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The world economy is entering a “perilous phase” of low economic growth and high financial risk, the International Monetary Fund has warned in its latest set of assessments.

The IMF, which is holding its spring meetings in Washington this week, downgraded its outlook for global growth and said its medium term forecast for economic output was now at the weakest level since the fund began publishing these forecasts in 1990.

However its chief economist Pierre-Olivier Gourinchas added that there were also more severe risks in prospect.

He said: “We are… entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner.”

“Below the surface,” he added, “turbulence is building, and the situation is quite fragile, as the recent bout of banking instability reminded us.

“Inflation is much stickier than anticipated even a few months ago. While global inflation has declined, that reflects mostly the sharp reversal in energy and food prices. But core inflation, excluding the volatile energy and food components, has not yet peaked in many countries.”

This cocktail of factors prompted the IMF to cut its forecast for global economic growth by 0.1 percentage points this year and next, to 2.8% and 3% respectively.

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Is Brexit to blame? The war in Ukraine? Ed Conway at the end of January taking a look at the IMF predicting the UK economy would end up behind advanced nations this year

However, the fund said that there was now a one-in-four chance of global growth falling below 2% this year, something tantamount to a global recession, and which has only happened five times since 1970 (most recently in 2009 and 2020).

The UK has received an upgrade to its economic growth forecast this year and next, but it is nonetheless forecast to be the worst performing economy in the G7 this year, shrinking by 0.3%. UK gross domestic product is slated to rise to 1% next year.

The fund’s warnings follow the collapse of Silicon Valley Bank in the US and Credit Suisse in Europe, episodes which have raised the prospect of further financial turbulence in the coming months, as the system responds to rising interest rates.

In the World Economic Outlook, Mr Gourinchas referred to the troubles in the UK pensions market following last September’s mini-budget, saying: “The financial instability last fall in the gilt market in the United Kingdom and the recent banking turbulence in the United States with the collapse of a few regional banks illustrate that significant vulnerabilities exist both among banks and non-bank financial institutions.

“In both cases the authorities took quick and strong action and have been able to contain the spread of the crisis so far. Yet the financial system may well be tested again.”

Yet alongside these immediate concerns, there is another worry haunting policymakers as they gather in Washington for this six-monthly set of meetings: that the global economy may have lost some of its mojo.

The decline in the long term global growth rate in this latest forecast is in part down to “benign” factors – among them the fact that countries like China, which have driven global growth for more than a decade, are becoming higher income nations, with an inherently slower growth rate.

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But the other worry they have is that the world is beginning to deglobalise, with many countries unravelling their supply chains and introducing new trade barriers.

Those barriers, which are rising faster than ever before, could constrict global productivity, implying weaker growth for the long run.

Responding to the IMF statement Chancellor Jeremy Hunt said:

“Thanks to the steps we have taken, the OBR [Office of Budget Responsibility] says the UK will avoid recession, and our IMF growth forecasts have been upgraded by more than any other G7 country.

“The IMF now say we are on the right track for economic growth. By sticking to the plan we will more than halve inflation this year, easing the pressure on everyone.”

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Israel receives hostage’s remains – as Turkey issues arrest warrants for 36 officials involved in the war

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Israel receives hostage's remains - as Turkey issues arrest warrants for 36 officials involved in the war

Israeli troops in Gaza have received the remains of another hostage.

They have now been taken to the National Institute for Forensic Medicine to be examined.

If it is confirmed that they belong to a hostage, this would mean there are five bodies left to be returned under the terms of a ceasefire that began on 10 October.

Israel has also released the bodies of 285 Palestinians – but this identification process is harder because DNA labs are not allowed in Gaza.

Last night’s transfer is a sign of progress in the fragile truce, but some of the remains handed over in recent weeks have not belonged to any of the missing hostages.

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October: Heavy machinery enters Gaza to clear rubble

At times, Israel has accused Hamas of violating the agreement – however, US President Donald Trump has previously acknowledged conditions on the ground in Gaza are difficult.

Meanwhile, UN officials have warned the levels of humanitarian aid flowing into the territory fall well short of what Palestinians require.

Deputy spokesperson Farhan Haqq said more than 200,000 metric tons of aid is positioned to move in – but only 37,000 tons has arrived so far.

