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Tag: World economy

  • Somali pirates are back on the attack at a level not seen in years, adding to global shipping threats

    Somali pirates are back on the attack at a level not seen in years, adding to global shipping threats

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    PUNTLAND, SOMALIA – JANUARY 29: Puntland Maritime Police Forces (PMPF) are patrolling against the recently increasing pirate attacks off the coast in Puntland, Somalia on January 29, 2024. (Photo by Abuukar Mohamed Muhidin/Anadolu via Getty Images)

    Anadolu | Anadolu | Getty Images

    Somali pirates are back on the attack, with piracy around the Horn of Africa rising sharply in recent months and adding to concerns for shipping vessels, government forces and private security already locked in a battle in the Red Sea with Houthi rebels.

    Over the past three months, there has been more piracy in the Horn of Africa region than at any point in the last six years, according to Royal United Services Institute (RUSI), an independent think tank, with high ransoms for seafarers or vessels, and robbing of ship passengers by pirates.

    Piracy off the coast of Somalia had been on the decline in recent years after peaking in 2011 when Somali pirates launched 212 attacks. The United Nations Security Council (UNSC) passed seven resolutions targeting Somalia piracy between December 2010 and March 2022, permitting foreign naval and air forces to enter and patrol Somali waters and authorizing the European Union Naval Force Operation Atalanta, working with a U.S.-led task force, to use “all necessary means to repress piracy and armed robbery at sea.” 

    The cost of piracy to the global economy is a steep one. A 2013 World Bank study, still widelt cited today, estimated that piracy cost the global economy around $18 billion annually.

    According to the UNSC, the anti-piracy measures in place to enforce the freedom of navigation off the coast of Somalia expired quietly after its last renewal for three months after December 3, 2021.

    Since last November, merchant vessels have been the target of about 20% of Somali piracy-related incidents, according to Dan Mueller, lead analyst for the Middle Eastern Region for maritime security firm Ambrey. On December 14, The International Chamber of Shipping reported the hijacking of a Handymax bulk carrier, the first successful hijacking of a vessel off the coast of Somalia since 2017. The pirates have also been attacking fishing vessels, mostly Iranian, as well as many other small boats such as skiffs.

    Ocean piracy is rising across the world

    Data from 2023 shows that by many key measures, piracy is on the rise in key global shipping lanes.

    There were 120 incidents of maritime piracy and armed robbery against ships reported in 2023, compared to 115 in 2022, according to the annual Piracy and Armed Robbery Report of the ICC International Maritime Bureau (IMB). The IMB also found increased threats to crew safety, with the number of crews taken hostage rising from 41 to 73 in 2023, and crews kidnapped from two to 14.

    A spokesperson for the International Maritime Organization (IMO) which represents the seafarer spokesperson stressed to CNBC in an email, “The entire world depends on international shipping and seafarers, and therefore ships and cargoes should not be the subject of any type of attacks. The safety of seafarers are paramount – they are innocent victims who are simply doing their jobs in very harsh conditions.”

    The UNSC did not respond to CNBC’s request for comment about reinstating anti-piracy resolutions related to Somalia.

    The IMO said it is working very closely with countries in the region through the Djibouti Code of Conduct to address piracy and avoid any escalation, through capacity-building, national legislation, information sharing and regional coordination.

     “We are also looking the possibility of updating the IMO guidance on piracy to take into account new threats and technologies that can affect the safety of seafarers,” said a spokesperson.

    A 2010 photo of an armed Somali pirate keeping vigil on the coastline at Hobyo, northeastern Somalia, while the Greek cargo ship, MV Filitsa is anchored just off the shores of Hobyo where it was held by pirates after beimng captured some 513 nautical miles northeast of the Seychelles as it was sailing from Kuwait to Durban in South Africa loaded with fertilizer. 

    Mohamed Dahir | Afp | Getty Images

    According to maritime security firm Dryad Global, shipping from the coast of the Horn of Africa to the coast of India is considered a “high risk zone.” There are 25 countries in the region with their naval forces, but given the size of the area, the numbers are not a sufficient guarantee of safe navigation.

    A slight increase in piracy has also been recorded in the Gulf of Guinea on Africa’s West Coast, where 22 piracy incidents were recorded in 2023, compared to 19 in 2022, 35 in 2021, and 81 in 2020. According to the IMB, these waters accounted for three of the four globally reported hijackings, all 14 crew kidnappings, and 75% of reported crew hostages and two injured crew in 2023.

    The Singapore Straits are another area of concern due to the high number of incidents in the region. While the IMB considers these incidents low-level opportunistic crimes, 95% of the reported incidents were successful.

    “Crew continue to be harmed with nine taken hostage and two threatened. Guns were reported in three recorded incidents and knives in 15,” the IMB report noted.

    Maritime security efforts

    To help deter piracy and enhance maritime security, vessels deploy what’s called Best Management Practice (BMP) 5 when operating in the Red Sea, Gulf of Aden, Indian Ocean, and Arabian Sea.

    “Private armed security teams have proven effective alongside BMP 5 measures,” Mueller said. “An adequate citadel has proven vital to enable the crew to remain safe until military responses can be coordinated.”

    Citadels are a pre-determined fortified area on a vessel built to resist pirates from gaining entry for a period of time to protect a crew.

    Dozens of companies in the maritime security space could see an increase in their business as the threats against commercial shipping widen. The size of the maritime safety market has grown to keep up with the flow of trade and will grow from $19.85 billion in 2023 to $21.18 billion in 2024, according to ResearchAndMarkets.com, and is forecast to reach $25.93 billion in 2028 at a compound annual growth rate of 5.2%. The list of major companies operating in the market of maritime safety systems includes several niche players as well as major industrials and defense contractors, such as Raytheon, Honeywell International, Elbit Systems Ltd., L3Harris Technologies, Lockheed Martin, and General Dynamics Corporation.

    Mueller said the Indian Navy and Coast Guard along with the EU Operation Atalanta and national counter-piracy missions are active in the region where Somali pirates have attacked.

    “Indian forces have successfully operated against PAGs [pirate action group] in four boarding incidents,” he said.

    U.S. and allied defense

    On February 1, the Biden Administration approved a $3.99 billion sale of drones and military equipment to India to be used to augment its maritime safety and surveillance. Included in the sale, according to the State Department: 31 Sky Guardian drones, 310 small-diameter bombs, 170 Hellfire missiles, and other related support equipment.

    A spokesperson for the Atalanta anti-piracy effort based out of the Rota Naval Base, Spain, told CNBC via email that the coalition of maritime forces protecting against pirates around the Horn of Africa will be enhanced.

    “In a week’s time, we will have additional ships and forces deployed to the area. We will do our utmost to continue fulfilling our missions, which include the fight against piracy and the protection of Word Food Programme vessels and all vulnerable vessels in our Area of Operations against these criminal networks,” the spokesperson wrote. “We will continue to work together with our international partners to maintain maritime security.”

    Atalanta includes permanent flagship vessel ESPS VICTORIA and at certain periods of time, numerous other vessels to support the operation. EUNAVFOR currently has four more ships offering support: ITS Martinengo, FS Alsace, FS Languedoc, and ITS Duilio. The spokesperson said EU member state support allows the operation to increase the number of assets very quickly, if necessary.

    In response to a question from CNBC about expanding Red Sea security coverage to the Somali Coast, a U.S. Navy spokesperson wrote, “To protect operational security and the safety of our service members, we do not discuss or forecast future operations or postures.”

    “What we can tell you is that Operation Prosperity Guardian (OPG) is working with participating countries to utilize increased patrols in the Red Sea to offer reassurance to the shipping industry and protect maritime traffic,” the Navy spokesperson said.

    In the Red Sea, the U.S. Navy is working with allies to increase efforts to prevent Houthi rebel attacks, which are continuing despite multiple U.S. airstrikes against Houthi targets. Much merchant vessel traffic is now taking the longer transit around the Cape of Good Hope instead of transiting the Red Sea. French ocean carrier CMA CGM is among firms to fully halt its Red Sea transits, according to a person familiar with the matter. It joins shipping giants MSC, Maersk, Hapag Lloyd and others who have earlier announced they were diverting away from the Red Sea. According to Kuehne + Nagel data, almost 100% of the former Red Sea traffic has been rerouted around the Cape of Good Hope.  

    The Houthis most recent attacks on commercial vessels in the Red Sea this week were against a commercial container vessel and a U.S.-owned bulker vessel carrying U.S. cargo. The Houthis have attacked commercial shipping a total of 39 times.

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  • India set to be world’s third largest economy by 2027, finance ministry says

    India set to be world’s third largest economy by 2027, finance ministry says

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    A pedestrian speaks on a mobile phone as he watches a digital screen relaying the budget speech by Indian Finance Minister Nirmala Sitharaman on the facade of the Bombay Stock Exchange (BSE) in Mumbai on February 1, 2021.

