<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086032-1657259956720-gettyimages-1241768433-JAPAN_ABE_SHOOTING.jpeg" alt="" class="wp-image-418332" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086032-1657259956720-gettyimages-1241768433-JAPAN_ABE_SHOOTING.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086032-1657259956720-gettyimages-1241768433-JAPAN_ABE_SHOOTING-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086032-1657259956720-gettyimages-1241768433-JAPAN_ABE_SHOOTING-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Police officers at the scene where former Japanese Prime Minister Shinzo Abe was shot during a campaign event in Nara, Japan on July 8, 2022. Abe was unresponsive after the attack, shocking a nation where gun violence is rare. Kosuke Okahara | Bloomberg | Getty Images</figcaption></figure>



Former Japanese leader Shinzo Abe is in critical condition after being shot at a campaign event on Friday, Prime Minister Fumio Kishida said.



Abe, Japan’s longest-serving prime minister, had just begun a speech in the city of Nara when gunfire was heard around 11:30 a.m. local time (10:30 p.m. Thursday ET). Public broadcaster NHK, citing the local fire department, reported that Abe was in a state of cardio and pulmonary arrest, suggesting that his heart had stopped.



It said he had been admitted to Nara Medical University Hospital. Officials said that one person had been apprehended in relation to the shooting.



Speaking from his office in Tokyo, a visibly shaken Kishida said that while the attack was still being investigated, “it was a despicable and barbaric act that took place in the midst of an election, which is the foundation of democracy.”



“I condemn it in the harshest possible terms,” he told a hastily arranged news conference after returning from campaigning in the country’s north.



Elections for the upper house of the Japanese Parliament are Sunday. Abe, 67, who stepped down in 2020, was campaigning for other members of the governing conservative Liberal Democratic Party (LDP) but is not a candidate himself.



The incident sent shockwaves through Japan, where gun violence is extremely rare. Handguns are banned in the country and people must undergo extensive tests, training and background checks to obtain and keep shotguns and air rifles.



Iwao Horii, an LDP member of the upper house representing Nara, was standing next to Abe when the former prime minister was shot. “We heard two loud sounds while he was talking and he fell immediately after that,” said Horii at a news conference. He added that Abe was unresponsive when emergency medics tried to resuscitate him.



Horii said Abe’s appearance at that location had been advertised locally via faxes to the media and loudspeakers on election vans. He said he was not aware of any threats made against Abe or the LDP before the speech.



“This is something that shakes the very foundations of democracy and cannot be forgiven,” he said. “At this point we are all praying for the quick recovery of former Prime Minister Abe.”



The shooting was also condemned by the country’s main opposition party, the center left Constitutional Democrats. “This is an unforgivable act of barbarism, but the first and utmost priority is the condition of former Prime Minister Abe, and I just pray that he survives,” party leader Kenta Izumi told reporters.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086006-1657254246749-gettyimages-1241767805-AFP_32E23V2.jpeg" alt="" class="wp-image-418333" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086006-1657254246749-gettyimages-1241767805-AFP_32E23V2.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086006-1657254246749-gettyimages-1241767805-AFP_32E23V2-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107086006-1657254246749-gettyimages-1241767805-AFP_32E23V2-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Workers stand near the scene where Japan’s former prime minister, Shinzo Abe, was shot outside the Kintetsu Yamato-Saidaiji station square in Nara on July 8, 2022. STR | Jiji Press | AFP | Getty Images</figcaption></figure>



The U.S. ambassador to Japan, Rahm Emanuel, said that he was shocked and saddened by news of the shooting.



“Abe-san has been an outstanding leader of Japan and unwavering ally of the United States,” Emanuel said in a statement Friday. “The U.S. Government and American people are praying for the well-being of Abe-san, his family, and people of Japan.”



Secretary of State Antony Blinken, speaking from Indonesia, where he is attending a G-20 Foreign Ministers’ Meeting, expressed how “deeply saddened and deeply concerned we are by the news coming from Japan, about the attempt on the life of former Prime Minister Abe.”