Earlier on Friday, hundreds of mourners attended the military funeral of an Israeli-American soldier whose body was returned on Sunday.

Omer Neutra was an Israeli-American soldier. Pic: AP
Image:
Omer Neutra was an Israeli-American soldier. Pic: AP

Captain Omer Neutra was 21 when he was killed by Hamas militants who then took his body into Gaza following the October 7th attacks.

Admiral Brad Cooper, who heads up US Central Command, said during the service: “He is the son of two nations.

“He embodied the best of both the United States and Israel. Uniquely, he has firmly cemented his place in history as the hero of two countries.”

His mother Orna addressed her son’s coffin – and said: “We are all left with the vast space between who you were to us and to the world in your life and what you were yet to become. And with the mission to fill that gap with the light and goodness that you are.”

Read more world news:
Controversial DNA pioneer dies
Trump marks year since election

IDF troops carry the coffin of hostage Omer Neutra. Pic: AP
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IDF troops carry the coffin of hostage Omer Neutra. Pic: AP

In other developments, Turkish prosecutors have issued arrest warrants for Prime Minister Benjamin Netanyahu and 36 other Israeli officials on charges of carrying out “genocide” in Gaza.

They have been accused of crimes against humanity – but the move is highly symbolic since these officials were unlikely to enter Turkey.

Foreign minister Gideon Saar dismissed the warrants, and said: “Israel firmly rejects, with contempt, the latest PR stunt by the tyrant Erdogan.”

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Putin’s right-hand man made him look weak – it may have cost him his seat at Kremlin’s top table

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Putin's right-hand man made him look weak - it may have cost him his seat at Kremlin's top table

In Soviet times, Western observers would scrutinise video footage of state occasions, like military parades on Red Square, to try to learn more about Kremlin hierarchy.

Who was positioned closest to the leader? What did the body language say? Which officials were in and out of favour?

In some ways, not much has changed.

The footage present-day Kremlinologists are currently pouring over is from Wednesday’s landmark meeting of Russia’s Security Council, in which Vladimir Putin told his top officials to start drafting proposals for a possible nuclear weapons test.

It was an important moment. Not one you’d expect a trusted lieutenant to miss. But Sergei Lavrov, Russia’s veteran foreign minister, was conspicuously absent – the only permanent member of the Council not present.

According to the Russian business daily, Kommersant, his absence was “coordinated”.

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US President Donald Trump meets with Russia's President Vladimir Putin in Alaska. Pic: AP
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US President Donald Trump meets with Russia’s President Vladimir Putin in Alaska. Pic: AP

Sergey Lavrov and Marco Rubio in Alaska. Pic: AP
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Sergey Lavrov and Marco Rubio in Alaska. Pic: AP

That episode alone would have been enough to raise eyebrows.

But coupled with the selection of a more junior official to lead the Russian delegation at the upcoming G20 summit (a role Lavrov has filled in recent years) – well, that’s when questions get asked, namely: Has Moscow’s top diplomat been sidelined?

The question has grown loud enough to force the Kremlin into a denial, but it’s done little to quell speculation that Lavrov has fallen out of favour.

Russian foreign minister Sergei Lavrov. File pic: Reuters
Image:
Russian foreign minister Sergei Lavrov. File pic: Reuters

Rumours of a rift have been mounting since Donald Trump called off a planned summit with Putin in Budapest last month, following a phone call between Lavrov and US secretary of state Marco Rubio.

According to the Financial Times, it was Lavrov’s uncompromising stance that prompted the White House to put the summit on ice.

Conversations I had with diplomatic sources here at the time revealed a belief that Lavrov had either dropped the ball or gone off-script. Whether it was by accident or by design, his diplomacy (or lack of it) torpedoed the summit and seemingly set back a US-Russia rapprochement.

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September: Anyone downing aircraft in Russian airspace will ‘regret it’

That would’ve angered Putin, who is keen to engage with Washington, not only on Ukraine but on other issues, like nuclear arms control.

More importantly, perhaps, it made the Russian president appear weak – unable to control his foreign minister. And Putin is not a man who likes to be undermined.