    PUNIT PARANJPE | AFP via Getty Images

    India could become the world’s third-largest economy by 2027 with a gross domestic product of $5 trillion, the finance ministry has said.

    The projections come ahead of an interim budget due to be released later this week.

    In a report released Monday, the finance ministry said the economy is poised to grow at or above 7% in the fiscal year 2024. India’s fiscal year starts on April 1 and ends on March 31.

    If it meets this year’s target, it will be the third straight year of 7% GDP growth for India.

    The country’s GDP currently stands at $3.7 trillion.

    India’s chief economic advisor, V Anantha Nageswaran, said the government’s goal is to become a developed country by 2047.

    “The robustness seen in domestic demand, namely, private consumption and investment, traces its origin to the reforms and measures implemented by the government over the last ten years,” Nageswaran said in the report, explaining the key drivers of India’s growth.

    He said investment in both physical and digital infrastructure helped boost the supply side and manufacturing. As a result, “real GDP growth will likely be closer to 7 per cent” in fiscal year 2025, he added.

    The document released Monday was not the Economic Survey of India, which is prepared by the Department of Economic Affairs ahead of the Union Budget.

    The Union Budget will only be released after the general election between April and May this year — the interim budget will be presented by Finance Minister Nirmala Sitharaman on Thursday, and is not likely to include any major changes to spending or tax policies.

    According to Goldman Sachs, India is poised to become the world’s second-largest economy by 2075, leapfrogging not just Japan and Germany, but the U.S. too.

    Currently, India is the world’s fifth-largest economy, behind U.S., China, Japan and Germany.

    Stock market optimism

    India stocks are off to a positive start this year.

    The Nifty 50 index rose more than 20% in 2023 after staging record-breaking rallies last year. This month, the index breached 22,000 for the first time.

    Growing optimism around the world’s most populous country’s growth prospects as well as higher liquidity and more domestic participation have been key factors in boosting the rally.

    Hopes of further policy continuity have also been a driver in the rally, as India gears up for its general election between April and May. 

    Investors are betting that the Reserve Bank of India will cut interest rates this year, most likely in the second half — which will likely lift stock markets as well as spur higher spending in the economy.

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  • Trump's proposed 10% tariff plan would 'shake up every asset class,' strategist says

    Trump's proposed 10% tariff plan would 'shake up every asset class,' strategist says

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    Former U.S. President and Republican presidential candidate Donald Trump holds a rally in advance of the New Hampshire presidential primary election in Rochester, New Hampshire, U.S., January 21, 2024. 

    Mike Segar | Reuters

    Markets need to begin thinking about the structural impact of Donald Trump‘s proposed 10% tariff increase, which “shakes up every asset class,” according to Michael Every, global strategist at Rabobank.

    The former president, and overwhelming favorite to secure the Republican nomination for the 2024 race, plans to impose a 10% tariff on all imported goods, trebling the government’s intake and aiming to incentivize American domestic production.

    Treasury Secretary Janet Yellen said earlier this month that the plan would “raise the cost of a wide variety of goods that American businesses and consumers rely on,” though she noted that tariffs are appropriate “in some cases.”

    Criticism of the policy has been relatively bipartisan. The Tax Foundation think tank highlights that such a tariff would effectively raise taxes on U.S. consumers by more than $300 billion a year, along with triggering retaliatory tax increases by international trade partners on U.S. exports.

    The center-right American Action Forum estimated, based on the assumption that trading partners would retaliate, that the policy would result in a 0.31% ($62 billion) decrease to U.S. GDP, making consumers worse off and decreasing U.S. welfare by $123.3 billion.

    After Republican rival Ron DeSantis ended his bid for the GOP nomination, Every told CNBC’s “Street Signs Asia” on Monday that markets were “not going to be caught napping” by a potential Trump presidency, as they were in 2016. He suggested one of investors’ top concerns would be the 10% tariff on all U.S. imports.

    “First of all, they can’t model that because they don’t really understand what the second and third order effects are, and more importantly, they don’t grasp that Trump isn’t talking about a 10% tariff just because it’s a 10% tariff,” Every said.

    “He’s talking about structurally breaking the global system by hook or by crook to basically reindustrialize the U.S. in a neo-Hamiltonian manner which is how the U.S. originally industrialized, putting up a barrier between it and the rest of the world so it’s cheap to produce in America and more expensive to produce everywhere else if you’re importing into America.”

    A second Trump term

    Every added that a return to this type of trade policy “shakes up every asset class — equities, FX, bonds, you name it — everything gets put in a box and shaken around, so that’s what markets should start thinking about.”

    In the American Action Forum’s November report, data and policy analyst Tom Lee concluded that in the most likely scenario that trading partners impose retaliatory tariffs, a new 10% duty on all goods imported to the U.S. would “distort global trade, discourage economic activity, and have broad negative consequences for the U.S. economy.”

    Read more CNBC politics coverage

    Trump floated the 10% tariff during an interview last year with Fox Business’ Larry Kudlow, his former White House economic advisor, saying “it’s a massive amount of money.”

    “It’s not going to stop business because it’s not that much,” he claimed, “but it’s enough that we really make a lot of money.”

    During his first term in office, Trump triggered a trade war with China by unilaterally slapping $250 billion worth of tariffs on goods imported from China, which the AAF estimated have cost Americans an extra $195 billion since 2018.

    China responded with its own tariffs on U.S. goods, and Trump also imposed tariffs on steel and aluminum imports from most countries, including many of Washington’s biggest allies.

    Wealth management firm explains why Trump could be bad for markets

    Keen to maintain a firm stance on Beijing, President Joe Biden‘s administration has largely kept these tariffs in place, though converted some of the metal tariffs into tariff-rate quotas, which allow a lower tariff rate on particular product imports within a specified quantity.

    Dan Boardman-Weston, CEO of BRI Wealth Management, said the macroeconomic and geopolitical landscape is now very different and more challenging than when Trump’s first term began in 2017, and added that his erratic approach to policy decisions would add to the kind of uncertainty that markets most dislike.

    “In 2017, markets really appreciated the Trump presidency because of all the tax cuts and deregulation, and there was a more conducive market environment I think back then, with where rates were, for markets to move higher,” he told CNBC’s “Squawk Box Europe” on Monday.

    “I think this time is going to be very different, and I do think the geopolitical risks across the world are rising, and this doesn’t seem to be on investors’ radars as of yet.”

    He noted Trump’s tendency to “change his mind” so frequently on geopolitical issues that “people won’t know where his thinking is at.”

    Can Putin and Trump agree a deal behind Ukraine's back? No, says Ukraine's foreign minister

    Trump has claimed that he would stop Ukraine’s war with Russia within 24 hours, but has been economical with details of his supposed peace plan, and throughout his political career has lavished praise on Russian President Vladimir Putin.

    He was also impeached by the U.S. House of Representatives for allegedly threatening to withhold U.S. military aid to Ukraine unless President Volodymyr Zelenskyy sanctioned a politically motivated investigation into his then-leading electoral challenger Biden. Trump was acquitted by the Senate.

    “That unpredictable approach to how he will approach the war in Ukraine or how he will approach relations with China and Taiwan I think lead to heightened risks from a geopolitical perspective, which I think will impact into market valuations,” Boardman-Weston said.

    “It’s that added element of uncertainty in an already very uncertain world.”

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  • Grayscale CEO says most of the 11 approved bitcoin ETFs won't survive, defends highest fees in industry

    Grayscale CEO says most of the 11 approved bitcoin ETFs won't survive, defends highest fees in industry

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    Michael Sonnenshein at the 2022 Forbes Iconoclast Summit at New York Historical Society on Nov. 3, 2022.

    Arturo Holmes | Getty Images Entertainment | Getty Images

    DAVOS, Switzerland — Grayscale Investments CEO Michael Sonnenshein told CNBC that most of the approved bitcoin exchange-traded funds won’t survive, while defending the highest fees in the market for the company’s own product.

    The Grayscale Bitcoin Trust ETF is the world’s largest, with over $25 billion in assets under management.

    When the U.S. Securities and Exchange Commission approved a swathe of spot bitcoin ETFs earlier this month, much focus was on the management fees that firms from BlackRock to Fidelity were charging.

    Many of the ETF issuers were charging 0% fees for a limited amount of time before raising them slightly. Most of the approved ETFs have fees of between 0.2% and 0.4%.

    But the Grayscale Bitcoin Trust ETF charges a 1.5% fee.

    Sonnenshein laid out several reasons why it is charging that fee, including the fact it is the largest bitcoin fund, has a 10-year track record of “operating successfully” and has a diversified investor base.

    “Investors are weighing heavily things like liquidity and track record and who the actual issuer is behind the product. Grayscale is a crypto specialist. And it has really paved the way for a lot of these products coming through,” Sonnenshein told CNBC in an interview at the World Economic Forum in Davos on Thursday.

    Sonnenshein said the reason other ETFs have lower fees is that the products “don’t have a track record” and the issuers are trying to attract investors with fee incentives.

