KEY POINTS



<ul><li>Speaking to CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland, on Tuesday, Herbert Diess said alleviating supply chain issues would likely help create some momentum for the German auto giant over the coming months.</li><li>“Markets are always about the future,” Diess said when asked why investors valued Tesla at such a premium to other traditional carmakers.</li><li>“We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales,” Diess said.</li></ul>



The chief executive of&nbsp;<a href="https://www.cnbc.com/quotes/VOW3-DE">Volkswagen</a>&nbsp;believes Europe’s biggest carmaker can overtake&nbsp;<a href="https://www.cnbc.com/quotes/TSLA" target="_blank" rel="noreferrer noopener">Tesla</a>&nbsp;to become the world’s largest seller of electric vehicles by 2025.



Speaking to CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland, on Tuesday, Herbert Diess said alleviating supply chain issues would likely help create some momentum for the German auto giant over the coming months.



“Markets are always about the future,” Diess said when asked why investors valued Tesla at such a premium to other traditional carmakers, such as Volkswagen.



“Tesla currently is in the lead when it comes to EVs, probably also it is the most digital car company already and they have some advantages,” he continued. “We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales.”



Diess said Tesla has been able to demonstrate good results and high returns with a credible business model. However, he reaffirmed his belief that Volkswagen could soon close the gap when it comes to EV sales.



“I think for Tesla, also, ramping up now will probably be a bit more challenging. They are opening up new plants and we are trying to keep up speed. We think in the second half of the year, we are going to create some momentum,” Diess said.



Volkswagen’s Frankfurt-listed shares traded around 0.9% lower on Tuesday morning, roughly in line with losses in the autos sector on the pan-European Stoxx 600.



<h2 class="wp-block-heading" id="h-supply-chain-crisis-to-alleviate"><a></a>Supply chain crisis to alleviate</h2>



More than two years into the coronavirus pandemic, the auto industry continues to grapple with the challenge of obtaining crucial parts and building enough vehicles to meet demand.



Shortages of critical supplies, particularly when it comes to battery production, are expected to be an ongoing constraint for the growth of electric vehicle sales in the years ahead.



Nonetheless, Diess said there are some positive signs on the horizon. He expects to see some relief from the semiconductor supply market from the middle of the year.



“I would say that we would see an alleviation of this situation towards mid-year and second half we should be in better shape — if the situation is not getting any worse, which I don’t think so,” Diess said.



When asked whether this means he expects the semiconductor crisis could end in the second half of the year, Diess replied: “I wouldn’t say end but we see a much-improved situation. I think supply chains are getting in order again.&#8221;

Volkswagen chief says German car giant will overtake Tesla on electric vehicle sales by 2025

WASHINGTON, May 23 (Reuters)&nbsp;&#8211;&nbsp;The United States issued an advisory on Monday warning U.S. companies of growing reputational risks of doing business with state-owned enterprises and military-controlled firms in Sudan.



&#8220;These risks arise from, among other things, recent actions undertaken by Sudan&#8217;s Sovereign Council and security forces under the military&#8217;s command, including and especially serious human rights abuse against protesters,&#8221; State Department spokesperson Ned Price said in a statement.



The African country has been racked by protests since a military coup in October, and lawyers say dozens of political prisoners remain in detention.



&#8220;Businesses and individuals operating in Sudan should undertake increased due diligence related to human rights issues and be aware of the potential reputational risks of conducting business activities and/or transactions with SOEs and military-controlled companies,&#8221; Price said.



The advisory was issued by the U.S. departments of State, Treasury, Commerce and Labor, he said.



(Reporting by Eric Beech; Editing by Tim Ahmann, Bernard Orr)

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U.S. warns companies of ‘reputational risks’ of doing business in Sudan

KEY POINTS



<ul><li>In a blog post ahead of this week’s World Economic Forum, IMF Managing Director Kristalina Georgieva said the global economy faces its “biggest test since the Second World War.”</li><li>In combining the Russia-Ukraine war, the Covid-19 pandemic and the spike in volatility in financial markets and persistent threat from climate change, the IMF said the world faces a “potential confluence of calamities.”</li></ul>



The International Monetary Fund has warned against “geoeconomic fragmentation” as policymakers and business leaders gather at the World Economic Forum in Davos, Switzerland.



In a blog post ahead of this week’s event, IMF Managing Director Kristalina Georgieva said the global economy faces its “biggest test since the Second World War,” with Russia’s invasion of Ukraine compounding the residual economic effects of Covid-19 crisis, dragging down growth and driving inflation to multi-decade highs.



Spiraling food and energy prices are squeezing households around the world, while central banks are tightening monetary policy to rein in inflation, exerting further pressure on indebted nations, companies and families.



When combined with the spike in volatility in financial markets and persistent threat from climate change, the IMF said the world faces a “potential confluence of calamities.”



“Yet our ability to respond is hampered by another consequence of the war in Ukraine—the sharply increased risk of geoeconomic fragmentation,” Georgieva said.



“Tensions over trade, technology standards, and security have been growing for many years, undermining growth—and trust in the current global economic system.”



She added that uncertainty around trade policies alone cut global GDP by almost 1% in 2019, according to IMF research, and the D.C.-based institution’s monitoring also indicates that around 30 countries have restricted trade in food, energy and other key commodities.



Georgieva warned that further disintegration would have enormous global costs, harming people across the socio-economic spectrum, and said technological fragmentation alone could lead to losses of 5% of GDP for many countries.



Carmine Di Sibio, global chairman and CEO of consultancy giant EY, told CNBC on Monday that the economy has “taken center stage” in discussions among big business leaders at Davos.



“The economy is the top conversation – inflation is a big concern and you do see some leading indicators starting to slow,” he said.



Although corporate deal volumes have slowed, Di Sibio said EY was still seeing signs of “pretty robust activity” and business leaders were still looking at options to transform their businesses, with pricing in the sector coming down of late amid resolute demand.



“The transformation that companies are going through – the transformation in terms of technology, in terms of supply chain and location of supply chain, and de-risking of supply chains – that is still going on and we do a lot around that as well,” Di Sibio said.



<h3 class="wp-block-heading" id="h-solutions">Solutions</h3>



In order to address the growing fragmentation, the IMF has firstly called for governments to lower trade barriers to alleviate shortages and reduce the prices of food and other commodities, while diversifying exports to improve economic resilience.



“Not only countries but also companies need to diversify imports—to secure supply chains and preserve the tremendous benefits to business of global integration,” Georgieva said.



“While geostrategic considerations will drive some sourcing decisions, this need not lead to disintegration. Business leaders have an important role to play in this regard.”



Secondly, the IMF urged collaborative efforts to deal with debt, as roughly 60% of low-income countries currently have significant debt vulnerabilities and will need restructuring.



