Economy

WELLINGTON (Reuters) – New Zealand’s annual consumer price index (CPI) hit a three-decade high in the first quarter, underlining the central bank’s hawkish stance to contain price pressures bubbling in the economy.Annual inflation rose 6.9% from 5.9% in the previous quarter, the fastest rate since a 7.6% annual increase in the year to the June quarter of 1990, Statistics New Zealand said in a statement on ThursdayCPI rose 1.8% in the quarter ending March from a 1.4% rise in the fourth quarter. But the data was below economists’ expectations in a Reuters poll for a 2.0% rise for the quarter, with an annual rise of 7.1%.Rising prices for food, construction and housing is fuelling surging inflation, said Statistics New Zealand.Prices for the construction of new dwellings increased 18% in the March 2022 quarter compared with the March 2021 quarter, the largest increase recorded since the series began in 1985.”Construction firms have been experiencing many supply-chain issues, higher labour costs, and also higher demand, which have pushed up the cost of building a new house,” senior prices manager Aaron Beck said.The kiwi dollar eased 0.4% to $0.6772, from $0.6804 just before the data hit dealing screens. Two-year swap rates dipped as much as six basis points to 3.52% as the market reconsidered the chance of another half-point rate hike.The Reserve Bank of New Zealand, which met last week, has been vocal about its concern around inflation expectations in New Zealand and the need to get out ahead of it. The central bank has increased the cash rate at four consecutive meetings and signalled there will be further increases in coming quarters. More

The UN has asked Sri Lanka to introduce a temporary basic income and negotiate “debt-for-nature” swaps tied to environmental conservation as part of measures to mitigate the country’s economic meltdown, as Colombo begins talks with the IMF.The UN Development Programme made the proposals in a document seen by the Financial Times that was submitted to President Gotabaya Rajapaksa’s government and that will be reviewed by the cabinet that was sworn in this week.Sri Lanka’s lack of foreign exchange has left the debt-laden island of 22mn unable to repay its loans, triggering an economic and political crisis with mass protests over shortages of food, fuel and medicine. Rajapaksa has faced sustained calls to resign.The government, which has about $8bn of debt and interest due this year on usable foreign reserves estimated as low as a few hundred million dollars, has suspended bond payments and begun negotiations for an IMF bailout.A Sri Lankan government delegation travelled to Washington this week to begin talks with the fund over an assistance package expected to include debt restructuring. The UNDP argues that Sri Lanka, which owes about $45bn in long-term debt to creditors that include international bondholders and countries such as India and China, needs immediate financial assistance while the IMF talks are under way. The UN body has asked Sri Lanka to pursue swaps and short-term financing from countries including India, China and Bangladesh to alleviate economic pain ahead of IMF assistance.“The IMF package, if it comes in, that is going to be an austerity package,” Kanni Wignaraja, the UNDP’s Asia director, told the FT. “So the government will have to, and they are considering very much, supporting the most vulnerable households with an immediate social protection flow.”Among the UNDP’s requests is that Rajapaksa’s government introduce a temporary basic income, which would take the form of an unconditional cash transfer to working-age Sri Lankans for a period of about six to nine months. Similar programmes have been implemented in Kenya and the US state of Alaska.“It’s something that has been tried and tested,” Wignaraja said. “There’s obviously a cost to bear, but it has been found to be more efficient than some of these very heavy social protection measures.”The agency has also asked Sri Lanka to pursue bonds or debt swaps linked to environmental and social sustainability, such as debt-for-nature deals in which some loans are forgiven in exchange for investment in environmental conservation.Similar measures have been introduced in countries such as Costa Rica, and Wignaraja argued that Sri Lanka — famed for its beaches, forests and mountains — was well-placed to tap such schemes.

