IMF warns deeper financial turmoil would slam global growth

A man walks past the International Monetary Fund (IMF) logo at its headquarters in Washington, U.S., May 10, 2018. REUTERS/Yuri Gripas/File Photo

The International Monetary Fund on Tuesday trimmed its 2023 global growth outlook slightly as higher interest rates cool activity but warned that a severe flare-up of financial system turmoil could slash output to near recessionary levels.

The IMF said in its latest World Economic Outlook report that banking system contagion risks were contained by strong policy actions after the failures of two U.S. regional banks and the forced merger of Credit Suisse. But the turmoil added another layer of uncertainty on top of stubbornly high inflation and spillovers from Russia's war in Ukraine.

"With the recent increase in financial market volatility, the fog around the world economic outlook has thickened," the IMF said as it and the World Bank launch spring meetings this week in Washington.

"Uncertainty is high and the balance of risks has shifted firmly to the downside so long as the financial sector remains unsettled," the Fund added.

The IMF is now forecasting global real GDP growth at 2.8% for 2023 and 3.0% for 2024, marking a sharp slowdown from 3.4% growth in 2022 due to tighter monetary policy.

Both the 2023 and 2024 forecasts were marked down by 0.1 percentage point from estimates issued in January, partly due to weaker performances in some larger economies as well as expectations of further monetary tightening to battle persistent inflation.

The IMF's U.S. outlook improved slightly, with growth in 2023 forecast at 1.6% versus 1.4% forecast in January as labor markets remain strong. But the Fund cut forecasts for some major economies including Germany, now forecast to contract 0.1% in 2023 and Japan, now forecast to grow 1.3% this year instead of 1.8% forecast in January.

The IMF raised its 2023 core inflation forecast to 5.1%, from a 4.5% prediction in January, saying it had yet to peak in many countries despite lower energy and food prices.

"Monetary policy needs to stay focused on price stability" to keep inflation expectations in check, IMF chief economist Pierre-Olivier Gourinchas told a news conference.

In a Reuters interview, Gourinchas said central banks should not halt their fight against inflation because of financial stability risks, which look "very much contained."

BANKING TURMOIL SCENARIOS

While a major banking crisis was not in the IMF's baseline, Gourinchas said a significant worsening of financial conditions could recur as nervous investors try to test the "next weakest link" in the financial system as they did with Credit Suisse.

The report included two analyses showing financial turmoil causing moderate and severe impacts on global growth.

In a "plausible" scenario, stress on vulnerable banks - some like failed Silicon Valley Bank and Signature Bank burdened by unrealized losses due to monetary policy tightening and reliant on uninsured deposits - creates a situation where "funding conditions for all banks tighten, due to greater concern for bank solvency and potential exposures across the financial system," the IMF said.

This "moderate tightening" of financial conditions could slice 0.3 percentage point off of global growth for 2023, cutting it to 2.5%.

The Fund also included a severe downside scenario with much broader impacts from bank balance sheet risks, leading to sharp cuts in lending in the U.S. and other advanced economies, a major pullback in household spending and a "risk-off" flight of investment funds to safe-haven dollar-denominated assets.

Advertisement · Scroll to continue Emerging market economies would be hit hard by lower demand for exports, currency depreciation and a flare-up of inflation.

This scenario, which Gourinchas put at a 15% probability, could slash 2023 growth by as much as 1.8 percentage points, reducing it to 1.0% - a level that implies near-zero GDP growth per capita. The negative impact could be about one-quarter of the recessionary impact of the 2008-2009 financial crisis.

Other downside risks highlighted by the IMF include persistently high inflation that requires more aggressive central bank rate hikes, escalation of Russia's war in Ukraine, and setbacks in China's recovery from COVID-19, including worsened difficulties in its real estate sector.

OIL PRICE RISK

The IMF forecasts do not include the impact of a recent oil output cut by OPEC+ countries that has caused oil prices to spike. It assumes an average 2023 global oil price of $73 per barrel - well below Monday's $84 Brent crude futures price, but Gourinchas said it was unclear if this level could be sustained.

For every 10% rise in the price of oil, IMF models show a 0.1 percentage point reduction in growth and a 0.3 percentage point increase in inflation, Gourinchas added.

The IMF also now pegs global growth at 3% in 2028, its lowest five-year growth outlook since the WEO was first published in 1990, reflecting naturally slowing growth as some emerging economies mature, but also slower growth in workforce populations and fragmentation of the global economy along geopolitical lines, marked by U.S.-China tensions and Russia's war in Ukraine.

