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Conflict, high borrowing costs clip growth in EBRD regions, report says

Two wars and high borrowing costs have trimmed expected growth in countries covered by the European Bank for Reconstruction and Development (EBRD), the bank said in a semi-annual report released on Wednesday. The EBRD, which covers economic trends across emerging Europe, central Asia, the Middle East and Africa, still expects economic growth of 3% across the 40 or so countries it covers, above 2.5% in 2023. But that forecast is 0.2 percentage points lower than in its September report. “This year is going to be better. But of course there ...

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Japan’s GDP contracts, complicating BOJ’s rate hike plans

Japan’s economy contracted in the first quarter, squeezed by weaker private consumption and external demand and throwing a fresh challenge to policymakers as the central bank looks to lift interest rates away from near-zero levels. Preliminary gross domestic product (GDP) data from the Cabinet Office on Thursday showed Japan’s economy shrank 2.0% annualised in January-March from the prior quarter, versus a 1.5% drop seen in a Reuters poll of economists. It followed a slightly positive reading in the fourth quarter. The reading translates into a quarterly contraction of 0.5%, versus ...

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Euro zone banks face increasing headwinds, ECB warns

Euro zone banks are likely to face a number of headwinds this year that will weigh on profitability and asset quality, European Central Bank Vice President Luis de Guindos said on Thursday. Banks face higher funding costs, weak overall economic growth, deteriorating loan books and an increase in non-performing loans, de Guindos told a news conference as he presented the ECB’s Financial Stability Review. “Our recommendation in terms of potential policy is quite clear: let’s try to take advantage of the good profitability in order to reinforce the capital buffers,” ...

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China tariffs could boost Fed rate cut case

Escalation of the U.S.-China trade war seems unavoidable whoever wins the White House in November, but the equally inevitable inflationary pressures that brings won’t automatically steer the Federal Reserve toward a more hawkish policy stance. If the blows to employment and economic growth from rising tariffs land harder than the hit to import prices, a new phase of the Sino-U.S. trade war will put policymakers in a bind, and under pressure to cut interest rates just as much as raise them. After keeping former President Donald Trump’s 2018-19 levies on ...

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How is China supporting Russia after it was sanctioned for Ukraine war?

Russian President Vladimir Putin and his Chinese counterpart Xi Jinping have praised the deep ties between their countries, during a meeting in Beijing. It was their fourth meeting since Russia invaded Ukraine in February 2022. In that time, Beijing has become a vital partner for Moscow, as it seeks to soften the impact of sanctions imposed by the US and other countries. Is China providing Russia with weapons? China has repeatedly denied allegations that it supplies Russia with weapons. In an interview with BBC News, US Secretary of State Antony ...

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Chinese overcapacity claims by US, Europe are ‘trade protectionism’, ministry says

China said on Thursday that U.S. and European assertions of excess capacity were “naked trade protectionism” and that efforts to constrain new energy exports from the World’s No.2 economy would frustrate global efforts to tackle climate change. Growing alarm over Chinese industrial overcapacity flooding the European Union with cheap products is opening a new front in the West’s trade war with Beijing, which kicked off with Washington’s import tariffs in 2018. “A country cannot be labelled as having excess capacity just because it has more capacity than it needs,” He ...

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Leaders from Western Balkans, EU, meet to discuss growth plan, reforms

The six Western Balkan countries brought together by the European Union met in Montenegro’s Adriatic resort of Kotor on Thursday to see how to speed up reforms, create their own single market and ultimately join the bloc. Having been promised EU membership years ago, the accession process across the region comprising Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia has slowed to a crawl, mainly because of reluctance among the EU’s 27 members and a lack of reform throughout the region. The EU wants to use a common growth plan ...

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US weekly jobless claims fall; labor market gradually easing

The number of Americans filing new claims for unemployment benefits fell last week, pointing to underlying strength in the labor market. Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 222,000 for the week ended May 11, the Labor Department said on Thursday. Economists polled by Reuters had forecast 220,000 claims in the latest week. The decline reversed a portion of the jump in the prior week, which had pushed claims to the highest level in more than eight months. The increase was largely attributed to a ...