    “I think from our standpoint, it may at times call into question their long-term commitment to the asset class,” Sonnenshein said.

    The Grayscale CEO said two to three of the spot Bitcoin ETFs “will maybe obtain some kind of critical mass” of assets under management, but that the others may be pulled from the market.

    “I don’t ultimately think that the marketplace will have ultimately these 11 spot products we find ourselves having,” Sonnenshein said.

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  • Jamie Dimon warns 'all these very powerful forces' will impact U.S. economy in 2024 and 2025

    Jamie Dimon warns 'all these very powerful forces' will impact U.S. economy in 2024 and 2025

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    JPMorgan Chase CEO Jamie Dimon said he remains cautious on the U.S. economy over the next two years because of a combination of financial and geopolitical risks.

    “You have all these very powerful forces that are going to be affecting us in ’24 and ’25,” Dimon told Andrew Ross Sorkin on Wednesday in a CNBC interview at the World Economic Forum in Davos, Switzerland.

    What is the World Economic Forum?

    “Ukraine, the terrorist activity in Israel [and] the Red Sea, quantitative tightening, which I still question if we understand exactly how that works,” Dimon said. Quantitative tightening refers to moves by the Federal Reserve to reduce its balance sheet and rein in previous efforts including bond-purchasing programs.

    Dimon has advocated caution over the past few years, despite record profits at JPMorgan, the nation’s largest bank, and a U.S. economy that has defied expectations. Despite the corrosive impact of inflation, the American consumer has mostly remained healthy because of good employment levels and pandemic-era savings.

    In Dimon’s view, the relatively buoyant stock market of recent months has lulled investors on the potential risks ahead. The S&P 500 market index rose 19% in the past year and isn’t far from peak levels.  

    “I think it’s a mistake to assume that everything’s hunky-dory,” Dimon said. “When stock markets are up, it’s kind of like this little drug we all feel like it’s just great. But remember, we’ve had so much fiscal monetary stimulation, so I’m a little more on the cautious side.”

    Goldman Sachs CEO David Solomon: 'Hard for me' to see the market's view of seven rate cuts in 2024

    Goldman Sachs CEO David Solomon said Wednesday that while the market environment excluding geopolitical issues “feels better today” than a year ago, he was troubled by soaring U.S. debt levels.

    “I’m very concerned about the growing debt,” Solomon said. “It’s a big risk issue that we’re going to have to deal with and reckon with, it just might not happen in the next six months.”

    Dimon is no stranger to dire predictions: In 2022, he warned investors of an economic “hurricane” ahead because of quantitative tightening and the Ukraine conflict.

    In Wednesday’s wide-ranging interview, Dimon discussed his views on Ukraine, former President Donald Trump, immigration, commercial real estate and bitcoin.

    “We have to teach the American public that this is about freedom and democracy for the free world, and that’s why the battle is being fought,” Dimon said about the Ukraine conflict.

    Read more: Jamie Dimon says ‘brace yourself’ for an economic hurricane caused by the Fed and Ukraine war

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  • Americans are canceling trips that are thousands of miles from Gaza. Here's why

    Americans are canceling trips that are thousands of miles from Gaza. Here's why

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    The Israel-Hamas war is affecting travel across the Middle East and beyond.

    International arrivals to the region grew in the fourth quarter of 2023 — mainly owing to an increase in visitors to Saudi Arabia — to a level that matched 2019 numbers, according to the travel data company ForwardKeys.

    But it’s a far cry from the 30% rise in inbound travelers the region was expecting compared to 2019 levels, based on the number of airline tickets purchased before the Oct. 7 attack on Israel, the company said.  

    The outlook for 2024 doesn’t look much different.

    “The forward-looking situation for arrivals to the Middle East in the first quarter of 2024 as of 6 Oct. — the day before the recent conflict started — was very positive, with tickets issued up by 49% vs pre-pandemic levels,” said Olivier Ponti, the company’s vice president of insights. “Fast-forward to 5 Jan. … with tickets issued now up by just 9% vs. 2019.”

    Data showed air tickets to the Middle East purchased after the war fell 6% from 2019, with purchases to the United Arab Emirates down 8%, Morocco 15%, Turkey 17% and Egypt 21%. Tickets to Jordan were affected the most, falling 50% from 2019 levels, according to ForwardKeys.

    Canceling plans a continent away

    Yet, the war’s effect on travelers extends far beyond the Middle East, according to a survey from Morning Consult.

    The data research company surveyed some 2,200 Americans in November, with one in five people saying they have delayed, rescheduled or canceled a travel booking as a direct result of the Israel-Hamas war. 

    Respondents said these plans included visits to the Middle East (12%) and North Africa (7%), as well as Western Europe (14%), according to the survey. However, the bulk of the cancelations — 41% — were for trips within the United States, the survey showed.

    Cancelations were high for domestic trips because most Americans travel within the 50 states, thus “there are simply more trips on the table to disrupt,” the report stated.

    But as to why the war is making Americans feel uneasy about traveling in their own country, the report stated: “This is also emblematic of the larger tensions — for example, concerns related to antisemitism and Islamophobia — stoked by the conflict, and peoples’ resultant apprehension to venture far from home.”

    Following Hamas’ attack on Israel on Oct. 7, tensions spilled over to college campuses, workplaces and suburban neighborhoods, with many countries reporting a rise in hate crimes against Muslims and Jewish people.

    A worldwide travel advisory, issued by the U.S. State Department less than two weeks following Hamas’ attack on Israel, may have affected traveler confidence as well, the report stated. Some 62% of respondents said they knew about it.

    Worldwide Caution

    “Due to increased tensions in various locations around the world, the potential for terrorist attacks, demonstrations or violent actions against U.S. citizens and interests, the Department of State advises U.S. citizens overseas to exercise increased caution.” — U.S. Travel Advisory issued on Oct. 19, 2023

    In addition to weather and natural disaster alerts, the U.S. State Department Bureau of Consular Affairs’ account on X, formerly Twitter, has pushed out numerous security alerts in the months following the Hamas attack — for Cyprus, Egypt, Jordan, Lebanon, Kuwait and Turkey, among others — as well as demonstration alerts for cities in Turkey, Malaysia, Colombia, Oman, Egypt, South Africa, the United Kingdom, Poland and Denmark, some connected to rising anti-U.S. sentiment over the war.

    U.S. domestic travel in the fourth quarter of 2023 fell below 2019 levels, according to ForwardKeys. The downturn happened after the outbreak of the war, the company said.

    The day before the attack, the travel outlook for U.S. domestic travel in the fourth quarter of 2023 was positive (+4%), but it ended down (-5%), “highlighting the impact of the ongoing conflict in Israel,” said Ponti.

    More feel unsafe

    Numerous reports indicate Muslims and Jewish people worldwide no longer feel safe.

    Morning Consult’s survey indicated those who know about the war may be feeling less safe as well.

    Some 52% of respondents with knowledge of the war said they viewed traveling to the Middle East as “very unsafe,” compared to 29% of those who had not heard about it.  

    Those who had heard about the war also indicated that they felt less safe traveling to North Africa and Eastern Europe too, the survey showed.

    Zicasso’s 2024 Luxury Travel Report named geopolitical conflict as one of the three most significant obstacles to booking travel this year.

    In a survey of 200 global travel specialists, 18% said uncertainty and safety issues in certain regions may discourage travelers from booking.

    “After the October events in the Middle East, we did see a significant fall-off in trip requests to Israel and the surrounding region,” said Zicasso’s CEO Brian Tan. “Typically, when travelers have second thoughts about overseas travel to a certain region due to obstacles such as geopolitical conflict, we find that travelers will redirect to other international destinations.”

    He said the war in Ukraine hasn’t materially affected business since Zicasso doesn’t receive many requests for bookings there, but that his company is carefully watching the situation in Ecuador, where gang violence erupted last week.  

    Tan noted that his company has seen a recent rise in trip requests for Morocco, which he noted is thousands of miles from Jerusalem.

    Yet, according to Morning Consult, the Israel-Hamas war could reduce travel interest to the region “for months and even years to come.”

       

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  • A slew of new conflicts could erupt in 2024, analysts say — while the world is watching Gaza and Ukraine

    A slew of new conflicts could erupt in 2024, analysts say — while the world is watching Gaza and Ukraine

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    Sudanese army soldiers, loyal to army chief Abdel Fattah al-Burhan, sit atop a tank in the Red Sea city of Port Sudan, on April 20, 2023.

    – | Afp | Getty Images

    With the eyes of the world on the ongoing wars in Ukraine and Gaza, an unprecedented number of potentially “catastrophic” conflicts are going under the radar, analysts have warned.

    The International Rescue Committee earlier this month released its emergency watchlist for 2024, documenting the 20 countries at the greatest risk of security deterioration. These countries account for around 10% of the world’s population but around 70% of its displaced persons, along with approximately 86% of global humanitarian need.

