Economy

JPMorgan (NYSE:JPM) predicted Turkey’s annual inflation would hover in the 65-70% range until the very end of the year when it could fall to 44% due to strong base effects.”The CBRT (Turkey central bank) has put all its emphasis on the FX-protected deposit scheme and is unlikely react to the CPI data no matter how strong it is,” said Yarkin Cebeci at JPMorgan in a note to clients.Goldman Sachs (NYSE:GS) forecast inflation to peak around 67% in May-June and remain above 65% for most of 2022 though end the year at 45%. “We also see upside risks from commodity prices and the monetary policy stance which is not geared to fighting inflation,” Murat Unur at Goldman Sachs wrote in a note to clients. “Real rates in Turkey are now deeply in negative territory and are likely to fuel inflation further in the coming months.” More

Costs for UK manufacturers have “shot up in an unprecedented manner”, according to official statistics that point to the price of food rising further later this year.Supply chain challenges, increasing costs and labour shortages have all pushed up prices for UK food and beverage manufacturers, an analysis of various official surveys published on Monday by the Office for National Statistics found. In March 2022, 60 per cent of UK businesses in the food and beverage sector reported being affected by rising energy prices, the highest of any industry and well above the 38 per cent average across all sectors, the data showed.UK food and beverage consumer prices rose at an annual rate of 5.1 per cent in February, the fastest pace in more than a decade.“Prices have shot up in an unprecedented manner,” said a food manufacturer that took part in a survey by the ONS. “Then electricity prices and wages on top of our raw materials — it’s very difficult. We are struggling to keep pace with the increases.” “We have experienced significant price increases across the supply chain. These have been anything up to and including 100 per cent increases,” echoed another food manufacturer.Cost rises take time to pass through the supply chain and the latest figures suggest pressures are mounting for consumers. In March, nearly 60 per cent of food and drink producers reported that they had to pass on price increases to customers, well above the 37 per cent across all businesses.About one-third of UK food producers also reported paying higher staff costs, while a similar proportion lamented difficulties in finding workers.  “We continue to face significant challenges as a business and remain in constant crisis management mode,” said one food manufacturer.The data were published as the price cap set by the energy regulator rose by an average of 54 per cent in April, reflecting spiralling international gas prices following Russia’s invasion of Ukraine. Food manufacturers are particularly exposed to the rise in energy costs as about one in five have variable electricity prices, a higher proportion than in the other industries. Faced with the rising cost of living, about one-third of respondents said they had spent less on food shopping and essentials in March, a strong rise from a few months ago, adding weakening demand to manufacturers’ challenges. The ONS data showed that food and beverage businesses were more likely to have incurred extra costs due to the end of the Brexit transition period on January 31 last year. More than half of food producers have switched to UK suppliers as a result. In March, nearly half of businesses in the sector reported additional transportation costs — twice as many as across all sectors. One-third said costs were up due to increased red tape, while one-fifth reported higher import prices. “Goods imported are taking longer to reach us. They cost more, and we are having to consider other suppliers’ goods whose prices are greater than what we bought before,” said an animal feed manufacturer. More

The value of the market would jump 72.6% from the Portland-based research firm’s estimate of nearly $73 billion in 2020, when COVID-19 delays and reallocation of funds to support the health crisis “severely affected” the defence sector.An increase in geopolitical conflicts and bigger military budgets would likely push the figure up at an annual compounded rate of 5.4% until 2030, the report said.U.S. President Joe Biden last week requested a record peacetime national defence budget, which would prioritise modernizing its nuclear “triad” of ballistic missile submarines, bombers and land-based missiles.The report predicted that demand for small nuclear warheads, which can be easily deployed through aircraft and land-based missiles, would fuel faster growth in these segments, although submarine-launched ballistic missiles (SLBMs) accounted for a quarter of the market in 2020.While North America dominated more than half the global market in 2020, the report predicted the fastest growth would come from the Asia-Pacific region on initiatives by India, Pakistan and China to bolster their nuclear arsenals.”However, international treaties and consortiums discourage nuclear testing,” the firm said in a report summary. “This hampers the market growth.” It predicted that the rising influence of non-nuclear proliferation treaties and national efforts should increase the number of warheads in storage or awaiting dismantlement.Active weapons, however, accounted for the “lion’s share” – more than two-thirds – of the market in 2020, it said, due to investment in nuclear arsenals and new warhead purchases.Britain, China, France, Russia and the United States at the start of the year issued a joint statement saying there could be no winners in a nuclear war and it must be avoided. More

