‘Our phones are ringing off the hook’: Amid a global downturn, the finance world is chasing Middle Eastern money

‘Our phones are ringing off the hook’: Amid a global downturn, the finance world is chasing Middle Eastern money

Post By Oil and Gas Abu Dhabi, Anthony Scaramucci, business news, dubai, Economy, Emerging markets, Exchange Traded Funds, Investment strategy, Middle East, Oil and Gas, Saudi Arabia, United Arab Emirates

A man dressed in a thawb walks past Dassault Falcon executive jets, Dubai, United Arab Emirates

Leonid Faerberg | Sopa Images | Lightrocket | Getty Images

The organizers of the Investopia x Salt conference in Abu Dhabi — the brainchild of American financier and one-time White House press secretary Anthony Scaramucci and Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum — expected to see 1,000 guests over its two-day event in early March. Instead, it got 2,500.

“We’re a little overwhelmed, but it’s a great sign,” one of the organizers told CNBC. Some others were annoyed. “It’s too many people. Everyone is coming to the Gulf now begging for money. It’s embarrassing,” one Dubai-based fund manager said. Both sources declined to be named due to professional restrictions.

That oil-rich Gulf states have a lot of money to spend isn’t new. The region’s 10 largest sovereign wealth funds combined manage nearly $4 trillion, according to the Sovereign Wealth Fund Institute. That’s more than the gross domestic product of France or the U.K. — and it doesn’t include private money.

But the influx of foreign institutional investors — and visible interest from venture capitalists and startup founders in advanced sectors like fintech, digital transformation and renewable energy technology — shows a level of sophistication that’s being noticed now more than ever, industry players say.

“Investment used to only flow from the Gulf outward. Now it’s going both ways; institutional investors are coming and investing here,” Marc Nassim, partner and managing director at Dubai-based investment bank Awad Capital, told CNBC.

The regional investors, especially the sovereign funds but also the families, are now much more sophisticated than before.

Marc Nassim

Partner & Managing director, Awad Capital

“The Middle East feels more stable than Europe does right now,” Stephen Heller, founding partner at Germany-based AlphaQ Venture Capital, told CNBC. “Europe’s security issues, economic inequality are getting worse … meanwhile, the Gulf has its s— together.” Heller’s fund of funds, which invests in megatrends like climate technology, infrastructure, health and fintech, recently opened its first Middle Eastern office in Abu Dhabi.

“There’s an entrepreneurial energy in the UAE and Saudi Arabia today,” Heller said. “I see the potential because you have technically infinite capital, and if you have entrepreneurs coming here, you can have huge outcomes.”

Follow the capital

As oil prices made a roaring comeback in the last two years, the Gulf’s public wealth funds went on a spending spree. The top five regional funds in terms of spending in the last year — Abu Dhabi’s ADIA, ADQ and Mubadala, Saudi Arabia’s PIF and Qatar’s QIA — deployed a combined total of more than $73 billion in 2022 alone, according to sovereign wealth fund tracker Global SWF.

Abu Dhabi city skyline, United Arab Emirates.

kasto80 | iStock | Getty Images

Meanwhile, the value of sovereign wealth funds’ assets globally dropped from $11.5 trillion to $10.6 trillion between 2021 and 2022, Global SWF reported, and those held by public pension funds also dropped amid a dramatic downturn in stock and bond markets.

“Five out of the ten most active investors hail from the Middle East,” and ADIA is currently the “world’s largest allocator to hedge funds,” Global SWF’s 2023 report wrote. It added that GCC sovereign wealth funds “played an important role in 2020 during the Covid-19 pandemic and now again in 2022 during times of financial distress.”

So it’s an understatement to say that foreign demand is high. “A lot of places in the world are low on capital – Western institutional funds are kind of hamstrung. And this region has a lot of capital. Our phones are ringing off the hook,” one manager from a UAE investment fund said, declining to be named due to professional restrictions.

No longer ‘dumb money’

But while many overseas companies have long seen the Gulf as a source of “dumb money,” some local investment managers said – referring to the stereotype of oil-rich sheikhdoms throwing cash at whoever wants it – investment from the region has become much more sophisticated, employing deeper due diligence and being more selective than in past years.

“The regional investors, especially the sovereign funds but also the families, are now much more sophisticated than before,” Awad Capital’s Nassim said. “They are much more diligent than before in terms of who they write the check to.”

“Before it was much easier to come and say, ‘I’m a fund manager from San Francisco, please give me a couple million’. Now, not only are they more sophisticated but there are far more funds from all over the world – the U.S., Latin America, from Europe, Southeast Asia – coming here to raise capital. I think that a very small minority of them will be able to take money from the region – they are much more selective than before.”

A screen broadcasts Khaldoon Al Mubarak, chief executive officer of Mubadala Investment Co., during a session at the Future Investment Initiative (FII) conference in Riyadh, Saudi Arabia, on Tuesday, Oct. 25, 2022.

Tasneem Alsultan | Bloomberg | Getty Images

In the UAE in particular, liberalizing reforms, a much-praised handling of the Covid-19 pandemic and a willingness to do business with anyone — including countries like Israel and Russia – have enhanced its image to foreign investors. In Saudi Arabia, financiers are attracted to historic reforms and a massive growth market of nearly 40 million people, some 70% of whom are below the age of 34.

The money from the GCC funds still overwhelmingly goes to developed markets, in particular the U.S. and Europe. Priority sectors include energy, renewables, climate technology, biotech, agri-tech and digital transformation, fund managers say.

Like any commodity-related economic boom, however, fortunes are subject to change – it was not so long ago that the pandemic pushed oil prices to multi-decade lows, forcing Gulf governments to reign in spending and introduce new taxes. Saudi Arabia and the UAE in particular are investing heavily in diversification, with a view to the long term.

“The music would stop if [the price of] oil goes down in a way that some SWFs are forced to use their reserves to help governments shore up their fiscal positions – very unlikely – or geopolitical risk” such as war or uprisings, Nassim said.

“If oil goes down, the surplus generated and which is usually allocated to the SWFs would obviously reduce, and that would force them to reduce their investments and limit them to assets that generate higher returns,” he added, though noted that not all SWFs have the same mandate when it comes to investment strategy.

For those companies seeking investment from the deep pockets of the Middle East, they are wise to do so while the music is playing.

Source link

#phones #ringing #hook #global #downturn #finance #world #chasing #Middle #Eastern #money

Will UK, EU deepen ties after Northern Ireland breakthrough?

Post By World Brexit, diplomacy, Economy, Europe, European Union, Features, rishi sunak, trade, United Kingdom, Ursula von der Leyen

After years of vexed negotiations, few predicted a new Brexit deal on Northern Ireland. But not only did the February 27 agreement offer a genuine resolution of the thorny border problem – it also marked a big change in the ambience surrounding UK-EU relations. Some analysts say the war in Ukraine is a major factor in Brussels softening its stance, given the UK’s importance to European security, but they underscore that Britain will still be unable to enjoy the full benefits of EU membership outside the club.

Amid the smiles and fanfare at the Windsor Guildhall as the Northern Irish border deal was unveiled, EU Commission President Ursula Von der Leyen referred to PM Rishi Sunak as “dear Rishi”. Selling the deal in Northern Ireland, Sunak indicated a change in thinking from a glowing endorsement of a hard Brexit, instead hailing the British province’s place in the European single market as an “unbelievably special position”.

Sunak’s language mirrors a shift in British public attitudes towards Brexit over the past year and a half, with support for UK membership in the EU climbing to around 57 percent, according to a What UK Thinks polling aggregate.

The British economy is in a poor state post-Brexit. Both the IMF and OECD expect it to contract in 2023, as the G7’s worst-performing economy. Brexit is far from the only cause of this economic weakness; the UK has suffered from poor productivity growth since the 2008 financial crash for a complex array of reasons. Nevertheless, economists say Brexit is undermining the UK’s economic growth, with the Treasury’s non-partisan forecaster, the Office for Budgetary Responsibility, expecting Brexit to leave the economy four percent smaller than it would have been if the UK had stayed in the EU.

>> Sunak’s ‘seismic’ deal resolves N. Ireland border problem – but DUP support remains elusive

There is a feeling “among a small but substantial minority of those who voted ‘Leave’ that it’s messed up the economy”, noted Tim Bale, a professor of politics at Queen Mary, University of London.

As far as the political class goes, “even a fair number of Brexit-supporting Tories would like to see things put on a more amicable and hopefully more profitable footing”, Bale added. “Continued hostility, now we’ve left, benefits very few politicians, outside of the Brexit ultras on the Conservative backbenches.”

‘More pragmatism, less ideology’

Brussels bore this context in mind when reaching out ahead of signing the Windsor Framework, sensing this was the right moment to improve relations with the UK.

“It’s the EU that moved the most; they’ve accepted the UK’s concerns about trade flows between Great Britain and Northern Ireland, and they did so for political reasons, at a time when you can see the under-performance of the British economy is only going to get worse,” explained Jacob Kirkegaard, a senior fellow at the German Marshall Fund’s Brussels office.

“They gave Sunak a pretty good deal, and they didn’t have to do that. They could have played hardball.”

