Economy

WASHINGTON (Reuters) -U.S. President Joe Biden’s administration said on Tuesday it would appeal a judge’s ruling ending a mask mandate on airplanes if public health officials deem it necessary to stem the spread of COVID-19.The Centers for Disease Control and Prevention, to whom the administration was deferring, said that it would continue to study whether the mandates were still needed. The mandates apply to planes, trains and other public transportation and, prior to Monday’s ruling, had been due to expire on May 3.”We will continue to assess the need for a mask requirement in those settings, based on several factors, including the U.S. COVID-19 community levels, risk of circulating and novel variants, and trends in cases and disease severity,” a CDC spokesperson said in a statement on Tuesday.The Justice Department said it would appeal Monday’s ruling by U.S. District Judge Kathryn Kimball Mizelle that the 14-month-old directive was unlawful, if the CDC determined the mandate was needed to protect public health.The ruling overturned a key presidential effort to reduce the spread of COVID-19.”If CDC concludes that a mandatory order remains necessary for the public’s health after that assessment, the Department of Justice will appeal the district court’s decision,” the Justice Department said in a statement.The CDC reiterated that it recommends that people wear masks on public transportation while indoors.That came hours after Biden, on a trip to New Hampshire, answered a question about whether people should continue to wear masks on planes, by saying, “It’s up to them.”Monday’s court decision, made in response to a lawsuit filed last year in Tampa, Florida, means the CDC’s public transportation masking order is no longer in effect, a U.S. official said.It comes as COVID-19 infections are rising in the United States, and more than 400 people are dying daily from the airborne disease, based on the latest seven-day average.The ruling followed a string of judgments against Biden administration directives to fight the infectious disease that has killed nearly 1 million Americans, including vaccination or COVID testing mandates for employers.”Public health decisions shouldn’t be made by the courts. They should be made by public health experts,” White House spokesperson Jen Psaki said. More

(Reuters) – Chicago Federal Reserve Bank President Charles Evans said Tuesday that he’s “comfortable” with a round of rate hikes this year that includes two 50 basis-point increases and reaches a neutral setting by year end, but he does not see the need for bigger hikes. “We should be looking for clear progress of easing inflationary pressures or else we would need to be much more concerned about how much we will have to do,” Evans told reporters after an event at the Economic Club of New York, adding that if core inflation is stuck at 3.5% the Fed may need to raise rates above neutral. “I’m just not going to be able to make a judgment about that until the end of this year and probably into next year.”Just a month ago Evans had not seen the need for two half-point rate hikes this year, but inflation has picked up, with consumer prices rising 8.5% in March, and Russia’s war in Ukraine and COVID-19 restrictions in China threaten to put further upward pressure on inflation. More