Hello and welcome to Trade Secrets. The horrors of the Ukraine war are mounting, and with them the spillover of security and foreign policy tensions to the whole of global governance. An EU-China summit took place on Friday where the sides disagreed frostily without resorting to actual fisticuffs, which is about the best you could hope for at this point. Official trade relations between the EU and China have been, it is safe to say, less than cordial. Any attempt to improve them is hostage to what attitude China takes to Ukraine and the sanctions on Russia. Speaking of national security and trade, today’s main piece is on one of the biggest test cases of the ability to build resilient supply chains between like-minded countries, the semiconductor industry. Charted waters is looking at food prices.Chips off the EU blocThe Ukraine war and the worsening crunch in international trade have given a bit more oomph to a trend already building up steam (or whatever the appropriate high-tech metaphor is) — governments poking around in supply chains convinced that they can make things better. Semiconductors are famously the big deal here. As the academics Anthea Roberts and Nicolas Lamp cogently argue, chips have emerged as a precursor of a whole series of potential wider battles to secure vital supplies and build up domestic capacity.Semiconductors are a tough test of the ability of industrial policy to target interventions precisely, given the blindingly complex globalised supply chain involving multiple stages of R&D, production and distribution. In the light of global semiconductor shortages (potentially worsened by the Ukraine war), the EU and US are each passing a Chips Act to secure supply.Supposedly they and the other big rich-world semiconductor producers (Taiwan, South Korea, Japan) will try to co-ordinate their interventions so they don’t end up doing the same thing. I’m — guess what? — sceptical this will happen. The co-operation mechanisms in the EU’s and US’s plans are pretty feeble and the Trade and Technology Council that Washington and Brussels have just set up to talk to each other on these matters doesn’t really have enough power.Whatever the intentions, Capitol Hill lobbies in particular are on hand as ever to turn a potentially constructive idea into a bad one. Midwestern lawmakers have already managed to reserve some of the money for less sophisticated “legacy” chips for the car industry, risking a future glut and companies indefinitely dependent on subsidies. In the EU, a big chunk of money is being spent getting Intel to invest: it’s vital to have more of the manufacturing part of the supply chain onshored in Europe because it is, so there. Even the European tech industry, which will benefit from funding, thinks it could be better focused.One institution at the heart of all of this is Interuniversity Microelectronics Centre (Imec) in the Belgian university town of Leuven. The world’s most advanced R&D hub for chips and other digital and nanotech, with more than 12,000 square metres of clean rooms for manufacturing, it dominates a vital early stage in the semiconductor supply chain. To your author, a humanities and social sciences graduate, some of their activities (the Mission Lucidity project recreates the circuits of human brains on chips to try to detect and treat Parkinson’s disease and dementia) seem somewhere between science fiction and outright sorcery.Founded in the 1980s with funding from the regional Flemish government, it has built up a dense worldwide ecosystem including 5,000 expert scientists and more than 600 industry partners. Its Chinese business has dropped off thanks to export controls from US and EU governments, but it’s active pretty much everywhere else. It’s a cluster that would be extremely hard to replicate.Nonetheless, other governments want some of the action. In a Trade Secrets interview, Luc Van den hove, Imec’s chief executive, says it will be setting up a research facility in the US to connect with universities (and federal dollars) there. “We can’t be naive,” he says. “It’s not politically acceptable to have full separation of the supply chain, to do only one thing in one place and another in another.”The ambition is “building bridges and connecting continents, having satellites across the world”. The danger is that governments will push for walled-off supply chains. “Doing nothing on US soil is probably not politically realistic, but duplicating makes no sense.”In the EU context, Van den hove welcomes the Chips Act but also approvingly quotes Margrethe Vestager, the EU competition commissioner, about the need for a level playing field. Vestager is sceptical of large-scale government subsidies and is often at odds with internal market commissioner Thierry Breton, an instinctive interventionist and the driving force behind the Chips Act. Last year Breton made a point of visiting Imec with journalists in tow.