“Without decisive cooperation to ease their burdens, both they and their creditors will be worse off, but a return to debt sustainability will draw new investment and spur inclusive growth,” Georgieva said.



“That is why the Group of Twenty’s Common Framework for Debt Treatment must be improved without delay.”



Thirdly, the IMF called for a modernization of cross-border payments, with inefficient payment systems posing a barrier to inclusive economic growth. The institution estimates that the 6.3% average cost of an international remittance payment means around $45 billion annually is diverted toward intermediaries and away from lower-income households.



“Countries could work together to develop a global public digital platform—a new piece of payment infrastructure with clear rules—so that everyone can send money at minimal cost and maximum speed and safety. It could also connect various forms of money, including central bank digital currencies,” Georgieva said.



Finally, the IMF called for an urgent closing of the “gap between ambition and policy” on climate change, arguing for a comprehensive approach to the green transition that combines carbon pricing and renewable energy investment with compensation for those adversely affected by climate change.

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IMF says global economy faces ‘confluence of calamities’ in biggest test since World War II

ABUJA, May 23 (Reuters)&nbsp;&#8211;&nbsp;Nigerian GDP grew 3.11% in the first quarter, slower than in the previous quarter as a fall in oil production hit the rest of the economy, the national statistics office said on Monday ahead of a central bank interest rate decision on Tuesday.



It was the sixth consecutive quarter of growth, with non-oil sectors helping Nigeria bounce back from a severe recession caused by the COVID-19 pandemic. The full-year GDP figure for 2021 showed the fastest growth in seven years.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2US0UR&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Gross domestic product grew by 3.98% in the fourth quarter of 2021. In the first three months of last year, the growth rate was 0.51%.



&#8220;After the recession experienced by the country in 2020 occasioned by the COVID-19 pandemic, the economy has been on the path of growth,&#8221; the National Bureau of Statistics (NBS) said.



It said non-oil sectors such as financials, communication, trade and healthcare were among the fastest growing.



However, oil refining, crude petroleum and natural gas, road transport, quarrying and other minerals were lagging.



The naira&nbsp;NGNP=, hit a record low of 609 against the dollar on the black market, where it is freely traded, as the GDP data was announced.



The oil sector shrank by 26.04% in the first quarter, compared with an 8.06% contraction the previous quarter. Crude production fell to 1.49 million barrels per day in the first quarter from 1.50 million barrels in the previous three months.



Frequent vandalism and illegal refining in the oil-producing Niger Delta region have kept the sector under pressure. Nigeria has struggled to meet its production targets, partly missing out on the effects of the global surge in oil prices.



The weak growth could prompt the central bank to keep its dovish stance at a policy meeting on Tuesday despite double-digit inflation, analysts say.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2VO1JM&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



($1 = 415.00 naira)



(Reporting by Chijioke Ohuocha; Editing by Estelle Shirbon, Jan Harvey and Tomasz Janowski)

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Nigeria Q1 GDP growth slows Q/Q ahead of rates decision

GENEVA, May 23 (Reuters)&nbsp;&#8211;&nbsp;The head of the World Health Organization said on Monday that it must be &#8220;at the centre&#8221; of a global healthcare system, while also acknowledging the need for internal reforms.



The World Health Assembly from May 22-28 is seen as one of the most important in the UN health agency&#8217;s 75-year history, as it seeks to define its future role in global health policy and get approval for a funding overhaul.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XC0VG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL5N2X96B0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;We need a stronger and sustainably financed WHO, at the centre of the global health security architecture,&#8221; Director-General Tedros Adhanom Ghebreyesus said in a major speech at the WHO&#8217;s annual assembly.



But he added: &#8220;There have been many calls for WHO to change. And there is no question that more change is needed.&#8221;



The WHO is under scrutiny after an independent panel described it as &#8220;underpowered&#8221; when COVID-19 struck, with limited powers to investigate outbreaks and coordinate containment measures.



However, its 194 member states are seen as split over whether it deserves new powers after its handling of COVID.



&#8220;Some members are saying the WHO did what it could during the pandemic and want to strengthen its authority and others are very disillusioned with the WHO and &#8230; are very divided on whether it should be given more powers,&#8221; said Adam Kamradt-Scott, a professor of Global Health at the School of Transnational Governance.



In the same speech, Tedros said COVID is far from over and that the world was not ready for the next pandemic, echoing the findings of a major report last week.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XA0VC&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;It&#8217;s clear that the world was and remains unprepared for a pandemic,&#8221; he said.



(Reporting by Emma Farge and Mrinalika Roy; Editing by Catherine Evans)

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WHO chief says it must take central role in global health

BERLIN, May 22 (Reuters)&nbsp;&#8211;&nbsp;Russia&#8217;s impact on energy and food prices and security will provide the backdrop to Olaf Scholz&#8217;s first trip to Africa as German Chancellor, a three-day tour of Senegal, Niger and South Africa kicking off on Sunday.



The first stop on Scholz&#8217;s trip is Senegal, which has billions of cubic metres of gas reserves and is expected to become a major gas producer in the region.



Germany is seeking to reduce its heavy reliance on Russia for gas following the Kremlin&#8217;s invasion of Ukraine. It could help explore a gas field in Senegal, a government official said on Friday.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS8N2WV04P&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The source said Scholz also wanted to discuss possible cooperation on the development of renewable energy. In Senegal, he will visit a solar power plant after meeting and holding a joint news conference with the country&#8217;s President Macky Sall.



Germany has invited both Senegal, which currently holds the rotating chairmanship of the African Union, and South Africa to attend the G7 summit it is hosting in June as guest countries.



Both countries abstained from voting on a United Nations resolution against Russia&#8217;s invasion of Ukraine, which Moscow calls a special military operation to demilitarize a neighbor it says threatened its security.



Ukraine and Western allies say the war is an unprovoked act of aggression.



The conflict has triggered supply disruptions that have pushed up food and energy prices in Africa. Russia&#8217;s military has blocked exports from ports in Ukraine, a major grains and food supplier to the region. The Kremlin blames Western sanctions for the rising prices.



SECURITY IN THE SAHEL



Scholz will travel later on Sunday to Niger. The country has taken on a bigger role hosting European special forces to stem a jihadist insurgency across the Sahel since European relations with the military junta ruling neighboring Mali have deteriorated.



The European Union suspended its military training mission in Mali due to a lack of guarantees from Malian authorities that military contractors from Russia&#8217;s Wagner Group would not interfere in the work. The group is under EU sanctions accused of human rights abuses.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2X95FS&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Russia denies any wrongdoing in Mali or in any other country where Wagner operates. Both Mali and Russia have previously said Wagner Group is not made up of mercenaries but trainers helping local troops with equipment bought from Russia.