The global economy will suffer a hit to growth and higher inflation this year as a result of Russia’s invasion of Ukraine, the IMF said on Tuesday.In its World Economic Outlook, the fund said prospects had “worsened significantly” with countries closest to the war likely to be hardest hit. But it warned that risks had intensified everywhere, raising the chances of even lower growth and more rapid price rises, and upending the fund’s view that there would be a stronger recovery from the pandemic this year. The IMF’s forecasts showed global growth of gross domestic product this year of 3.6 per cent, down 0.8 percentage points since the fund’s January projections and 1.3 percentage points lower compared with six months ago. In 2021, global growth was estimated at 6.1 per cent, the fund said. In a simulation exercise, the IMF warned an immediate oil and gas embargo against Russia would raise inflation further, hit European and emerging economies hard and require even higher interest rates, including in the US.Latest news: Russian forces are using “powerful anti-bunker bombs” to shell the Azovstal steel plant in Mariupol, where civilians are sheltering underground.Military developments: Russia said it had begun a new phase of its invasion of Ukraine as officials in the eastern region of Donbas urged civilians to flee.Markets: The UK plans to strip Russia’s stock exchange of a status that allows investors to claim tax relief on trades.Energy: Can the EU give up Russian gas? The FT’s data visualisation team looks at the feasibility of the bloc’s plan to wean itself off Russian energy imports.Thanks for reading FirstFT Asia. Here’s the rest of today’s news — Emily.Five more stories in the news1. Netflix sheds subscribers for the first time in a decade Netflix shares fell more than 20 per cent after it warned its decade-long run of subscriber growth had ended in the first quarter and admitted that it is becoming “harder to grow membership” in many markets.2. Buyout groups won’t write equity cheque for Musk’s Twitter bid Elon Musk’s $43bn bid to take Twitter private is struggling to draw interest from several large institutions with the financial firepower to pull off such a large leveraged buyout in part owing to concerns over whether the social media group can become more profitable.Go deeper: Here’s a look at how Elon Musk could fund his Twitter takeover.3. Yen’s slides to fresh 20-year low The Japanese currency hit a new 20-year low yesterday as it slid for the 13th straight day, ratcheting up the stakes for the Bank of Japan on whether to maintain its ultra-loose monetary policy stance.4. China unveils new economic support measures China’s central bank unveiled 23 measures to support the economy after official data highlighted the worsening impact of a wave of lockdowns on consumer activity. The measures encouraged financial institutions to support local government infrastructure projects, the country’s struggling property sector, and provide financial services to industries hit by the pandemic.5. EV battery maker signs $9bn Indonesia supply deal A group led by South Korea’s LG Energy Solution, the world’s second-biggest EV battery maker, will invest $9bn in Indonesia to build a mines-to-manufacturing electric vehicle supply chain, as battery makers look to reduce their reliance on Chinese suppliers and mitigate commodity price rises.The day aheadJohnson to fly to India UK prime minister Boris Johnson is scheduled to fly to India on a trade and diplomatic mission, leaving behind a Westminster swirling with criticism of his conduct and a vote looming on whether he deliberately misled the House of Commons in the partygate scandal.Morrison-Albanese debate Australian prime minister Scott Morrison will face Labor leader Anthony Albanese in their first televised debate ahead of the May 21 election. Use this video to catch up on what’s on the ballot. (7 News, Guardian) Macron-Le Pen debate Polls now show Macron’s lead over Le Pen widening slightly to 54 per cent to 46 per cent ahead of a televised debate on Wednesday. Analysts predict that the debate will be crucial in swaying undecided voters or those who may abstain.Our latest newsletter, Inside Politics, launched today. Join us every weekday morning for insider analysis of the latest political news, plus polls and a dose of culture — all written by our new columnist Stephen Bush. What else we’re readingPandemic accelerates fall in China’s birth rate Before the pandemic, China was already the centre of the global baby bust, but the fall in birth rates has accelerated in the two years since the virus struck. Just 10.6mn babies were born in China last year, the lowest number recorded since the Communist party took power in 1949.Musk’s bid will change Twitter even if it fails Elon Musk’s interest in Twitter has focused global attention on the company in a way that makes it hard for executives to claim nothing can be improved. The way the business is run and the experience of its users are both up for grabs, writes Elaine Moore. A culinary tour of Hong Kong with chef Simon Rogan The British superchef shares his highlights of the Hong Kong food scene, from mooncakes to Michelin stardom — via the best fried chicken in town and creative odes to classic Cantonese cooking.Interview: Korean Air urges government to ease Covid restrictions Walter Cho, Korean Air’s chief executive, has urged South Korean authorities to lift pandemic restrictions on air passengers. In an interview with the FT he warned the country was opening “too slowly” to beat regional rivals in the race to capture pent-up demand.Should I spend, save or invest my bonus? The squeeze on living standards and turbulent world markets mean it’s even more important to use your bonus wisely. In this episode of Money Clinic, Claer Barrett discusses comments from FT readers who bravely bared their financial souls to tell us whether they intended to spend, save or invest their bonus.What would you do with a bonus? Tell us in our latest poll.