“Each region should take an important position in the global value chain, which does not mean everybody has to do everything,” Van den hove says. “We should not fall into protectionist rhetoric.” He adds: “I support having Intel coming over to Europe, but the centre of gravity of Intel will always be in the US. Moving Imec from Europe to the US makes no sense, but having a significant research activity in the US makes sense.”Distance isn’t really the issue, he notes, pointing out it’s about the same distance from Europe to the US east coast as it is from the US east coast to the west. The point of dispersing is being able to build up different networks of skilled workers and university research.One of the best ways for Europe to be part of a secure semiconductor supply chain is not to try to do everything but to make other economies dependent on what it does well. “We should also create reverse dependencies so that we stay connected,” Van den hove says. “Europe has unique assets which are nearly impossible to copy.”So there’s the challenge: diversification without duplication. There’s a lot of public money being thrown at the chip problem, but the risks of poor co-ordination, special-interest lobbying and good old economic nationalism mean it’s going to be a challenge to make sure it lands in the right place.Charted watersThe Ukrainian war is forcing the European farming sector to take some tough decisions as Russia’s invasion of its neighbour squeezes grain supplies and sends the cost of energy and other raw materials skyrocketing, as this excellent piece of on-the-ground reporting by FT colleagues from across the continent explains.

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The above chart shows how the problem reaches much further than Europe. It is also feeding through into the prices consumers see at the checkouts. German retailer Aldi has got tongues wagging at the tills after announcing that it is raising prices by up to 50 per cent today, blaming rising production costs caused by the Ukrainian conflict. If a discount retailer like Aldi cannot hold back the cost pressures, it seems highly probable that others will follow suit. (Jonathan Moules)Trade linksSoaring energy costs have caused bicycle manufacturers to slow the reshoring of production to Europe.The US trade representative’s office has released its annual National Trade Estimate, a 500-page moan about everyone else’s trade policy.Cutting off Russian gas supplies would savage German industry, executives are warning.The Peterson Institute’s Russia sanctions tracker is updated to the end of last week — keep watching for the impact of new measures being discussed by the EU.The Ukraine war has clobbered the EU’s farmers, with implications for global agricultural trade. More

Investing.com — Chinese ADRs get a boost after state regulators say they’ll lift the current ban on providing full audit information to foreign regulators. The EU plots fresh sanctions against Russia after evidence emerges of atrocities committed by its soldiers during their occupation of northern Ukraine. Elon Musk takes a 9% stake in Twitter and Howard Schultz pauses Starbucks’ buyback program. Here’s what you need to know in financial markets on Monday, 4th April.1. EU mulls new sanctions after evidence of Russian atrocities The EU is set to discuss fresh sanctions against Russia later after evidence emerged at the weekend of atrocities committed by Russian soldiers during their three-week occupation of areas around Kyiv. France’s President Emmanuel Macron called for an immediate embargo on oil and coal imports from Russia, but not on natural gas imports. Germany remains opposed to such measures.The Mayor of Bucha, Anatoliy Fedoruk, said the authorities had found 280 people in a mass grave, all shot in the back of the head, some with their hands tied behind their back. Iryna Venediktova, Ukraine’s prosecutor general, said 410 bodies of civilians had been recovered from the Kyiv region. Those executed included the mayor of the town of Motyzhyn, Olga Sukhenko, along with her husband and son.Russia’s Foreign Minister Sergey Lavrov said the reports were fake and orchestrated by the Ukrainian authorities. An editorial by the Russian news agency RIA Novosti meanwhile called for the liquidation of the whole Ukrainian elite.2. Chinese ADRs roar after regulators unveil new audit rulesChinese tech stocks rallied in Hong Kong after mainland regulators said at the weekend they will lift the ban on providing full audit information to foreign regulators. That appears to remove the threat of the forced delisting