Thu, Jun 23, 2022 page10

• World Business Quick Take

  • Agencies
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  GLOBAL ECONOMY

  Recession risk rising

  The probability of the world economy succumbing to a recession is nearing 50 percent as central banks tighten monetary policy and demand for goods weakens, Citigroup Inc said yesterday. Supply shocks continue to push up inflation and drive down growth, while central banks are hiking interest rates vigorously and consumer demand for goods is softening, the economists led by Nathan Sheets said in a report. Citigroup now sees the world economy growing 3 percent this year and 2.8 percent next year. The economists said if a recession did occur, unemployment would rise several percentage points and output would experience a couple of weak quarters.

  EUROPE

  Inflation likely to slow

  While growth forecasts were cut and price expectations raised following Russia’s invasion of Ukraine, economic activity in Europe is still seen increasing next year and inflation is expected to slow below 2 percent in the second half of next year, European Central Bank researchers said in a report yesterday. “Current expert forecasts remain far from a stagflation scenario,” it said. “However, uncertainty has increased,” leading to a greater range of estimated outcomes. The researchers also said that some differences between the current situation and the 1970s “make it less likely that stagflation will develop now.”

  CURRENCY

  Won falls on US worries

  South Korea’s won fell to the weakest level in 13 years on concern aggressive rate hikes in the US will damage the world’s largest economy and slow global growth. The won fell as much as 0.3 percent to 1,297.60 per US dollar, the lowest since July 2009. The currency is the worst performer in emerging Asia this year with a loss of more than 8 percent. The won’s weakness has fueled concern among the authorities. South Korean Minister of Finance Choo Kyung-ho this week said that there is no change in the basic principle that currency authorities will appropriately take necessary measures if excessive one-sided moves are seen in markets.

  FOOD

  Calbee hiking prices

  Calbee Inc, Japan’s answer to Frito-Lay Inc with an enormous product lineup ranging from pizza-flavored potato chips to low-carb granola, is raising prices again as companies struggle to absorb costs that are climbing at the fastest clip in years. The Tokyo-based company said in a statement yesterday that it would raise the prices of snacks and cereals in Japan by 5 to 20 percent from September because of increasing material costs. The company has already raised prices several times this year due to a bad potato crop and higher material costs.

  AUTOMAKERS

  VW warns on energy shift

  Volkswagen AG (VW) chief executive officer Herbert Diess said that the shift away from Russian energy is not happening fast enough to shield the German automaker from a sudden stop in natural gas deliveries. VW would keep the ability to run its power plants with coal instead of gas because of Germany’s reliance on Russian imports, Diess said in an interview for the Qatar Economic Forum in Doha. While the war in Ukraine, rising interest rates and inflation all weigh on investors’ risk appetite, Diess said he is not yet seeing demand destruction in the automotive sector. VW has electric vehicle orders lined up for “roughly one year” and is optimistic it would achieve its targets for this year.
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