The changing of the guard at Downing Street made a colossal difference to what was possible – with the EU regarding Sunak very differently from the way it viewed a blustering Boris Johnson. Combined with the shift in British public opinion, the return of emollient, technocratic diplomacy in London laid the groundwork for deeper UK-EU ties.

The Windsor Framework “may open a new chapter in EU-UK relations, based more on pragmatism and less on Brexit ideology”, said Nicoletta Pirozzi, head of the European Union programme at the Italian Institute of International Affairs in Rome.

Ukraine ‘shifted the EU’s trajectory’

Even before Sunak’s Northern Ireland deal, the Conservative government showed a little more movement than pundits expected. Sunak’s predecessor Liz Truss had a similarly belligerent diplomatic style to Johnson’s – refusing to say whether France was friend or foe, for example. Yet Truss signed up to French President Emmanuel Macron’s grand idea of a European Political Community, bringing together EU members and non-members alike to discuss Europe’s common priorities.

When Truss surprised observers by attending the European Political Community’s inaugural meeting in October, Europe’s united stance behind Ukraine was at the top of the agenda. Indeed, the Russo-Ukrainian War has made Britain a relevant geopolitical actor again after the turmoil of Brexit. Europe’s biggest defence spender and a global leader in intelligence, the UK is the second-largest weapons donor to Ukraine behind the US. London has developed a special relationship with Kyiv – as demonstrated by the talks on Ukraine manufacturing its own arms thanks to a licensing deal with British companies.

Defence and security issues are much more salient than they were during the first stage of Brexit wrangling from 2016-2019. Back then, it was common to hear pro-Brexit pundits in the UK talking up the chances of Eastern European countries like Poland helping Britain get a special trade deal, seeing as the UK was the main proponent of their accession to the EU and has long shared their hawkish stance towards Russia. But this was wishful thinking, as the EU 27 maintained a united front behind the European Commission’s chief negotiator Michel Barnier, who was keen to make sure that Britain did not enjoy the benefits that come with being part of the club after summarily rejecting membership.

Yet now the war in Ukraine is likely to soften Brussels’ stance towards the UK even further – and Eastern European countries will cheer this process on, Kirkegaard predicted. “The EU is certain to accept Ukraine as a member state within the next 10 years – and that means the EU will almost certainly have a difficult border with a nuclear-armed adversary in the shape of Russia. The UK is a major military power, a nuclear power – and that really matters,” he said.

“Before the war, it didn’t matter very much, to be frank, but the war has really shifted the trajectory of the EU,” Kirkegaard continued. “Military and security issues are a much bigger deal – making the UK a lot more important to the bloc – and nowhere will this be felt more keenly than Poland, the Baltic states and Finland.

“I’m not so sure that even the French hard line on Brexit would have been sustained if the war had broken out in 2017 or 2018,” Kirkegaard added.

‘Full benefits for full members’

If both sides proceed with building closer economic relations, the most likely options are either the Norway model or the Switzerland model.

The Norwegian approach is membership in the single market without EU membership, which involves a lot of rule-taking without any real say in rule-making. This would be anathema to the anti-EU hardliners on the Tory backbenches, who heaped opprobrium on fellow Conservative MP Tobias Ellwood when he endorsed re-joining the single market last year, even if they are largely acquiescent about Sunak’s Northern Ireland deal. The Labour Party also rules out the Norway option.

By contrast, the Swiss option could give Britain the single market access its services-reliant economy needs without it having to adopt every single EU rule. Switzerland negotiates regulatory alignment with the single market on a sector-by-sector basis through an array of bilateral deals, many of which require renegotiation as the EU changes its rules.

Downing Street denied The Sunday Times’s report in November that it is looking at the Swiss model, amid backlash from the backbenches. Labour leader Keir Starmer said the same month he is not considering the Swiss option.

Enjoying a whopping poll lead, Labour are the overwhelming favourites to win the next general elections, due before the end of 2024 – although historically polls at this stage in the electoral cycle have tended to exaggerate Labour’s chances of taking power.

Starmer’s party wants to keep Brexit off the agenda and focus on the UK’s cost-of-living crisis and flagging public services, since Leave-voting Labour supporters switched to the Tories en masse to give Johnson his landslide in 2019. Hence Labour’s oft-repeated, opaque mantra about “making Brexit work”.

“Labour’s policy is basically to find ways of reducing trade friction without getting too close to the single market,” said John Curtice, a professor of politics at the University of Strathclyde. This position has fuelled speculation that Labour wants to “cherry-pick” EU rules to follow for market access à la Switzerland, Curtice observed.

But regardless of who wins the 2024 elections, there will be limits to the EU’s new conciliatory approach. Despite its importance as a defence and security heavyweight while war rages in Europe, the EU will not accept the UK trying to undercut the single market, noted Juha Jokela, director of the European Union research programme at the Finnish Institute of International Affairs in Helsinki.

The prospects for a better economic deal depend on how much the UK diverges from the EU regulation, Jokela said. If the UK seeks a “competitive advantage by lowering standards in areas such as workers’ rights and environmental protection”, for instance, the two sides’ relations could worsen again.

There will be a “limit” to the EU’s ties with Britain as long as it remains outside the bloc, Jokela concluded. “Even if the UK is a former member state, the EU is likely to continue to highlight that the full benefits of European integration belong to full members of the Union; while they enjoy all the rights of membership, they also have to fulfil the obligations of membership.”

Source link

#deepen #ties #Northern #Ireland #breakthrough

Lebanon adopts ‘dollarization’ as currency, economy crumble

Post By World Amin Salam, COVID-19 pandemic, Currency, dollarization, Economy, economy crumble, Economy Minister, Lebanon, luxury goods and services

When Moheidein Bazazo opened his Beirut mini-market in 1986, during some of the fiercest fighting in Lebanon’s civil war, he didn’t expect it to thrive. But several years later, he had shelves full of food and needed 12 employees to help him manage a bustling business.

Those days are over. Bazazo now mostly works alone, often in the dark to reduce his electric bill. Regular customers are struggling to make ends meet, and as they buy less so does he, leaving some shelves and refrigerators bare.

Moheidein Bazazo changes price tags from Lebanese pound to the U.S. dollar in a shop in in Beirut, Lebanon, Wednesday, March 1, 2023. Lebanon began pricing consumer goods in supermarkets in U.S. dollars Wednesday as the value of the Lebanese pound hit new lows.
| Photo Credit:
AP

With the Lebanese economy in shambles and its currency in free fall, Bazazo spends much of his time trying to keep up with a fluctuating exchange rate. Businesses like his are increasingly leaning on one of the world’s most reliable assets — the U.S. dollar — as a way to cope with the worst financial crisis in its modern history.

“I once lived a comfortable life, and now I’m left with just about $100 after covering the shop’s expenses” at the end of the month, Bazazo said, crunching numbers into a calculator. “Sometimes it feels like you’re working for free.”

The Lebanese pound has lost 95% in value since late 2019, and now most restaurants and many stores are demanding to be paid in dollars. The government recently began allowing grocery stores like Bazazo’s to start doing the same.

While this “dollarization” aims to ease inflation and stabilize the economy, it also threatens to push more people into poverty and deepen the crisis.

That’s because few in Lebanon have access to dollars to pay for food and other essentials priced that way. But endemic corruption means political and financial leaders are resisting the alternative to dollarization: long-term reforms to banks and government agencies that would end wasteful spending and jump-start the economy.

Other countries like Zimbabwe and Ecuador have turned to the dollar to beat back hyperinflation and other economic woes, with mixed success. Pakistan and Egypt also are struggling with crashing currencies but their economic crises are largely tied to an outside event — Russia’s war in Ukraine, which has caused food and energy prices to soar.

Lebanon’s woes are much of its own making.

As the country felt the impacts of the COVID-19 pandemic, a deadly Beirut port explosion in 2020 and Russia’s invasion Ukraine, its central bank simply printed more currency, eroding its value and causing inflation to soar.

Prices are seen marked in U.S. dollar instead of the Lebanese pounds in a store in Beirut, Lebanon, Wednesday, March 1, 2023. Lebanon started pricing consumer goods in supermarkets in U.S. dollars Wednesday as the value of the Lebanese pound hit new lows.
| Photo Credit:
AP

Three-quarters of Lebanon’s 6 million people have fallen into poverty since the 2019 crisis began. Crippling power cuts and medicine shortages have paralyzed much of public life.

Currency shortages prompted banks to limit withdrawals, trapping millions of people’s savings. It’s led some in desperation to hold up banks to forcibly take back their money.

The damage of the last few years was magnified by decades of economic mismanagement that allowed the government to spend well beyond its means. The head of the country’s Central Bank was recently charged with embezzling public funds and other crimes.

The pulverized Lebanese pound fluctuates almost hourly. Though officially pegged to the dollar since 1997, the pound’s value is dictated now by an opaque black market rate that has become standard for most goods and services.

Last month, its value fell from about 64,000 pounds to the dollar to 88,000 on the black market, while the official rate is 15,000. Making things worse for a country reliant on imported food, fuel and other products priced in dollars, the government recently tripled the amount of tax — in Lebanese pounds — that importers must pay on those goods.