    The U.N. estimated in October that more than 114 million people were displaced by war and conflict worldwide. That figure is now likely higher.

    IRC President and CEO David Miliband said that for many of the people his organization serves, this is the “worst of times,” as exposure to climate risk, impunity in an ever-growing number of conflict zones and spiraling public debt collide with “diminishing international support.”

    “The headlines today are rightly dominated by the crisis in Gaza. There is good reason for that — it is currently the most dangerous place in the world to be a civilian.” Miliband said.

    “But the Watchlist is a vital reminder that other parts of the world are on fire as well, for structural reasons relating to conflict, climate and economy. We must be able to address more than one crisis at once.”

    Isabelle Arradon, research director at the International Crisis Group, told CNBC earlier this month that conflict fatalities globally are at their highest since 2000.

    “All the red flags are there, and on top of that, there is a shortage of means to resolve conflict. There’s a lot of geopolitical competition and less appetite for resolving these deadly conflicts,” she added.

    Sudan

    No. 1 on the IRC’s watchlist is Sudan, where fighting erupted in April 2023 between the country’s two military factions, and internationally brokered peace talks in Saudi Arabia yielded no solution.

    The conflict has now expanded into “large-scale urban warfare” that is garnering “minimal” international attention and poses a serious risk of regional spillover, the IRC said, with 25 million people in urgent humanitarian need and 6 million displaced.

    The Rapid Support Forces — led by Gen. Mohammed Hamdan Dagalo (known as Hemedti) and allegedly supported by the UAE and Libyan warlord Khalifa Haftar — has expanded a multipronged offensive from the conflict’s epicenter in the capital of Khartoum, leaving a trail of alleged atrocities in the western region of Darfur.

    METEMA, Ethiopia – May 4, 2023: Refugees who crossed from Sudan to Ethiopia wait in line to register at IOM (International organization for Migration) in Metema, on May 4, 2023. More than 15,000 people have fled Sudan via Metema since fighting broke out in Khartoum in mid-April, according to the UN’s International Organization for Migration, with around a thousand arrivals registered per day on average

    AMANUEL SILESHI/AFP via Getty Images

    The RSF reportedly pushed into central Sudan for the first time in recent days, prompting further mass exoduses of people from areas previously held by the Sudanese Armed Forces.

    The ICG’s Arradon told CNBC that alongside the ongoing risk of further mass atrocities in Darfur is the possibility of an “all-out ethnic conflict” that draws in more armed groups from the region.

    “Peace initiatives are very limited right now. Clearly, at the global level, there is a lot of distraction, and so the situation in Sudan is one where I don’t think there’s enough serious engagement right now at a high level for cease-fire negotiations, and so there needs to be a greater push,” she said.

    The flow of refugees into neighboring South Sudan and Ethiopia, themselves blighted by internal conflict, the effects of climate change and extreme economic hardship, amplify the risks of spillover, analysts believe.

    Democratic Republic of the Congo, Rwanda

    Last week’s chaotic election in the Democratic Republic of the Congo marked just the start of a new electoral cycle that will continue through 2024 against a brittle backdrop.

    Voting was marred by long delays at polling stations, with some failing to open all day and voting extended into Thursday in some areas of the massive mineral-rich country with 44 million registered voters.

    Several opposition candidates called for the election to be canceled, the latest controversy after a campaign blighted by violence as 18 candidates challenged incumbent President Félix Tshisekedi for the leadership.

    Partial preliminary results suggest Tshisekedi is well ahead in the vote, but the government on Tuesday banned protests against the election that were called for by five opposition candidates.

    The political turbulence comes amid ongoing armed conflict in eastern DRC and widespread poverty, and precedes further regional elections early next year.

    The likely prolonged contestation of the results, borne out of long-held suspicions among Tshisekedi’s fragmented opposition about the independence of the electoral commission, could spark further conflict with implications for the wider region, crisis analysts believe.

    “We’re very concerned about the risk of a serious crisis. We saw in 2018 already how the contestation of the vote was a big problem, but now we have on top of that M23 [rebels], backed by Rwanda, that is increasing its fighting and coming very close to [the city of] Goma,” Arradon said.

    M23 rebels reappeared in the province of North Kivu in eastern DRC in November 2021, and have been accused by human rights groups of multiple apparent war crimes since late 2022 as they expand their offensive.

    Why there are still conflict minerals in our electronics

    Neighboring Rwanda has allegedly deployed troops to eastern Congo to provide direct military support to M23, stoking tensions between Kigali and Kinshasa, and prompting U.N. Secretary-General Antonio Guterres to repeatedly voice concern about the risk of a “direct confrontation.”

    The combination of a fractured and distrustful political backdrop, an ongoing armed rebellion and extreme socioeconomic pressures render the region fertile ground for conflict next year.

    Arradon described the situation in DRC and other active and potential conflict zones around the world as “catastrophic.”

    “DRC, we’re talking about 6 million displaced. If you look at Myanmar, of course you’ve got this huge population in Bangladesh of displaced Rohingyas, and also displaced within Myanmar itself,” she said.

    Read more CNBC politics coverage

    “We’ve never seen so many people on the move globally, largely due to conflict. It’s not just people on the move, it’s the fact that often civilian populations live side by side with armed groups, and that’s the case in Myanmar, that’s the case in the east of DRC, also in Sudan, in the west and Darfur.”

    Myanmar

    The civil war in Myanmar has been underway since a February 2021 military coup, and subsequent brutal crackdown on anti-coup protests, triggered an escalation of long-running insurgencies from ethnic armed groups throughout the country.

    Government forces have been accused of indiscriminate bombing and both the IRC and IGC fear the tactics may be ramped up in 2024 as ethnic armed groups and resistance forces have made significant gains in the north of the country.

    Gen. Charles Brown: Any type of military conflict will disrupt the world economy

    The military currently faces challenges from an alliance of three ethnic armed groups in the northern Shan state, along with one of the country’s largest armed groups in the northwestern Sagaing region and smaller resistance forces in Kayah state, Rakhine State and along the Indian border in the west.

    “For first time in decades, military will have to fight numerous, determined and well-armed opponents simultaneously in multiple theatres; it may double down on brutal efforts to reverse tide on battlefield, including scorched-earth tactics and indiscriminate bombing in coming weeks,” the IGC’s latest CrisisWatch report assessed.

    The Sahel

    Countries across the Sahel have experienced a swathe of military coups over the past couple of years, partly in response to heightened instability as governments struggle to tackle Islamist militant insurgencies spreading throughout the region.

    The Sahel encompasses north-central Africa’s semiarid belt between the Sahara Desert and savanna regions, and includes Burkina Faso, Cameroon, Chad, Gambia, Guinea, Mali, Mauritania, Niger, Nigeria and Senegal.

    COP28: There's a business to be had in adaptation, says USAID's Samantha Power

    Mali, Niger, Burkina Faso, Guinea and Chad have all endured coups and severe instability in the last three years. IGC’s Arradon said security issues had been deepened by the fallout from civil war in Libya to the north, which saw a deluge of weapons move south to supply armed groups in countries with large proportions of their populations in “peripheries that have felt neglected.”

    “So this overall security context of populations feeling neglected, plus easy access to weapons, has indeed created a growing security risk in the Sahel region, and the dissatisfaction from these populations has grown,” she added.

    … and many more

    Alongside these, the IGC also has grave concerns about potential outbreaks of armed conflict in Haiti, Guatemala and Ethiopia, along with the well-documented risk of a Chinese incursion into Taiwan and its global geopolitical implications.

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  • European markets muted as global stocks search for new highs

    European markets muted as global stocks search for new highs

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    The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 13, 2023.

    Staff | Reuters

    LONDON — European stocks were little changed on Thursday as global markets search for new record highs to close out the year.

    The pan-European Stoxx 600 index hovered around the flatline by mid-morning, with health care stocks adding 0.5% while oil and gas stocks dropped 0.6%.

    The continental blue chip index was last trading around the 478.66 mark, not far below the index’s record closing high of 483.44 notched in November 2021.

    Stateside, U.S. stock futures were little changed in early premarket trade after another day of modest gains on Wall Street, with the S&P 500 benchmark also closing in on a record high.

    Shares in Asia-Pacific were mostly higher overnight, with markets in mainland China and Hong Kong leading gains and Australia’s S&P/ASX 200 hovering near a two-year high. Japan’s Nikkei 225 and Topix bucked the trend to post slight declines.

    Trading volumes are expected to be thin during the last two days of the trading year, with fewer data points on the economic calendar and all major central bank meetings out of the way.

    In terms of individual share price movement in Europe, Spanish utility company Endesa fell 3% in early trade to the bottom of the Stoxx 600, while Danish biotech Zealand Pharma gained 3% to lead the index.

    Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

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  • UK inflation slide fuels rate cut bets and jolts markets

    UK inflation slide fuels rate cut bets and jolts markets

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    LONDON, UK – Sept. 2021: People seen dining outdoors in Soho in London in September 2021.