Football fans will be familiar with Sir Alex Ferguson’s golden rule of management: Never let a player grow bigger than the club. Putin operates in a similar fashion. Loyalty is valued extremely highly.

Lavrov meets with his Iranian counterpart Mohammad Javad Zarif in 2015. Pic: Reuters
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Lavrov meets with his Iranian counterpart Mohammad Javad Zarif in 2015. Pic: Reuters

North Korea's Kim Jong Un and Lavrov meet in Pyongyang in 2023. Pic: AP
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North Korea’s Kim Jong Un and Lavrov meet in Pyongyang in 2023. Pic: AP

Lavrov and Chinese counterpart Wang Yi meet in Indonesia in 2022. Pic: Reuters
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Lavrov and Chinese counterpart Wang Yi meet in Indonesia in 2022. Pic: Reuters

If Lavrov has indeed been sidelined, it would be a very significant moment indeed. The 75-year-old has been the face of Russian diplomacy for more than two decades and effectively Putin’s right-hand man for most of the Kremlin leader’s rule.

Known for his abrasive style and acerbic putdowns, Lavrov has also been a vociferous cheerleader for Russia’s invasion of Ukraine.

At the Putin-Trump summit in Alaska, he arrived wearing a jumper emblazoned with the initials “CCCP”, the Russian letters for USSR. The apparent message: Ukraine still belongs to Moscow.

And in the melee that immediately followed the presidents’ press statements at the summit, I remember racing over to Lavrov as he was leaving and yelling a question to him through the line of security guards.

He didn’t even turn. Instead, he just shouted back: “Who are you?”

It was typical of a diplomatic heavyweight, who’s known for not pulling his punches. But has that uncompromising approach finally taken its toll?

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COP’s potential for change limited not by who turned up, but by the elephants not in the room

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COP's potential for change limited not by who turned up, but by the elephants not in the room

The COP climate summit in Belem opened with a diplomatic double-whammy.

The Prince of Wales and Sir Keir Starmer reaffirmed the UK’s commitment to fighting climate change and urged the rest of the world to do so, too.

But as the tropical rain beat down on the tarpaulin roof of this temporary summit venue, it’s hard not to feel the air going out of the process.

The Prince of Wales is passionate about fighting climate change. Pic: Reuters
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The Prince of Wales is passionate about fighting climate change. Pic: Reuters

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COP30: India’s climate refugees

Sir Keir and Prince William’s presence doesn’t make up for the geopolitical weight of the elephants not in the room.

The leaders of China, the US and India – the world’s three largest contributors to climate change – are no-shows.

Donald Trump’s highly-publicised decision to withdraw America from the UN climate talks is a blow.

Before Mr Trump, America – the world’s largest economy, largest oil and gas producer, and major market for renewable energy – had serious deal-making power here.

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Having formally withdrawn, there is no US delegation.

And, as far as I can tell, any US broadcasters either, so for Americans, this meeting may as well not be happening at all.

Pic: Reuters
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Pic: Reuters

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Cop out: Is net zero dead?

Without the US, things will be harder.

But does that mean the process is doomed?

The leaders of China and India may be absent but they’ve sent high-level delegations.

Read more on COP 30:
Is net zero dead?

Why is COP 30 controversial?

China is represented by vice-premier Ding Xuexiang, the country’s most high-ranking politician after President Xi himself.

And, while China and India might not be big on eco-messaging, between them they are busy driving the most rapid shift away from fossil fuels towards wind, solar and nuclear power the world has ever seen.

What’s more, the real work at these summits isn’t done by heads of state, but experienced sherpas, some of whom have trodden the nylon carpeted corridors of COP for 30 years.

The Prince of Wales with Prime Minister Keir Starmer. Pic: PA
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The Prince of Wales with Prime Minister Keir Starmer. Pic: PA

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Prince takes a tumble on Brazil beach

It’s reasonable to ask what they’ve achieved in all that time.

The commitments of the Paris agreement of a decade ago have been missed by a wide margin.

The world is about to blow past 1.5 degrees of warming and almost certainly exceed two degrees as well.

But when the Paris deal was signed, the trajectory was for four degrees of warming.

There are good COPs and bad COPs, but the world is undoubtedly a safer place now than it would have been without them.

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