We’re “moving quite aggressively to see if the debt-for-nature swaps can be a big part of [a deal]. We’ve got to reduce our debt burden, not just keep restructuring it,” she said. “Sri Lanka has amazing natural resources that they can put [up] to draw down the debt.”Sri Lanka is Asia’s largest issuer of high-yield debt but was locked out of private markets and rendered unable to refinance after rating downgrades sparked by sharp tax cuts in 2019 and the loss of tourism during the pandemic.Dwindling foreign exchange reserves left the import-dependent island with shortages and severe inflation. Food and fuel prices have doubled while the currency has fallen 60 per cent since it was floated last month.Rajapaksa’s government had for months resisted international calls to restructure or approach the IMF before a U-turn last month triggered by widespread protests followed by the resignation of his cabinet. A protester was killed after police opened fire on crowds in the town of Rambukkana on Tuesday. More

Elon Musk, Tesla chief executive, said that a factory shutdown in China and severe supply chain pressures would put a further brake on the electric carmaker’s headlong growth in the current quarter.However, he stuck to bullish predictions for 2022 as a whole on Wednesday, while claiming that a new, purpose-built robotaxi without a steering wheel or pedals would reach production in 2024 and become a “massive driver of growth” for the company. The comments came as Tesla revealed that it had withstood the worst of the auto industry’s supply chain crisis to generate revenue and earnings above most Wall Street forecasts in the first quarter. The news lifted the company’s shares about 5 per cent in after-market trading, erasing a loss of the same magnitude earlier in the day.Tesla said that a continuing shortage of chips and constraints caused by Covid-19 restrictions had hit production and left it with long waiting lists for new cars, some stretching into next year.Tesla’s Shanghai plant was closed under local rules for a number of days in March, and Musk said that with the plant only now starting to pick up production again, the carmaker’s second-quarter production was likely to be “roughly on par” with the preceding period. That would mark the second quarter in a row of stalled production growth, after an 83 per cent leap in vehicle volumes last year.However, the Tesla chief predicted that a rapid acceleration at new plants in Berlin and Austin would enable the company to overcome bottlenecks and make “over 1.5mn cars this year”, a higher figure than most analysts have been expecting.Tesla has put off production of new vehicles such as its cybertruck until next year in the hope that focusing on existing models would enable it to scale up more quickly at new plants. Musk’s promise of a robotaxi for 2024 added to the spate of vehicles waiting to go into production, some of which are years behind schedule. The timing will also depend on whether Tesla can overcome persistent problems in developing its self-driving software, though Musk has predicted it will finally achieve a breakthrough by the end of this year.Meanwhile, Musk conceded that increases in Tesla’s prices at a time when its profits are hitting records risked looking “unreasonable”. But he said that long waiting lists meant many of the cars being sold would face higher production costs. “This is our best guess,” he said.

Tesla’s revenue in the latest quarter more than doubled from a year before to $18.7bn, or about $1bn more than most analysts’ forecasts, as year-over-year volumes jumped, helping increase some prices to offset higher supply costs. Pro forma earnings of $3.22 were up more than three-fold and topped estimates of $2.26.The results were boosted by $679mn from sales of regulatory credits, more than double the preceding three months. Tesla receives credits from some governments for producing more zero-emission vehicles than it is required to under local regulations, and can sell these to other carmakers that produce too few. It has warned that sales of credits will fluctuate widely and eventually decline.Even without the credit sales, Tesla managed to lift the gross margin from its automotive operations — the best measure of its underlying auto business — to 30 per cent for the first time, up from 29.3 per cent in the final quarter of last year. More