“Our thoughts, our prayers are with him and his family, with the people of Japan,” Blinken said. “This is a very, very sad moment, and we’re awaiting news from Japan.”



Abe hails from Japan’s political elite and as prime minister had made reviving economic growth through his “Abenomics” policies a key pillar of his time in office.



Though Abe had been praised for amplifying Japan’s profile on the world stage, his party was plagued by scandals and he was accused of mishandling the country’s response to the Covid-19 pandemic.



Abe’s resignation two years ago came amid a worsening of his ulcerative colitis, a chronic bowel condition he’d battled for years.



He made the announcement days after he set a record as Japan’s longest-lasting prime minister, having been in office for almost eight years. He previously served as prime minister from 2006 to 2007.



In a post to his Truth Social platform late Thursday, former President Donald Trump called Abe “a truly great man and leader.”



“He was a true friend of mine and, much more importantly, America,” Trump said. “This is a tremendous blow to the wonderful people of Japan, who loved and admired him so much. We are all praying for Shinzo and his beautiful family!”



Abe was the first foreign leader to meet with Trump after he became president-elect in November 2016.

Japanese Prime Minister Shinzo Abe to resign

Former Japanese PM Shinzo Abe shot at campaign event, in critical condition

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-820x547.jpg" alt="" class="wp-image-418289" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/GettyImages-1404854299-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>BAKU, AZERBAIJAN &#8211; JUNE 24: Russia&#8217;s Foreign Minister Sergei Lavrov speaks during a joint news conference with his Azerbaijani counterpart inJeyhun Baramov following talks on June 24, 2022 in Baku, Azerbaijan. During the talks the ministers discussed issues related to the development of bilateral relations. (Photo by Aziz Karimov/Getty Images)</figcaption></figure>



July 6 (Reuters)&nbsp;&#8211;&nbsp;G20 foreign ministers travel to the resort island of Bali this week for a meeting that will be overshadowed by the war in Ukraine, with Russia&#8217;s attendance creating rifts in the bloc as host Indonesia tries to mediate.



The Group of 20 includes Western countries that have accused Moscow of war crimes in Ukraine and rolled out sanctions, but also countries like China, Indonesia, India and South Africa that have not followed suit.



The gathering will be the first time that foreign ministers from some of the world&#8217;s top economies meet Russian Foreign Minister Sergei Lavrov since Russia invaded Ukraine in February.



Speaking ahead of the G20 meeting that runs from Thursday to Friday, German foreign ministry spokesperson Christian Wagner said it would not be a &#8220;normal summit&#8221; nor &#8220;business as usual&#8221;.



Germany holds the presidency of the Group of Seven industrialised nations and would coordinate in Bali over how to respond to Lavrov in light of the war in Ukraine, he said.



Top officials from Britain, Canada and the United States walked out on Russian representatives during a G20 finance meeting in Washington in April.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2WI15Q&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



U.S. Secretary of State Antony Blinken would be an active participant at the meeting while &#8220;also staying true to another over-riding objective, and that is the fact that it cannot be business as usual with the Russian Federation&#8221;, a U.S. state department spokesperson said.



Blinken will meet Chinese Foreign Minister Wang Yi in Bali, but no meeting is expected with Lavrov.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YM0RQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



As G20 chair this year, Indonesia has been caught at the centre of a geopolitical storm over the war, attempting to head off threats by Western countries to boycott meetings. After the foreign ministers&#8217; meeting, G20 finance ministers are scheduled to meet next week, also in Bali.



Trying&nbsp;to leverage Indonesia&#8217;s neutrality, President Joko Widodo embarked on an ambitious peace-brokering mission last week, visiting Kyiv and Moscow to meet Ukrainian President Volodymyr Zelenskiy and Russian President&nbsp;Vladimir&nbsp;Putin.