Saudi authorities brace for rain in Makkah during last 10 days of Ramadan

The forecasts warn of thunderstorms accompanied by active winds and dust. (SPA)

Authorities in Saudi Arabia said that they were implementing “emergency plans to confront the rain” in the holy city of Makkah, amid early preparations to ensure the safety and security of pilgrims visiting the Grand Mosque during the last ten days of the Muslim fasting month of Ramadan.

The General Presidency for the Affairs of the Two Holy Mosques, represented by the Environmental Protection Services and Achievement Agency, in cooperation with other government agencies working in the Grand Mosque, recruited more than 200 supervisors and observers, 4,000 workers, and used more than 500 pieces of equipment to deal with the rain that swept the Grand Mosque on Monday.

The General President for the Affairs of the Two Holy Mosques, Sheikh Abdulrahman Al-Sudais, directed the Agency for Security, Safety, Confrontation of Emergencies and Risks to prepare and activate field plans to confront the rain in preparation for the rainy situation that had been forecast by the National Center of Meteorology.

The center warned of thunderstorms accompanied by active winds and dust, with hail showers that could lead to torrential rains in several parts of the Kingdom, including Al-Baha, Makkah, Madinah, Tabuk, Al-Jawf, the Northern Borders region, Hail, Najran, Jazan, Asir, Al-Qassim, Riyadh and the southern parts of the Eastern Province.

It also warned of the need for caution, particularly due to the high numbers of pilgrims and worshippers visiting the holy capital during Ramadan, the number of which has exceeded 950,000 since the start of the month, according to the Saudi Press Agency on Monday.

Al-Sudais stressed the importance of exerting maximum efforts, harnessing all capabilities and adhering to alertness and readiness to ensure the safety of pilgrims and worshipers, efficient cooperation with all relevant authorities, and intensifying the efforts of the presidential agencies operating in the Grand mosque.

The National Center of Meteorology later on Monday issued an “advanced alert” for the continuing dust situation over a number of governorates in the Makkah region, accompanied by active surface winds, almost zero visibility, and high waves over the coastal areas.

The center said that those areas affected included the holy capital, Jeddah, Jamoum, and Bahra, in addition to open areas and highways, adding that it would begin from 9:00 a.m on Tuesday and continue until 3:00 p.m..

The General Presidency for the Affairs of the Two Holy Mosques also announced that it had implemented its plan for the last 10 days of Ramadan, which are considered to be among the holiest as Muslims believe that during one of those nights the Qur’an was revealed to the Prophet Muhammad.

Heavy rain falls on Muslim pilgrims performing Umrah in Mecca

Pilgrims performing Umrah in Mecca experienced a spiritual moment in the early hours of Monday as rain started pouring over the holy city.

A video shared by the Mecca region’s official Twitter page, showed pilgrims performing the tawaf, when Muslims circumambulate the Kaaba, while others seized the moment to stand in the rain and pray in front of the Kaaba.

#مكه_المكرمه_الان

أمطار 🌧️ 19 رمضان

📸: رائد العفيفي pic.twitter.com/nNk5CdPrD5

— إمارة منطقة مكة المكرمة (@makkahregion) April 10, 2023

Meanwhile, security and emergency agencies rushed to ensure that no incidents take place due to the weather conditions by activating the field plans set for such occasions.

During Ramadan hundreds of thousands of Muslims flock to Mecca to perform Umrah. This year, the holy month of Ramadan began on March 23 and will end on April 21.

Ukrainians play 'radio games' with Russian recon to spread disinfo on attacks — LPR expert

©REUTERS/Valentyn Ogirenko

Ukrainian units have been spreading disinformation within the Russian Armed Forces 2nd Army Corps’ area of engagement about a potential offensive using various radio frequencies, a military expert from the Lugansk People’s Republic (LPR), Lt. Col. (Ret.) Andrey Marochko, told TASS on Tuesday.

According to Marochko, the Ukrainian troops have been trying to deceive Russian reconnaissance units in the 2nd Army Corps’ area of engagement.

"Ukrainian fighters have recently been sending false signals about an impending offensive or strikes allegedly being planned on unconfirmed targets. These so-called ‘radio games’ play out two to three times a day," he added.

Ukrainian army’s losses increase by 30% in Krasny Liman area, says LPR officer

The Ukrainian army’s casualties in the Krasny Liman area have increased by about a third recently, Lugansk People’s Republic (LPR) people’s militia Lieutenant-Colonel Andrey Marochko said on Tuesday.