    SOPA Images | LightRocket | Getty Images

    LONDON — U.K. inflation fell by more than expected to hit 3.9% in November, in the lowest annual reading since September 2021.

    Economists polled by Reuters had expected a modest decline in the headline consumer price index to 4.4%, after the 4.6% annual reading of October surprised to the downside by dropping to a two-year low.

    Month on month, the headline CPI fell by 0.2%, compared with a consensus forecast of a 0.1% increase.

    The Core CPI — which excludes volatile food, energy, alcohol and tobacco prices — came in at an annual 5.1%, well below a 5.6% forecast.

    The surprisingly large falls prompted a spike in bets that the Bank of England will cut interest rates in 2024, which manifested in a sharp fall in British bond yields.

    The yield on the U.K. 10-year government bond, or gilt, sunk to an eight-month low, dropping 11 basis points to around 3.54%. Yields move inversely to prices. Meanwhile, the U.K.’s FTSE 100 was the only major European stock index in positive territory on Wednesday, climbing 0.8% by midmorning London time.

    The Office for National Statistics said the largest downward contributions came from transport, recreation and culture, and food and nonalcoholic beverages.

    The Bank of England last week maintained a hawkish tone as it kept its main interest rate unchanged at 5.25%. The Monetary Policy Committee reiterated that policy is “likely to need to be restrictive for an extended period of time.”

    The central bank ended a run of 14 straight interest rate hikes in September, as policymakers looked to wrestle inflation back down toward the bank’s 2% target from a 41-year high of 11.1% in October 2022.

    U.K. Finance Minister Jeremy Hunt cheered the Wednesday figures and said the country was “starting to remove inflationary pressures from the economy.”

    “Alongside the business tax cuts announced in the Autumn Statement this means we are back on the path to healthy, sustainable growth,” he said in a statement.

    “But many families are still struggling with high prices so we will continue to prioritise measures that help with cost of living pressures.”

    Significant fall ‘undermines’ Bank of England caution

    The Bank of England has repeatedly pushed back against market expectations for significant cuts to interest rates in 2024, noting last week that “key indicators of U.K. inflation persistence remain elevated.”

    Suren Thiru, economics director at ICAEW, said the “startling” fall in inflation recorded Wednesday will reassure households that there is a “light at the end of the tunnel,” with easing core CPI figures showing that underlying price pressures are relenting.

    “The likely squeeze on wages from rising unemployment and a stagnating economy should help to continue to keep them on a downward trajectory,” he said by email.

    The UK is likely to tip into a recession next year, analyst says

    “These inflation numbers suggest that the Bank of England is too pessimistic in its rhetoric over when interest rates could start falling. A deteriorating economy could push the Bank to start loosening policy by the Autumn, particularly if inflationary pressures continuing easing.”

    A ‘glimmer of relief’

    Richard Carter, head of fixed interest research at Quilter Cheviot, said the latest inflation print adds to a sense of “cautious optimism” in the U.K. relative to the cost-of-living crisis and bond market chaos of last year.

    Despite the drop in CPI, he noted that the broader economic picture remains “complex, marred by stagnation and subdued growth prospects.”

    The U.K. economy contracted by 0.3% month on month in October, after flatlining in the third quarter.

    “This stagnation, leaving the output no higher than it was in January, paints a picture of an economy struggling to rebound from a series of unprecedented challenges,” Carter said over email, while acknowledging that the pace at which inflation is slowing offers a “glimmer of relief” for households.

    “The pressures are manifold – from the cost of living crisis, volatile energy markets, Brexit aftershocks, to enduring productivity issues. These factors have collectively dampened economic prospects and consumer confidence.”

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  • Why U.S. ports are getting a $21 billion upgrade

    Why U.S. ports are getting a $21 billion upgrade

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    U.S. ports are receiving multimillion dollar grants to upgrade cargo handling infrastructure.

    The grants are part of the Biden administration’s $21 billion commitment to modernize port infrastructure in the U.S.

    Midsize port cities such as Baltimore are among the 2023 grant recipients. In November, the Port of Baltimore received a $47 million grant to kick-start an offshore wind manufacturing hub, among other improvements. For example, the funds will pay for a new berth, or dock, for rolling cargo. Baltimore is the top U.S. destination for rolling cargo imports, a category including farm machinery from John Deere and light-duty vehicles from BMW, according to the Maryland Port Administration.

    More than $653 million in Port Infrastructure Development Program grants were awarded to U.S. ports in 2023 by the U.S. Department of Transportation, Maritime Administration. Other projects receiving federal funds include the Port of Tacoma Husky Terminal Expansion in Washington state ($54.2 million), and the North Harbor Transportation System Improvement Project in Long Beach, California ($52.6 million).

    Port improvements are also coming from the Environmental Protection Agency, which offers funds to combat truck idling. The U.S. Department of Defense is deepening some waterways on the East Coast to welcome larger ships.

    Baltimore isn’t the only city with a growing port according to maritime economists. Experts say gateways along the U.S. southeast coast are moving more cargo as major points of entry clog up with truck traffic.

    “All of the ports on the East Coast are upgrading their infrastructure and capacity,” said Walter Kemmsies, managing partner at the Kemmsies Group, a maritime economics consulting firm currently working with the Port Authority of Georgia in Savannah. “What that does is it makes it more attractive to the ocean carriers. They like to be able to go in and out of a port very quickly, and they like to go to several ports.”

    Ports America formed a public-private partnership with the state of Maryland to manage equipment and operations in sections of the Port of Baltimore. The group told CNBC that $550 million in upgrades have gone into Seagirt Marine Terminal alone for densification of the container yard since the partnership began in 2010.

    These upgrades build on past plans to revive America’s declining industrial cities. In Baltimore, public officials are addressing bottlenecks along the supply chain beyond the Port. They believe that the Howard Street Tunnel expansion project will increase double-stack rail capacity out of Baltimore, which could help the companies working at the port move goods to and from points in the Midwest.

    Watch the video above to see more of the upgrades coming to the Port of Baltimore.

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  • China reports fastest industrial expansion in nearly 2 years; retail sales growth misses estimates

    China reports fastest industrial expansion in nearly 2 years; retail sales growth misses estimates

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    View of Shanghai skyline from a container station.

    Yaorusheng | Moment | Getty Images

    China reported Friday its industrial output expanded at the fastest pace since February 2022 in November, though retail sales growth missed expectations, pointing to a patchy recovery in the world’s second-largest economy.

    Economists are approaching the China data with some caution, given a low base effect. The country was in the final months of its stringent zero-Covid curbs in the last quarter of 2022, which had adversely impacted the economy.

    “The data is a mixed bag,” Miao Ouyang, Bank of America’s Greater China economist, told CNBC. “If you look at the whole set of data, it still shows that domestic demand is still on the weak side…and [the government] still definitely needs to do more to stabilize the economy.”

    China’s industrial output grew 6.6% in November from a year earlier, according to the country’s National Bureau of Statistics Friday. This outpaced expectations for 5.6% in a Reuters poll and follows a 4.6% rise in October.

    Retail sales climbed 10.1% in November from a year ago, the fastest pace of growth since May — though analysts had expected a 12.5% spike following a low base in 2022. Retail sales rose 7.6% in October.

    Fixed asset investment in urban areas cumulatively grew 2.9% in the first 11 months of the year, compared with expectations for 3% growth. China’s urban unemployment rate stayed at 5% in November.

    Hong Kong shares, among this year’s underperformers in Asia Pacific, saw gains accelerate after the release of Friday’s data. The Hang Seng Index surged more than 3%, though it’s still down more than 14% in 2023 to date, poised for a third annual loss.

    The CSI 300 benchmark of the largest blue chips listed in Shanghai and Shenzhen saw more modest gains, up 0.7% in mid-morning trade to trim year-to-date losses to about 12.8%.

    Still fragile

    The post-Covid recovery of the world’s second-largest economy has so far fallen short of expectations, plagued by a festering real estate crisis, debt risks and chronic youth unemployment.

    A slew of policy support measures have not sufficiently lifted economic sentiment, igniting calls for Beijing to amp up its stimulus amid fears of a deepening slowdown.

    Shanghai Pudong district at sunrise

    China vows to boost domestic demand in bid for 2024 recovery

    Still, there are several green shoots that underscore Beijing’s focus on growth, while also underscoring the depths of the real estate malaise.

    On a cumulative basis in the first 11 months, investments in infrastructure and manufacturing increased 5.8% and 6.3%, year-on-year, respectively; retail sales rose 7.2%, while real estate development investment dropped 9.4%, China’s NBS said.

    Official data released earlier Friday showed that China’s new home prices fell for the fifth straight month in November, underscoring weak confidence in demand and investment as some of the largest real estate developers are facing serious debt problems as Beijing strives to deleverage its once-bloated real estate sector.