The president, who is widely known as Jokowi, has invited Ukraine to the G20 this year, attempted to convince Russia to end a blockade on grain exports that is driving a global food crisis, and offered up Indonesia as a &#8220;diplomatic bridge&#8221; between the nations.



Ukraine&#8217;s ambassador to Indonesia Vasyl Hamianin said his country&#8217;s foreign minister would give a virtual address at the Bali meeting.



<h2 class="wp-block-heading" id="h-plan-to-snub-g20-meetings-rethought">PLAN TO SNUB G20 MEETINGS RETHOUGHT</h2>



Despite early talk of snubbing some G20 meetings, Western leaders ultimately decided that ceding the floor to Russia would be counter-productive, said Max Bergmann, a Russia and Europe expert and a former senior U.S. State Department official.



&#8220;If you don&#8217;t show up, and then the Russians have the floor with some really critical countries like Indonesia, India, and others, then they&#8217;re making their arguments unopposed,&#8221; said Bergmann, who is now at Washington&#8217;s Center for Strategic and International Studies.



Ramin Toloui, U.S. assistant secretary of state for economic and business affairs, said on Tuesday that food and energy would feature prominently at the meeting.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AW1N2XZ015&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;G20 countries should hold Russia accountable and insist that it support ongoing U.N. efforts to reopen the sea lanes for grain delivery,&#8221; he said.



During a trip to Vietnam on Wednesday, Russia&#8217;s Lavrov called on all parties in the world to make efforts to protect international laws as &#8220;the world is evolving in a complicated manner.&#8221;



His comments ahead of his arrival in Bali come as Russia has been accused by Western countries of breaching international law through its invasion of Ukraine, which Moscow calls a &#8220;special operation&#8221;.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YN05S0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The reaction to Lavrov in Bali could also provide an indication of how G20 members might respond if Putin attends November&#8217;s summit meeting of the group in person, which is yet to be confirmed.



The Indonesian president, until recently not normally very active on foreign policy issues, has come to see his handling of the group&#8217;s presidency as a defining moment in his presidency, said Murray Hiebert, a Southeast Asia expert at CSIS.



&#8220;Jokowi desperately hopes to avoid a diplomatic train wreck if Putin shows up in November,&#8221; he said.



(Reporting by Alexander Ratz in Berlin, David Brunnstrom in Washington and Kate Lamb in Sydney; Editing by Ed Davies and Raju Gopalakrishnan)

Russian Foreign Minister Sergey Lavrov Visits His Azerbaijani Counterpart Jeyhun Baramov

Not ‘business as usual’ for G20 foreign ministers meeting in Bali

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/106255443-1574240778568gettyimages-1179906331.jpeg" alt="" class="wp-image-418276" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/106255443-1574240778568gettyimages-1179906331.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/106255443-1574240778568gettyimages-1179906331-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/106255443-1574240778568gettyimages-1179906331-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A euro currency symbol sits on display in the visitor centre at the European Central Bank (ECB) building in Frankfurt, Germany. Alex Kraus | Bloomberg | Getty Images</figcaption></figure>



The euro fell to its lowest level in two decades on Tuesday as fears of a recession in the euro zone ramped up, with gas prices soaring and the Ukraine war showing no signs of abating.



The euro shed around 1.3% for the session to hit $1.029 by mid-afternoon in Europe, having earlier been as low as $1.028.



Euro zone inflation hit a record 8.6% in June, prompting the European Central Bank to give markets advance notice of its intention to hike interest rates for the first time in 11 years at its July meeting.



However, growing fears of a recession may limit the central bank’s capacity to tighten monetary policy. The July Sentix Economic Index on Monday showed investor morale across the 19-country euro zone has plunged to its lowest level since May 2020, pointing toward an “inevitable” recession.



Record-high inflation in Europe has been abetted by skyrocketing gas prices over recent months.