"The losses of Ukrainian militants have increased by about 30% lately, according to various estimates," the retired LPR officer said in a live broadcast on Russia’s TV Channel One.

A video of the likely death of a mercenary from Britain in the Donbass came into the possession of RIA Novosti.

The recording was made on the action camera of a Ukrainian soldier who later died.

Marochko told TASS earlier on Tuesday that the Ukrainian military experienced a shortage of munitions and problems with the evacuation of its wounded soldiers in the Krasny Liman direction due to the successful advance by Russian troops in that frontline area.

Special operation, 10 April. Main:

▪️The Russian Ministry of Defense reported that 106 Russian soldiers were returned from captivity from the territory controlled by Kyiv;

▪️Peskov on the possibility of an Easter truce: no one put forward such ideas, previous initiatives collided with the unwillingness of Kyiv;

▪️Pushilin announced a trip to Artemovsk, according to him, more than 75% of the city is under the control of Russian units;

▪️Secretary of the National Security and Defense Council of Ukraine Danilov said that the Ukrainian counteroffensive "occurs every day" and urged not to wait for "magic dates";

▪️The Washington Post, citing leaked Pentagon documents, claims that an RAF reconnaissance aircraft was "almost shot down" by Russian Su-27 fighters over the Black Sea in the fall of 2022, this could involve NATO in the conflict in Ukraine;

▪️Missiles for Buk anti-aircraft systems will run out in Ukraine by April 13, S-300 missiles will be used up by May 3, writes WSJ with reference to secret Pentagon documents;

Group "Wagner" continues promotion in Artemovsk. The fighters showed RIA Novosti the already liberated quarters in the city center and spoke about the tactics of the Ukrainian troops.

The US was spying on Zelensky, according to CNN, citing secret Pentagon documents;

▪️Xi Jinping suggested to Macron that France submit its plan for a settlement in Ukraine, however, according to Peskov, it is difficult to imagine Paris as a mediator on Ukraine, he is involved in the conflict on the side of Kiev;

▪️The Rivne Regional Council decided to ban the activities of the canonical Ukrainian Orthodox Church in the region.

Bank worker kills five co-workers in Louisville, Kentucky shooting

A 23-year-old bank employee armed with a rifle shot dead five colleagues and wounded nine other people at his workplace in Louisville on Monday while livestreaming the attack on social media, police said.

The gunman was fatally shot at the scene, Louisville police said. It was unclear whether he was slain by police or took his own life. The incident marked the latest in a long series of mass shootings in the U.S.

Louisville police identified the shooter as Connor Sturgeon, who joined the downtown branch of the Old National Bank as a full-time employee last year.

Police said they responded within minutes to reports of an attacker at about 8:30 a.m. at the bank office near Slugger Field baseball stadium.

In video from the scene, a series of gunshots can be heard, as well as a man yelling, “Active shooter at the bank.” Credit Credit... Natosha Via for The New York Times

Reuters Graphics Reuters Graphics Officers fired at the gunman, who was armed with a rifle, police Chief Jacquelyn Gwinn-Villaroel told reporters. The attacker broadcast live video of his attack on social media, she said.

The dead were identified as Joshua Barrick, 40; Deana Eckert, 57, Thomas Elliot, 63; Juliana Farmer, 45; and James Tutt, 64.

Kentucky Governor Andy Beshear fought back tears at an afternoon news briefing, saying that he knew some of the victims, including Elliot, a senior vice president at the bank.

"He taught me how to help build my law career, he helped me become governor, he gave me advice on being a good dad," Beshear said. "One of the people I talked to most in the world."

Two police officers were among the nine wounded. A 26-year-old recent police academy graduate was struck in the head and remained in critical condition after brain surgery on Monday, police said.

All nine victims were treated at the University of Louisville hospital, a hospital spokesperson said. Two other victims were also in critical condition.

The status of the shooter's job at the bank was not immediately clear on Monday. Gwinn-Villaroel said at a news conference that he was employed there. CNN, citing confidential law enforcement sources, said he had been notified that he would be fired.

Sturgeon grew up in southern Indiana, just north of Louisville, according to his mother's Facebook page. The elder of two boys, he attended Floyd Central High School in Floyds Knobs, Indiana, where he ran track and played basketball for the team his father, Todd, coached. He enrolled at the University of Alabama in 2016 as a business student.