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China says ‘bullying’ tariff hike shows that some in US have lost their minds

The U.S. move to raise tariffs on Chinese goods is a case of “typical bullying” and “shows that some people in the United States have reached the point of losing their minds,” China’s foreign minister said on Wednesday. “The U.S.’s suppression of China does not prove that the U.S. is strong, but rather exposes that the U.S. has lost its self-confidence and is out of order,” Minister Wang Yi said, according to state broadcaster CCTV. Source: Reuters

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ECB’s Centeno sees lower interest rates soon, no word on June decision

Euro zone inflation is in a sustained decline towards 2% and the European Central Bank’s interest rates will certainly start diminishing, ECB policymaker Mario Centeno said on Thursday, declining to predict whether it will happen at the next meeting in June. “This nearing of the inflation rate towards 2% is real and we are certain that the monetary policy interest ratewill come down,” he told a news briefing in Lisbon. “The market expects that the interest rate reduction will begin in June… I’m not going to anticipate the decision,” he ...

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US single-family housing starts, permits fall in April

U.S. single-family homebuilding and permits fell in April amid a resurgence in mortgage rates, but new construction remains supported by an acute shortage of houses for sale. Single-family housing starts, which account for the bulk of homebuilding, slipped 0.4% to a seasonally adjusted annual rate of 1.031 million units last month, the Commerce Department’s Census Bureau said on Thursday. Data for March was revised higher to show single-family starts falling to a rate of 1.035 million units instead of the previously reported 1.022 million units. Housing starts increased 17.7% year-on-year ...

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Alpha Bank’s quarterly profit jumps 37% on strong interest income

Greece’s Alpha Bank ACBr.AT, the country’s fourth-largest lender by market value, reported on Thursday a 37% rise in first-quarter net profit on higher net interest income and lower provisions for bad loans. Alpha Bank, of which Italian bank UniCredit CRDI.MI controls 9%, reported normalised net earnings of 221.6 million euros ($241.10 million) versus 162 million euros in the first quarter of 2023. Net interest income grew 9.6% year-on-year in the first three months of the year to 420.2 million euros, driven by higher rates in the eurozone and increased lending. ...

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ECB not in a hurry to cut rates, should take measured steps after June, Kazaks says

The European Central Bank is likely to cut interest rates in June but the bank is not in a hurry to ease policy, so subsequent moves could be spaced out to give time for assessment, ECB policymaker Martins Kazaks said on Thursday. The ECB has all but promised a rate cut on June 6 so the discussion has shifted to how quickly its next move should come and what conditions must be met for more easing. “I think we would benefit from a measured path going down,” Kazaks, Latvia’s central ...

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US import prices increase by the most in two years in April

U.S. import prices rose by the most in two years in April amid rising costs for energy products and other goods, suggesting that domestic inflation could remain elevated for a while. Import prices surged 0.9% last month, the largest increase since March 2022, after an upwardly revised 0.6% rise in March, the Labor Department’s Bureau of Labor Statistics said on Thursday. Economists polled by Reuters had expected import prices, which exclude tariffs, to advance 0.3% following a previously reported 0.4% gain in March. In the 12 months through April, import ...

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German and French economies show first quarter signs of revival

Despite Germany’s relatively good performance last quarter, the International Monetary Fund believes that structural issues such as aging and lack of investment remain. The second estimate for the Eurozone quarter-on-quarter gross domestic product (GDP) report was released on Wednesday morning, at 0.3% in Q1 2024, according to Eurostat, in line with market estimates. This was also a step up from the last two quarters’ -0.1%. Q1 2024 saw the eurozone experiencing the strongest GDP performance since Q3 2022. German GDP made an especially strong comeback, rising to 0.2% from -0.5% ...

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