This will likely lead to more price hikes. For small businesses, it could means selling products at a loss just minutes after stacking them on the shelves.

Dollarization could give the impression of greater financial stability, but it also will widen already vast economic inequalities, said Sami Zoughaib, an economist and research manager at Beirut-based think tank the Policy Initiative.

“We have a class that has access to dollars … (and) you have another portion of the population that earns in Lebanese pounds that have now seen their income completely decimated,” Zoughaib said.

The shift to a more dollar-dominated economy happened not by government decree, but by companies and individuals refusing to accept payment in a currency that relentlessly loses value.

First, luxury goods and services were priced in dollars for the wealthy, tourists and owners of private generators, who have to pay for imported diesel. Then it was most restaurants. And now grocery stores.

Caretaker Economy Minister Amin Salam said the Lebanese pound was “used and abused” over the past three years and that dollarizing grocery stores will bring some stability to fluctuating exchange rates.

As more people and businesses reject the local currency, the dollar gradually becomes the de facto currency. The lack of trust in the Lebanese pound has become irreversible, said Layal Mansour, an economist specializing in financial crises in dollarized countries.

“People are fed up with the fluctuation of the dollar rate, and having to spend lots of time changing it, so practically, on a societal level, it’s better to use dollars,” Mansour said. “This is the end of the Lebanese pound as we know it.”

Without a strategy to address the economy’s underlying problems, the government “is allowing this to happen,’’ said Lawrence White, an economics professor at George Mason University.

Dollarization means the Central Bank can’t keep printing currency that fuels inflation, and having a more reliable currency might create more confidence for businesses. But many people could be further squeezed if Beirut officially adopts the greenback as its currency.

Millions in Lebanon who tolerated the dollarization of luxury items may not respond similarly to groceries, whose prices were already surging at some of the highest rates globally.

Over 90% of the population earns their income in Lebanese pounds, according to a 2022 survey by the International Labor Organizaton and the Lebanese government’s statistics agency. Families that receive money from relatives abroad spend much of it keeping the lights on and covering medical expenses.

Moheidein Bazazo changes price tags from Lebanese pound to the U.S. dollar in a shop in in Beirut, Lebanon, Wednesday, March 1, 2023. Lebanon began pricing consumer goods in supermarkets in U.S. dollars Wednesday as the value of the Lebanese pound hit new lows.

They would have to be paid in dollars to adequately adjust, which most businesses and employers, especially the Lebanese state, are short on.

Public school teachers have been on strike for three months because their salaries barely cover the cost of gasoline to commute. Telecom workers are threatening walkouts because their wages have not been adjusted to the Lebanese pound’s falling value.

Lebanon is nowhere near implementing the kinds of reforms needed for an International Monetary Fund bailout, such as restructuring banks and inefficient government agencies, reducing corruption, and establishing a credible and transparent exchange-rate system.

Zoughaib, the Beirut economist, said he fears the absence of sound policy and economic reforms means that dollarization will likely only deepen poverty, making it even more difficult for families to pay for health care, education and food.

Bazazo, the market owner, acknowledges that pricing in dollars will help him manage his finances and cut a small portion of his losses but worries it will drive away some customers.

“Let’s see what happens,” Bazazo said, sighing. “They’re already complaining.”

Source link

#Lebanon #adopts #dollarization #currency #economy #crumble

I asked ChatGPT to help me plan a vacation. Here’s what happened next

Post By Business Accommodations, Adventure travel, artificial intelligence, Bahamas, Bali, Booking Holdings Inc, business news, Business travel, Caribbean, Costa Rica, Economy, entertainment, Family travel, florida, France, Hawaii, Holidays, Hospitality and leisure industry, Hotels and resorts, Istanbul, Italy, Jamaica, Japan, Japan Airlines Co Ltd, Life, lifestyle, London, Luxury, Luxury travel, Malaysia, New York City, Paris, Qatar, Qatar Airways, Singapore, Singapore Airlines Ltd, South Africa, Technology, Thailand, tourism, Travel, Travel safety, Tripadvisor Inc, Vacation costs, Vacations, Vietnam, Walt Disney Co, Wealth

Some people love travel planning.

But I am not one of those people.

So the idea that artificial intelligence chatbots, such as ChatGPT and Bing, can research travel destinations and create itineraries is intriguing.

But I’m skeptical too.

Do recommendations just scratch the surface — for example, suggesting that I see the Eiffel Tower in Paris? Or can they recommend lesser-known restaurants and handle specific hotel requests too?

The answer is: yes and no — at least for ChatGPT.

Unfortunately, I couldn’t test Bing. When I tried to access it, I was put on a waiting list. The website said I could “get ahead in the line” if I set Microsoft defaults on my computer and scanned a QR code to install the Bing app. I did both. I’m still waiting.

ChatGPT was easier. I went to the developer’s website, clicked on the word “ChatGPT,” registered for an account — and started chatting.

‘Can you help me plan a beach trip?’

“Of course!” replied ChatGPT. But first, I needed to tell it about my interests, budget and how long I planned to be away.

I’m looking for a week-long beach trip in mid-March to spend time with my family, with no set budget, I typed.

“Sounds like a wonderful idea!” it replied, before recommending Hawaii, the Caribbean — specifically the Bahamas, Jamaica and the Dominican Republic — Florida and Costa Rica, along with details about the weather and popular attractions for each.

Nice. But I live in Singapore, I said.

“I see!” it exclaimed. (ChatGPT loves exclamation points.) In that case, Bali, Indonesia; Langkawi, Malaysia; and Phuket and Krabi in Thailand were better choices.

One more thing — I want great food too, I typed.

In that case, it said, the better bets are:

Penang, Malaysia — for char kway teow, nasi lemak and laksa
Ho Chi Minh City, Vietnam — for pho, banh mi and bun cha
Osaka, Japan — for takoyaki, okonomiyaki, and kushikatsu
Bangkok, Thailand — for pad Thai, green curry and mango sticky rice

Not bad. But I have another ask: I want to avoid crowds.

In that case, I may want to consider:

Langkawi — “a beautiful island off the west coast of Malaysia … [with] plenty of secluded spots”
Krabi — “not as busy as other destinations in Thailand such as Phuket or Koh Samui”
Bali — “beaches in the north of Bali, such as Lovina Beach, tend to be less crowded”

All true.

But what about a treehouse in Bali — is that possible?

“Yes! …. Here are a few options,” it said:

The Hideout Bali
Bambu Indah
Sandat Glamping Tents
Free Spirit Spheres

Which one has the best online reviews?

“All of the places I recommended have great online reviews,” ChatGPT replied, providing ratings from Tripadvisor, Booking.com and Google for each hotel.

Yet, the reviews missed the mark in several instances.

For example, it said Sandat Glamping Tents had a 4.9/5 rating on Google (actual: 4.5/5) and “over 400 excellent reviews” on Tripadvisor (actual: 277 reviews).

But perhaps the biggest blunder: Free Spirit Spheres is actually in Canada, which the bot acknowledged when pressed.

ChatGPT is nothing if not apologetic.

Cost estimates for each hotel were more accurate. But ChatGPT couldn’t show photographs of the hotels or help book them — although it did provide ample instructions on how to do both.

By road or by rail?

For a road trip across the United States, ChatGPT recommended Route 66, Pacific Coast Highway and the Great River Road, the latter of which traces the Mississippi River through 10 states.

What about train trips in Europe? “Certainly!” it said, recommending:

The Orient Express — from Paris to Istanbul
The Glacier Express — from St. Moritz to Zermatt, Switzerland
The Bernina Express — from Chur, Switzerland, to Tirano, Italy
The Golden Pass Line — from Lucerne to Montreux, Switzerland
The Trans-Siberian Railway — “one of the world’s most famous train journeys” from Moscow to Vladivostok, Russia

One issue: The “Orient Express” is no longer in service. Does ChapGPT know this?

It does, but it seems to confuse every departure of the Venice Simplon-Orient-Express — which uses restored carriages from the original train service — with the once-annual Paris to Istanbul route, which will run in August this year, and has already sold out.

Flights

ChatGPT can name airlines that connect cities, but it can’t give current flight information or help book flights.

It wasn’t able to tell me the cheapest fare — or any fare — from London to New York this spring because it doesn’t “have access to real-time pricing information,” it said.

In fact, ChatGPT data ends at September 2021; it doesn’t “know” anything that’s happened since.

However, the bot could answer which month the London-to-New York route is usually the cheapest, which it said is “January and February, or during the shoulder season months of March and November.”

As for the best airline in the world, it said: “As an AI language model, I cannot have personal preferences or opinions.” But it went on to name the top five airlines named to Skytrax’s “World’s Top 100 Airlines” in 2021.

The list wasn’t correct.

The list provided by ChatGPT appears to be Skytrax’s airline ranking from 2019 instead.

“Where should I eat?”

Asking ChatGPT “Where should I eat?” and “What are the best restaurants?” in a given city produces two different lists — one with more popular places to eat, and the other with those that have more industry awards.

For example, here is how it answered those two questions for Singapore:

Where should I eat?