Scholz will visit German troops in Niger and discuss the lengthy battle against insurgents linked to al Qaeda and Islamic State that have killed thousands and made swathes of territory ungovernable in the Sahel, south of the Sahara.



On Monday evening Scholz is set to travel to Johannesburg for the final leg of his tour.



(Reporting by Andreas Rinke and Sarah Marsh; Editing by Frank Jack Daniel)

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Russia looms large on Scholz’s first Africa tour as chancellor￼

May 20 (Reuters)&nbsp;&#8211;&nbsp;Ratings agency S&amp;P&nbsp;<a href="https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/2842888" target="_blank" rel="noreferrer noopener">revised</a>&nbsp;South Africa&#8217;s outlook to &#8220;positive&#8221; on Friday, saying it reflects favourable terms of trade and a path toward contained fiscal expenditure for the country.



S&amp;P upgraded its outlook from &#8220;stable&#8221; and affirmed the &#8220;BB-/B&#8221; foreign currency as well as &#8220;BB/B&#8221; local currency ratings on South Africa.



&#8220;Recent favourable terms of trade in South Africa have improved the external and fiscal trajectory, while the country&#8217;s reasonably large net external asset position, flexible currency and deep domestic capital markets provide strong buffers against shifts in external financing,&#8221; S&amp;P said in its report.



S&amp;P said it expects South Africa&#8217;s fiscal deficit to remain elevated, but gradually narrow to 5% of GDP by fiscal 2025.



The economic growth of Africa&#8217;s most industrialised country is expected to slow to 1.7% this year, according to the central bank&#8217;s forecast on Thursday, from a 4.9% expansion last year, as it recovers from a contraction in the wake of the COVID-19 pandemic.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2XB4IH&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Ahmed Farhatha in Bengaluru and Olivia Kumwenda-Mtambo in Johannesburg; Editing by Amy Caren Daniel)

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S&P raises South Africa’s outlook to ‘positive’ on trade terms, fiscal discipline

KEY POINTS



<ul><li>Nearly 2,500 global leaders from business, politics and civil society are expected to take part in a rare springtime version of Davos this week.</li><li>Organizers of the event had postponed the meeting from its traditional January slot over safety concerns amid the coronavirus pandemic. However, in a welcome boost to local residents, the forum’s first in-person event has now returned after a two-year hiatus.</li><li>That’s not to say everyone is happy to see the return of the world’s business and political elite to the Swiss Alps.</li></ul>



The World Economic Forum is trying to fix an image problem.



Nearly 2,500 global leaders from business, politics and civil society are expected to take part in a rare springtime version of Davos this week.



The annual meeting will see movers and shakers convene in Switzerland’s luxury Alpine ski resort of Davos for five days of conversation on issues including Covid-19, Russia’s war in Ukraine and the climate crisis.



Organizers of the event had&nbsp;<a href="https://www.cnbc.com/2021/12/20/davos-world-economic-forum-postpones-meeting-due-to-covid.html">postponed the meeting</a>&nbsp;from its traditional January slot over safety concerns amid the coronavirus pandemic. However, in a welcome boost to local residents, the forum’s first in-person event has now returned after a two-year hiatus.



The&nbsp;<a href="https://www.weforum.org/agenda/2022/05/davos-2022-whos-coming-and-everything-else-you-need-to-know/" target="_blank" rel="noreferrer noopener">theme</a>&nbsp;of this year’s event is “History at a Turning Point: Government Policies and Business Strategies.”



“It means a lot to us. It means a lot to the whole of Switzerland,” Samuel Rosenast, a spokesperson for the local tourism board, said in an interview with CNBC’s&nbsp;<a href="https://www.cnbc.com/tom-chitty/">Tom Chitty</a>.



Rosenast said the event was “unbelievably important” to those residing in Europe’s highest town, estimating that the resort could see a windfall of approximately 70 million Swiss francs ($72 million) in just this week alone.



“Every business is in contact with the World Economic Forum. The people know how important it is,” Rosenast said. “Most people here are looking forward to the World Economic Forum. They are happy that it takes place here again this year.”



<h2 class="wp-block-heading" id="h-a-symbol-of-a-failed-era"><a></a>‘A symbol of a failed era’</h2>



That’s not to say everyone is pleased to see the return of the world’s business and political elite to the Swiss Alps. The event has been sharply criticized in recent years for being&nbsp;<a href="https://fortune.com/2015/01/22/davos-out-of-touch/" target="_blank" rel="noreferrer noopener">out of touch</a>,&nbsp;<a href="https://www.cnbc.com/2018/01/18/is-davos-nothing-more-than-an-overpriced-ineffective-talking-shop.html">ineffective</a>&nbsp;and&nbsp;<a href="https://www.fnlondon.com/articles/davos-is-broadly-irrelevant-there-is-no-case-for-guzzling-jets-and-gallons-of-dom-perignon-20220516" target="_blank" rel="noreferrer noopener">irrelevant</a>.



Three years ago, Dutch historian Rutger Bregman went viral at a Davos panel&nbsp;<a href="https://www.cnbc.com/2019/03/19/rutger-bregman-historian-who-confronted-davos-elite-on-higher-taxes.html">when he called out billionaires for tax avoidance</a>. In a clip that has now been viewed nearly 11 million times, Bregman said that a global failure to effectively tackle tax avoidance was the primary cause of inequality.



“It feels like I’m at a firefighters conference and no one’s allowed to speak about water,” Bregman said at the time. “This is not rocket science … we have got to be talking about taxes. That’s it. Taxes, taxes, taxes.”



More recently, protestors, activists and people on the frontlines of inequality have sought to challenge the WEF over its “<a href="https://inequality.org/research/global-inequality-protest-davos/" target="_blank" rel="noreferrer noopener">empty rhetoric</a>,” accusing Davos of representing “a symbol of a failed era” that should be left behind.



A report published Monday by global charity Oxfam found that 573 people became new billionaires during the coronavirus pandemic — at a rate of one every 30 hours. The brief, entitled “Profiting from Pain,” expects that 263 million additional people will fall into extreme poverty this year at a rate of 1 million people every 33 hours.



“Billionaires are arriving in Davos to celebrate an incredible surge in their fortunes. The pandemic and now the steep increases in food and energy prices have, simply put, been a bonanza for them,” said Gabriela Bucher, executive director of Oxfam International.



“Meanwhile, decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the cost of simply staying alive.”



In his youth, Philipp Wilhelm was one of those protesting the annual gathering of billionaires and political leaders in the town where he was born. Now, however, Wilhelm is the mayor of Davos, and his goal is to deliver a successful meeting.



“I protested during the annual meeting because, for me, it was important to express that it’s really crucial that we solve this climate crisis. And we need to make the world a more just place,” Wilhelm said.



Wilhelm said that he had taken part in protests because he felt it was essential to ensure that everyone arriving in Davos “gets the message that it’s really important to solve these issues.”