Your feedbackThanks to readers who responded to last week’s prompt asking whether you support Lawrence Wong as Singapore’s next leader. Here’s what one reader in the city-state had to say: When I heard the appointment of Lawrence Wong, the first impression was one of relief — relief in that a good choice has been made. As a resident of Singapore for over 15 years, I have valued the safety, quality of life and the sensible and stable leadership the country offers. The past two years have been as difficult for us as for others globally but we have had a sense of being ‘looked after’ and ‘led with care’. Wong is the face of the Covid Multi-Ministry Taskforce responsible for steering us through the pandemic and alongside the others in the team, has done a remarkable job. — FirstFT Asia reader in Singapore More

The International Monetary Fund’s new World Economic Outlook expects growth to slow to 3.6 percent this year. The group is one of many to slash their forecasts recently.WASHINGTON — The world economy has entered a period of intense uncertainty as a capricious pandemic and the fallout from Russia’s war in Ukraine combine to fuel rapid inflation and weigh on an already fragile global recovery.These colliding challenges are confronting policymakers and central bankers in the United States and Europe as they seek to bring down inflation without slowing growth so much that their economies tip into recession.In the last week, international organizations and think tanks have begun slashing their forecasts for growth and trade as they assess the war’s disruptions to global energy, food and commodity supplies, as well as China’s sweeping lockdowns to contain a renewed coronavirus outbreak.The pall over the world economy was underscored on Tuesday by the International Monetary Fund, which said in its World Economic Outlook that global output was expected to slow this year to 3.6 percent, from 6.1 percent in 2021. That is a downgrade from a January forecast of 4.4 percent growth this year.“Global economic prospects have been severely set back, largely because of Russia’s invasion of Ukraine,” Pierre-Olivier Gourinchas, the I.M.F.’s chief economist, said at a news briefing on Tuesday. “This crisis unfolds as the global economy has not yet fully recovered from the pandemic.”The impact of Russia’s war on the global economy will be a central topic for policymakers convening in Washington this week for the spring meetings of the International Monetary Fund and the World Bank.As the meetings got underway, policymakers grappled with how to maintain pressure on Russia while keeping the economic recovery on track and protecting the world’s poor from rising prices. While some countries that export commodities will benefit from a period of higher fuel and food prices, for most economies the disruptions weigh heavily.“The war has made an already dire situation worse,” Treasury Secretary Janet L. Yellen said in a speech about rising food insecurity on Tuesday. “Price and supply shocks are already materializing, adding to global inflationary pressures, creating risks to external balances, and undermining the recovery from the pandemic.”On Wednesday, Ms. Yellen plans to attend an opening session that will include Ukraine’s finance minister as the United States looks to stand with allies in opposition to Russia’s invasion, a Treasury official said. However, Ms. Yellen will not attend some Group of 20 sessions, such as those on international financial architecture and sustainable finance, if Russians are participating.Against that backdrop, the I.M.F.’s new data revealed a daunting set of economic headwinds. Mr. Gourinchas said the war was slowing growth and spurring inflation, which he described as a “clear and present danger” for many countries. He added that disruptions to Russian supplies of oil, gas and metals, along with Ukrainian exports of wheat and corn, will ripple through commodities markets and across the global economy “like seismic waves.”He acknowledged that the trajectory of the global economy would depend on how the war proceeded and the ultimate breadth of the sanctions that the United States and its allies in Europe and Asia imposed on Russia.“Uncertainty around these projections is considerable, well beyond the usual range,” Mr. Gourinchas said. “Growth could slow down further while inflation could exceed our projections if, for instance, sanctions extend to Russian energy exports.”Ukraine and Russia are facing the most dire economic consequences from the war. The I.M.F. expects the Ukrainian economy to contract by 35 percent this year, while Russia’s economy is projected to shrink 8.5 percent. Mr. Gourinchas noted that the Russian authorities had so far managed to prevent a collapse of their financial system and avoided bank failures but said further sanctions targeting Russia’s energy industry could have a significant impact on its economy.The sweeping sanctions that America and its allies have already imposed on Russia are the main factor contributing to the downward revision of the I.M.F.’s global growth outlook, Mr. Gourinchas said. He added that a tightening of restrictions on Russian energy exports would be an “adverse scenario” that would further slow output around the world.Rising prices around the world show no signs of abating, the I.M.F. said, even if supply chain problems ease. It expects inflation to remain elevated throughout the year, projecting it at 5.7 percent in advanced economies and 8.7 percent in emerging markets. Inflation hit 8.5 percent in the United States last month, the fastest 12-month pace since 1981.An empty street in Shanghai this week. The World Bank warned that the lingering pandemic and Covid-19 lockdowns in China could amplify income inequality and poverty rates.Aly Song/ReutersOther international organizations and research groups have also pared back their global growth forecasts. Economists at the Peterson Institute for International Economics, a Washington think tank, expect global growth to decline from a rapid 5.8 percent in 2021 to 3.3 percent annually in 2022 and 2023.The World Bank also expressed alarm this week about the state of the global economy, warning that the lingering pandemic, Covid-19 lockdowns in China and higher inflation could amplify income inequality and poverty rates. It lowered its 2022 growth forecast to 3.2 percent from 4.1 percent.“I’m deeply concerned about developing countries,” David Malpass, the World Bank president, said on Monday. “They’re facing sudden price increases for energy, fertilizer and food, and the likelihood of interest rate increases. Each one hits them hard.”According to the Bank of International Settlements, more than half of emerging economies have inflation rates above 7 percent. And 60 percent of “advanced economies,” including the United States and the euro area, have inflation over 5 percent, the largest share since the 1980s, the bank said.In Britain, inflation climbed to 7 percent in March, the highest level in 30 years.An April 12 survey of global investors by BofA Securities found that more than two-thirds were pessimistic about global growth prospects in the months ahead.The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