Hawker centers
Din Tai Fung
Jumbo Seafood
Liao Fan Hong Kong Soya Sauce Chicken Rice & Noodle
Odette
Tim Ho Wan

What are the best restaurants?

Burnt Ends
Candlenut
Corner House
Hawker Chan
Jaan
Restaurant Andre

That’s a decent but dated list. Restaurant Andre, which was regarded as one of the city’s best in the 2010s, permanently closed in February 2018.

Every city I asked ChatGPT about resulted in the bot praising the local food scene. New York City is a “food lover’s paradise,” Florence is “known for its delicious food” and Melbourne is “renowned for its coffee culture.”

ChatGPT is exceptionally cheery, but do all cities get this treatment? To test this, I asked for food recommendations in Galveston, Texas. This time, ChatGPT just provided the list.

And if you’re wondering about the best coffee in Melbourne, ChatGPT says it’s at Proud Mary — a coffee shop that tops many “best of” lists today.

Specific questions

I had many more questions for ChatGPT, such as:

“How should I spend five days in South Africa?”
“Which chateaux accept visitors in Bordeaux?”
“If I only have one day in London, what should I do?”
“Which rides have the longest lines at Disney World?”

But before I could, my screen said “Access denied” alongside an “error code 1020” message.

This error may be caused by overloaded servers or by exceeding the daily limit, according to the tech website Stealth Optional. Either way, all of my previous chats were inaccessible, a huge negative for travelers in the middle of the planning process.

A new window didn’t fix the problem, but opening one in “incognito mode” did. Once in, I clicked on “Upgrade to Plus,” which showed that the free plan is available when demand is low, but for $20 per month, the “Plus plan” gives access to ChatGPT all the time, faster responses and priority to use new features.

With access again, I quickly asked about wait times on Disney World rides, a subject which I had spoken to luxury travel advisor Jonathan Alder of Jonathan’s Travels about last week. Alder lives close to the park and has lost count of how many times he’s visited, he said. Yet, only one of their answers — Epcot’s “Frozen Ever After” — overlapped.

ChatGPT mentioned that FastPass and Genie+ can reduce wait times at Disney World, which is partly right. The company phased out its “skip the line” virtual queue FastPass program when it introduced Genie+ in the fall of 2021.

The takeaway

ChatGPT is fast, chatty and feels like you’re interacting with a human. I found myself responding with unnecessary pleasantries — “Ok, sure” and “Thank you” — out of habit.

I could see how it could save travelers’ time, especially if they are looking for an overview or are at the early stages of planning.

But information will need to be current, of course — and bugs and error messages, which I faced several times in addition to the “1020” message mentioned above — will need to be fixed.

OpenAI states that the current ChatGPT version “is a free research preview.” It also says the system may “occasionally generate incorrect or misleading information” and that it’s “not intended to give advice.”

When I asked it about its travel planning abilities, it said it “can assist with many aspects of travel planning” but that it may not be able to “provide personalized advice based on your unique circumstances.”

My verdict: Travel agents’ jobs are secure for the time being.

Source link

#asked #ChatGPT #plan #vacation #Heres #happened

India is becoming a hot market for investors, but it risks falling victim to its own success

Post By Stock analyst comment, Analyst Comment/Recommendation, article_opinion, business, Business/Consumer Services, C&E Exclusion Filter, C&E Executive News Filter, C&E Industry News Filter, commentary, Commentary/Opinion, commodity, Commodity/Financial Market News, conglomerate, consumer services, Content Types, corporate, Corporate/Industrial News, Diversified Holding Companies, Economic News, Economy, Equity Markets, Factiva Filters, financial market news, Financial Services, general news, government policy, india, industrial news, international relations, investing, Investing/Securities, investor, modi, opinion, partnercontent, political, Political/General News, politics, Politics/International Relations, recommendation, regulation, Regulation/Government Policy, roubini, securities, Tech

India is poised to become the world’s most important country in the medium term. It has the world’s largest population (which is still growing), and with a per capita GDP that is just one-quarter that of China’s, its economy has enormous scope for productivity gains.

Moreover, India’s military and geopolitical importance will only grow. It is a vibrant democracy whose cultural diversity will generate soft power to rival the United States and the United Kingdom.

One must credit Indian Prime Minister Narendra Modi for implementing policies that have modernized India and supported its growth. Specifically, Modi has made massive investments in the single market (including through de-monetization and a major tax reform) and infrastructure (not just roads, electricity, education, and sanitation, but also digital capacity). These investments – together with industrial policies to accelerate manufacturing, a comparative advantage in tech and IT, and a customized digital-based welfare system – have led to robust economic performance following the COVID-19 slump.

These investments — together with industrial policies to accelerate manufacturing, a comparative advantage in tech and IT, and a customized digital-based welfare system — have led to robust economic performance following the COVID-19 slump.

Yet the model that has driven India’s growth now threatens to constrain it. The main risks to India’s development prospects are more micro and structural than macro or cyclical. First, India has moved to an economic model where a few “national champions” — effectively large private oligopolistic conglomerates — control significant parts of the old economy. This resembles Indonesia under Suharto (1967-98), China under Hu Jintao (2002-12), or South Korea in the 1990s under its dominant chaebols.

In some ways, this concentration of economic power has served India well. Owing to superior financial management, the economy has grown fast, despite investment rates (as a share of GDP) that were much lower than China’s. The implication is that India’s investments have been much more efficient; indeed, many of India’s conglomerates boast world-class levels of productivity and competitiveness.

But the dark side of this system is that these conglomerates have been able to capture policymaking to benefit themselves. This has had two broad, harmful effects: it is stifling innovation and effectively killing early-stage startups and domestic entrants in key industries; and it is changing the government’s “Make in India” program into a counterproductive, protectionist scheme.

We may now be seeing these effects reflected in India’s potential growth, which seems to have declined rather than accelerated recently. Just as the Asian Tigers did well in the 1980s and 1990s with a growth model based on gross exports of manufactured goods, India has done the same with exports of tech services. Make in India was intended to strengthen the economy’s tradable side by fostering the production of goods for export, not just for the Indian market.

Instead, India is moving toward more protectionist import-substitution and domestic production subsidization (with nationalistic overtones), both of which insulate domestic industries and conglomerates from global competition. Its tariff policies are preventing it from becoming more competitive in goods exports, and its resistance to joining regional trade agreements is hampering its full integration into global value and supply chains.

“ India should be focusing on industries where it has a comparative advantage, such as tech and IT, artificial intelligence, business services, and fintech. ”

Another problem is that Make in India has evolved to support production in labor-intensive industries such as cars, tractors, locomotives, trains, and so forth. While the labor intensity of production is an important factor in any labor-abundant country, India should be focusing on industries where it has a comparative advantage, such as tech and IT, artificial intelligence, business services, and fintech. It needs fewer scooters, and more Internet of Things startups. Like many of the other successful Asian economies, policymakers should nurture these dynamic sectors by establishing special economic zones. Absent such changes, Make in India will continue to produce suboptimal results.

“ The recent saga surrounding the Adani Group is symptomatic of a trend that will eventually hurt India’s growth. ”

Finally, the recent saga surrounding the Adani Group
512599,
-4.98%
is symptomatic of a trend that will eventually hurt India’s growth. It is possible that Adani’s rapid growth was enabled by a system in which the government tends to favor certain large conglomerates and the latter benefit from such closeness while supporting policy goals.

Again, Modi’s policies have deservedly made him one of the most popular political leaders at home and in the world today. He and his advisers are not personally corrupt, and their Bharatiya Janata Party will justifiably win re-election in 2024 regardless of this scandal. But the optics of the Adani story are concerning.

There is a perception that the Adani Group may be, in part, helping to support the state political machinery and finance state and local projects that would otherwise go unfunded, given local fiscal and technocratic constraints. In this sense, the system may be akin to “pork barrel” politics in the US, where certain local projects get earmarked in a legal (if not entirely transparent) congressional vote-buying process.

Supposing that this interpretation is even partly correct, Indian authorities might reply that the system is “necessary” to accelerate infrastructure spending and economic development. Even so, this practice would be toxic, and it would represent a wholly different flavor of realpolitik compared to, say, India’s vast purchases of Russian oil since the start of the Ukraine War.

While those shipments still account for less than one-third of India’s total energy purchases, they have come at a significant discount. Given per capita GDP of around $2,500, it is understandable that India would avail itself of lower-cost energy. Complaints by Western countries that are 20 times richer are simply not credible.

The scandal surrounding the Adani empire does not seem to extend beyond the conglomerate itself, but the case does have macro implications for India’s institutional robustness and global investors’ perceptions of India. The Asian financial crisis of the 1990s demonstrated that, over time, the partial capture of economic policy by crony capitalist conglomerates will hurt productivity growth by hampering competition, inhibiting Schumpeterian “creative destruction,” and increasing inequality.

It is thus in Modi’s long-term interest to ensure that India does not go down this path. India’s long-term success ultimately depends on whether it can foster and sustain a growth model that is competitive, dynamic, sustainable, inclusive, and fair.