Wilhelm said he — and WEF — had changed their positions since his protesting days, adding that he believes he can influence policy more effectively in his current role.



When asked whether it was a concern that criticism of WEF had become too closely associated with Davos given that the town itself has become largely interchangeable with the forum, Wilhelm replied: “No it doesn’t bother me at all.”



“I think it is interesting that people know Davos as a place where people meet and discuss — and I mean it should be controversial. There should be a discussion about what is the right way to improve the state of the world,” Wilhelm said.



<h2 class="wp-block-heading"><a></a>Davos 2022 is ‘one marker in time’</h2>



“The forum’s work is ongoing. The meeting is one marker in time,” said Saadia Zahidi, managing director at the World Economic Forum.



“What we’ve been doing over the last two and a half years — while it hasn’t been visible through a particular meeting — is a set of work that is trying to make a dent on inequality and at the same time also make changes towards addressing one of the biggest existential risks we all face which is climate change.”



When asked whether rising income inequality had become a particular problem for the forum, Zahidi replied: “Inequality is a problem for the world. I think we know that societies that do not combat inequality will have slower growth.”



“And so there has to be an effort that addresses inequality. Now, what does that? Better education, better skills, better jobs, addressing issues like taxation and changing the nature of our economies so that they actually work for people and not just for the few,” Zahidi said. “That is going to be front and center on next week’s agenda.”

Stefan Wermuth | Bloomberg | Getty Images

How Davos became the anti-establishment’s punching bag

KEY POINTS



<ul><li>A document outlining the European Commission’s aims for the REPowerEU plan was published on Wednesday.</li><li>It highlighted the importance of energy savings, the diversification of energy imports and speeding up what it called “Europe’s clean energy transition.”</li><li>The EU’s desire to wean itself off Russian hydrocarbons means it will need to find oil and gas from other parts of the world to plug supply gaps.</li></ul>



The European Commission has fleshed out details of a plan to ramp up the EU’s renewable energy capacity and reduce its reliance on Russian fossil fuels, at the same time acknowledging that existing coal facilities may have to be used for “longer than initially expected.”



A document outlining the Commission’s aims for the REPowerEU plan was published on Wednesday, highlighting the importance of energy savings, the diversification of energy imports and speeding up what it called “Europe’s clean energy transition.”



In total, it envisages extra investment of 210 billion euros ($220.87 billion) between 2022 and 2027. When it comes to renewables’ share in the EU’s energy mix, the Commission has proposed that the current target of 40% by 2030 should be increased to 45%.



The Commission’s proposals came on the same day the governments of Denmark, Germany, the Netherlands and Belgium said they would aim for a combined target of at least 65 gigawatts of offshore wind capacity by 2030. By the middle of the century, they are aiming for 150 GW of capacity.



On the fossil fuel front, the situation is a challenging one. Russia was the biggest supplier of both petroleum oils and natural gas to the EU last year,&nbsp;<a href="https://ec.europa.eu/eurostat/statistics-explained/index.php?title=EU_imports_of_energy_products_-_recent_developments#:~:text=Russia%20was%20the%20largest%20supplier,and%2C%20at%20some%20distance%20Algeria" target="_blank" rel="noreferrer noopener">according to Eurostat</a>.



The EU’s desire to wean itself off Russian hydrocarbons&nbsp;following the latter’s invasion of Ukraine&nbsp;means it will need to find oil and gas from other parts of the world to plug supply gaps.



The Commission said as much as 1.5 to 2 billion euros of investment would be needed to secure oil supply. To import enough liquefied natural gas and pipeline gas from other sources, an estimated 10 billion euros will be needed by 2030.



All the above comes at a time when the EU has said it wants to be carbon neutral by 2050. In the medium term, it wants net greenhouse gas emissions to be cut by at least 55% by 2030, which the EU calls its “Fit for 55” plan.



The Commission said REPowerEU could not work without what it called “a fast implementation of all Fit for 55 proposals and higher targets for renewables and energy efficiency.”



In this new reality, gas consumption in the EU would “reduce at a faster pace, limiting the role of gas as a transitional fuel,” the Commission said.



“However, shifting away from Russian fossil fuels will also require targeted investments for security of supply in gas infrastructure and very limited changes to oil infrastructure alongside large-scale investments in the electricity grid and an EU-wide hydrogen backbone,” it added.



“In parallel, some of the existing coal capacities might also be used longer than initially expected, with a role for nuclear power and domestic gas resources too,” the Commission said.



During a press conference on Wednesday the EU’s climate chief, Frans Timmermans, admitted that using less natural gas in a transitional phase would mean “you might use coal a bit longer — that has a negative impact on your emissions.”



“But if at the same time, as we propose, you rapidly speed up the introduction of renewables — solar, wind, biomethane — you then have the opposite movement,” he said.



Timmermans, who is the European Commission’s executive vice president for the European Green Deal, went on to stress the importance of finding a middle ground.



“If we can actually do what I say — reduce our energy consumption in combination with a speedier introduction of renewables — we will bring down our emissions even quicker than before,” he said.



“And then, of course we will have slightly higher emissions if people stick a bit longer to coal, but we need to strike the balance so that, on balance, we do not increase our emissions — we hopefully even decrease them more.”



Coal has a substantial effect on the environment, with Greenpeace describing it as “the dirtiest, most polluting way of producing energy.”



Elsewhere, the U.S. Energy Information Administration lists a range of emissions from coal combustion, including carbon dioxide, sulfur dioxide, particulates and nitrogen oxides.



The European Commission announcement drew criticism from a number of environmental organizations.



“These plans are supposed to fast-track the clean energy transition — but the European Commission’s latest strategy gives with one hand and takes with the other,” Eilidh Robb, an anti-fossil fuels campaigner at Friends of the Earth Europe, said.



“So-called REPowerEU contains useful and necessary strides towards renewable solutions but it simultaneously enables almost 50 fossil fuel infrastructure projects and expansions,” Robb said.

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Europe admits it’ll have to burn more coal as it tries to wean itself off Russian energy

<ul><li>China stocks firm on higher-than-expected borrowing rate cut</li></ul>



<ul><li>Turkish consumer conf in May edges up from record low</li></ul>



<ul><li>EM stocks, FX eye weekly gains of 3% and 1% respectively</li></ul>



By Anisha Sircar and Bansari Mayur Kamdar



May 20 (Reuters)&nbsp;&#8211;&nbsp;China stocks led emerging market stocks higher on Friday after Beijing&#8217;s larger-than-expected cut to a key borrowing rate, while a softer dollar sent an index of currencies to their highest level in two weeks.



