response to the pledges, particularly internet companies on which authorities clamped down last year, as the Politburo’s pledge to “promote the healthy development of the platform economy” bolstered hopes the worst was over.Authorities are set to have a meeting with internet majors next month, a person with knowledge of the matter said.Analysts believe more stimulus measures and some easing of property curbs will be needed to hit the government’s growth target for 2022.”While these messages are positive, the key is about the specific policies and their implementation,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.”The economy is in trouble, with second-quarter GDP growth likely turning negative (year-on-year),” he said. “A significant change of macro policy is necessary to turn the economy around.” Ting Lu, chief China economist at Nomura, said he still expected the economy to grow 1.8% in the second quarter and 3.9% in 2022.COVID-19 JITTERSFinancial markets have been hit hard over the past two weeks by fears that lockdowns will cause severe damage for China’s economy and derail a global recovery just as many nations rebound from pandemic-led slumps.The benchmark share index jumped more than 2% on Friday, with the tech-focused STAR50 Index surging nearly 5%. Shares of Hong Kong-listed tech firms rose, with the Hang Seng Tech Index up by 10%. On Tuesday, Xi chaired a meeting that announced a big infrastructure push to boost demand, reinforcing Beijing’s reliance on big-ticket projects to spur growth.”Senior leaders called for a ‘frontloading’ of policy measures as well as increased support, confirming our view that the authorities will ensure a stable economic and political environment ahead of the 20th party congress later in the year,” ANZ analysts said in a note.”However, to attain the 5.5% target China may be borrowing from the future and incur more debt.”Beijing will also back “healthy development” of the property market, fanning hopes that some cities will relax supervision of escrow funds to help ease a liquidity crunch for developers.But the Politburo said China would stick to a controversial dynamic zero-COVID policy to stamp out diseaase outbreaks while minimising the pandemic’s economic impact. More

The central bank met after it unexpectedly cut the key rate to 17% earlier in April following an emergency rate increase to 20% days after Russia sent tens of thousands of troops into Ukraine on Feb. 24.Friday’s rate cut exceeded expectations for a 200-basis-point move in a Reuters poll from earlier this week. Analysts predicted Russia would need lower rates in the face of a looming economic recession following the West’s imposition of unprecedented sanctions.”If the situation develops in line with the baseline forecast, the Bank of Russia sees room for key rate reduction in 2022,” the central bank said in a statement.A Reuters poll showed earlier on Friday that the central bank was expected to slash its key rate to 10.5% by the year end as the firming rouble helps cap inflationary risks.”Rouble exchange rate dynamics will remain a meaningful factor shaping the path of inflation and inflation expectations,” the central bank said.The central bank said consumer inflation was on track to accelerate to 18-23% in 2022, far exceeding the 4% target, which could be reached in 2024. It was at 17.6% as of April 22.High inflation dents living standards and has been one of the key concerns among Russians for years.The central bank now needs to tame inflation that is near 20-year highs, while steering the economy through its steepest contraction since the years following the 1991 fall of the Soviet Union.Russia’s export-dependent economy will shrink 8-10% this year, the central bank’s renewed set of forecasts showed.Central Bank Governor Elvira Nabiullina will shed more light on the bank’s forecasts and policy plans at a media briefing at 1200 GMT.    The next rate-setting meeting is scheduled for June 10. More