Nouriel Roubini, professor emeritus of economics at New York University’s Stern School of Business, is chief economist at Atlas Capital Team and the author of “Megathreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them” (Little, Brown and Company, 2022).

This commentary was published with permission of Project Syndicate —
India at a Crossroads

More: This perfect storm of megathreats is even more dangerous than the 1970s or the 1930s.

Also read: Freeing the U.S. economy from China will create an American industrial renaissance and millions of good-paying jobs

Source link

#India #hot #market #investors #risks #falling #victim #success

These high school sweethearts have visited 112 countries. Here’s how they pay for it on a budget

Post By Business Accommodations, Adventure travel, Amazon, Bali, Budgeting, business news, Economy, entertainment, Holidays, Hospitality and leisure industry, Hotels and resorts, indonesia, Jordan, Life, lifestyle, new york, Perú, Sydney, Thailand, tourism, Travel, Travel safety, Vacation costs, Vacations

Most people have a travel bucket list, perhaps with 10 to 15 countries.

For this couple, it’s all 195 — and they’re more than halfway there.

Hudson and Emily Crider have visited 112 countries, but their journey together began long before that. Both are from the “same small town” of Lancaster, Pennsylvania. They met in fifth grade and started dating in high school, the couple said.

Speaking to CNBC via video from Chiang Mai, Thailand, the couple explained that their goal in college was to buy an RV and travel to all 50 states in the United States.

Hudson and Emily Crider in high school.

Hudson and Emily Crider

They began to save for that goal after getting married in 2012, but just a few years later, Hudson’s father died of a heart attack. “It was a reminder to us that we’re not guaranteed another day,” said Hudson, 32.

That motivated them to “sell everything and buy this old RV,” said Hudson. The couple left their jobs — Emily as a marketing manager in an agency, Hudson as a financial planner — in the Washington D.C.-Baltimore area, said Emily, 31. Just two years later, they accomplished their goal of traveling to all 50 states.

So they set their sights higher.

Now, as the couple pursue their goal of traveling to every country in the world, they spend less than when they lived in D.C., said Emily. “The thing we found most helpful is eliminating expenses,” said Hudson. “We don’t have a house, car, kids and also make sure to budget.”

The couple have met people on the road who have children, or a home that they’re renting out to travel long term, said Emily. “We really believe there’s not a right or wrong way to travel,” she said.

Hudson and Emily Crider on a safari in Kenya, Africa.

Hudson and Emily Crider

The couple work remotely while on the road to support their travels, said Hudson. They teach English online, create content on YouTube and Instagram, and sell products like clip-on hand sanitizer holders on Amazon.

Although every traveler has different circumstances, being able to research and read reviews on the internet makes travel “the most open that it’s ever been,” said Hudson.

The couple’s own style of traveling helps them save on food, attractions and local culture in countries they visit, no matter how expensive.

Least to most expensive regions

The Criders have traveled to every continent except Antarctica, they said. The following is their ranking of the world’s major regions based on the cost of travel — from the least to most expensive:

Asia
South America
Africa
Middle East
Australia
Europe
North America

Asia

Food is one of the categories of travel that “people plan the least for,” yet it’s the cost that is “easiest to add up,” the couple told CNBC. In Bali, Indonesia, they kept those costs low by eating street food like nasi goreng, spending as little as $1 per meal.

Trying street food is a “great way to taste local food and culture,” said Emily. Their favorite Asian cuisines include pad Thai and khao soi from Thailand and Vietnamese banh mi, she said.

The couple save on housing, their second biggest expense, by doing homestays with locals. In Bali, they stayed with the “sweetest family” for just $4 per night, said Emily.

Hudson trying an organ sandwich in Marrakech, Morocco.

Hudson and Emily Crider

The couple also use Couchsurfing.com, a site where travelers can find locals offering free housing. In Switzerland, they stayed with another couple who made them raclette, a traditional Swiss dish, and took them paragliding, said Emily.

Homestays are a great way to connect with local people, said Emily. “When you’re quickly going to a place and taking pictures of tourist sites, you don’t always get the full picture.”

South America

South America was the third cheapest for activities, at an average of $15.00 per experience, the couple told CNBC. Many activities were free, they added.

The couple research and budget for the main activities they want to do before visiting any country, they said.

Hudson and Emily Crider on a hike in Patagonia, South America.

Hudson and Emily Crider

They hiked through “amazing” places like Patagonia and Peru without booking a guide, said Hudson. With online resources, “it was so easy to find it ourselves,” he said.

The couple call this “do-it-yourself style travel,” where they find transportation and explore cities without having to book a tour, said Emily.

Africa

“Do-it-yourself” travel even extends to safaris, according to the couple.

In East Africa, Hudson and Emily rented a car and drove through the Serengeti on their own.

Hudson and Emily Crider camping during their self-drive safari in the Serengeti in Tanzania.

Hudson and Emily Crider

“It was more of an adventure than we signed up for, but it was a good way to save money,” said Emily.

Middle East

Transportation typically means metros, buses or tuk-tuks instead of taxis and Uber, the couple said.

Hudson and Emily Crider in Petra, Jordan.

Hudson and Emily Crider

But renting a car can also be worth it.

The couple spent the most on transportation in the Middle East, at an average of $14.00 per ride, they told CNBC.

“If anybody’s traveling to Jordan in particular, rent a car — it’s a great way to meet local people,” said Hudson.

Australia

The couple spent $85 on a harbor cruise in Sydney that went past the Sydney Opera House. “We prefer to spend a little less money on housing and food and more on experiences,” said Emily.

They spent the most on activities in Australia, with an average of $42.50 per experience. Transportation, however, was the second-least costly, at an average of $3 per ride.

The cruise was also an example of how the couple create content on the road, as they partnered with a company to promote the experience, said Hudson.

Europe

By saving a little bit in every category, the couple save a lot of money in the long run, they told CNBC. They did the same in Europe, which was the second-most expensive for housing, food and transportation.

It helps to spend less time staying in the more expensive areas, said Hudson. Compared with Paris, cities like Prague and Budapest are “equally beautiful” but have housing that is “half the cost,” he added.

Hudson and Emily Crider paragliding in Switzerland.

Hudson and Emily Crider

To get around, the couple used the Eurail unlimited pass to travel to as many places as they wanted within a booked time period, said Hudson. Budget airlines like Wow Air and Ryanair were also “amazing” options, he said.

“We would get a €12.00 flight and spend more on getting the Uber to the airport,” he quipped.

They used Google to find accommodations based on budget, then booked using Airbnb or Booking.com for the “best deals,” said Emily. They typically did a “really cheap hotel or motel” in Europe as it was often less expensive than a hostel, she added.

North America

Although New York consistently ranks as the most expensive city in the U.S., it is a popular destination for travelers who visit North America, said Hudson.

The couple got around by walking or riding on New York’s “amazing” subway system for $2.75 per trip, he said. They used Google Maps to access bus and metro times in almost every major city they visited, they said.

They also said they use blogs and Facebook groups to find suggestions for public transportation too.

More tips

Hudson and Emily try to strike a balance between “comfort and cost” when picking accommodations, they told CNBC.

That often leads to a choice between air conditioning and Wi-Fi, said Hudson. (They rarely compromise on the Wi-Fi.)

Reading an accommodation’s newest reviews gives a “current update of someone’s experience staying there,” said Emily.

“We don’t book places without reviews within the past four or five months.“

A hostel room where the Criders stayed in Sydney, Australia.

Hudson and Emily Crider

Bonus points on credit cards also help to save money, said Emily. “Chase Sapphire Preferred and Reserve cards are our favorite because those can be transferred to a lot of different hotels and airlines,” she said.

The couple plan for future trips by using Google Flights to notify them if a flight price drops below a certain amount, said Emily. Instead of being fixed on one specific destination, pick five places you want to visit and set notifications for them, she recommended.

As for Hudson and Emily, they have set their sights on more places than that.

They are headed to West Africa next, they said.

Source link

#high #school #sweethearts #visited #countries #Heres #pay #budget

Why is the Russian economy holding up against Western sanctions?

Post By World Economy, European Union, Russia, Ukraine, Vladimir Putin, War

Despite nine sets of sanctions imposed by the European Union, the Russian economy only experienced a small contraction of its GDP in 2022. The “resilience” of the Russian economy was hailed on Tuesday by President Vladimir Putin during his state of the nation address. However, certain Western observers and politicians point out blind spots in the official statistics provided by Moscow.

The Russian economy is resisting. Far from the “collapse” predicted by French Finance Minister Bruno Le Maire after the first waves of Western sanctions following the outbreak of the Russian invasion of Ukraine, Moscow’s GDP contracted by only 2.1% in 2022, according to the Russian statistics service Rosstat. The Russian economy is even projected to grow by 0.3% in 2023, according to the International Monetary Fund (IMF).

“We have ensured the stability of the economic situation and protected our citizens,” said Russian President Vladimir Putin on February 21 in his state of the nation address, adding that the West had failed to “destabilise Russian society”.

The apparent resilience of the Russian economy is primarily due to the surge in oil and gas prices in 2022, which compensated for the drop in the volume of exports – a reduction of around 25% for gas.