of their American Depositary Receipts by the U.S. Securities and Exchanges Commission.The Hang Seng index rose 2.1%, while mainland indices were closed for a public holiday. In premarket trading in New York, Alibaba (NYSE:BABA) ADRs rose 4.9%, while Baidu (NASDAQ:BIDU) ADRs rose 5.0%, and Pinduoduo (NASDAQ:PDD) ADRs rose 8.0%.The China Securities Regulatory Commission unveiled draft rules on Saturday that the English-language China Daily publication said will provide clearer guidelines for confidentiality for overseas listings, as well as facilitating cross-border regulatory cooperation, including joint inspections.3. Elon Musk takes a stake in TwitterTwitter (NYSE:TWTR) stock rose 25% in premarket after Tesla (NASDAQ:TSLA) disclosed that its CEO Elon Musk had taken a passive stake of 9.2% in the social media company. Musk, who paid $40 million to settle SEC charges that he misled investors with tweets in 2018, has criticized the platform for restricting free speech.The news comes after Tesla said at the weekend it posted a new record for deliveries in the first quarter despite what Musk called “exceptional” difficulties.Tesla’s Shanghai factory is set to remain closed again this week after city authorities extended their lockdown order to allow for testing of all 25 million of its inhabitants for COVID-19. Reports from China suggest that outbreaks of the virus continue to spread, even as global deaths from the disease hit a two-year low.4. Stocks set to push higher; Starbucks in focus; Durable goods data dueU.S. stock markets are set to push a little higher at the opening, still supported by a rock-solid employment report for March that showed continued rapid gains in jobs and wages.By 6:15 AM ET (1015 GMT), Dow Jones futures were up 23 points, or 0.1%, while S&P 500 futures were up 0.2% and Nasdaq 100 futures were up 0.4%.Stocks likely to be in focus later (in addition to Twitter) include Starbucks (NASDAQ:SBUX), after chairman Howard Schultz paused the coffee chain’s buyback program on his return to the CEO’s seat, and J.P. Morgan (NYSE:JPM), after CEO Jamie Dimon acknowledged a possible loss of to $1 billion on its Russia exposure in the long term. Data for U.S. factory and durable goods orders are due at 8:30 AM ET.5. Oil flat as EU sanctions talk balances Shanghai lockdownCrude oil prices have opened the week in a mixed fashion, with the news from China and weekend talk of European nations joining the latest U.S. initiative to release strategic reserves weighing, while the talk of fresh EU sanctions on Russia has kept the threat of a squeeze on non-Russian supplies alive.By 6:25 AM ET, U.S. crude futures were up a modest 4c at $99.31 a barrel, while Brent futures were down less than 0.1% at $104.31 a barrel.ICE Dutch TTF Natural Gas Futures were left unchanged as German politicians reiterated their opposition to an immediate boycott on Russian natural gas. More

Russia has been accused of committing war crimes after the dead bodies of hundreds of unarmed civilians were discovered in areas recently occupied by Russian forces near the Ukraine capital Kyiv.Volodymyr Zelensky, Ukraine’s president, vowed to create a “mechanism of justice” to investigate alleged atrocities by the retreating Russian soldiers in the city of Bucha, 25km north-west of Kyiv. “The world has already seen many war crimes. At different times. On different continents. But it is time to do everything possible to make the war crimes of the Russian military the last manifestation of such evil on earth,” Zelensky said in a video address on Sunday.Iryna Venedyktova, Ukraine’s prosecutor-general, said 410 bodies of civilians had been recovered from the Kyiv region.Human Rights Watch, the New York-based group, said it had documented several cases of unlawful violence it described as “apparent war crimes”, including in the Chernihiv, Kharkiv and Kyiv regions.Pictures of charred corpses and reports of mass graves prompted outrage from western leaders yesterday. Images from Bucha were “unbearable”, French president Emmanuel Macron said on Twitter. German chancellor Olaf Scholz described “terrible and grisly” scenes emerging from the town, mentioning “roads littered with corpses”.“You can’t help but see these images as a punch to the gut,” said US secretary of state Antony Blinken, urging the global community against becoming “numb”. Liz Truss, British foreign secretary, said she was “appalled by atrocities in Bucha and other towns”, adding that the UK was collecting evidence of war crimes.The EU said it was preparing to introduce more sanctions against Moscow after the reports emerged. Russia’s ministry of defence denied accusations of murdering civilians, describing the claims as a “provocation”, adding that photos and videos of atrocities are “another production of the Kyiv regime for the western media”.China, which has refused to condemn Russia’s invasion of Ukraine, offered a muted response on Monday. Meanwhile, Russian forces continued their bombardment of critical infrastructure in the south of the country. The besieged