The price index that the Federal Reserve watches most closely climbed 6.6 percent in the year through March, the fastest pace of inflation since 1982 and the latest reminder of the painfully rapid price increases plaguing consumers and challenging policymakers.Much of the gain in the Personal Consumption Expenditures price index, released Friday, was driven by a pop in energy prices that came early in Russia’s invasion of Ukraine along with rising food costs. After stripping out volatile food and fuel prices, a core index climbed by a slightly more muted 5.2 percent in the year through March.On a monthly basis, that core measure picked up by 0.3 percent, slower than its pace the previous month.Central bank and White House officials spent much of 2021 hoping that a pandemic-era surge in used car prices and cost increases in other goods would fade as supply chains returned to normal, and strong demand cooled. But inflation has remained too high for the Fed’s comfort for a year, despite occasional hopeful signs like the latest monthly slowdown in the core measure, and its persistence is now drawing a firm response from the central bank.Policymakers lifted interest rates in March for the first time since 2018, and have set the stage for an even larger rate increase at their meeting next week. Many Fed officials now expect to raise rates back to a neutral setting — around 2 percent — by the end of the year as they try to slow down borrowing, temper demand and allow supply to catch up. The goal is to help cool off inflation so that it does not become locked into consumer and business expectations, which might make it a more permanent feature of America’s economy.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: Times readers sent us their questions about rising prices. Top experts and economists weighed in.Interest Rates: As it seeks to curb inflation, the Federal Reserve announced that it was raising interest rates for the first time since 2018.How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.The task ahead is difficult. The Fed has in the past caused recessions while trying to weigh down high inflation. Officials are constraining demand just as the war in Ukraine ramps up uncertainty and threatens to keep prices for gas and other commodities elevated, potentially making the cental bank’s job even more challenging.White House officials have been emphasizing the role that the war is playing in elevating inflation, often blaming President Vladimir V. Putin of Russia for higher prices. While Russia’s invasion did push gas prices sharply higher last month, inflation had been high for months before the conflict.Government spending helped fuel some of that increase. As households received stimulus checks and expanded unemployment benefits in 2020 and 2021, they built up cash buffers, which has helped to sustain fervid spending on couches, cars and grills even as costs have climbed higher. Strong demand for goods in particular collided with shutdowns of overseas factories and overburdened transit routes to spur shortages and push prices up.Now, though, inflation has become broader. As employers struggle to hire enough workers to meet strong consumer demand, they are paying higher wages. That could prompt some businesses to charge more to cover their rising costs. It could also help households to keep up their spending.A number of services — notably rents and restaurant meals — have grown more expensive in recent months.The Fed is trying to keep those widespread price pressures from becoming embedded. While officials still expect price increases to begin fading soon and to be running considerably slower by the end of the year, they are no longer betting on that outcome.Inflation F.A.Q.Card 1 of 6What is inflation? More

Inflation in the euro zone hit a fresh record on Friday and investors are expecting the ECB to ditch its policy of negative interest rates and massive bond purchases, which was adopted eight years ago to revive sluggish price growth.Lane seemed to confirm expectations of an imminent increase to the ECB’s deposit rate, which investors expect in July, but he was cautious on further hikes, citing the war in Ukraine as a risk to the outlook. “The story is not the issue about ‘are we going to move away from minus 0.5 (%) for the deposit rate’,” Lane said on Bloomberg TV.”The big issue which we do have to still be data-dependent about is the scale and the timing of interest rate normalisation.”The ECB has never said what it meant by normalisation but policymakers who spoke to Reuters said that equated to a policy rate of between 1% and 1.25%.Investors are pricing in nearly 90 basis points of ECB hikes by the end of this year.Data earlier on Friday showed euro zone inflation inched up to a new record high of 7.5% in April, driven by a persistent surge in energy and food prices.But even with those volatile items filtered out, inflation still rose to 3.9%, or nearly twice the ECB’s 2% target, showing price pressures were rising in all corners of the economy.”In the near-term, yes, inflation is very high and that does carry its own risk of momentum,” Lane said.”On the other hand the high energy prices are eating into disposable incomes, it’s reducing consumption and the war has a scope – especially depending on how it goes – in terms of mapping into lower investment, lower consumption, confidence effects and extra pressure on energy.” More