Previously one of Russia’s main trading partners, the EU managed to reduce its imports of Russian natural gas by 55%, with the aim of undermining Moscow’s ability to finance its offensive in Ukraine. To remedy the deficit, Russia turned to new buyers, including Turkey, India and China in particular. Gas deliveries to the latter through the Power of Siberia gas pipeline increased by 48%, according to the Russian Deputy Prime Minister Alexander Novak.

As Russia’s war in Ukraine enters its second year, the arms industry has also contributed to economic activity. “The metallurgical industry has seen a sharp increase in production. This is an obvious sign that certain branches of the military-industrial complex have succeeded in adapting. For example, there are factories in the Urals that operate 24 hours a day,” says David Teurtrie, senior lecturer in political science at the Catholic Institute of Vendée in Western France.

Another strong sector of the Russian economy, according to President Putin, is the agricultural sector. “By the end of the agricultural year, that is, by June 30, 2023, we will be able to bring the total volume of grain exports to 55-60 million tonnes,” said the Russian president.

‘We are used to problems’

Gas, oil, finance, trade, technology… all sectors of the Russian economy have been affected by successive waves of Western sanctions. However, Russian companies are adapting. Excluded from the SWIFT system, a secure messaging system that facilitates rapid cross-border payments, the banks depend on intermediaries to circumvent the sanctions.

Western goods are easily imported through third countries such as Kyrgyzstan, Armenia or Georgia, border countries at the heart of a parallel trade circuit which supplies Russian industry.

The food industry was also able to rebound through the emergence of local players which replaced Western brands, like Pepsi or Coca-Cola.

“Since the beginning of capitalism in Russia, we have experienced at least four major crises. We are used to problems and, to be honest, these are not the worst we have faced,” said Yuri Saprygin, an entrepreneur from the city of Kaluga, in central Russia, contacted by France 24.

Faced with Western sanctions, Saprygin was forced to replace parts from Europe and Taiwan with Russian and Chinese components. “It was not easy, but we never stopped our activity,” said the businessman whose company sells medical equipment to laboratories.

Not all sectors are suffering in the same way. Highly dependent on electronic imports, the technology sector is bearing the brunt of Western sanctions on semi-conductors, essential for the military and aeronautical industries, and even for the automotive sector.

A tapered economic situation?

Russia’s automotive sector is one of the industries that has struggled the most under the weight of sanctions. According to the Association of European Businesses (AEB), nearly a million fewer cars were sold last year compared to 2021, representing a reduction of 59%. The figure says a lot about the impact of the sanctions but also about the loss of Russian citizen’s purchasing power, who suffered like all Europeans from high inflation. While inflation in Russia rose to nearly 12% throughout the past year, it should be limited to between 5% and 7% in 2023, according to the Central Bank of Russia.

The situation is therefore far from idyllic. Especially since some observers and politicians doubt the official statistics provided by Russia. Reacting to Russian GDP figures, French President Emmanuel Macron said on Tuesday that “Russia’s economy is suffering a lot”, adding he “does not believe” Moscow’s “propaganda”.

Some important indicators, such as foreign trade data, are no longer published. “Probably to prevent the West from claiming the effectiveness of sanctions,” said Agathe Demarais, global forecasting director at the Economist Intelligence Unit in the journal Foreign Policy.

In addition, more than 300,000 men have been called up to fight in Ukraine and hundreds of thousands of Russians have reportedly fled the country over the past twelve months. This situationcould weigh on the productivity of the country over the long term. “Besides the sanctions, it is probably this aspect which penalised the Russian economy the most in the second part of the year because it was mainly educated and wealthy Russians who emigrated,” said David Teurtrie.

Is the worst yet to come?

While the Russian economy is still standing, it seems to be durably weakened and the situation could get worse. Some sanctions have not yet been felt by the economy, but time will tell. This is the case of sanctions on oil, the primary source of revenue for the Russian federal budget.

Since December, an EU embargo on Russian crude oil came into force in December. It was accompanied by a price cap on barrels delivered through maritime routes. Since February 5, the same mechanisms apply to refined oil products.

These embargoes could considerably penalise the country’s budget. According to data from the Centre for Research on Energy and Clean Air (Crea), the EU has paid EUR84 billion to Russia for its oil since the invasion of Ukraine.

“This is only the beginning. Sanctions on Russia are more of a marathon than a sprint”, said Agathe Demarais. “In the coming months, Moscow will need to solve an impossible equation to finance the war in Ukraine, while keeping social subsidies high enough to avoid unrest”.

“Lower oil prices have definitely had an impact on the Russian budget, but the markets will stabilise,” cautioned David Teurtrie. According to the researcher, Russia remains far from being economically crippled as the West had hoped and still has ways of pushing back against the sanctions: enormous financial reserves and “relatively low debt, which offer it a significant borrowing capacity”.

Ukraine, one year on © Studio graphique France Médias Monde

This article was translated from the original in French.

Source link

#Russian #economy #holding #Western #sanctions

‘Unpredictable’ election in Africa’s largest economy is set to resonate around the world

Post By Oil and Gas business news, Economy, Energy, Oil and Gas, politics, World economy, World Markets

ABUJA, Niger,a – Feb. 18, 2023: Supporters of Nigeria’s Labour Party parade in the streets during a global march for the presidential candidate of Labour Party (LP) Peter Obi ahead of the Nigerian presidential election scheduled for February 25, 2023.

KOLA SULAIMON/AFP via Getty Images

Nigerians head to the polls on Saturday, with an unprecedented youth turnout expected against a backdrop of widespread insecurity and economic hardship.

After 24 years of uninterrupted democracy since ending military dictatorship in 1999, Africa’s most populous nation and largest economy is conducting its seventh election.

Nigeria is at a pivotal juncture amid record unemployment and inflation, a massive debt burden, fuel shortages, worsening security conditions, endemic corruption and crumbling public services.

The record 93.5 million Nigerians registered to vote will choose among 18 candidates to replace President Muhammadu Buhari, who has reached the two-term limit.

Muhammadu Buhari, Nigeria’s president, speaks during the U.S.-Africa Business Forum in New York.

Michael Nagle | Bloomberg | Getty Images

The aspiring successor chosen by the ruling All Progressives Congress party, 70-year-old former Governor of Lagos State Bola Tinubu, is a frontrunner alongside former Vice President Atiku Abubakar of the main opposition Peoples Democratic Party, and Peter Obi, a relative outsider from the Labor Party.

Obi’s disruptive and decentralized campaign has resonated with young and professional voters disillusioned by the two main parties, and some polls now have him leading the race.

Leena Koni Hoffmann, associate fellow of the Africa Programme at Chatham House, told CNBC on Monday that the presidential election will be the “most unpredictable” since the transition to civilian rule.

“We haven’t had these technologies shaping Nigeria’s elections before, and we’ve never had a three-way race before, and the context is not primed for an easy incumbent win,” Koni Hoffmann explained. The Independent National Electoral Commission is rolling out an unprecedented technological innovations to ensure a free and fair election.

ABUJA, Nigeria – Feb. 20, 2023: Former South African President Thabo Mbeki speaks to media. The Commonwealth of Nations sent 16 observers for the presidential and governorship elections to be held on 25 February and 11 March in Nigeria.

Adam Abu-Bashal/Anadolu Agency via Getty Images

During a period in which West Africa has been beset by coups and violent extremism, Hoffmann added that the region “needs Nigeria to have a credible election.”

A deluge of international observers arrives this week, including a mission led by former Assistant U.S. Secretary of State for African Affairs Johnnie Carson and a Commonwealth of Nations delegation headed by former South African President Thabo Mbeki. The U.S. has also announced visa bans on individuals identified as undermining confidence in Nigeria’s democratic process.

Demographics

Nigeria has one of the world’s fastest-growing populations — currently near 220 million and forecast to double by 2050. It also has one of the world’s youngest average populations, with 42% of citizens under the age of 15 and a median age of just over 18, the UN estimates.

Political engagement has spiked in recent years, amid deteriorating prospects for Nigeria’s youth — eras of economic growth have not expanded opportunities, social inequality has increased, and youth unemployment hit 42.5%, according to the National Bureau of Statistics. Almost 40% of registered voters are between 18 and 34, according to INEC.

IBADAN, Nigeria – Feb. 16, 2023: Supporters of Bola Ahmed Tinubu, Presidential candidate of All Progressives Congress (APC), parade during the party’s presidential campaign in Ibadan, Nigeria.

Adekunle Ajayi/NurPhoto via Getty Images

“Recent years have been particularly brutal for young people in Nigeria, having to live through two recessions and a failing economy and with inflation in double digits and the impact of food inflation,” Koni Hoffmann said.

Four in 10 Nigerians experience monetary deprivation and more than six out of 10 are “multidimensionally poor,” the National Bureau of Statistics finds.

“The kind of social mobility and independence that you would project for yourself in your early twenties, the last couple of years haven’t allowed young people that kind of space for pursuing opportunity, for self-determination, so that explains a lot of the frustration and discontent,” Koni Hoffman said.