Natural gas prices in Europe on Monday extended their relentless rise, climbing to highs not seen since early March as planned strikes in Norway added to market woes about Russian supply cuts. The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was last seen trading up 7.8% to hit 175.5 euros ($180.8) per megawatt-hour.



All of these factors have converged to hit the euro hard. The currency of the euro zone has lost over 9% of its value against the dollar since the start of the year.



The dollar’s strength continues, meanwhile, as risk-averse investors seek a safe haven, and the U.S. Federal Reserve embarks upon what looks to be an aggressive rate hike regime.



After raising benchmark interest rates by three-quarters of a percentage point in June, Fed Chair Reserve Chair Jerome Powell said the central bank could raise interest rates by a similar magnitude next month.



The euro also fell fractionally against sterling to trade at £0.8595 by mid-afternoon, and dropped by around 1.2% against the Japanese yen, itself near multi-decade lows against a resurgent dollar.



— CNBC’s Sam Meredith contributed to this report

106255443-1574240778568gettyimages-1179906331

Euro slides to 20-year low against the dollar as recession fears build

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679.jpeg" alt="" class="wp-image-418246" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>The G7 has floated the idea of an oil price cap, but experts are doubtful about how effective this would be. Picture Alliance | Picture Alliance | Getty Images</figcaption></figure>



The world’s seven-largest industrialized economies have floated the idea of a price cap on Russian oil to further squeeze the Kremlin’s ability to fund its onslaught in Ukraine and try to protect consumers amid surging energy prices.



The G-7′s pursuit of a price ceiling on Russian oil is not without its challenges, however, with energy analysts highly skeptical about the integrity of the proposal.



For its part, the Kremlin has warned any attempt to impose a price cap on Russian oil will cause more harm than good.



<h2 class="wp-block-heading" id="h-how-the-idea-came-about"><a></a>How the idea came about</h2>



The United States seems to be the biggest supporter of a price cap on Russian oil.



Back in May, U.S. Treasury Secretary Janet Yellen explained the idea to her European counterparts, saying it would work as a tariff or cap on Russian oil and help Europe in the interim period until imposing a full ban.



The EU agreed in late May to impose a gradual embargo on Russian oil until the end of 2022 — after several weeks of tough negotiations among the 27 nations.



The bloc used to receive about 25% of its oil imports from Russia and it represented one of the most important buyers for the Kremlin. Stopping these oil purchases are an attempt to hurt Russia’s economy after the unprovoked invasion of Ukraine, but they are difficult to end overnight given how some EU countries are heavily dependent on Russian fossil fuels.



U.S. President Joe Biden presented the idea of an oil price cap to the rest of the G-7 leaders over the weekend of June 25 and 26 and his counterparts agreed to look at how to do it. The G-7 is comprised of the U.S., Canada, France, Germany, Italy, the U.K. and Japan.



German Chancellor Olaf Scholz said the idea was very ambitious and needed a “lot of work” before becoming reality.



A spokesperson for the European Commission, the executive arm of the EU, said in an email to CNBC Friday: “We share the G7 countries’ concerns about the burden of energy price increases and market instability, and how these aggravate inequalities nationally and internationally.”



“In this context, as tasked by the European Leaders, the Commission will continue our work on ways to curb rising energy prices, including assessing the feasibility of introducing temporary import price caps where appropriate,” the same spokesperson said, adding the discussions are treated as “a matter of urgency.”



<h2 class="wp-block-heading"><a></a>How might a price cap work?</h2>



Energy analysts have questioned exactly how the G-7 can impose a price ceiling for Russian oil, warning that the plan could backfire if key consumers are not involved, and time may be running out to make it workable.



“I’m one of those scratching my head,” Neil Atkinson, an independent oil analyst, told CNBC’s “Squawk Box Europe” on Thursday.



“Something like this could only work if you get all of the key producers and crucially all of the key consumers working together and then finding some way of enforcing whatever plan you come up with,” he added.