city of Mariupol remained a target and the port of Odesa, further to the west, was targeted for the first time over the weekend. The mayor of Mykolayiv, 130km north-east of Odesa, said Russian troops launched several rocket attacks on his city earlier today.More on Ukraine: Nato: Just four months ago, the idea of Finland joining Nato this year would have seemed far fetched. Now, the prospect of Russia’s once-neutral neighbour applying to become a member seems all but inevitable.Diplomacy: The war has sparked a debate in Europe on the merits of neutrality. Chinese leader Xi Jinping called on the EU “to pursue an independent policy towards China” — a thinly veiled criticism of the bloc’s solidarity with the US.Sanctions: Small businesses and multinationals alike are devising creative solutions to keep money flowing in and out of Russia as they face decisions about whether to suspend business in the country entirely.Demographics: Asked what keeps him up at night, Vladimir Putin identified Russia’s population decline and the threat it poses to the economy. The birth rate dropped during the second world war and after the fall of the Soviet Union, leading to labour shortages. The war in maps: Follow the conflict with the FT’s visual guide to Russia’s invasion of Ukraine in a series of maps and infographics.Thanks for reading FirstFT Americas. Here’s the rest of today’s news — GordonFive more stories in the news1. Jamie Dimon warns of ‘volatile markets’ JPMorgan chief executive Jamie Dimon, in his annual letter to shareholders, has warned of “very volatile markets” to come as the Federal Reserve tightens monetary policy. Meanwhile, Mary Daly, president of the Fed’s San Francisco branch, made the case for a half-point interest rate rise in an interview with the Financial Times. 2. US executives reap record pay US chief executives are on track to receive record rewards this year while CEO pay ratios, which compare a chief executive’s total annual pay with that of the median company employee, are also on track to hit a record. Part of the jump in executive pay stemmed from bonuses paused or slashed in 2020 during the pandemic.3. Carrie Lam says she will not seek a second term Hong Kong’s chief executive said she would not seek a second five-year term in office, signalling the end of her tumultuous tenure as the territory’s most senior leader. Lam’s resignation came shortly after Hong Kong, which has followed China’s strict zero Covid policy, was rocked by a disastrous Omicron outbreak that peaked last month.4. Costa Rica elects anti-establishment candidate as president Rodrigo Chaves, a former World Bank official accused of sexual harassment, is on course to become the next president of Costa Rica. Elsewhere, Viktor Orban won a fourth consecutive term as Hungary’s prime minister and in Serbia president Aleksandar Vucic was on track to be re-elected. 5. China changes audit secrecy rules in bid to stop US delistings In a significant concession to pressure from Washington, Beijing has revised confidentiality laws in efforts to stop about 270 Chinese companies from being delisted from US exchanges. This is China’s first major rule change to allow disclosure of financial information outside the country.The day aheadOutlook for markets The yield on two-year US government bonds exceeded the 30-year for the first time since 2007, as investors continued to fret about the prospect of a recession in America caused by a rapid rise in interest rates to calm inflation. Equities futures trading implied a small loss for shares on Wall Street when trading begins this morning. Go deeper: Mohamed El-Erian says investors in equities would be wise to make the most of their recent gains and take some chips off the table.Canada outlook Bank of Canada publishes its quarterly Business Outlook Survey. In its previous release, the central bank warned that “reports of supply chain bottlenecks and labour shortages remain elevated”. (FT, Bank of Canada)US factory output US February factory orders data are released. According to recently released purchasing managers’ index responses, US “companies are not anticipating a downturn just yet”. (IHS Markit)Pakistan’s constitutional crisis The country’s Supreme Court is to convene today to hear arguments and later rule on whether Prime Minister Imran Khan and his allies had the legal right to dissolve parliament and set the stage for early elections.Space ambitions Nasa will hold a press conference to discuss the final test stages — called a “wet dress rehearsal” — for its Artemis 1 rocket. (Nasa)Starbucks chief retires Starbucks chief executive Kevin Johnson retires today, with Howard Schultz returning to the helm as interim CEO. (Reuters)What else we’re readingHave we reached peak globalisation? Dockworkers in Los Angeles have never been busier. The biggest US port reported its highest-ever level of activity in February. Yet policymakers, economists and investors fear globalisation has peaked after 30 years of growth. Reforms should stop Spacs in their tracks The mania for special purpose