Emerging Markets Daily - April 20
War Derails Global Recovery: IMF, Global Food Crisis Rising, Colombia's Leftist Prez Contender and Business, Africa Record-Breaking Investment, Tata Steel and Russia
The Top 5 Stories Shaping Emerging Markets from Global Media - April 20
The Russian War in Ukraine Slows Global Recovery, IMF Says
IMF World Economic Outlook
“The war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution. At the same time, economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest.”
”Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January.”
“Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term. War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January. Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential.”
Global Food Crisis Will Last For Months, World Bank Chief Says
The National
“The global food crisis is ‘severe’ and is affecting poorer countries, World Bank president David Malpass said. He called on countries to take urgent action to solve the food security challenge caused by geopolitical conflict.”
“‘People in poor countries, especially in rural areas, are the hardest hit by the food crisis … there is also a tendency to move towards less nutritional food that is more concerning.’”
“‘There has been a shortage of food, energy and fertilisers … fertilisers and energy are critical for the crop cycle, so they are building on each other and creating a food crisis that will last at least for months and probably into next year. Food prices are already up almost 37 per cent year-on-year,’ Mr Malpass said during an online press conference.”
“For each one percentage point increase in food prices, 10 million people are thrown into extreme poverty, according to the World Bank's estimates. The UN Food and Agriculture Organisation's food price index has warned of sharp price increases for grains, oils and other foodstuffs as exports from agricultural powerhouse Ukraine continue to be affected by conflict.”
“However, Mr Malpass said there is one ‘positive side’ to this crisis. ‘Markets have reacted quickly, and we are entering this food insecurity cycle with large global stockpiles … as they [food stockpiles] are released there can be progress and also the supply of food, fertilisers and energy can be increased substantially by countries if they choose to do so.’”
“On Monday, the World Bank cut its forecast for global growth to 3.2 per cent, from its earlier expectation of 4.1 per cent. The International Monetary Fund also lowered its projections for global growth to 3.6 per cent in 2022 and 2023, revising it down 0.8 and 0.2 percentage points from its January forecast.” Alkesh Sharma reports.
Leading Colombia Prez Candidate Signs Oath Against Expropriation
Buenos Aires Times
“Ex-Guerrilla Gustavo Petro, who leads in opinion polls ahead of Colombian elections next month, signed an oath Tuesday not to expropriate property if he becomes the country's first-ever leftist president.”
“In a bid to appeal to skeptics of his left-wing economic policy, Petro called the media to a notary's office in Bogotá to watch him sign a document under oath, stating that he will respect private ownership. ‘My proposal of transformation for this country is not grounded in, and does not include, any kind of expropriation,’ the 61-year-old senator told reporters.”
“Legal experts told local media the oath is not binding. In March primaries, Colombians voted for Petro as the left's presidential nominee by a wide margin, making him the front-runner in a country that has always been ruled by the political right.”
“Petro has vowed to reduce income inequality by ending Colombia's neoliberal economic model, inviting accusations from right-wing rival and ex-Medellín mayor Federico Gutiérrez that he is ‘populist and authoritarian.’”
“Colombian voters have a deep-rooted distrust of the left, which is associated with the FARC and other rebel groups that fought the government in a nearly six-decade civil conflict. Petro himself was a member of the former M-19 guerilla group.” Buenos Aires Times reports.
Despite Covid, Africa Attracts Record-Breaking Private Investments
African Business
“Last year, private investment in Africa hit a record high of $7.4bn, representing a 118% jump from 2020, an annual report from the industry’s African Private Equity and Venture Capital Association (AVCA) found.”
“Despite the deep economic disruption caused by the Covid-19 pandemic, ‘Africa’s economies are leading as a region of resilience with vast potential,’ the report says."
“‘Historically, the continent has maintained growth in adverse conditions: through the global financial crisis, periods of political instability, and outbreaks of communicable disease. It comes as no surprise, then, that Africa should maintain this strength and fortitude in its recovery from the Covid-19 pandemic,’ the group, that promotes private investment on the continent, argues.”
“The impressive growth in Africa’s investment activity over the past year was mainly driven by a growing number of venture capital (VC) deals. AVCA touted 2021 as a ‘record-breaking year’ for VC investment, with a total of $5.2 billion raised from 604 unique companies, representing an 104% increase from to 2020.” Leo Komminoth reports.
Tata Steel to Stop Doing Business with Russia
Indian Express
“Tata Steel will stop doing business with Russia, India’s largest steelmaker by revenue said on Wednesday, making it the latest global company to cut ties with the country for invading Ukraine.”
“‘Tata Steel does not have any operations or employees in Russia. We have taken a conscious decision to stop doing business with Russia,’ the company said in a statement.”
“The company imports coal from Russia for its steelmaking process. Tata Steel is among only a handful of Indian companies that have halted business with Russia, with the move coming even as India abstains from condemning the invasion and has not imposed sanctions on Moscow.”
“Infosys, India’s No. 2 software services firm, said last week it would move business out of Russia. Western allies have called for India to speak out against the war. Several Western companies have withdrawn from Russia.”
“All of Tata Steel’s manufacturing sites in India, the UK and the Netherlands have sourced alternative supplies of raw materials to end its dependence on Russia, the company said.” Indian Express reports.
“We are what we repeatedly do; excellence, then, is not an act but a habit.” - Aristotle