    Chinese yuan cash bills and chinese flag (money, economy, finance, inflation, crisis)

    Moody’s cuts China’s credit outlook to negative on rising debt risks

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  • IEA expects oil demand slowdown to persist in 2024 as prices fall on oversupply concerns

    IEA expects oil demand slowdown to persist in 2024 as prices fall on oversupply concerns

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    A Petroleos de Venezuela SA oil pumpjack on Lake Maracaibo in Cabimas, Zulia state, Venezuela, on Friday, Nov. 17, 2023.

    Gaby Oraa | Bloomberg | Getty Images

    The International Energy Agency on Thursday said evidence of softening global oil demand is mounting and a slowdown is expected to continue into 2024, reaffirming a starkly different outlook compared to oil producing group OPEC.

    The IEA said oil market sentiment had turned “decidedly bearish” in recent weeks, even after some members of OPEC and non-OPEC oil-exporting allies — collectively known as OPEC+ — on Nov. 30 announced a new round of voluntary production cuts in the first quarter of next year.

    Oil prices were higher on Thursday morning, paring losses after recently falling to their lowest level since late June on gnawing oversupply concerns.

    International benchmark Brent crude futures with February expiry traded 1.4% higher at $75.31 per barrel at 9 a.m. London time, while U.S. West Texas Intermediate crude futures for front-month January traded 1.3% higher at $70.36 per barrel.

    In its latest monthly oil market report, the IEA said global oil demand was on course to rise 2.3 million barrels per day to 101.7 million barrels per day in 2023, noting that this forecast “masks the impact of a further weakening of the macroeconomic climate.”

    The energy agency warned that “evidence of a slowdown in oil demand is mounting,” with the pace of expansion poised to “slow drastically” from 2.8 million barrels per day year-on-year in the third quarter to 1.9 million barrels per day in the final three months of 2023.

    It prompted a downward revision of the IEA’s global consumption growth forecast of nearly 400,000 in the fourth quarter, with weaker-than-anticipated demand in Europe, Russia and the Middle East accounting for the bulk of that adjustment.

    Looking ahead, the IEA said oil consumption growth is projected to halve next year, falling to 1.1 million barrels per day as global economic growth stays below trend in major economies, and as Covid-19-related distortions fade.

    IEA vs. OPEC

    OPEC, meanwhile, struck a markedly different tone in its latest monthly report.

    The oil producer group, which has frequently clashed with the IEA in recent years over issues such as peak oil demand and the need for investment in new supplies, on Wednesday said that it remained “cautiously optimistic” about oil market dynamics in 2024.

    OPEC blamed “exaggerated concerns” about oil demand growth for a recent downturn in oil prices and maintained its relatively high oil use prediction for next year.

    It reaffirmed its outlook for world oil demand growth in 2023 at 2.46 million barrels per day, roughly in line with the IEA’s forecast.

    For next year, OPEC said it sees world oil demand at 2.25 million barrels per day, unchanged from the previous month, but a sharply higher estimate than the IEA’s prediction of 1.1 million barrels per day for the period.

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  • A crunch week for central banks will put rate-cut expectations to the test

    A crunch week for central banks will put rate-cut expectations to the test

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    Fed Chairman Jerome Powell prepares to deliver remarks to the The Federal Reserve’s Division of Research and Statistics Centennial Conference on November 08, 2023 in Washington, DC. 

    Chip Somodevilla | Getty Images

    A flurry of major central banks are set to make their final rate decisions of the year in a crunch week that will test market bets for rate cuts in early 2024.

    The U.S. Federal Reserve on Wednesday will kick off what is poised to be a pivotal week, followed by a “Super Thursday” when the European Central Bank, Bank of England, Swiss National Bank and Norway’s Norges Bank will all meet.

    Policymakers at the central banks are broadly expected to hold interest rates steady, except for Norway’s central bank which warned it would likely raise the cost of borrowing in December.

    Investors will be searching for clues in the banks’ statements on when rate cutting could start next year as inflation continues to fall away from its highest level in decades.

    “The biggest risk to ‘risk-on’ is the fact that the Fed does not do what the market is telling it that it is going to do, which is slash interest rates over the course of 2024,” David Neuhauser, chief investment officer of Livermore Partners hedge fund, told CNBC’s “Squawk Box Europe” on Monday.

    “The market is telling you one thing, so what the market is doing essentially is calling out the Fed’s credibility … and we’ll see who’s right here.”

    Rate cuts ahead?

    Market participants overwhelmingly expect the Fed to hold rates at 5.25%-5.50%, although traders are pricing in a 25 basis point cut as early as March next year, according to the CME FedWatch Tool.

    The Fed has sought to push back on market expectations for aggressive rate reductions next year, however.

    Fed Chairman Jerome Powell warned earlier this month that it would be “premature” to speculate when policy might ease and suggested the central bank would be “prepared to tighten policy if it becomes appropriate to do so.”

    Livermore Partners’ Neuhauser said the high market expectations for rate cuts contrast with Powell’s recent commentary.

    “There’s two different dynamics at play: what the market is telling you, and what Federal Reserve Chairman Powell is telling you, let’s see who has the credibility this time,” Neuhauser said.

    Powell has also noted that policy is currently “well into restrictive territory” and said the balance of risks between doing too much or too little were close to balanced.

    “When we think about the Fed moving into next year, we think it makes sense that they are on the lookout for when and how much to reduce rates,” Sam Zief, head of global FX strategy at J.P. Morgan Private Bank, told CNBC’s “Street Signs Europe” on Monday.

    “As their policy rate is so restrictive, as the unemployment rate gets closer to neutral, as inflation gets closer to neutral, their policy rate should do the same. The real question is: what is the pace of that?”

    The Marriner S. Eccles Federal Reserve building during a renovation in Washington, DC, US, on Tuesday, Oct. 24, 2023.

    Valerie Plesch| Bloomberg | Getty Images

    Ahead of the Fed’s meeting Wednesday, Zief said market participants should be prepared to be slightly disappointed by a lack of clarity over the pace and scale of further interest rate changes.

    “Our base case is actually that the Fed isn’t going to say all of that much. The dots probably don’t move all that much. The statement probably doesn’t change all that much,” he added.

    The Fed’s approaching rate decision comes shortly after U.S. job creation showed little sign of abating in November. Nonfarm payrolls grew by a seasonally adjusted 199,000 for the month, beating expectations of 190,000, while the unemployment rate dipped to 3.7%, compared with the forecast for 3.9%.

    Economists said at the time that the economic data appeared to reflect a job market that continues to be resilient even after a year of dodging recession fears.

    What about the ECB?

    Major banks elsewhere are set to follow in the Fed’s footsteps with their final respective policy statements on Thursday.

    Investors will be closely monitoring the ECB’s meeting for any sign the central bank is poised to impose swift rate cuts in 2024. Euro zone inflation, which exceeded 10% last year, came in at 2.4% in November, reflecting its lowest level in more than two years.

    Price rises have dropped quickly toward the ECB’s target levels of 2% in recent months, fueling investor bets for rate cuts early next year.

    Christine Lagarde, president of the European Central Bank (ECB), at a rates decision news conference in Frankfurt, Germany, on Thursday, Sept. 14, 2023. The ECB raised interest rates again, acting for the 10th consecutive time to choke inflation out of the euro zone’s increasingly feeble economy.

    Bloomberg | Bloomberg | Getty Images

    Policymakers have cautioned investors, however, that the “last mile” of tackling disinflation could be the hardest — and it may take twice as long as the battle to get inflation back under 3%.

    Economists at Deutsche Bank said in a research note published earlier this month that it was once again bringing forward the timing of the first ECB rate cut to April, citing the latest inflation data and the tone of official commentary. It added that there is also a “significant risk” of a rate cut as soon as March.

    “We fear we were too timid,” economists at Deutsche Bank said on Dec. 6. “The risk is now earlier and larger cuts, and an ECB more capable of decoupling from the Fed.”

    Economists at Pantheon Macroeconomics have said that while the consensus now expects the first ECB rate cut in June next year, “we still believe March is a good bet.”

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  • IMF chief makes the case for carbon pricing as 'writing on the wall' for oil and gas

    IMF chief makes the case for carbon pricing as 'writing on the wall' for oil and gas

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    Kristalina Georgieva, managing director of the International Monetary Fund, speaks during the Singapore FinTech Festival in Singapore, on Wednesday, Nov. 15, 2023.

    Bloomberg | Bloomberg | Getty Images

    Dubai, UNITED ARAB EMIRATES — The head of the International Monetary Fund on Sunday underlined the case for carbon pricing at the COP28 climate summit, saying that the oil and gas industry recognizes “the writing on the wall.”

    A long-time proponent of carbon pricing, IMF Managing Director Kristalina Georgieva said this approach creates an incentive for polluters to rapidly decarbonize.

    Carbon pricing ascertains the cost that a company needs to pay for its planet-warming emissions and is widely regarded as the most cost-effective and flexible way to cut such pollution.