“And the reality is that the biggest consumers of Russian oil, or amongst the biggest consumers of Russian oil, are China and India.”







<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083621-1656664592399-gettyimages-1239439340-ROMANIA_PORT.jpeg" alt="" class="wp-image-418247" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083621-1656664592399-gettyimages-1239439340-ROMANIA_PORT.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083621-1656664592399-gettyimages-1239439340-ROMANIA_PORT-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/07/107083621-1656664592399-gettyimages-1239439340-ROMANIA_PORT-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A tanker moored in a gas and oil dock at the Port of Constanta in Romania. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



China and India have “benefitted enormously” from discounted Russian crude, Atkinson said. Russian oil has been selling at a heavy discount of $30 or more when compared to international benchmark Brent crude futures at $110 a barrel — and China and India have been snapping it up.



Atkinson also highlighted a lack of unity over Russia’s invasion of Ukraine given that China and India have failed to explicitly condemn the Kremlin.



“In any event, the Russians won’t just sit there and do nothing. They can play games with supplies of oil and indeed gas … they can mess with the G-7′s head in some respect so I think this plan is really a non-starter,” Atkinson said.



“For me, honestly the mechanism doesn’t work,” Amrita Sen, co-founder and director of research at Energy Aspects, told CNBC’s “Squawk Box Europe” on Friday.



“They haven’t thought it through, they haven’t spoken to India and China … Do we really think they are going to agree to this? And do we really think that Russia will actually accept this and not retaliate? I think this sounds like a very, very good theoretical concept but it is just not going to work in practice.”



Sen said the idea that countries around the world are on the same page as Western policymakers, particularly relating to energy security, is “the biggest misconception right now.” She added, “I think that really needs to go away.”



For Claudio Galimberti, senior vice president at energy research firm Rystad, the most direct mechanism to impose a price cap on Russian oil is via insurance.



“The International Group of Protection &amp; Indemnity Clubs in London covers around 95% of the global oil shipping fleet. Western countries could try to impose a price cap by letting buyers keep that insurance, as long as they agree to pay no more than a certain price cap for the Russian oil on board,” Galimberti said in a note.



“However, there are many obstacles that could derail such a plan,” he added.



Among the most obvious examples, Galimberti said, was the fact that Russia could simply decide not to sell at the prices set by the cap, particularly if the benchmark is very low and close to the cost of production.



President Vladimir Putin has already shown his willingness to withhold natural gas supplies to so-called “unfriendly countries” that have refused to meet his gas-for-rubles payment demands.



China is the “next most likely obstacle,” Galimberti said, since Beijing may decide for geopolitical reasons “to lend support to Russia by accepting inferior Russian insurance and therefore facilitate a loophole for the price cap.”



“Still, a price cap is surely a measure worth considering at this stage, albeit time is running out, as the EU is determined to ban imports of Russian oil by the end of the year,” Galimberti said.



<h2 class="wp-block-heading"><a></a>How has Russia responded?</h2>



Russia has warned any attempt to limit the price of Russian oil could wreak havoc in the energy market and push commodity prices even higher.



Deputy Prime Minister Alexander Novak on Wednesday described the move by Western leaders to consider imposing a price cap as “another attempt to intervene into the market mechanisms which may only lead to market’s disbalance … which would lead to [a] price increase,” according to Reuters.



Novak said he was confident Russia would restore oil output to pre-sanction levels in the coming months, largely because a significant amount of Russian crude had been re-routed to Asian markets.

