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EU economy faces more pain in 2023 after a gloomy year

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Energy crunch will trigger contraction as high inflation drags down output

The 19 European Union nations that use the euro are in for a rocky 2023, with eurozone inflation set to soar higher and unemployment about to worsen, according to economists who blamed the high price of energy for the zone’s woes.

The grim outlook was the consensus of 37 economists polled by newspaper Financial Times, or FT.

Around 90 percent of them said the eurozone was probably already in recession, and most said its GDP will contract further during 2023.

They said the zone’s difficulties will trigger a fall in the value of real estate, with residential house prices set to drop 4.7 percent after the European Central Bank, or ECB, raised interest rates by 2.5 percentage points during 2022 and signaled further hikes to come.

Chiara Zangarelli, an economist at Morgan Stanley, told the FT that the Russia-Ukraine conflict and resulting disruption of fossil fuel supplies have been major causes of inflation and will continue to be a problem.

“Gas markets in Europe remain a key risk,” Zangarelli told the newspaper. “Additional supply disruptions, or a particularly cold winter, could lead to renewed tensions and prices rising again, forcing another round of adaptation and demand destruction.”

But, the economists said the eurozone has likely seen the worst of the energy crisis, and predicted the situation will improve as new sources of energy come online, and nations, businesses, and households adapt to the new normal. They added that Europe was fortunate to have had a relatively mild fall, which meant its reserves of natural gas and other fuels remained relatively intact.

Sylvain Broyer, chief economist for Europe, Middle East and Africa at S&P Global Ratings, told the FT: “The tail risk of gas rationing has likely been avoided for this winter, but the question of energy supply for the next winter is still open.”

The economists said new sources of gas — from the Middle East, Norway, and the United States — as well as a renewed emphasis on nuclear power and a ramping up of renewable energy generation have all helped, but that no one knows whether Europe has diversified enough to not miss Russian fuel next winter, when stockpiles will be gone.

Significant driver

The economists said the high cost of energy has been the single most significant driver of inflation in the eurozone, and looks set to continue to be, with prices likely to rise by an additional 2.7 percent in 2023. And the economists said the eurozone’s economy will likely shrink, by almost 0.01 percent. The prediction is worse than the European Commission’s expectation that the economy will grow by 0.3 percent, Agence France-Presse reported. And it is worse than the ECB’s prediction of a 0.5 percent expansion.

The economists told the FT they expect the ECB to counter high inflation with interest rate cuts in 2023, which could “lead to a severe recession in the euro area”.

Consequently, inflation is likely to remain above the ECB’s target of 2 percent for at least two more years, with the consensus saying it will sit around 6 percent in 2023, and 2.7 percent in 2024, the FT reported. And the economists said unemployment could rise from the record eurozone low of 6.5 percent recorded in October, to 7.1 percent by the end of 2023.

Many countries are now grappling with cost-of-living crises because wages are not keeping up with inflation, forcing households to make difficult choices in their spending.

Russia, meanwhile, has reacted to attempts to force lower global energy prices through an imposed price cap on its exports.

Agencies via Xinhua contributed to this story.

EARLE GALE in London

Source(s): China Daily

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IASL is seeks A contractor to refurbish the Maafaru airport terminal

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BY: FATHIMATH LAUZA.

Island Aviation Services Limited (IASL) is looking for a contractor to refurbish the Maafaru International Airport terminal. IASL has asked interested Maldivian enterprises to submit proposals by February 12.

According to General Manager Mumthaz Ali, the goal of the terminal upgrade is to expand the airport’s capacity, add additional Maldives Immigration counters, and develop commercial and VVIP lounges.
He stated that the terminal will be a two-story structure, with the first level housing the VVIP lounge and the second housing the commercial lounge and offices.

Furthermore, the Maldives Transport and Contracting Company (MTCC) is planning to rebuild and enlarge the runway at Maafaru International Airport. The Abu Dhabi Fund for Development has provided a USD27 million grant to the project (ADFD). The expansion of the runway and terminal is projected to greatly boost the airport’s capacity.

The renovation and extension are part of Maafaru International Airport’s second phase of development. MTCC is in charge of extending the runway by 650 meters, enlarging the strip, recovering land, and constructing coastline protection buildings. Other activities include improving the runway pavement, enlarging the taxiway, and modernizing the AGL and power systems.

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State reserve at USD 827.7M by end of last year, a significant improvement

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Statistics publicized Maldives Monetary Authority (MMA) show that the state reserve stood at USD 827.7 million at the end of last year.

The ‘Economic Update’ publicized by MMA on Thursday showed that the gross international reserve, or in other words, the foreign currency reserve of the central bank, increased to USD 827.7 million by the end of last December.

This marks a three percent increase compared to the previous year. At the end of 2021, the state reserve stood at USD 805.8 million.

The reserve significantly improved in December 2022 compared to November 2022 with an addition of USD 223.5 million – marking a 37 percent increase. At the end of November 2022, the reserve stood at USD 604.2 million.

Tourism sector performed significantly well in the last quarter of last year. Statistics by Tourism Ministry showed that Maldives recorded 184,051 tourist arrivals in December alone, marking a 12 percent increase compared to December 2021.

As per MMA, the number of fisheries exports from the Maldives also significantly increased during December 2022. The central bank said that number of total exports had also significantly increased last year.

Economic experts cite the increased tourist arrivals to the Maldives and increased exports from the Maldives as a positive impact on the Maldivian economy.

While statistics from MMA shows Maldivian economy making steady improvements – Finance Ministry had recently announced measures to cut down state expenditure which is currently in force.

Source(s): sun.mv

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OPEC+ committee recommends staying course on oil output policy

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VIENNA, Feb. 1 (Xinhua) — Leading oil officials on Wednesday recommended to maintain the current oil output policy of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, amid an uncertain global economic outlook.

The OPEC+ agreed in October 2022 to cut production by 2 million barrels per day from the following month until the end of 2023. The cut equals to about 2 percent of the annual global oil demand.

Members of the OPEC+ Joint Ministerial Monitoring Committee (JMMC) “reaffirmed their commitment” to the current output plan at a virtual meeting on Wednesday and “urged all participating countries to achieve full conformity and adhere to the compensation mechanism,” according to an OPEC statement.

The JMMC comprises oil ministers from the OPEC+ countries. It has no decision-making power but provides policy recommendations for the OPEC+ ministerial meeting, the group’s decision-making body. It has also the authority to request additional OPEC+ ministerial meetings “at any time to address market developments,” according to OPEC.

The JMMC has reviewed the oil production data for November and December last year and “noted the overall conformity” for the OPEC+ countries, OPEC added.

The next JMMC meeting is scheduled for April 3. The next OPEC+ ministerial meeting, where the group will formally decide its output policy, is set for June 4.

Source(s): Xinhua

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