WASHINGTON/LONDON (Reuters) – Top officials from Britain, the United States and Canada walked out on Russia’s representatives at a Group of 20 meeting on Wednesday and many members spoke to condemn Moscow’s war in Ukraine, exposing deep divisions in the bloc of major economies.Indonesian Finance Minister Sri Mulyani Indrawati, who chaired the meeting of G20 finance officials in Washington, acknowledged the body faced unprecedented challenges but called for cooperation to overcome headwinds slowing global growth.”This is an extraordinary situation,” Indrawati told reporters after the daylong meeting. “It’s not business as usual, a very dynamic and challenging one.”The G20 includes Western countries that have accused Moscow of war crimes in Ukraine, as well as China, India, Indonesia and South Africa which have not joined Western-led sanctions against Russia over the conflict. Indrawati said many countries spoke out against the war at the meeting, although she did not identify them.”In order for us to be able to recover together … we need more and even stronger cooperation,” Indrawati told a briefing. “The G20 is still … the premier forum for all of us to be able to discuss and talk about all the issues.”U.S. Treasury Secretary Janet Yellen told attendees she strongly disapproved of a senior Russian official’s presence at the meeting before she walked out, two sources told Reuters.She was joined by Federal Reserve Chair Jerome Powell, Bank of England Governor Andrew Bailey, Canadian Finance Minister Chrystia Freeland, and European Central Bank President Christine Lagarde.Ukrainian officials, in Washington seeking billions of dollars of additional funding, also walked out of the meeting, a source familiar with the meeting said.Russian Deputy Finance Minister Timur Maksimov represented Moscow in person, while Russian Finance Minister Anton Siluanov and Russia’s central bank governor joined virtually, a second source said.Over five million Ukrainians have fled abroad since Russia invaded on Feb. 24, the biggest attack on a European state since 1945. The United States accuses Russia of committing war crimes in what Moscow calls a “special military operation”. Russia denies the allegations.NO ‘BUSINESS AS USUAL’One source added that Yellen told participants there could be “no business-as-usual” for Russia in the global economy, a view echoed by Indrawati, whose government is heading the G20 group this year.British Finance Minister Rishi Sunak said in a tweet: “We are united in our condemnation of Russia’s war against Ukraine and will push for stronger international coordination to punish Russia.”Russia’s finance ministry did not mention the walkout in a statement issued after the meeting. It cited Siluanov as calling on the G20 not to politicize dialogue between members and stressing the grouping had always focused on the economy.He also complained about the damaging effect of Western sanctions, the statement said.”Another aspect of the current crisis is the undermining of confidence in the existing international monetary and financial system,” it said. “The safety of international reserves and the possibility of free trade and financial transactions are no longer guaranteed.”Lagarde urged Maksimov to convey to Moscow a clear message – to end the war in Ukraine, one of the sources said.G20 finance ministers and central bank governors met on the sidelines of a semi-annual conference held by the International Monetary Fund (IMF) and World Bank in Washington, with the Ukraine war, food security and ongoing recovery from the coronavirus pandemic the key topics.Given the divisions, the group did not issue a communique. Instead, Indrawati read a statement summarizing the meeting and underscoring the importance of the body.Freeland, who is of Ukrainian descent and has made impassioned pleas on behalf of the country, said she walked out of a G20 plenary meeting to protest against Russia’s participation.”This week’s meetings in Washington are about supporting the world economy – and Russia’s illegal invasion of Ukraine is a grave threat to the global economy,” she said on Twitter (NYSE:TWTR), adding that Russia should not be participating.FRAGMENTATION FEARSIMF Managing Director Kristalina Georgieva on Wednesday acknowledged it was a “difficult moment” for the G20, a forum that has played a key role in coordinating the fight against COVID-19 and responding to the 2008-2009 financial crisis.But she said cooperation through the forum would continue. “There are clearly very, very unsettling facts we have to deal with,” said Georgieva, a Bulgarian native. “But we also recognize how interdependent we are … And it is so obvious that cooperation must and will continue.”Georgieva and Yellen have warned against a fragmentation of the global economy into geopolitical blocs, with the United States and market-driven democracies on one side and China, Russia and other state-driven economies on another. More

