Saturday, May 7, 2016
IMF may pull out of Greek rescue; US jobs growth falters in April; Water scare over global economy
1 IMF may pull out of Greek rescue (Helena Smith in The Guardian) Hopes of an end to the impasse between Greece and its creditors have appeared to evaporate after a surprise intervention from the International Monetary Fund.
In a letter - leaked three days before eurozone finance ministers are scheduled to discuss how best to put the crisis-plagued country back on its feet – IMF chief Christine Lagarde issued her most explicit warning yet: either foreign lenders agree to restructure Greece’s runaway debt or the Washington-based organisation will pull out of rescue plans altogether.
Six years have elapsed since Greece, revealing a deficit that was four times higher than previously thought, received its first loans from a bailout programme that has since exceeded more than €240bn in emergency funding. Since a third €86bn bailout last summer, talks have been largely deadlocked.
The IMF managing director’s intervention came after the surprise decision of the leftist-led government in Athens to put unpopular pension and tax changes to a vote on Sunday.
The prospect of such controversial measures being passed so urgently unleashed a wave of civil unrest with a 48-hour general strike by private and public sector unions bringing Greece to a standstill. Unionists said the measures were a “barbaric” eradication of hard-won rights and would be “the last nail in the coffin” for workers whose salaries have already been savaged by relentless rounds of gruelling austerity.
In a repeat of the drama that dominated the eurozone last year, Athens faces the spectre of default if its fails to honour maturing European Central Bank bonds and IMF loans in July.
2 US jobs growth falters in April (BBC) The US economy added 160,000 jobs in April - undershooting expectations and well below the 208,000 created in March, official figures show. March's figure was revised down from 215,000 and February's was also revised from 242,000 down to 233,000.
The jobless rate remained at 5% and average hourly earnings rose 2.5%. April's report is being closely watched, as it could influence an upcoming interest rate decision by the US Federal Reserve.
Aberdeen Asset Management, investment manager Luke Bartholomew, said: "Anyone wanting a June hike should probably look away now. The headline number is disappointing, while the household survey looks particularly ugly. However, Paul Ashworth, chief US economist at Capital Economics, thinks that a rate increase is still possible.
In December, the Fed raised rates for the first time in ten years. That rise was seen as the first of a number of moves upwards and Fed officials have forecast two more rate rises for this year. But since then the economic news has been mixed.
3 Water scare over world economy (Khaleej Times) Economies across large swathes of the globe could shrink dramatically by mid-century as fresh water grows scarce due to climate change, the World Bank reported on Tuesday.
The Middle East could be hardest hit, with its gross domestic product slipping as much as 14 per cent by 2050 unless measures are taken to reallocate water significantly, the Washington-based institution said in a report. Such measures include efficiency efforts and investment in technologies such as desalination and water recycling, it said.
"When we look at any of the major impacts of climate change, they one way or the other come through water, whether it's drought, floods, storms, sea level rise," Richard Damania, World Bank lead economist and lead author of the report, told reporters in a telephone conference.
Water scarcity would not have the same impact worldwide, and Western Europe and North American economies would likely be spared, according to the World Bank models. But rising economies such as China and India could be hard hit, it said.
In the Sahel belt that stretches across Africa below the Sahara, GDP could well dip some 11 per cent with water scarcity, the World Bank said. A similar impact would be felt in Central Asia, it said. But measures to reallocate fresh water could show gains in some regions, the bank said.