COLOMBO (Reuters) -All Sri Lanka’s creditors will be treated equally in a planned restructuring of the country’s debt, its central bank governor said on Friday, adding that he expected progress in talks with the International Monetary Fund (IMF) in the next two months.Sri Lanka has already missed coupon repayments on some of its bonds and its bailout discussions with the IMF include a possible bridge loan, Governor Nandalal Weerasinghe said.”All external creditors will be treated equally, whether they are (sovereign bond) holders, or China or Japan,” he said, while warning creditors not to hold up the process.”It is in the best interests of the creditors to cooperate and ensure debts are repaid as quickly as possible. If one party delays the process then they will get their payments delayed,” Weerasinghe told a news briefing.Sri Lanka’s economy was hit hard by the pandemic and tax cuts by the populist government of President Gotabaya Rajapaksa.This has led to dwindling foreign currency reserves and shortages of fuel, food and medicines that have brought thousands onto the streets in sporadically violent protests. The central bank raised interest rates by a record 700 basis points this month in an attempt to tame rampant inflation and stabilise the economy, but figures released on Friday showed the cost of most goods continued to rise sharply. Food inflation for April stood at 46.6% year-on-year, compared with 30.2% a month earlier, data from Sri Lanka’s government statistics department showed. Transportation costs were up 68.5% from last year versus 35.5% in March. “We have already significantly raised rates and expect that to be reflected in inflation numbers over the next few months,” Weerasinghe said. “Supply-side inflation will take about two to three months to come under control.” More

(Reuters) -AstraZeneca’s COVID-19 vaccine still has a role to play in the fight against the pandemic, even as sales slow and the company charges more in some places, CEO Pascal Soriot said on Friday, the latest drugmaker to warn about a global supply glut.The comments come after the company reported better-than-expected first-quarter profit and sales driven by the vaccine, its second bestseller last year raking in $3.9 billion. It also confirmed its forecast that 2022 sales of the shot would fall.The vaccine, branded as Vaxzevria and Covishield, has struggled to compete with rivals made by Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) using mRNA technology, and has hit setbacks with production, rare side-effects and relatively limited shelf life. Approval in the United States has been delayed.Soriot said the shot, which was seen early in the pandemic as the inoculation of choice for low-income countries, should remain relevant because it’s easy to administer and distribute.Volume will ease, though, because people will probably only need one booster.”We are no longer in a period of scarcity of vaccine supply – we have oversupply everywhere around the world. So what is out there needs to be used and then of course we’ll be able to get a better sense for reordering,” he said on a media call.Rival Johnson & Johnson (NYSE:JNJ) this month pulled its sales forecast for its COVID-19 vaccine, blaming oversupply on hesitancy in developing countries. So far, 2.9 billion shots of the AstraZeneca (NASDAQ:AZN) vaccine have been delivered globally. In the first quarter, the company recorded $1.15 billion in sales for the product, the majority of which came from initial contracts, but that number eclipsed analysts’ consensus forecast of $739 million, cited by Credit Suisse (SIX:CSGN).AstraZeneca’s shares were down 0.6% in early afternoon trading, underperfoming London’s blue-chip index. The company has started earning a modest profit on the vaccine, which was initially sold at-cost, but it will continue selling in low-income countries on a non-profit basis.Apart from the vaccine, AstraZeneca also has a COVID-19 treatment, Evusheld, which has been authorised in many regions including the United States, United Kingdom and European Union for preventing infections in people whose immune system is too weak to respond to vaccines. The drug generated $469 million in first-quarter revenue, below the consensus forecast of $480 million, cited by Credit Suisse.Access to the drug in the United States has been limited by logistical bottlenecks that are being addressed, Soriot said, adding Britain was one of the few developed countries that has not ordered Evusheld. “It’s a sad situation, quite frankly, because people who are immunocompromised are really suffering from the COVID crisis.” CANCER AstraZeneca – which unveiled plans to open an R&D centre in Cambridge, Massachusetts designed to serve as the new headquarters for rare disease unit Alexion (NASDAQ:ALXN), which it bought last summer – relies on cancer drugs for about a third of its total product sales.Even though COVID-19 levels are beginning to wane, access to cancer diagnoses and treatment has still not rebounded to pre-pandemic levels. Things should normalise over the next few months, Soriot predicted. Meanwhile, the company pared back its expectations for China, which accounted for about 16% of total revenue last year. The Anglo-Swedish drugmaker said it expected sales there to decline by a mid-single-digit percentage in 2022, largely due to the impact of a programme designed to bring down the prices of off-patent drugs in the country. “The future for China, we believe is still very strong and we expect to return to growth in the next couple of years,” Soriot said, cautioning that lockdowns in China this year could hurt the uptake of cancer and other drugs. More