China&#8217;s main share indexes&nbsp;.CSI300,&nbsp;.SSEC&nbsp;added 1.6% and 2% after Beijing lowered the five-year loan prime rate&nbsp;CNYLPR5Y=CFXS&nbsp;by 15 basis points (bps) to 4.45% to aid the ailing economy, more than the five or 10 bps tipped by analysts in a Reuters poll.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XC033&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



That boosted MSCI&#8217;s index of stocks&nbsp;.MSCIEF&nbsp;up 2% and more than 3% on the week to track its best weekly performance since mid-March. Most other EM Asian indexes gained between 1% and 2.2% while those in Turkey&nbsp;.XU100&nbsp;and South Africa&nbsp;.JTOPI&nbsp;gained 0.4% and 0.5%.



Still, stocks have clocked losses every month in 2022 and were eyeing their fifth in May as investors remain fearful over the impact of surging inflation, China&#8217;s COVID-19 lockdowns and monetary tightening in developed economies.



&#8220;I&#8217;m not looking at a strong recovery from here &#8211; some stability in (China&#8217;s) renminbi has provided some temporary support this week, but the fact is we&#8217;ve got the strong dollar and concerns over European and Chinese growth very much still with us,&#8221; said Chris Turner, global head of FX Strategy at ING.



Meanwhile, EM currencies&nbsp;.MIEM00000CUS&nbsp;looked set for their first weekly gain in seven, lifted by a glum week for the dollar&nbsp;=USD&nbsp;which lost steam after a breathless 14-week surge and amid a retreat in U.S. Treasury yields.&nbsp;FRX/



Mexico&#8217;s peso&nbsp;MXN=&nbsp;and South Africa&#8217;s rand&nbsp;ZAR=&nbsp;were 0.9% and 2% stronger on the week, with the rand helped by a 50 basis point lending rate hike by the central bank on Thursday.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2XB4IH&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Turkey&#8217;s lira&nbsp;TRY=&nbsp;was the outlier, slipping 0.3% and down 11 sessions out of the last 12, with some upbeat data doing little to boost the struggling currency. Turkish consumer confidence was seen rising to 67.6 points in May from a record low in April.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AAPN0KU2M1&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;The strategy in place&#8230;is costing an arm to Turkey, which is why soft data like the consumer data isn&#8217;t fit to reverse the ugly mood or fears of seeing the lira crumble if the Turkish central bank were to let go,&#8221; said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.



Elsewhere, Russia&#8217;s rouble&nbsp;RUBUTSTN=MCX&nbsp;saw its fifth straight week in the black, boosted by capital controls and domestic tax payments that support demand for the currency, despite growing global sanctions after its invasion of Ukraine.&nbsp;RU/RUB



For GRAPHIC on emerging market FX performance in 2022, see&nbsp;<a href="http://tmsnrt.rs/2egbfVh" target="_blank" rel="noreferrer noopener">http://tmsnrt.rs/2egbfVh</a>



For GRAPHIC on MSCI emerging index performance in 2022, see&nbsp;<a href="https://tmsnrt.rs/2OusNdX" target="_blank" rel="noreferrer noopener">https://tmsnrt.rs/2OusNdX</a>



For TOP NEWS across emerging markets&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3ATOPEMRG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



For CENTRAL EUROPE market report, see&nbsp;CEE/



For TURKISH market report, see&nbsp;.IS



For RUSSIAN market report, see&nbsp;RU/RUB



(Reporting by Anisha Sircar in Bengaluru; Editing by Kim Coghill)

P7D3GU2BGZNHDCNT6DEA6AP3D4

EMERGING MARKETS-China rate cut boosts EM stocks; currencies recover as greenback eases￼

NAIROBI, May 20 (Reuters)&nbsp;&#8211;&nbsp;The International Monetary Fund has extended its support for Somalia under its Extended Credit Facility to Aug. 17, the lender said on Friday.



Early this month, the Somali government had asked the fund for a three-month extension in its financial support.



In February, the IMF warned against the risk of automatic expiry this month of the three-year budget support programme worth nearly $400 million, after delayed legislative and presidential elections jeopardised its renewal.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2US5NQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Duncan Miriri; Writing by George Obulutsa; Editing by Clarence Fernandez)

IMF_logo

IMF extends financial support for Somalia to August

KHARTOUM, May 19 (Reuters)&nbsp;&#8211;&nbsp;A leading&nbsp;Sudanese&nbsp;politician was&nbsp;arrested&nbsp;on Thursday as&nbsp;protests&nbsp;raged in the capital&nbsp;Khartoum&nbsp;for the seventh month against military rule, with tear gas and heavy security force deployment.



A military coup in October effectively ended a 2019 power-sharing deal between generals who overthrew President Omar al-Bashir, andpolitical parties that opposed him.



One of those parties, the&nbsp;Sudanese&nbsp;Communist&nbsp;Party, said its&nbsp;leader&nbsp;Mohamed Mukhtar Al-Khatib had been&nbsp;arrested&nbsp;on Thursday, following a visit to Juba where he met with leading&nbsp;Sudanese&nbsp;rebel&nbsp;leaders.



The party, which has been the most hardline against the coup and any future deal, was pursuing a unified front against the coup, it said.



Sudan&#8217;s economy has spiralled as its government has gone without a prime minister since January. Businesses are stagnating while citizens face steep increases in the prices of food, electricity and fuel.



&#8220;The military has failed economically, politically and psychologically &#8211; in every way,&#8221; said a 30-year-old protester and unemployed engineer who declined to give his name for fear of retribution. &#8220;They are just being stubborn now, but we are more stubborn.&#8221;



The protesters marched under the harsh sun as security forces, including the U.S.-sanctioned Central Reserve Police,&nbsp;were deployed at key points along&nbsp;the protest route.



(Reporting by Khalid Abdelaziz and Nafisa Eltahir; Editing by Richard Chang)

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Sudanese communist leader arrested as protests rage in Khartoum￼

LONDON, May 19 (Reuters)&nbsp;&#8211;&nbsp;A new study by the&nbsp;central&nbsp;bank&nbsp;to the world&#8217;s&nbsp;central&nbsp;banks, the&nbsp;Bank&nbsp;of International Settlements (BIS), has called for&nbsp;urgent&nbsp;action to tackle&nbsp;rising&nbsp;wealth&nbsp;inequality, warning the problem was feeding a dangerous loop of recessions and poverty.



While government policies have largely been blamed for the rise in&nbsp;inequality&nbsp;since the 1980s,&nbsp;central&nbsp;bankers have also come under fire in recent years for fuelling huge stock market gains with ultra-low interest rates and asset buying schemes.



The&nbsp;BIS, looking at 182 recessions across 70 countries, found that even six years after a downturn, the income share of the bottom 50% of earners in an impacted economy remained 0.3% below the pre-recession level on average, whereas for those in the top 10% bracket it was still 0.7% higher.



