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Agencies have quoted Germany’s central bank that the country’s economy will shrink by more than 3 percent in 2023, if Russian energy supplies are halted.
And the bank continued, commenting that this “would be the worst recession outside the recession periods provoked by the (Covid-19) pandemic and the global financial crisis,” according to the American “Bloomberg” agency, yesterday, Saturday.
And German economic institutes warned last April that the immediate halt to Russian imports of oil and natural gas would damage production worth 232 billion US dollars over the next two years.
And “Bloomberg” added that after Russian President Vladimir Putin cut gas flows to Europe by 60 percent, experts in the administration of German Chancellor Olaf Schultz last week put together the scenarios, none of which resulted in sufficient reserves to withstand the cold of winter. next.
On Thursday, Germany, which still depends on Russia for more than a third of its gas supplies, raised the threat level to the second highest “alert” stage, and if pressure intensifies, Germany could start rationing supplies.
German factory manufacturing orders have fallen over the past three months, costs have risen and confidence has collapsed, and Germany’s Ifo gauge has fallen unexpectedly this month, which is closely watching the business outlook.

The Bloomberg Agency report indicated that German companies are currently preparing to reduce energy for a long time, including BASF, the largest chemical maker in Europe, which may reduce its production due to the high cost of gas, which is used as an intermediate in production and electricity generation.
And BMW, the world’s largest luxury car maker, might buy electricity instead of burning gas at its power plants.
The gas shortage crisis has already extended far beyond Germany, as 12 EU member states are affected, 10 countries have issued an early warning under the Gas Security Regulation, and the rising European demand for LNG is also expected to affect poor countries around the world. As it struggles to compete for shipments.

Business

Sri Lanka central bank holds rates steady

Policy makers are assessing effects of interest hikes this year on cooling price growth, amid an unprecedented economic crisis.

The Central Bank of Sri Lanka (CBSL) has kept its key rates steady, a widely anticipated move as it awaits the effect of past hikes to trickle through the economy while a fall in global commodity prices is also expected to soothe domestic inflation.

The Standing Lending Facility rate stayed at 15.5 percent on Thursday, while the Standing Deposit Facility Rate remained at 14.5 percent.

Eleven out of 15 economists and analysts polled by the Reuters news agency had expected rates to remain unchanged.

The central bank has raised rates by a record 950 basis points so far this year to battle high inflation in Sri Lanka, which is wilting under a severe economic crisis.

A foreign exchange shortage has left the government struggling to pay for essential imports of fuel, fertilisers, food and medicine.

Inflation hit 60.8 percent year-on-year in July, and food costs expanded by a searing 90.9 percent, according to the latest government data.

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Business

US and Taiwan announce formal bilateral trade talks

The US has announced that they will begin formal trade negotiations with Taiwan, weeks after a controversial visit by US House Speaker Nancy Pelosi.

The first round of talks are expected to begin in “early fall”, said the Office of US Trade Representative.

Their discussion will include talks on trade facilitation, digital trade and anti-corruption standards.

Relations between the US and China have been increasingly tense following Ms Pelosi’s visit.

The US-Taiwan Initiative on 21st Century Trade was first unveiled in June, with both sides now saying they had “reached consensus on the negotiating mandate”.

“We plan to pursue an ambitious schedule…. that will help build a fairer, more prosperous and resilient 21st century economy,” said Deputy United States Trade Representative Sarah Bianchi in a statement.

Trade between the US and Taiwan was worth nearly $106bn (£88bn) in 2020.

The announcement comes as China launched its largest-ever military exercises around Taiwan after Ms Pelosi’s visit earlier in August.

Under the “One China policy”, the US recognises and has formal ties with China rather than the island of Taiwan but maintains a “robust unofficial” relationship with Taiwan, including continued arms sales to the island so that it can defend itself.

Beijing sees the self-governing island as its own, renegade territory that must be united with the mainland.

However, Taiwan is a self-ruled island that sees itself as distinct from the mainland.

Agencies

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Business

UK inflation exceeds 10% as bread and milk prices soar

Inflation in the United Kingdom hit a new 40-year high last month, rising above 10% for the first time since 1982 and piling further pain on households already struggling to pay their bills.

Annual consumer price inflation hit 10.1% in July, according to data published by the Office for National Statistics on Wednesday, up from 9.4% in June. Soaring food prices — up 12.7% since July 2021 — were the largest single contributor to the acceleration in inflation, the ONS said.
The headline inflation number was higher than predicted by a  poll of economists, and food inflation is now running at its highest level in 14 years.
“All the eleven food and non-alcoholic beverage classes made upward contributions to the change in the annual inflation rate, where prices overall rose this year but fell a year ago,” the ONS said.
The largest upward contributions came from bread and cereals, and from milk, cheese and eggs, with notable price increases in cheddar cheese and yogurts.
On a monthly basis, the consumer price index was up 0.6% in July, compared with no change a year ago. Higher gasoline and diesel prices, together with rising air fares, were also to blame, the ONS added.

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