Economy

First Lady Aisha Muhammadu Buhari in September apologized to Nigerians for the economic problems and growing insecurity they have experienced since her husband was elected in 2015. Alongside the Covid-19 pandemic and war in Ukraine, Koni Hoffmann noted “missed opportunities” and “self-inflicted crises” under Buhari’s regime.

In 2019, the government closed goods movement through Nigeria’s borders with neighboring Benin, Cameroon, Chad and Niger, ostensibly to stem smuggling of rice and other agricultural goods.

Economists panned the decision, which Koni Hoffmann suggested rendered Nigeria and its neighbors more vulnerable to the damage of the pandemic.

The administration has come under fire for its multiple exchange rate system, aimed at defending the domestic naira currency by artificially inflating its value. Critics argue that such interventions heighten volatility by driving greater fluctuations in price discovery.

The oil sector accounts for more than 80% of national budgetary revenues, leaving Abuja highly susceptible to oil price variations and low production due to large scale crude theft.

KANO, Nigeria – Feb. 9, 2023: Supporters carry banner of candidate of the opposition Peoples Democratic Party (PDP) Atiku Abubakar and running mate Ifeanyi Okowa during a campaign rally in Kano, northwest Nigeria.

PIUS UTOMI EKPEI/AFP via Getty Images

Tinubu’s foreign exchange policies are unlikely to deviate from those of the current administration, analysts say, while Abubakar and Obi propose more liberal economic measures and diversification, alongside greater fiscal prudence.

“No matter who wins the race to be Nigeria’s next president, the public debt-to-GDP ratio is likely to remain on an upwards path in the near-term, but victory for an opposition candidate could make the fiscal outlook considerably brighter further down the line,” said Virág Fórizs, Africa economist at Capital Economics.

“Opposition parties’ fiscal discipline pledges put Mr. Abubakar and Mr. Obi in a better position to get Nigeria’s fiscal house in order.”

Fórizs concluded, “The upshot is that, from an economic standpoint, the polls offer a choice between marginal steps away from growth-sapping policies and a more meaningful shift towards pro-market reforms that could unlock Nigeria’s economic potential down the line but involve near-term economic pain.”

Security

Buhari took office vowing to tackle Islamist militant organization Boko Haram, whose insurgency killed thousands and displaced millions.

Government forces seemingly succeeded, reclaiming large swathes of territory from the jihadist group. However, the extremist contingent splintered into competing groups in the north, complicating the challenge facing the incoming president.

Meanwhile, cattle bandits terrorize the north-central and northwest states, secessionists in the southeast clash with police and cattle herders battle farmers in “middle belt” states.

The Council on Foreign Relations Security Tracker documented around 7,000 violent deaths in Nigeria in 2022, down from 9,000 in 2021. It also confirmed an increase in state violence against civilians.

ABUJA, Nigeria – Oct. 20, 2021: A young woman stand in front of riot policemen during a protest to commemorate one year anniversary of EndSars, a protest movement against police brutality at the Unity Fountain in Abuja.

KOLA SULAIMON/AFP via Getty Images

This came to a head in late 2020, when thousands of young people demonstrated countrywide against police brutality. Security forces sought to violently quash the protests, culminating in the Lekki Toll Gate massacre in October 2020.

Peter Obi, the 61-year-old former governor of Anambra State, rode that wave with a vision for policy and governance reforms, including proposals for tackling deep-rooted insecurity and corruption, while promoting social and political mobility.

“The dominant parties did not seem to provide the kinds of channels or vessels that young people wanted, so they have turned to Peter Obi, who is the nearest proximate for them, for how various sections of young people in Nigeria would like to remake the nation’s politics,” said Hoffmann.

Source link

#Unpredictable #election #Africas #largest #economy #set #resonate #world

Nigeria: Protests at banks and ATMs break out amid ‘cash scarcity’ concerns

Post By World Africa, Economy, election, Nigeria

Issued on: 17/02/2023 – 14:12

Destroying ATMs, breaking into banks and setting up blockades in the street: angry protests erupted on February 15 in several cities across Nigeria as people struggle to get their hands on newly designed banknotes. Frustration is mounting as some citizens can’t even purchase basic necessities amid widespread shortages of the new currency, just a week ahead of the 2023 general elections.

The Central Bank of Nigeria began circulating newly designed banknotes worth 1,000, 500 and 200 naira (2.03, 1.02 or 0.41 euros) on December 15, 2022. The move was intended to replace dirty, old cash currently in circulation, tackle inflation and counterfeiting, as well as promote a cashless society.

The old banknotes were set to expire on February 10, before Nigeria’s President Muhammadu Buhari extended the deadline for citizens to continue using their old 200 naira banknotes until April 10. The 500 and 1,000 naira notes must be exchanged or deposited in banks.

But a lack of new notes in the banks – as well as allegations that banks are hoarding the new notes – have left people desperate, with lines forming outside banks and at ATMs.

What in God’s name is this!!!
We are in a country that do not even give a damn about us. A lot of people abandoned their works just to collect 1000 naira, which they will stand on that queue for hours for.
The bank officials explain to them that they can only get 1000 a day and pic.twitter.com/TRfwjqohzX

— Oyatybabe (@oyatybabe) February 2, 2023

A video shared on Twitter on February 2, 2023 shows a long line of people queuing up to collect naira banknotes at a United Bank of Africa branch.

Some merchants have already stopped accepting the old banknotes, rendering them essentially valueless. In a cash-based society where around 40% of the population do not have bank accounts, the currency redesign has caused growing anxiety among those who can’t access the new money.

Protests at bank branches erupted in Ibadan and Benin City as well as several towns in Delta State, in southern Nigeria, on February 15.

First Bank Akpakpava this morning, make una continue to dey praise CBN o. Like the so called politicians nor get the new naira note to do the vote buying already… Make una continue to dey praise Emefiele pic.twitter.com/gHh9IgSmFZ

— EFE 𓃵 (@efewonyi) February 15, 2023

A video shared on Twitter on February 15, 2023 shows damaged ATMs outside First Bank in Benin City, Nigeria.

Protest rocks Ibadan, protesters block highway as traders reject old naira note pic.twitter.com/k9nqJDgiaF

— Govern-MEND (@Govern_mend) February 15, 2023

A video shared on Twitter on February 15, 2023 shows protesters blocking a road in Ibadan, Nigeria.

‘The people in the streets feel massive frustration’

In Benin City, a crowd of protesters attempted to breach the local branch of the Central Bank of Nigeria (CBN). Local residents had gathered around the bank to wait for a chance to exchange their naira notes.

NAIRA SCARCITY: Viral video shows the moment Benin protesters attempted to invade CBN office.

Protesters attempted to invade the Central Bank of Nigeria at Ring road in Benin, Edo State on Wednesday. pic.twitter.com/5sQcLfFeDo

— NewsWireNGR (@NewsWireNGR) February 15, 2023

Protesters in Benin, Nigeria attempt to break into the local office of the Central Bank of Nigeria on February 15, 2023.

However, according to local media, they began throwing stones at the building and were met with teargas and gunshots from security forces.

Protesters, armed with sticks and weapons, also attacked other bank offices and destroyed ATMs around Benin City.

Benin city pic.twitter.com/WWzENHb4fU

— Right Choice🧩 (@RightChoice___) February 15, 2023

A video shared on Twitter on February 15 shows people gathered and tyres burning outside of a United Bank of Africa branch in Benin City, Nigeria.

Godsent Clement Ogumu is a tech entrepreneur who lives in Benin City.

Yesterday [February 15], I unknowingly bumped into one of the protests that was going on in the middle of town in Benin City. I was almost mobbed or lynched by some very, very angry, protesting youths. They are very frustrated by the whole situation of naira scarcity. The frustration is very high and the youths are willing to take it out on anybody who happens to be someone that they perceive to be better off or in a position of power. During the time I witnessed the protests, the crowd was not exactly very violent, but they were very agitated. And a lot of damage has been done already.

GOD HELP US IN BENIN
GOD HELP NIGERIA 🇳🇬 #Trending pic.twitter.com/m4Zpav8PAJ

— 𝓑𝓘𝓖_____𝓦𝓔𝓢𝓣🔞🦅 (@T_west02) February 15, 2023

A video shared on Twitter on February 15, 2023 shows protesters near a Union Bank and United Bank of Africa branch in Benin City, Nigeria. Protesters appear to be breaking windows at the Union Bank. One protester appears to be wounded.

It started escalating between protesters and police. That’s when I left the scene, because we all know what the Nigerian police is capable of. Not too long after I left, we started getting information that some of the protesters were shot dead.

At least three people were shot dead by security forces on February 15 as protesters attempted to break into the CBN building in Benin City.

Protests also forced many bank branches in Benin City to temporarily close. Many ATMs were also out of service or destroyed.

‘A family told me they haven’t eaten because no one is willing to take their old banknotes’

The people in the streets feel massive frustration. A family came to me and told me they haven’t eaten since the previous day – even though they have the money – because no one is willing to take the old banknotes from them.

The instruction was to deposit all your old naira notes and then withdraw the new naira notes. The funny thing is that the banks are not even allowing the withdrawal of new naira notes. There is no way anybody is coming across the new naira notes, even in this very, very serious situation. I know none of my family or friends have actually come across the new naira in quantities that are actually useful. Once in a while, you come across one or two of the new naira, which is barely enough to do anything.