Economies that are more unequal go through deeper recessions which in turn further increases&nbsp;inequality, its analysis showed. Less progressive taxes and social support programme in many countries have made the problems worse as well.



&#8220;It is increasingly apparent that&nbsp;inequality&nbsp;has evolved from being an academic issue to an&nbsp;urgent&nbsp;policy&nbsp;matter,&#8221; the&nbsp;<a href="https://www.bis.org/" target="_blank" rel="noreferrer noopener">BIS&nbsp;paper</a>&nbsp;said, adding that one of key risks for&nbsp;central&nbsp;banks was that their policy tools become less effective.



The&nbsp;BIS&nbsp;study showed that low-paid workers in some countries were over three time more likely to have lost their jobs during the COVID-19 pandemic, while surging inflation was&nbsp;now&nbsp;hitting poorer households disproportionately hard.



&#8220;Once&nbsp;inequality&nbsp;is left to grow unchecked, deeper and deeper recessions demand additional policy support,&#8221; it said.



&#8220;But at the same time monetary stimulus loses traction, so that the&nbsp;central&nbsp;bank&nbsp;needs to deploy bolder and bolder instruments, which can in turn produce undesirable side effects in terms of wealth&nbsp;inequality&#8221;.



Instead it recommended keeping inflation in check and that governments use &#8220;stabilisation policies&#8221; such as subsidies or support payments that help poorer people.



(Reporting by Marc Jones; Editing by Jan Harvey)

people-black-poverty-guinea-african-bissau-940174-pxhere.com_

Rising inequality now an urgent matter, BIS central bank group warns

May 19 (Reuters) &#8211; Russia will send any oil rejected by European countries to Asia and other regions, Deputy Prime Minister Alexander Novak said on Thursday, adding that Europe would have to find substitute supplies that would be more expensive.



The European Commission on Wednesday unveiled a 210 billion euro ($220 billion) plan for Europe to end its reliance on Russian fossil fuels by 2027 and to use the pivot away from Moscow to quicken its transition to green energy. <a href="https://www.reuters.com/business/sustainable-business/eu-unveils-escape-route-russian-fossil-fuels-by-2027-2022-05-18/">read more</a>



Europe receives about 4 million barrels per day (bpd) of Russian oil, Novak said, adding that Russia was ready to reroute those supplies leaving Europe with more expensive crude from other origins.



Western sanctions imposed on Russia after its troops marched into Ukraine in February forced a number of oil buyers to delay or refuse cargoes, which in turn knocked Russian oil production.



Novak said Russian oil production was about 1 million bpd lower in April but had increased by 200,000-300,000 bpd in May with more volumes expected to be restored next month.



He said Russia&#8217;s oil exports were gradually recovering and the country would be able to find export markets because its energy resources were competitive.



($1 = 0.9537 euros)



RegisterReporting by Reuters; Editing by Edmund Blair



<a href="https://eb2.3lift.com/pass?tl_clickthrough=true&amp;redir=https%3A%2F%2Frtb-us-east.linkedin.com%2Flax%2Fclk%3Ftrk%3DCwEAAAGA3JCq4mVrhscHC6XDe2DE2ro5JDlEjtw-w19DJo5ePkcIoSpbHWSScK0OeYlrUBmKpgzhzZ1y6JEY2ocP9vRVaaZiPt8YSS7Gq_eLkjPaoDqQ75p_iPl1pRk5L2YwP2X6IDKGWIqE3-ap-_gpkQqKiM_Rksb-VIYbZXviu4-cG6jJxCFd5eiQv1DJBJji8Piv_c14WM6ZVVHx7OjEgHSSNIl3Xb1AMZpS31o7FGFuKBrEFNPWT8F83gC1-yZw9CJhhrZWIyLz06xe1GmH-iuByGuDTQ4CgE5wa9z2OSWBEhtiCAFUMMPM4hG8X8bmE_OTZBLSLqFmT-tiM36jAesbJ8bxRnyLAf62uR0skxp3WSpMf3x-5_hn-osx-KcQ79hmbQ_82lnPz2-028CEOKmSW_ZzBnVUYQizW9GrGUUQVLihjGOVycNL7fEiEyhZe5ijf60hf3z5UHJellPn3KshJYB4Tp1_RJ0xrmLErvCYJeslsQD_DIjdFFg57JhNsIQXf8zvJC4wzzzkIiA27qFWRKL48u16NB-VU38PjywkxFXeF-jh3-8hgFAnWaazk0G0fVQc4JgyaiNjEIBc-TuyD0uto80S0Ii8OixkcgPqgHw62VqtAKP4LHLXywkREq5bZxg-Z0NqubwSJqmW3uMmpxXHkuhVNWhI3m5Oa1EG5zMOw6Dj8DND-C_30tJOX1OP6xKX9hCMRHlU3uHrKo8Aow2siZs54qdvUeGfJLm1Zbp657VRNHcaSOO2NfCc5VuDCXOAOiKkdYMz9KQwGaZPki11VBud0niYF8H0itM8f79DdJPtIDcmMKDJYA9ZPFAt0kVNENZ330tDzh8gyT6Nd0KOnpRPH_qn2cJzgUGtngcpjDU4laODj40tzDV8pfkp6GE1lUqLhUZhpY1eKoCIVCdXejMBsD7p2YmtEyNHkSzdaB5shBZuGxaDJ45okavF2X1fdMvgUz41roNCxC2fnMXxv-y79qByr5qwjAmNjE9d6gTyww5LNVcYEKW_PL803F51DheN12iLMOhb3NgzAnVlwctQ8V9dT6Di6eLHnMge7HYRu-sGnfBynv1EhHFyTk45KSKZSXsR2pK0vZvQ8NvqpIcgjfy7m_Ctnhp2fEGO8MGDcWtt7u_sw6hAu3kkHzU9KbQxqCZb3mmkzvGotPX4mbDpJM8LqbrnNXa2mgIjvYBTm6bJj62lrCJYc1yYCHJ2-enalD_4Z7EadYX6MRaMSvLMe1x7wuLwPgw2fO1WJWPp44CDjoMyKkyz4KH1i4w679BdeSIx7sQ8O03DD9aylx3RnZnoj9zPSdriem8q4kPFaZ54lW-FiacyvipCs3QTBhhP2stoxhwAnLiEcBDoSGqORfRvX-IWoduC1KrJACd8_nV1zGZb4jd45mNOe04bhThQYq76Ixg-vC7mYmgWbJjzxSjIcok-KynftIYyIiUrLMzxV6N1kO3Oh5SgAfCATfX5fLOaA-UL%26action%3Dclick%26laxrid%3D24f5c29d-cf3d-40f2-b108-99addb80d74f%26laxbid%3D2%26eid%3D3%26crtype%3Dvid%26laxerid%3D27513682238991459463900%26adfmt%3D6%26urle%3DCwEAAAGA3JCq9-hRRtXsu-wPa_J8Ur10q0hLs8UOYV-GjXUfbMvOviv_7QvcFASlXhVdCuJlBBI4mJFxQ7TvqvOV1gjmLavd4lh3vI-t4JxDYlGEfZ3nhBLwRZKc7v7xRflbkOCy89yplrQJHVVX5u0_god5Rfh15o1QauwG-LoPK8PGUaRwif4Mtt0j-uJe5wXC5WBuLdOvRr580aEuP4nQuywCESJyla65oBSQpDvgBs07_7aYsYqIFJSAm3M87TF38x4RR2jzZJAtA5BZrg-575fm_jyWN2xk1r6TXzjz2qTj8b_dQhfICDT-eGHThJhs9d0ins-182El193wr4H6mp5trHdxpJC1srZ0s2hra9jOeqWMFrWTb_wF4utRlgXaFCg9QnCk_cNP32UGnr0Y_Wt26BI4QQFtJUgNLbbVYjkTfsfiLXs0P765HUO36C8RTahma63SCAHdE-wo4XvxbbzFLq484BR-AA%26urlhash%3DwsTS&amp;pr=1.444&amp;bc=3.307&amp;aid=27513682238991459463900&amp;bmid=6250&amp;biid=6250&amp;sid=66552&amp;brid=554848&amp;adid=193517973&amp;crid=29158957&amp;ts=1652967909&amp;bcud=3307&amp;ss=12&amp;cb=81714" target="_blank" rel="noreferrer noopener"></a>