acquisition companies was always going to end in tears, writes Brooke Masters. Since the start of the pandemic, more than 1,000 such companies have floated on global stock exchanges but now US regulators are planning to tighten rules governing these investment vehicles. Shanghai lockdown tests limits of Xi Jinping’s zero-Covid policy The city of 26mn is dealing with rising cases of Omicron but there are signs of growing public anger at the stringent measures introduced by Beijing to control the outbreak. Five ways to fight the information war For those of us fortunate enough to be a safe distance from the horrors of war, the Russian invasion of Ukraine is providing a crash course in how to think both about accidental misinformation and deliberate disinformation. Tim Harford offers some simple guidelines to follow when interacting with social media.Why being a manager matters more than ever Management matters. Above all, managers matter, writes Andrew Hill. If nothing else, when managers fail, things have a tendency to go wrong. Bad management leads, at best, to unnecessary misery for staff, and at worst, as two extreme cases suggest, to disaster and death.BooksToday we begin our search for the best business book of the year. Now in its 18th year, previous winners of the prize include Sarah Frier’s No Filter about the rise of Instagram and John Carreyrou’s Bad Blood, whose reporting exposed the Theranos scandal. Go deeper: Andrew Hill explains how the recent explosion of business titles has taken them beyond off the page and into streaming services and other media. More

The writer is professor of history and international affairs at Princeton UniversityToday’s pick-up in inflation was initially driven by large fiscal packages and supply chain disruptions during the pandemic. It is now certain to last much longer because of military conflict and additional disruption of supply chains. Food and fuel price rises are likely to spark discontent, protests and even revolutions across the world. Does this amount to an end of globalisation, pushing national inflation levels even higher?Early this century, policymakers and academics identified a relationship between globalisation and a transition to low inflation in rich industrial countries, then in Asian emerging markets and ultimately even in Latin America, where inflation had been a way of life. A global labour market pressed wages down in the rich countries, and poorer countries wanted monetary stability.Fed chair Alan Greenspan explained in 2005 that globalisation and innovation were “essential elements of any paradigm capable of explaining the events of the past 10 years”, or what was termed the Great Moderation. As late as 2021, Jay Powell, current Fed chair, still referred to “sustained disinflationary forces, including technology, globalisation and perhaps demographic factors”.Those forces have not ceased to operate, but in order to be harnessed productively they require effective action by governments. That is where history holds out a lesson. To understand why our future is not necessarily so bleak, and why globalisation may not be ending because of the pandemic or war in Ukraine, look at the decisive turning points of the past. They were inflationary, but they drove the world to more not less globalisation. Modern globalisation appears as two distinct episodes. The first began in the mid-19th century but was interrupted by the first world war, after which there was a desperate attempt to revive globalisation with a more robust institutional framework. This failed with the Great Depression. Then new-style globalisation took off in the 1970s. Both caesuras started with shortages and inflationary surges.The antithesis of globalisation can be found in periods of conflict and war, when economic advantage appears as a zero-sum game and fiscally driven inflation drives up prices. The two world wars interrupted globalisation. Now we are living through a 21st-century conflict that may be thought of as a return to the era of world wars and cold war. Both modern globalisations were technologically driven and involved big productivity gains in transport. The steam engine opened up continents and oceans with railroads and steamships. The container cut the cost of moving goods after the 1970s. But these innovations long predated the moment at which they made an economic impact. Matthew Boulton and James Watt were creating operational steam engines as early as the 1770s. The Autocarrier, usually thought to be the first container ship, was launched in 1931.It required a specific set of circumstances to realise the transformative character of the innovations. This came with the disruption of big price rises. The new technologies would pay off because of conditions of shortage. The adoption of innovation depended, too, on policy choices: the removal of impediments to commerce, but also a consensus around a stable, internationally applicable monetary framework, whether the gold standard in the late 19th century or modern inflation targeting in the late 