TOKYO (Reuters) -The yen’s recent declines have been driven by fundamentals and would be no reason for Japan to change its economic policy, including the central bank’s ultra-low interest rates, a senior International Monetary Fund (IMF) official said.The currency has plunged to two-decade lows against the dollar with the Bank of Japan (BOJ) continuing to defend its ultra-low rate policy in contrast with heightening chances of aggressive rate hikes by the U.S. Federal Reserve.”What we’re seeing so far on the yen is driven by fundamentals,” Sanjaya Panth, deputy director of the IMF’s Asia and Pacific Department, told Reuters late on Wednesday.”Economic policymaking should continue to look at fundamentals. We don’t see any reason to change economic policy because what’s happening right now reflects fundamentals.”When asked whether yen-buying currency intervention by Japanese authorities would be justified, Panth said the current policy stance was appropriate as conditions in the foreign exchange market were not disorderly.Once welcomed for the boost it gives to exports, a weak yen has emerged as a source of concern for Japanese policymakers as it inflates the already rising cost of importing food and fuel.Markets are rife with speculation Japan may act to combat further yen declines, such as by conducting yen-buying currency intervention, raise interest rates or tweak the BOJ’s dovish guidance on the future path of monetary policy.”As you know, a weak yen hasn’t been bad for Japan,” Panth said. “At the same time, it does affect households. It’s a little bit of a mixed bag,” he said in the interview.With inflation pressures still muted, there was no need for the BOJ to change its ultra-loose policy, Panth said.”Japan is in a very different situation compared with other advanced countries who have begun tightening monetary policy,” he said. “We do not see any need to change the accommodative monetary policy stance.”The BOJ is expected to raise this year’s inflation forecast but maintain its massive stimulus programme at its next policy meeting on April 27-28. More

Anglo American has joined rivals in reporting a weak start to the year after it grappled with effects from coronavirus pandemic and weather-related disruptions at its operations.Production in the three months to March was 10 per cent lower than the period a year ago because of Covid-related absenteeism and high rainfall in South Africa and Brazil, the London-listed miner said in a trading update on Thursday.“As a result, we are updating our platinum group metals, iron ore and metallurgical coal volume guidance for the full year,” said Mark Cutifani, the outgoing chief executive.The company increased its guidance on costs by 9 per cent, citing currency fluctuations and broader inflationary pressures, particularly the price of diesel, which it uses to power trucks at its sites.Anglo said operations at its Moranbah coking coal mine in Australia had been suspended following an accident in March and that it had lowered production guidance to 17mn-19mn tonnes, from 20mn-22mn previously, as a result.The statement was more positive, however, about prospects for the De Beers diamond division, saying rough diamond production had jumped 25 per cent and demand was strong. Analysts believe De Beers could benefit from the western sanctions imposed on Russian producer Alrosa.Anglo’s update came just hours after BHP, the world’s biggest miner, warned of a hit to copper and nickel production from pandemic-related absenteeism and social unrest in Chile. Rio Tinto and Vale have also issued weak first-quarter trading updates this week.“This challenging start to the year highlights the importance of adhering to our operating model to stabilise performance after the necessary disruptions of the last two years as we adapted to — and now learn to live with — Covid,” said Cutifani, who is being replaced by Duncan Wanblad, Anglo’s head of strategy and business development. More

The central bank’s weekly FOCUS survey compiles data from over 100 private economists for macroeconomic indicators, including inflation and interest rates. It was last released on March 28 and will be returned to normal next Tuesday, said the central bank. Central bank workers suspended the release of the survey and several other indicators in protest over wage demands. The strike, however, was paused on Tuesday, after the government signaled some disposition to grant salary adjustments.In charge of an aggressive monetary tightening to curb double-digit inflation, the Brazilian central bank has repeatedly said it will consider the convergence of market expectations to the official inflation targets in its policy dosage.Monitoring this data was seen as crucial at a time when consumer prices continue to surprise upwards, casting doubt on how far the tightening cycle would go. Rates stand at 11.75% from a 2% record low in March 2021, and policymakers had said one last hike of 100 basis points could wrap the process in May. The central bank said that it continued to have internal access to such information despite its interruption to the general public. More