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Russia to send oil rejected by Europe to Asia, other regions, says Novak

<ul><li>Digital rand at least a few years away, says deputy governor</li></ul>



<ul><li>Cen bank digital currency likely only for wholesale purposes</li></ul>



<ul><li>SARB hopes crypto assets could be regulated within 15 months</li></ul>



<ul><li>Regulation to prevent theft, fraud, undermining SARB authority</li></ul>



By Rachel Savage and Promit Mukherjee



LONDON/JOHANNESBURG, May 18 (Reuters)&nbsp;&#8211;&nbsp;A digital rand in South Africa could cut the high cost of cross-border payments for banks but its introduction is still a few years away, a senior central bank official said.



However, regulation of crypto assets&nbsp;is in the offing and might come into force within nine to 15 months, South&nbsp;African&nbsp;Reserve Bank (SARB) Deputy Governor Kuben Naidoo told Reuters in an interview.



It costs 13% of a transaction to remit money from South Africa to another country, more than double the average of the Group of 20 (G20) leading global economies, according to a 2021&nbsp;<a href="https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q421.pdf" target="_blank" rel="noreferrer noopener">World Bank report</a>.



Sending money to South Africa costs 6.2%.



Some countries are planning to introduce e-versions of traditional currency, known as central bank digital currencies (CBDCs) and are studying how the underlying technology could be used.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2X13EL&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL2N2W922S&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



China&#8217;s digital yuan project is the most advanced among large economies, though central banks from the&nbsp;euro zone&nbsp;to the United States are in varying stages of research into CBDCs.



Last year, Nigeria&#8217;s central bank introduced an eNaira for use by ordinary citizens.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL8N2RL4J4&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



South Africa has conducted small-scale experiments with a wholesale CBDC and participated in a cross-border pilot with the central banks of Malaysia, Australia and Singapore.



The next stage is for regulators to test the digital rand at a bigger scale and develop rules for its use.



&#8220;We&#8217;re still learning, we&#8217;re still experimenting,&#8221; Naidoo said.



Meanwhile, Naidoo said the South&nbsp;African&nbsp;Reserve Bank wants regulation of crypto assets to prevent theft, money laundering and undermining of monetary policy and hopes it will be in place in the next 15 months.



&#8220;If crypto assets were to become a very ubiquitous currency, you could undermine the authority of the central bank,&#8221; he said.



(Reporting by Rachel Savage and Promit Mukherjee; Editing by Lisa Shumaker)

South African Economy As Inflation Rate Rises For First Time In 2017

S.African central bank eyes digital rand to cut cross-border payment costs

<ul><li>Stocks slide as inflation scare drives uncertainty</li><li>UK inflation hits 9%, in Canada rises to 6.8%</li><li>German 2-year yield hits 2011 high on ECB rate hike bets</li></ul>



NEW YORK, May 18 (Reuters) &#8211; Global stocks plunged and the dollar strengthened for the first time in four sessions on Wednesday as concerns about rising inflation on economic growth soured sentiment.



The mood was underscored by a 9% surge in British consumer prices and a faster-than-expected acceleration in inflation in Canada.



British inflation surged to its highest annual rate since 1982 as energy bills soared, while Canadian inflation rose to 6.8% last month, largely driven by rising food and shelter prices, Statistics Canada data showed. <a href="https://www.reuters.com/markets/uk-inflation-hits-9-highest-since-modern-records-started-2022-05-18/">read more</a>



British inflation is now the highest among major economies in Europe, but prices are rapidly rising worldwide, forcing central banks around the globe to hike interest rates and tamp down growth as suggested by a modest decline in U.S. homebuilding in April.&nbsp;<a href="https://www.reuters.com/business/us-building-permits-dive-april-housing-starts-fall-2022-05-18/">read more</a>



Soaring prices and material shortages have already hit homebuilding, the sector of the economy most sensitive to rates. But the U.S. Commerce Department report also showed a record backlog of houses to be built, indicating a decline in homebuilding potentially might be marginal.



Adding to the gloom caused by inflation were earnings results from Target Corp&nbsp;<a href="https://www.reuters.com/companies/TGT.N" target="_blank" rel="noreferrer noopener">(TGT.N)</a>, whose quarterly profit halved as it warned of a bigger margin hit this year due to rising fuel and freight costs.&nbsp;<a href="https://www.reuters.com/business/retail-consumer/target-profit-halves-rising-costs-warns-bigger-margin-hit-2022-05-18/">read more</a>



Target shares plummeted 24.88%, its biggest one-day percentage drop since the &#8220;Black Monday&#8221; stock market crash on Oct. 19, 1987, a day after Walmart Inc <a href="https://www.reuters.com/companies/WMT.N" target="_blank" rel="noreferrer noopener">(WMT.N)</a> warned of similar margin squeezes and saw its stock drop 11.4% for its biggest one-day percentage fall since Oct. 16, 1987.



&#8220;It was Walmart yesterday and everybody thought it was a one-off,&#8221; said Dennis Dick, head of markets structure and a proprietary trader at Bright Trading LLC in Las Vegas. &#8220;Now that Target misses earning a lot more than Walmart even did, they&#8217;re scared that consumer is not as strong as everybody think it is.&#8221;



MSCI&#8217;s gauge of stocks across the globe&nbsp;<a href="https://www.reuters.com/quote/.MIWD00000PUS" target="_blank" rel="noreferrer noopener">(.MIWD00000PUS)</a>&nbsp;shed 2.74%, while in Europe, the pan-regional STOXX 600 index&nbsp;<a href="https://www.reuters.com/quote/.STOXX" target="_blank" rel="noreferrer noopener">(.STOXX)</a>&nbsp;closed down 1.14%.