    The IMF recently raised its average price forecast to $85 a ton by the end of the decade, up from a previous forecast of $75. Underlining the scale of the challenge, Georgieva said the current average price is around $20 per ton.

    “For those that have adopted a carbon price, how do we get big emitters to accept that we need to accelerate decarbonization?” Georgieva told CNBC’s Dan Murphy at the COP28 conference.

    “Well, two things. One, without a carbon price, it won’t happen fast enough. So, we have to move to that incentive,” she said.

    “Two, Mother Nature is helping us because countries rich and poor are already experiencing the devastating force of climate change.”

    I want to tell everybody who is willing to listen that a carbon price has proven to work.

    Kristalina Georgieva

    IMF Managing Director

    Her comments come as policymakers and business leaders convene in Dubai for the U.N.’s two-week long climate summit, which is scheduled to end on Dec. 12.

    The conference is a pivotal opportunity to accelerate climate action, at a time when the world is on track to record its hottest year on record and as extreme weather events take their toll across the globe.

    For the IMF chief, COP28 marks an important opportunity for countries to reassess policies that incentivize the use of fossil fuels. She stressed that government subsidies for coal, oil and gas hit $1.3 trillion last year.

    “Now we have to pull this gradually and substitute with the other part of the incentive, which is pricing. I want to tell everybody who is willing to listen that a carbon price has [been] proven to work,” Georgieva said, adding that existing schemes — such as the EU’s Emissions Trading System — have registered a rapid reduction of emissions.

    “Two, it generates revenues. The same European Union got 175 billion euros ($191 billion) collected from [a] carbon price,” she said.

    “Three, it can be fair. It is fair first, because the more you pollute, the more you pay, and the less you pollute, the less you pay. But also, many countries [can] take some of this money and give it back, especially to the vulnerable people.”

    Asked about the role of the oil and gas industry at COP28 and how to get Big Oil on side with carbon pricing, Georgieva said, “One of the good news that comes from research is that we are going to see the peak of oil and gas in this decade. Consumption is then going to gradually going down.”

    “One of the great news from COP is a commitment to triple renewables in energy within the next years. Where the power of COP has come is by mobilizing the voices of people and that is already happening. I cannot think of any industry that is willing to be the enemy of the people,” she continued.

    “I think that oil and gas is seeing the writing on the wall. We see many of the oil-producing countries diversifying quite rapidly and we also see an investment coming from money generated from oil into renewables [at] scale.”

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  • Gaza’s economy is in ruins as Israel-Hamas war sets development back decades

    Gaza’s economy is in ruins as Israel-Hamas war sets development back decades

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    Civilians and rescuers look for survivors amid the rubble of a destroyed building following an Israeli bombardment in Khan Younis in the southern Gaza Strip on November 12, 2023.

    Mahmud Hams | Afp | Getty Images

    War-battered Gaza’s already fragile economy lies in ruins, much like its buildings, following more than a month of bombings by Israel after Hamas militants attacked the country in October.

    Even before the war, a majority of Gazans had limited access to affordable, nutritious provisions and were deemed food insecure, according to the United Nations World Food Programme, but the situation has now turned dire. About 80% of Gaza residents were reliant on some sort of international aid before the latest escalation.

    “Gaza’s economy is 100% dependent on two sources of revenue: foreign aid and access to Israel’s labor market. The latter is now gone, probably forever. The only thing remaining is foreign aid,” Marko Papic, partner and chief strategist at Clocktower Group, told CNBC via email.

    Gaza’s unemployment rate, which has traditionally been one of the world’s highest at above 40%, now stands near 100%, with the enclave’s economy effectively “ceasing activity” indefinitely, according to a  report from the Ramallah, West Bank-based Palestine Economic Policy Research Institute.

    You have a very young (Palestinian) population that doesn’t see hope … It’s very hard to see an economic future.

    Kevin Klowden

    Milken Institute’s Chief Global Strategies

    Over one month into the war, Gazans have lost at least 182,000 jobs, or 61% of the workforce, according to the International Labor Organization. Another U.N. agency, the United Nations Development Programme, has forecast that Gaza’s development would be set back by 16 to 19 years in its assessment based on economic, health and educational indicators.

    On Oct. 7, Hamas militants launched a multi-pronged attack by land, sea and air and infiltrated Israel, killing approximately 1,200 people. In retaliation, Israel launched air strikes and a ground invasion into the Gaza Strip, which has so far killed more than 14,500 people in the enclave.

    Economy outlook worse than after 1967 war

    “Even though the Israelis had occupied Gaza starting 1967 well into the 80s, the economy was doing a bit better, but mostly it was doing well, based on having a number of educated people who went outside of Gaza,” said Kevin Klowden, chief global strategist at Santa Monica, California-headquartered think tank Milken Institute.

    Gaza was under the control of Egypt from 1948 until mid-1967 before Israel seized it along with the West Bank following its victory in the Six-Day War against a coalition of Arab countries.

    “In the first 25 years of [Israeli] occupation, Gaza had both people working inside Israel [and] it had its own local economy … it was an important part of the Palestinian economy,” Raja Khalidi, director-general of the Palestine Economic Policy Research Institute told CNBC via telephone.

    Gazans were able to work in Israel, Egypt, the Gulf and other places 50 years back, and there was a strong professional class, university and airport at the time, but with the current conflict the enclave’s economy now is dire, almost nonfunctional, Klowden also said.

    Israel had issued about 18,000 permits for Gazans to work and live in the country and its settlements in the West Bank, but they were revoked after the Oct. 7 attack.

    According to the United Nations, during the 1970s and 1980s, the Palestinian economy saw relatively strong capital inflows, largely due to remittances from Palestinian workers in Israel and the Gulf countries. 

    Things changed after Hamas gained power in Gaza in 2006 when Israel relinquished its control of the enclave. Hamas has not held an election in Gaza since.

    That deal [to end the conflict] is likely to have to see Gulf Arab monarchies and Saudi Arabia footing much of the bill for the viability of Gaza in the future.

    Marko Papic

    Chief Strategist at Clocktower Group

    Not only did the Palestinians lose out on working in Israel after Hamas took over Gaza, their trade with the Egyptians also dissipated as Egypt views Hamas as a threat, with investments into the Palestinian Authority-governed West Bank no longer flowing into Gaza, Klowden said.

    Since 2007, Gaza has been surrounded by concrete walls and barbed wire fences after Israel imposed an air, land and sea blockade on the Gaza Strip, saying the move was necessary to safeguard itself from Hamas’ attacks. The U.N. classifies Israel as an occupier state over the Palestinian territories of the West Bank and Gaza.

    “When people ask me what does it take for Gaza to get back to where it was … We want to go back to where it was 20 years ago, not where it was two months ago,” said Khalidi.

    ‘Hard to see an economic future’

    The blockade and repeated wars with Israel since 2008 have hollowed out the enclave’s economy, with its anemic economic growth falling far behind that of the West Bank over the last 15 years, according to the International Monetary Fund. 

    “It’s not been a situation where there’s been economic hope. And for the last 15 years, essentially, that’s been the situation,” Klowden said. “You have a very young population that doesn’t see hope out of that. It’s very hard to see an economic future out of that.”

    As many as 65% of the 2.3 million Palestinians living in the 140-square-mile sliver of land, between Israel and Egypt are under the age of 24.

    “Ultimately, some form of a deal to end the conflict will have to be put in place,” said Clocktower Group’s Papic.

    “But that deal is likely to have to see Gulf Arab monarchies and Saudi Arabia footing much of the bill for the viability of Gaza in the future.”

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  • Global smartphone sales rebound in October after declining for more than 2 years: Counterpoint

    Global smartphone sales rebound in October after declining for more than 2 years: Counterpoint

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    Apple CEO Tim Cook holds up a new iPhone 15 Pro during an Apple event on September 12, 2023 in Cupertino, California.

    Justin Sullivan | Getty Images

    Global smartphone sales rose in October after declining for 27 straight months on a year-on-year basis, led by a recovery in emerging markets, data from Counterpoint Research showed.

    Sell-through transactions, or retail sales volumes, grew 5% year-on-year in October, according to the report.

    “The growth has been led by emerging markets with a continuous recovery in Middle East and Africa, Huawei’s comeback in China and onset of festive season in India,” the research firm said. The developed markets with relatively higher smartphone saturation have seen a slower recovery, it added.

    Huawei clocked the fastest growth among smartphone makers in China in the third quarter after the firm released its Mate 60 Pro smartphone in September which sparked a lot of consumer interest due to its advanced chip.

    October also recorded the highest monthly smartphone sales since January 2022, the report said.

    The launch of Apple’s iPhone 15 series in late September also helped bolster smartphone sales. “As compared to last year, the launch was delayed by a week which meant the full effect of the new iPhone sales was felt in October,” said Counterpoint Research.

    Global smartphone sales have been impacted by component shortages, inventory build-up and longer replacement cycles.