A lot of us use online banking and transfers, which is an alternative, but a lot of families don’t know how to use these channels so they basically rely on cash transactions. These people can’t make payments, buy food, buy water – they are stranded. It’s a very dire, serious situation for a lot of people living in my neighbourhood.

‘It feels as though we are no longer in control of our lives’

Oyinkitana, who declined to provide his full name for security reasons, lives in southwestern Nigeria and is the CEO of a startup.

The scarcity of Naira currency has had a significant impact on the Nigerian population, particularly those who depend on cash for their daily transactions, such as small business owners. As for myself, I find it challenging to purchase fuel for my car since many fuel stations prefer cash over POS [Point of Sale vendors who use card machines to make transfers for people, but often charge commissions for the service] or bank transfers. Moreover, some small business owners […] see cash as the only source for certain items, and their sales have been directly affected due to the lack of cash circulation.

The current state of affairs in Nigeria is truly unbearable, as feelings of uncertainty loom over everything. It seems as though we have lost our bearings, with even the simple task of determining whether to use new or old notes becoming a challenge due to inconsistent acceptance by vendors. It feels as though we are no longer in control of our lives, as businesses shut down and the purchasing power of individuals continues to plummet. It’s a confusing time and nobody seems to understand what’s really going on in the country anymore.

‘The federal government wants to mop up all the cash in circulation so that politicians wouldn’t be able to buy votes’

Both our Observers told us the timing of the new currency redesign, coming just before the general elections, is no coincidence. They believe that it is also a mechanism to prevent politicians from hoarding cash and using it to buy off votes.

Clement Ogumu explained:

We all feel like this agenda is targeted at politicians who have stacks of cash stashed away in warehouses, in their bedrooms, or in various locations to buy election votes. They want to bribe their way into office by buying votes. I believe that’s the reason the federal government wants to mop up all the cash in circulation so that politicians wouldn’t be able to buy votes from those that are impoverished and willing to sell their votes for some cash.

I think it’s a good thing that the government is doing something about vote buying, but the truth of the matter is that it is coming with a lot of huge consequences for the population. The people bearing those consequences are people with little education, little money.

The general election in Nigeria will be held on February 25, with three main candidates vying for the presidency: Bola Ahmed Tinubu, from the ruling All Progressives Congress party; Atika Abubakar, of the main opposition People’s Democratic Party; and Peter Obi, a favourite of the youth vote who represents the Labour Party.

Insecurity – including a kidnapping crisis and a militant Islamist insurgency – and economic concerns, such as inflation and unemployment, are among the top electoral issues ahead of the vote.

Source link

#Nigeria #Protests #banks #ATMs #break #cash #scarcity #concerns

Here’s what the Federal Reserve’s 25 basis point interest rate hike means for your money

Post By Business Banks, business news, Central banking, coronavirus, Coronavirus: Personal Finance, covid-19, Credit card debt, Economic events, Economy, Federal Reserve System, Inflation, Interest Rates, Investment strategy, Jerome Powell, Lendingtree Inc, Mortgages, Personal Finance, Personal loans, Personal saving, Prices, U.S. Economy

The Federal Reserve raised the target federal funds rate for the eighth time in a row on Wednesday, in its continued effort to tame persistent inflation.

At its latest meeting, the central bank approved a more modest 0.25 percentage point increase after recent signs that inflationary pressures have started to cool.

“The easing of inflation pressures is evident, but this doesn’t mean the Federal Reserve’s job is done,” said Greg McBride, chief financial analyst at Bankrate.com. “There is still a long way to go to get to 2% inflation.”

What the federal funds rate means to you

The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves do affect the borrowing and saving rates consumers see every day.

This rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing — putting more pressure on households already under financial strain.

“Inflation has shredded household budgets and, in many cases, households have had to lean against credit cards to bridge the gap,” McBride said.

On the flip side, “with rates still rising and inflation now declining, it is the best of both worlds for savers,” he added.

How higher interest rates can affect your money

1. Your credit card rate will rise

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles.

“Credit card interest rates are already as high as they’ve been in decades,” said Matt Schulz, chief credit analyst at LendingTree. “While the Fed is taking its foot off the gas a bit when it comes to raising rates, credit card APRs almost certainly will keep climbing for at least the next few months, so it is important that cardholders continue to focus on knocking down their debt.”

Credit card annual percentage rates are now near 20%, on average, up from 16.3% a year ago, according to Bankrate. At the same time, more cardholders carry debt from month to month while paying sky-high interest charges — “that’s a bad combination,” McBride said.

At more than 19%, if you made minimum payments toward the average credit card balance — which is $5,474, according to TransUnion — it would take you almost 17 years to pay off the debt and cost you more than $7,528 in interest, Bankrate calculated.

Altogether, this rate hike will cost credit card users at least an additional $1.6 billion in interest charges in 2023, according to a separate analysis by WalletHub.

“A 0% balance transfer credit card remains one of the best weapons Americans have in the battle against credit card debt,” Schulz advised.

Otherwise, consumers should consolidate and pay off high-interest credit cards with a lower-interest personal loan, he said. “The rates on new personal loan offers have climbed recently as well, but if you have good credit, you may be able to find options that feature lower rates that what you currently have on your credit card.”

2. Mortgage rates will stay higher

Rates on 15-year and 30-year mortgages are fixed and tied to Treasury yields and the economy. As economic growth has slowed, these rates have started to come down but are still at a 10-year high, according to Jacob Channel, senior economist at LendingTree.

The average interest rate for a 30-year fixed-rate mortgage is now around 6.4% — up almost 3 full percentage points from 3.55% a year ago.

“Relatively high rates, combined with persistently high home prices, mean that buying a home is still a challenge for many,” Channel said.

This rate hike has increased the cost of new mortgages by around 10 basis points, which translates to roughly $9,360 over the lifetime of a 30-year loan, assuming the average home loan of $401,300, WalletHub found. A basis point is equal to 0.01 of a percentage point.

“We’re still a ways away from the housing market being truly affordable, even if it has recently become a bit less expensive,” Channel said.

Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year, but a HELOC adjusts right away. Already, the average rate for a HELOC is up to 7.65% from 4.11% a year ago.

3. Auto loans will get more expensive

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans, so if you are planning to buy a car, you’ll shell out more in the months ahead.

The average interest rate on a five-year new car loan is currently 6.18%, up from 3.96% last year.

The Fed’s latest move could push up the average interest rate even higher, although consumers with higher credit scores may be able to secure better loan terms or look to some used car models for better deals.

Paying an annual percentage rate of 6% instead of 4% would cost consumers $2,672 more in interest over the course of a $40,000, 72-month car loan, according to data from Edmunds.

“The ever-increasing costs of financing remain a challenge,” said Ivan Drury, Edmunds’ director of insights.

4. Some student loans will get pricier

Federal student loan rates are also fixed, so most borrowers won’t be affected immediately. But if you are about to borrow money for college, the interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, up from 3.73% last year and any loans disbursed after July 1 will likely be even higher.

If you have a private loan, those loans may be fixed or have a variable rate tied to the Libor, prime or T-bill rates, which means that as the central bank raises rates, borrowers will likely pay more in interest, although how much more will vary by the benchmark.

Currently, average private student loan fixed rates can range from just under 4% to almost 15%, according to Bankrate. As with auto loans, they also vary widely based on your credit score.

For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the Education Department expects to happen sometime this year.

What savers should know about higher interest rates

The good news is that interest rates on savings accounts are finally higher after the recent run of rate hikes.

While the Fed has no direct influence on deposit rates, they tend to be correlated to changes in the target federal funds rate, and the savings account rates at some of the largest retail banks, which have been near rock bottom during most of the Covid pandemic, are currently up to 0.33%, on average.

Also, thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.35%, much higher than the average rate from a traditional, brick-and-mortar bank.

Rates on one-year certificates of deposit at online banks are even higher, now around 4.75%, according to DepositAccounts.com.

As the Fed continues its rate-hiking cycle, these yields will continue to rise, as well. However, you have to shop around to take advantage of them, according to Yiming Ma, an assistant finance professor at Columbia University Business School.

“If you haven’t already, it’s really important to benefit from the high interest environment by getting a higher return,” she said.

Still, because the inflation rate is now higher than all of these rates, any money in savings loses purchasing power over time.

Subscribe to CNBC on YouTube.

Source link

#Heres #Federal #Reserves #basis #point #interest #rate #hike #means #money

Cart

Ukraine ‘shifted the EU’s trajectory’

‘Full benefits for full members’

‘We are used to problems’

A tapered economic situation?

Is the worst yet to come?

Demographics

Economy

Security

‘The people in the streets feel massive frustration’

‘A family told me they haven’t eaten because no one is willing to take their old banknotes’

‘It feels as though we are no longer in control of our lives’

‘The federal government wants to mop up all the cash in circulation so that politicians wouldn’t be able to buy votes’

1. Your credit card rate will rise

2. Mortgage rates will stay higher

3. Auto loans will get more expensive

4. Some student loans will get pricier