On Wall Street, the Dow Jones Industrial Average&nbsp;<a href="https://www.reuters.com/quote/.DJI" target="_blank" rel="noreferrer noopener">(.DJI)</a>&nbsp;fell 3.56%, the S&amp;P 500&nbsp;<a href="https://www.reuters.com/quote/.SPX" target="_blank" rel="noreferrer noopener">(.SPX)</a>&nbsp;lost 4.03% and the Nasdaq Composite&nbsp;<a href="https://www.reuters.com/quote/.IXIC" target="_blank" rel="noreferrer noopener">(.IXIC)</a>&nbsp;dropped 4.73%.



The declines for the S&amp;P 500 and Dow marked their biggest one-day percentage declines since June 11, 2020.



Few analysts are willing to predict the end to selling after a bruising first five months of the year for risk assets given the magnitude of macroeconomic uncertainty, with many anticipating market volatility will be the norm for some time.



The U.S. dollar gained ground as the sell-off in risk assets boosted the safe-haven appeal of the greenback, which was on pace to snap a three-session losing streak, a day after Fed Chair Jerome Powell pledged the U.S. central bank would ratchet up rates as high as needed to combat rising inflation.



The dollar index rose 0.581%, with the euro down 0.8% to $1.0463. The Japanese yen strengthened 0.92% to 128.23 per dollar.



Treasury yields fell, although a steep path for rates remained the prevailing market consensus as the benchmark 10-year note yield hit a one-week high of 3.015% after Powell&#8217;s hawkish comments.



The yield fell 8.1 basis points to 2.890% on Wednesday after a soft U.S. housing starts number.



The German two-year government bond yield shot to 0.444%, its highest since November 2011 after more hawkish central banker comments, and last was up 1.6 basis points at 0.386%. The European Central Bank&#8217;s Klaas Knot said on Tuesday that a 50-basis-point rate hike in July was possible if inflation broadens.



Gold prices were little changed despite the risk-off environment as looming U.S. interest rate hikes and a resurgent dollar dimmed the metal&#8217;s shine.



Spot gold was up 0.1% at $1,816.06 an ounce.



Oil prices dipped in volatile trade, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output.&nbsp;<a href="https://www.reuters.com/markets/europe/oil-prices-climb-hopes-china-demand-recovery-2022-05-18/">read more</a>



U.S. crude settled down 2.5% at $109.59 per barrel and Brent settled at $109.11, down 2.52% on the day.



Reporting by Herbert Lash and Chuck Mikolajczak; additional reporting by Devik Jain in Bengaluru; editing by Jonathan Oatis



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Trading Board Is Showing A Crash In Stok Exchange Market

Stocks pummeled by growth worries, U.S. dollar climbs

KEY POINTS



<ul><li>Goldman Sachs analysts have cut their China GDP forecast to 4% from 4.5% after weak data in April.</li><li>The bank does not expect China will start fully easing Covid controls before the second quarter of 2023.</li><li>On Monday, Citi — which had one of the highest China GDP forecasts — cut its outlook for growth to 4.2% from 5.1%.</li></ul>



BEIJING — Goldman Sachs analysts on Wednesday cut their forecast for China’s GDP to 4% after&nbsp;<a href="https://www.cnbc.com/2022/05/16/china-economy-covid-lockdowns-weigh-on-retail-industrial-production-data.html">data for April showed a slump</a>&nbsp;in growth as Covid-19 controls restricted business activity.



The new forecast is even further below the&nbsp;<a href="https://www.cnbc.com/2022/03/05/china-on-deck-to-reveal-its-2022-gdp-target.html">“around 5.5%”</a>&nbsp;growth target the Chinese government announced for the year in March.



“Given the Q2 Covid-related damage to the economy, we now expect China’s growth to be 4% this year (vs. 4.5% previously),” Hui Shan and a team at Goldman wrote in a report Wednesday. That prediction assumes there will be significant government support, on top of measures to stabilize the property market and control Covid outbreaks.



Since March, mainland China has struggled to contain its worst Covid outbreak in two years. Notably, the metropolis of Shanghai only started this week to begin discussing the resumption of normal activity — with a goal of mid-June.



Among April’s weak data, the Goldman analysts pointed to a plunge in housing starts and sales, half the credit growth that markets expected and&nbsp;<a href="https://www.cnbc.com/2022/05/11/chinas-consumer-prices-climb-as-covid-prompts-food-stockpiling.html">a drop below 1% for the increase in consumer prices, excluding food and energy.</a>



Other data for April released Monday showed an <a href="https://www.cnbc.com/2022/05/16/china-economy-covid-lockdowns-weigh-on-retail-industrial-production-data.html">unexpected drop in industrial production</a> and a worse-than-expected 11.1% decline in retail sales from a year ago. Exports, a major driver of growth, rose <a href="https://www.cnbc.com/2022/05/09/china-economy-april-exports-slow-imports-unchanged-amid-virus-curbs.html">by 3.9% in April</a> from a year earlier, the slowest pace since a 0.18% increase in June 2020, according to official data accessed through Wind Information.



“The weak data highlight the tension between China’s growth target and zero-Covid policy which is at the core of China’s growth outlook,” the Goldman analysts said.



They noted how Chinese leaders have&nbsp;<a href="https://www.cnbc.com/2022/05/12/chinese-official-on-chinas-economy-amid-covid-pandemic.html">emphasized their “dynamic zero-Covid” policy,</a>&nbsp;and how news that China will not host the Asian Cup next summer due to Covid reflects Beijing’s conservative mindset.



“We now expect reopening does not start before 2023Q2 and the process to be more gradual and controlled than previously assumed,” the Goldman analysts said.



“This is why our 2023 GDP growth forecast only increases by a quarter point to 5.3% (vs. 5.0% previously) despite the half a point downward revision to 2022 full-year growth forecast.”



<h2 class="wp-block-heading" id="h-other-banks-cut-forecasts"><a></a>Other banks cut forecasts</h2>



On Monday, Citi — which&nbsp;<a href="https://www.cnbc.com/2022/04/26/investment-banks-slash-china-growth-outlook-one-puts-gdp-below-4percent.html">had one of the highest China GDP forecasts</a>&nbsp;— cut its outlook for growth to 4.2% from 5.1%.



A few days earlier, JPMorgan had reduced its estimate to 4.3% from 4.6%. Morgan Stanley cut its target in late April to 4.2% from 4.6%.

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