Employees at an Apple store in Atlanta filed a petition on Wednesday to hold a union election. If successful, the workers could form the first union at an Apple retail store in the United States.The move continues a recent trend of service-sector unionization in which unions have won elections at Starbucks, Amazon and REI locations.The workers are hoping to join the Communications Workers of America, which represents workers at companies like AT&T Mobility and Verizon, and has made a concerted push into the tech sector in recent years.The union says that about 100 workers at the store — at Cumberland Mall, in northwest Atlanta — are eligible to vote, including salespeople and repair technicians, and that over 70 percent of them have signed authorization cards indicating their support.In a statement, the union said Apple, like other tech employers, had effectively created a tiered work force that denied retail workers the pay, benefits and respect that workers earned at its corporate offices.Workers said they loved working at Apple but sometimes felt they were treated like second-class employees. “We want equal to what corporate actually gets,” said Sydney Rhodes, an employee at the store who is involved in the union campaign.Ms. Rhodes, who has worked at Apple for four years, said that she and many of her co-workers hoped to continue working for Apple for years to come but that it was often unclear how they could progress within the company. “Another reason why we’re working toward this union is for a more clear and concise way to grow, especially internally,” she added.An Apple spokesman said the company offered strong benefits, including health care coverage, tuition reimbursement and paid family leave, and a minimum pay rate of $20 per hour for retail workers.“We are fortunate to have incredible retail team members, and we deeply value everything they bring to Apple,” the spokesman said, but declined to comment on the union effort. The company would not say whether it would recognize the union voluntarily.Officials at the National Labor Relations Board will next determine whether there is sufficient interest among workers to hold an election — the bar is officially 30 percent — and set the terms for a potential vote. Both the union and the employer will have an opportunity to weigh in on the details, including the universe of employees eligible to take part and whether the vote should occur by mail or in person.Other unions, most notably Workers United, an affiliate of the giant Service Employees International Union that has led the organizing campaign at Starbucks, are also seeking to unionize Apple retail workers, of which there are tens of thousands in the United States.Workers at an Apple Store at Grand Central Terminal in New York City have begun to sign authorization cards that could lead to a filing for a union vote that would allow them to join Workers United. The move was reported over the weekend by The Washington Post.Activism and labor organizing at Apple have been building since last summer, when discontent over the company’s plan to require employees to return to the office snowballed into a broader movement, called #AppleToo. That movement aimed to highlight workplace problems like harassment, unequal pay and what workers described as a culture of secrecy that pervaded the company.“Apple workers across every line of business and around the world are using their voices to demand better treatment,” Janneke Parrish, one of the #AppleToo leaders, said of the union effort. Ms. Parrish has said Apple fired her in retaliation for her organizing. “I’m so happy to see workers taking this big step to stand up for their rights,” she said. Apple has disputed Ms. Parrish’s accusations.The #AppleToo movement included retail workers, who have said throughout the pandemic that Apple did not do enough to keep them safe from the coronavirus.Retail workers’ complaints escalated late last year when the Omicron variant spread rapidly throughout the country and at least 20 Apple stores had to close temporarily as a precaution or because so many of their workers had become infected that the stores could no longer operate. On Christmas Eve, several dozen Apple workers walked off their jobs to demand better pay and working conditions. Ms. Rhodes said that the effort at her store began in earnest last fall, and that her co-workers had taken encouragement from the union campaigns at companies like Starbucks and Amazon.Beyond its overtures at Apple, the communications workers union has had a presence at Google in recent years, helping workers form a so-called solidarity or minority union that enables them to coordinate actions without holding a union election and seeking certification from the labor board. Companies are not required to bargain with minority unions, as they are with more formal unions.The union also recently won a vote to represent about one dozen retail employees at Google Fiber stores in Kansas City, Mo., who are formally employed by a Google contractor. It is seeking to represent a few dozen Wisconsin-based quality assurance workers at the video-game maker Activision Blizzard, which Microsoft is acquiring, pending approval from regulators. More