20th century.Before that happened, each era saw monetary and price surges. In the 19th century, this originated in a combination of new gold supplies and banking innovation. Over a century later, there was the same move to inflation, then a push to globalise to alleviate scarcity, then a long disinflation. The Great Inflation of the 1970s began with economic overheating which encouraged the actions of the Opec cartel. Shortages and price hikes destroyed confidence in government, and that required a rethinking of policies. The new vision involved monetary stabilisation and a refocusing of government on core tasks. It was inflation that helped create a new policy environment in the mid-19th century and in the 1970s. As the economic and political costs of inflation became more obvious and more damaging, it appeared more attractive to look for ways to calm inflationary pressures.For sure, the disinflationary cure — more globalisation as well as more effective government — was temporarily uncomfortable. But it drove the world to seize technical and geographical opportunities once ignored or neglected. There is, in short, a post-conflict future to which we might look forward with some degree of hope. More

PARIS (Reuters) – French President Emmanuel Macron risks seeing high inflation eroding economic gains achieved during his presidency as he seeks a second term.Macron was elected in 2017 on promises to reboot the euro zone’s second-biggest economy with a shock of pro-business reforms by cutting taxes, easing labour laws and aggressively promoting France to foreign investors.His early reforms prompted violent anti-government “Yellow Vest” protests in late 2018, but Macron can point to a series of indicators as evidence his reform drive is paying dividends.Opinion polls show Macron is likely to win the first round of the election on Sunday. But far-right leader Marine Le Pen is staging a comeback in the polls and the race is tightening between the two frontrunners for the April 24 run-off.ECONOMIC OUTPUT During his presidency, France’s economy outperformed other big European countries as well as the broader euro zone, bouncing back from the worst of the COVID crisis with the strongest growth in more than five decades.For a related graphic on French growth vs European peers over last five years, click https://tmsnrt.rs/3NBsPjdUNEMPLOYMENTStrong growth along with labour reforms to make hiring and firing easier have helped push France’s stubbornly high unemployment to the lowest level since the start of the 2008 global financial crisis.More remarkably, youth unemployment – a bane of Macron’s predecessors for decades – has come down even faster as his government ramped up apprenticeship programmes and incentives to hire young people.For a related graphic on Unemployment in France, click https://tmsnrt.rs/36DvokhINFLATIONRecord high inflation across the euro zone has left Macron’s government increasingly at pains to convince voters that its cocktail of growth, tax cuts and targeted payouts to people on low incomes is translating into real purchasing power gains.To keep those gains from evaporating, France put together a more than 25 billion euro ($27.6 billion) package of measures to soften the blow of an energy price-fuelled inflation spike.For a related graphic, click https://tmsnrt.rs/3uBcjaoWhile costly caps on gas and power price increases have kept French inflation lower than in most other euro zone countries, Macron’s rivals are capitalising on voters’ frustration with dwindling purchasing power.COMPANY REGISTRATIONSThe inflation surge is tarnishing an economic record that otherwise suggests France has become more open to business during Macron’s presidency.Foreign direct investment has poured in and employers are shedding their fear of coveted long-term labour contracts, knowing they can more easily get rid of workers if necessary. Meanwhile, entrepreneurs are setting up new companies faster than ever in France, although a large share is of self-employed delivery workers setting up to ride the online shopping boom.For a related graphic on New company registrations in France, click https://tmsnrt.rs/3gg4zUANATIONAL DEBT The public finances represent a blemish on Macron’s economic record.Promising to stabilise the economy at the start of the pandemic “whatever it costs”, Macron ran a record budget deficits in 2020 of 8.9% of economic output, leaving the country saddled with debts the central bank says will take a decade to bring back to pre-COVID levels.For a related graphic on France’s national debt as percent of GDP, click https://tmsnrt.rs/3wPk4w8COMPETITIONMacron’s progress in making France more business friendly has so far not translated into gains in competitiveness if the trade balance is anything to go by.The trade deficit has swelled to record levels partly due to more expensive energy imports but also because French firms are still struggling to win foreign market share.For a related graphic on France’s national debt as percent of GDP, click https://tmsnrt.rs/3wPk4w8($1 = 0.9045 euros) More