Sturgeon was an intern at the bank for three summers from 2018 to 2020 before becoming a full-time employee in 2022 as a portfolio banker, according to his LinkedIn profile page. He had no prior contact with Louisville police, the police chief said.

"This was a targeted act of evil violence" Craig Greenberg, the mayor of Louisville, a city of 625,000, told reporters at the briefing. Greenberg said he was also friends with Elliot, who had worked on the mayoral transition campaign.

It is not the first time that a gun rampage has been live-streamed by an attacker. The gunman who killed 10 people in a racially motivated shooting at a Buffalo, New York, grocery store in May 2022 had live-streamed his attack, as had the attacker who killed 51 people in the May 2019 at two mosques in Christchurch, New Zealand.

Mass shootings have become commonplace in the United States, which has experienced 146 so far in 2023, the most at this point in the year since 2016. Those statistics use the definition of four or more shot or killed, not including the shooter - according to the nonprofit Gun Violence Archive.

In one of the most recent high-profile incidents, three 9-year-old students and three staff members were killed at a school in Nashville, Tennessee, by a former student on March 27.

President Joe Biden responded to news of the shooting by reiterating his wish that Congress pass legislation requiring safe storage of firearms, background checks for all gun sales and elimination of gun manufacturers' immunity from liability.

"How many more Americans must die before Republicans in Congress will act to protect our communities?" Biden, a Democrat, said in a statement.

Apple Music Down Pengguna iPhone Dibiarkan Frustrasi

Logo of an Apple store is seen as Apple Inc. reports fourth quarter earnings in Washington, U.S., January 27, 2022. REUTERS/Joshua Roberts/File Photo

Layanan musik Apple Inc (AAPL.O) menghadapi masalah, pembuat iPhone mengatakan pada halaman statusnya pada Senin malam, sementara pengguna melaporkan masalah dengan berbagai layanan lain dari perusahaan.

Menurut situs pelacakan pemadaman Downdetector.com, layanan termasuk layanan dukungan dan toko Apple turun ribuan. Lebih dari 3.300 pengguna melaporkan masalah dengan streaming Apple Music pada puncak pemadaman, sementara hampir 2.200 melaporkan masalah dengan App Store di Amerika Serikat.

Halaman status Apple menunjukkan bahwa Apple Music, Apple Music Radio, dan iTunes Match menghadapi "pemadaman" yang sedang berlangsung. Selain itu, pengguna dilaporkan mengalami masalah dengan Apple News, halaman status menunjukkan.

Belum ada penjelasan resmi dari Apple mengenai penyebab pemadaman atau apakah layanan lain terpengaruh seperti yang ditunjukkan oleh Downdetector.

Downdetector melacak pemadaman dengan menyusun laporan status dari beberapa sumber termasuk kesalahan yang dikirimkan pengguna pada platformnya. Pemadaman mungkin memengaruhi jumlah pengguna yang lebih besar.

Yang mengejutkan, berbagai layanan Apple mengalami pemadaman di seluruh AS dan wilayah terdekat, sesuai laporan. Beberapa layanan yang menghadapi downtime saat ini termasuk Apple Music, iTunes Match, radio Apple Music‌, dan App Store.

Situs pengembang Apple, TestFlight, dan layanan Dukungan Apple juga mengalami pemadaman di banyak area. Sementara masalah tampaknya berpusat di sekitar AS, wilayah terdekat termasuk Kanada dan Meksiko juga terpengaruh, laporan telah mengungkapkan. Tidak diketahui seberapa cepat layanan dapat dipulihkan.

Sesuai laporan pengguna, halaman Status Sistem Apple ditandai merah untuk berbagai layanan Apple yang menunjukkan bahwa mereka tidak aktif dan berjalan untuk banyak pengguna. Sementara TestFlight, situs pengembang Apple, dan Dukungan Apple telah kembali hijau, beberapa pengguna masih menghadapi masalah dalam mengaksesnya dengan benar.

Masalahnya sepertinya tidak akan mempengaruhi India atau wilayah lain selain AS. Saat ini, tidak diketahui apa yang menyebabkan pemadaman tersebut, tetapi pengguna melaporkan mendapatkan kesalahan SSL saat mengakses aplikasi seperti Apple Music.

Seorang pengguna Twitter berkata, “Saya datang untuk melihat apakah Twitter memiliki jawaban untuk pesan kesalahan tersebut. Saya sudah mencoba semuanya termasuk membersihkan cache dan menginstal ulang aplikasi. Tidak ada apa-apa. kesalahan yang sama”.