(Reuters) -The U.S. Department of Education has canceled student loan debt for 40,000 people and offered credits to help another 3.6 million pay off their loans under a plan announced on Tuesday designed to aid low-income borrowers and public servants.”Student loans were never meant to be a life sentence, but it’s certainly felt that way for borrowers locked out of debt relief they’re eligible for,” Education Secretary Miguel Cardona said in the statement. The measures add to other steps taken by the administration of President Joe Biden, including a pause on nearly all student loan collection, but they stop short of demands from the progressive wing of the Democratic Party for comprehensive student loan forgiveness. In his 2020 presidential campaign, Biden called for canceling $10,000 in student loan debt for each borrower, a commitment of more than $400 billion. Since he was elected, the White House has said Congress must take action for wider student loan relief.The government said it was addressing “historical failures” to communicate to borrowers all the benefits they were eligible for in federal student loan programs.At least 40,000 borrowers will receive immediate debt cancellation under the Public Service Loan Forgiveness (PSLF) Program.Several thousand borrowers with older loans will also receive forgiveness through income-driven repayment (IDR) forgiveness, plus another 3.6 million borrowers will receive at least three years of additional credit toward IDR forgiveness, the Education Department said in a statement. Those programs cap the amount lower-income borrowers are required to pay and forgive the remaining balance after a set number of years.Student loan debt is seen as a drag on the economy, burdening young professionals for years after graduation, while the wide availability of loans has contributed to rising tuition.Some 43.4 million borrowers are carrying about $1.6 trillion in outstanding student loans from the Federal Loan Portfolio, an average of more than $37,000 each, according to the Education Data Initiative.The Biden administration canceled more than $17 billion in debt for 725,000 borrowers in its first year in office while also extending a pause on loan repayment that has provided at least temporary relief for 41 million borrowers, the Education Department said. More