    “These issues have been compounded with an uncertain macroeconomic environment and as a result, global smartphones sales have declined year-on-year every month for more than 2 years,” the research firm said.

    Tech research firm Canalys last month said the decline in global smartphone sales was slowing with third-quarter shipments falling just 1% compared with a 10% decline the previous quarter.

    “Rising demand for fresh offerings in emerging markets is propelling brands and channels forward as the holiday season approaches,” said Sanyam Chaurasia, senior analyst at Canalys.

    South Korea’s Samsung continued to lead the global smartphone market in the third quarter, with a 20% share of total smartphone sales, according to Counterpoint Research data. Apple finished second with a 16% market share, followed by Chinese brands Xiaomi (12%), Oppo (10%) and Vivo (8%).

    Counterpoint Research expects the global smartphone market to grow further in the fourth quarter.

    “Following strong growth in October, we expect the market to grow year-on-year in 2023 Q4 as well, setting the market on the path to gradual recovery in the coming quarters,” the research firm said.

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  • IMF says central bank digital currencies can replace cash: ‘This is not the time to turn back’

    IMF says central bank digital currencies can replace cash: ‘This is not the time to turn back’

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    Kristalina Georgieva, managing director of the International Monetary Fund, at a press conference at the IMF Headquarters on April 14, 2023.

    Kevin Dietsch | Getty Images News | Getty Images

    SINGAPORE — Central bank digital currencies have the potential to replace cash, but adoption could take time, said Kristalina Georgieva, managing director of the International Monetary Fund on Wednesday.

    “CBDCs can replace cash which is costly to distribute in island economies,” she said Wednesday at the Singapore FinTech Festival. “They can offer resilience in more advanced economies. And they can improve financial inclusion where few hold bank accounts.”

    CBDCs are the digital form of a country’s fiat currency, which are regulated by the country’s central bank. They are powered by blockchain technology, allowing central banks to channel government payments directly to households.

    “CBDCs would offer a safe and low-cost alternative [to cash]. They would also offer a bridge to go between private monies and a yardstick to measure their value, just like cash today which we can withdraw from our banks,” the IMF chief said.

    The IMF has said that more than 100 countries are exploring CBDCs – or approximately 60% of countries in the world.

    “The level of global interest in CBDCs is unprecedented. Several central banks have already launched pilots or even issued a CBDC,” the IMF said in a September report.

    According to a 2022 survey conducted by the Bank for International Settlements, of the 86 central banks surveyed, 93% said they were exploring CBDCs, while 58% said they were likely to or may possibly issue a retail CBDC in either the short or medium term.

    But as of June, only 11 countries have adopted CBDCs, with an additional 53 in advanced planning stages and 46 researching the topic, according to data from the Atlantic Council.

    … this is not the time to turn back. The public sector should keep preparing to deploy CBDCs and related payment platforms in the future.

    Kristalina Georgieva

    Managing director, IMF

    Referring to a 2018 speech by her predecessor Christine Lagarde, when the former IMF chief encouraged policymakers to follow the “winds of change” and explore the use of CBDCs, Georgieva said: “Five years on, I’m here to provide an update on that voyage.”

    “First, countries did set sail. Many are investigating CBDCs and are developing regulation to guide digital money developments,” said Georgieva referring to the speech.

    On Wednesday, the fund launched a CBDC handbook as a reference guide for policymakers around the world. Georgieva said many countries are investigating CBDCs and developing regulation to guide digital money developments.

    “Second, we have not yet reached land. There is so much more space for innovation and so much uncertainty over use-cases,” Georgieva told an audience which included industry experts, investors and journalists.

    “In some countries the case seems dim today, but even they should remain open to potentially deploy CBDCs tomorrow. Why?” said Georgieva. “This is not the time to turn back.”

    “The public sector should keep preparing to deploy CBDCs and related payment platforms in the future. Fourth, these platforms should be designed from the start to facilitate cross-border payments, including with CBDCs,” the managing director said.

    Potential of CBDCs

    Countries that have issued retail CBDC include the Bahamas, Jamaica and Nigeria.

    Singapore’s Monetary Authority of Singapore has said that cash is “generally incompatible” with the digital economy. In a 2021 report, the country’s central bank said the demand for cash as a means of payment is set to decline further.

    According to the BIS, using CBDCs for cross-border payments could lower the costs of obtaining, storing and spending foreign currency, depending on design and regulations.

    Georgieva also said that artificial intelligence “could amplify some of the benefits of CBDCs” by providing accurate credit scoring and personalized support.

    Demand for generative AI has boomed following the release of OpenAI’s ChatGPT in November last year, which was estimated to have reached 100 million monthly active users within two months after launch.

    “It could improve financial inclusion by providing rapid, accurate credit scoring based on various data. It could provide personalized support to people with low financial literacy,” said Georgieva.

    “To be sure, we need to protect personal privacy and data security, and avoid embedded biases so we don’t perpetuate inequality but aim to reduce it. Managed prudently, AI could help,” she added.

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  • World economy to perform better than expected in 2024, says Goldman Sachs

    World economy to perform better than expected in 2024, says Goldman Sachs

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    New York city skyline

    Alexander Spatari | Moment | Getty Images

    Goldman Sachs predicts the global economy will top expectations in 2024, driven by strong income growth and confidence that the worst of rate hikes is already over.

    The investment bank forecasts the world economy to expand 2.6% next year on an annual average basis, above the 2.1% consensus forecast of economists polled by Bloomberg. The U.S. is expected to outpace other developed markets again with estimated growth of 2.1%, Goldman said.

    Goldman also believes that the bulk of the drag from monetary and fiscal tightening policies is over.

    To curtail rising inflation, the U.S. Federal Reserve started its aggressive rate hike campaign in March 2022 as inflation climbed to its highest levels in 40 years. Last Thursday, Fed Chair Jerome Powell said he is “not confident” the Fed has done enough to tackle inflation, and suggested that more rate hikes may be necessary.

    Goldman said policymakers in developed markets are unlikely to cut interest rates before the second half of 2024 unless economic growth comes in weaker than estimated.

    The bank noted inflation has also continued to cool across G10 and emerging market economies, and is expected to ease further.

    “Our economists forecast this year’s decline in inflation to continue in 2024: sequential core inflation is predicted to fall from 3% now to an average 2-2.5% range across the G10 (excluding Japan),” the report stated.

    Global factory activity

    The investment bank also expects global factory activity to recover from a recent slump as headwinds are set to dissipate this year. Goldman noted global manufacturing activity has been weighed down by a weaker-than-expected rebound in Chinese manufacturing and the European energy crisis, as well as an inventory cycle that had to correct for overbuilding last year.

    We continue to see only limited recession risk and reaffirm our 15% U.S. recession probability.

    Jan Hatzius

    Chief Economist at Goldman Sachs

    Global production has been in a slump for most of the year. S&P Global’s gauge of worldwide manufacturing activity came in at 49.1 in September. A reading below 50 indicates a contraction in activity. Additionally, China’s Caixin/S&P Global manufacturing PMI fell to 49.5 in October from 50.6 in September, marking the first contraction since July.

    Manufacturing activity should recover somewhat in 2024 from a subdued 2023 pace, Goldman economists led by chief economist Jan Hatzius said, especially as “spending patterns normalize, gas-intensive European production finds a trough, and inventories-to-GDP ratios stabilize.”

    Big economies to avoid recession

    Rising real income also contributed to Goldman’s positive growth outlook.

    “Our economists have a positive outlook for real disposable income growth at a time of much lower headline inflation and still-strong labor markets,” Goldman wrote in a release based on the report. While they hold the view that U.S. real income growth is set to slow from its strong 2023 pace of 4%, it is still purported to support consumption and GDP growth of at least 2%.

    “We continue to see only limited recession risk and reaffirm our 15% U.S. recession probability,” Hatzius continued in the outlook report, owed in part to the real disposable income growth.

    In September, the bank had cut their forecast for a U.S. recession from 20% to 15% on the basis of cooling inflation and a resilient labor market.

    While rate hikes and fiscal policy will still continue to weigh on the growth across G10 economies, Hatzius is confident that the worst of that “drag” is already over.

    “Both the Euro area and the UK are expected to have a meaningful acceleration in real income growth — to around 2% by end-2024 — as the gas shock following Russia’s invasion of Ukraine fades,” the economists also noted.

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  • Dispersion is coming among emerging market central banks, Citi analyst says

    Dispersion is coming among emerging market central banks, Citi analyst says

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    Luis Costa, global head of EM sovereign credit at Citi, says dispersion is coming in emerging market monetary policy, offering opportunities for investors.

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  • Swiss banking environment is ‘completely normal’ after UBS-Credit Suisse takeover: EFG CEO

    Swiss banking environment is ‘completely normal’ after UBS-Credit Suisse takeover: EFG CEO

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    Giorgio Pradelli of Swiss private bank EFG International is eyeing the Middle East and China for wealth creation, and says Switzerland remains a major private banking hub.

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