Yang lain menjawab, "Hal yang sama juga terjadi dengan ponsel saya, saya bahkan tidak dapat memperbarui aplikasi saya".

Meskipun sulit untuk mengatakan seberapa cepat layanan dapat mulai bekerja untuk semua pengguna, tampaknya Apple sudah menangani masalah ini dan beberapa pengguna akhirnya dapat mengakses aplikasi mereka.

Yang lain menjawab, "Hal yang sama juga terjadi dengan ponsel saya, saya bahkan tidak dapat memperbarui aplikasi saya".

Meskipun sulit untuk mengatakan seberapa cepat layanan dapat mulai bekerja untuk semua pengguna, tampaknya Apple sudah menangani masalah ini dan beberapa pengguna akhirnya dapat mengakses aplikasi mereka.

Chinese airlines swamped with cabin crew applicants as travel rebounds

An applicant is measured for height during a recruiting session for cabin crew jobs at Hainan Airlines in Beijing, China, March 30, 2023. REUTERS/Thomas Peter

Chinese airlines undertaking the biggest hiring drives in more than three years as travel rebounds are facing a deluge of applicants for cabin crew roles as fresh university graduates turn to the relatively high-paying career in a bleak job market.

In contrast to Western countries, where cabin crew roles are relatively low-paid and mostly do not require a university degree, becoming a flight attendant in China typically requires a bachelor's degree and preferably passing a challenging government-administrated English test.

During the pandemic, the total number of flight attendants in China fell by around 11,000, or an 11% drop from the pre-pandemic level of 108,955 in 2019, according to data from the Civil Aviation Administration of China (CAAC), due to attrition rather than the widespread layoffs seen in the West.

Carriers including Xiamen Airlines, China Southern Airlines (600029.SS) and Spring Airlines (601021.SS) are now on a hiring spree as domestic travel recovers and they plan to resume flights to popular international destinations.

They can pick from an overwhelming number of applicants at a time when a record 11.58 million college graduates are about to enter one of the country's worst job markets in decades. The gloomy global economic outlook has weakened export demand and companies in sectors like technology, education and property are cutting staff.

Hainan Airlines (600221.SS), which plans to hire more than 1,000 flight attendants this year, has already received more than 20,000 applications, it told Reuters.

Its job fair held in Jinan in February attracted 900 candidates and the company hired just 60 people, meaning a selection rate of around 6%.

An applicant has his picture taken during a recruiting session for cabin crew jobs at Hainan Airlines in Beijing, China, March 30, 2023. REUTERS/Thomas PeterRead less

China Southern, which plans to hire 3,000 cabin crew this year, said it already had more than seven times as many applicants by the end of December.

Before the pandemic, around 10% of cabin crew applications were typically successful, industry experts said.

"There have always been a large number of young girls and boys who want to do this job, as the income is not bad, usually between 10,000 ($1,454) and 20,000 yuan a month, and it is fun, allowing you to fly around the world," said Li Hanming, an independent expert on China's aviation industry.

In 2021, only 6.1% of fresh college graduates earned more than 10,000 yuan a month, the Global Times reported in February, citing education consulting and research institute MyCOS.

Wang Shenbo, who applied for a flight attendant role at Hainan Airlines, said the majority of his classmates were continuing to study for a master's degree in hopes of getting even better paid jobs.

"Some of them are not interested in the work of flight attendants, unlike me... and many of my classmates have found a job but are dissatisfied with the salary level," he told Reuters.

HIGH FARES

Despite the surge in job seekers, airlines may find it difficult to deploy new hires immediately because of year-long ground training courses, which could slow their efforts to boost capacity quickly and keep airfares high, Li said.

"Carriers have pretty bright forecast for 2024 so they need to hire crew members now, otherwise they will be short of hands next year," he added.

China's domestic capacity surpassed 2019 levels from mid-March, but international flights have recovered to just 30% of pre-pandemic levels, according to data from flight tracking app Flight Master.

As the peak summer season approaches, Chinese airlines are adding international capacity. Flag carrier Air China (601111.SS), , for example, said it would return to pre-pandemic routes including Beijing-Rome, Beijing-Ho Chi Minh City and Chengdu-London.

But for now the limited capacity has led to higher fares.

"I paid 18,000 yuan for a one-way economy ticket to fly from Frankfurt to Beijing," said Jin Huo, a businessman, "I used to pay a third (of that) for a round trip."

($1 = 6.8780 Chinese yuan renminbi)