WASHINGTON (Reuters) – Russia’s economy will not recover anytime soon from sweeping sanctions imposed by Western nations over its war in Ukraine, and could see further damage if those sanctions are expanded to hit energy exports, the new chief economist of the International Monetary Fund said Tuesday.Pierre-Olivier Gourinchas, who joined the fund in January, said U.S. and Western sanctions and export bans had put the Russian economy on a “very different trajectory,” making the kind of rebound often seen after economic shocks unlikely.”As long as these sanctions are in place – and they could be in place for a quite a long time – then the Russian economy is going to be on a very different growth trajectory,” Gourinchas told Reuters in an interview.”We’re viewing this as … something that is really hurting the Russian economy going forward and could hurt it even more if the sanctions are escalated,” he said. “The shock is already pretty sizeable … and we don’t expect that there would be a bounce back from where the Russian economy is.”The IMF on Tuesday slashed its forecast for global economic growth by nearly a full percentage point, citing Russia’s war in Ukraine, and warning that inflation was now a “clear and present danger” for many countries.It said Russia’s gross domestic product was expected to contract 8.5% this year, with a further drop of 2.3% expected next year.Gourinchas told a news briefing earlier that Western sanctions targeting Russian energy exports could cause Russia’s economic output to drop by as much as 17% by 2023.Russia’s economy would effectively be “thrown into autarchy” if sanctions were expanded to include energy, leaving it with only a few trading partners, he said.While countries like China and India have not joined Western sanctions on Russia, the threat of secondary sanctions was still having a chilling effect on their trade with Russia, he said.”We’re seeing that, for instance, with a number of Chinese companies – there’s a fear of second-rung sanctions, that if you’re doing business with sanctioned entities, then you yourself could be subject to sanctions yourself,” he said.The continued sanctions would force India and China to make difficult choices going forward, given their need to continue to trade with the rest of the world, even if they saw a chance to buy Russian oil and gas at lower prices now.”It’s very important to remain in those (global) supply chains going forward,” he said. “A lot of countries are going to have to ask themselves, where do we want to be in that new landscape that is emerging?”Right now, he said, he did not expect many countries to “make the choice that their future lies in jumping to the other side.”Gourinchas said a recovery in the value of the Russian ruble could not obscure general indications in the economy, including elevated inflation numbers. At the same time, it was clear that Russian monetary authorities had been successful in using capital controls and higher interest rates to avert bank runs, failure of financial institutions or a “complete financial meltdown.”For now, he said, there were no signs of social unrest triggered by rising energy and food prices in Russia, although the IMF has warned that unrest could increase in other parts of the world where prices have surged. More

WASHINGTON (Reuters) – The potential for a global economic slowdown is reason for the Fed “to be cautious” as it raises interest rates in coming months, Atlanta Fed president Raphael Bostic said in comments Tuesday to CNBC.“I don’t think it is easy to know for sure how strong the economy is going to continue to be as we move through the summer and into the fall,” said Bostic, who sees rates rising less this year than many of his colleagues. The International Monetary Fund’s reduction in estimated 2022 global growth to 3.6% from 4.4% “is a sign we need to be cautious as we move forward.” More

The UK will be the worst-performing G7 economy next year with the cost of living crisis and tax increases projected to slow economic activity to a crawl, according to a new IMF forecast. The US, Japan, Germany, France, Italy and Canada are forecast to grow faster, according to the fund. The new forecast undermines recent claims by Boris Johnson, prime minister, that the UK was the fastest growing G7 economy thanks to its successful vaccine programme and recovery from the coronavirus pandemic. In a speech to a Conservative party conference last month, Johnson said: “Thanks to the speed of that booster rollout, we have the fastest growing economy in the G7.”The IMF predicted that Britain’s economy would increase by just 1.2 per cent in 2023 and that its inflation would be higher than every other G7 member and slower to return to its 2 per cent target. Pierre-Olivier Gourinchas, IMF chief economist, said: “What we are seeing is that the UK is facing elevated inflation, and tight monetary policy is weighing down on economic activity this year and next.” Economists have pointed out that the UK’s economic performance over the Covid-19 crisis has been average among the G7. This has been masked by greater volatility following a relatively big contraction in 2020 followed by a faster recovery last year, with the IMF forecasting more of a hangover in 2023 as taxes rise.Julian Jessop, an independent economist, said the volatility of the UK’s performance from year to year depended on the timings of its Covid lockdowns, subsequent bounce-backs and its exposure to Russia’s invasion of Ukraine. “The medium-term growth performance [of most G7 countries] is pretty similar,” he said, adding that the UK’s growth projections for the middle of the decade were towards the top of the G7 league table, highlighting a reasonable outlook. Weak growth next year as households deal with the rising cost of living and companies face an increase in the corporate tax rate from 19 per cent to 25 per cent next April will make it difficult for Rishi Sunak, chancellor, to put the economy centre stage in any early general election. Rachel Reeves, shadow chancellor said: “The IMF’s economic outlook shows the UK is forecast to have the slowest growth in the G7 next year. Once again, the Conservative economic strategy of low growth and high taxes is laid bare.”With slow growth in 2023, the IMF forecast that unemployment would rise to 4.6 per cent after it hit a multi-decade low of 3.8 per cent at the start of the year, according to official data. More