107083058-1656592302584-gettyimages-1241584476-20090101220628-99-829679

The G-7 is considering a price cap on Russian oil. But energy analysts think it’s impossible

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="529" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-820x529.jpg" alt="" class="wp-image-418162" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-820x529.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-300x193.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-140x90.jpg 140w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-768x495.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-1536x990.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/3E6NE363LNJ5HHZTB4NIPAEJRM-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FILE PHOTO: A view shows polished colorless and yellow diamonds produced at &#8220;Diamonds of ALROSA&#8221; factory in Moscow, Russia April 30, 2021. Picture taken April 30, 2021. REUTERS/Tatyana Makeyeva/File Photo</figcaption></figure>



JOHANNESBURG, June 29 (Reuters)&nbsp;&#8211;&nbsp;Russia condemned what it called a push to &#8220;politicise&#8221; its diamonds over the conflict in Ukraine and said attempts to question its compliance with the international diamond certification scheme were &#8220;totally unfounded&#8221; and &#8220;far-fetched&#8221;.



The Kimberley Process, a coalition of governments, the diamond industry and civil society responsible for certifying diamonds as conflict-free, is split over a push by Ukraine and others to expand its definition of conflict diamonds to include those funding aggression by states.



The KP Civil Society Coalition (CSC) and some member states sought to discuss whether Russia&#8217;s diamonds were helping to fund the war in Ukraine during a KP meeting in Botswana last week.<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YB1CR&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;The Russian Federation absolutely condemns the orchestrated attempts of CSC, backed by absolute minority of some Western participants, to politicize the work of the Kimberley Process by deliberately distorting or even openly replacing its basic principles,&#8221; Russia&#8217;s finance ministry said in an emailed statement. It did not specify which principles it felt were being distorted or replaced.



The CSC did not immediately respond to an emailed request for comment.



The KP defines conflict diamonds as those that fund rebel movements seeking to overthrow legitimate governments, a narrow definition that many have sought to widen since the KP was founded in 2003.



The revision of that definition should be part of a review of the KP certification scheme due in 2023, the finance ministry said, adding that Russia, which was KP chair last year, has &#8220;championed&#8221; work on revising the definition for the past five years.



&#8220;We therefore call on our opponents to refrain from further speculative accusations, abstain from political demagoguery and concentrate on the substantive work of the KP,&#8221; the finance ministry said.



The KP makes all decisions by consensus and the rift over Russia and Ukraine could jeopardise its effectiveness.



(Reporting by Helen Reid; Editing by Emelia Sithole-Matarise)

FILE PHOTO: A view shows polished colorless and yellow diamonds produced at “Diamonds of ALROSA” factory in Moscow

Russia hits back at attempts to ‘politicise’ its diamonds

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-820x547.jpg" alt="" class="wp-image-418109" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/HQ4CYEMKPJLQJJPLAFWIAQ2CGA-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>An Iranian Army paratrooper flies with the Iranian flag during a military exercise dubbed &#8216;Zulfiqar 1400&#8217;, in the coastal area of the Gulf of Oman, Iran, in this picture obtained on November 7, 2021. Iranian Army/WANA (West Asia News Agency)/Handout via REUTERS ATTENTION EDITORS &#8211; THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY</figcaption></figure>



DUBAI, June 27 (Reuters)&nbsp;&#8211;&nbsp;Iran has submitted an application to become a member in the group of emerging economies known as the BRICS, an Iranian official said on Monday.



Iran&#8217;s membership in the BRICS group, which includes Brazil, Russia, India, China and South Africa, &#8220;would result in added values for both sides,&#8221; Iran&#8217;s Foreign Ministry spokesperson said.



Russian Foreign Ministry spokeswoman Maria Zakharova said separately that Argentina had also applied to join the group. Argentinian officials could not be reached for immediate comment.



Argentina&#8217;s President Alberto Fernandez, currently in Europe, has in recent days reiterated his desire for Argentina to join BRICS.



&#8220;While the White House was thinking about what else to turn off in the world, ban or spoil, Argentina and Iran applied to join the BRICS,&#8221; Zakharova wrote on the Telegram messaging app.



Russia has long been pushing to forge closer ties with Asia, South America and the Middle East, but it has intensified its efforts recently to weather sanctions imposed by Europe, the United States and other countries over its invasion on Ukraine.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AR4N2XO03B&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



On Monday, the United States and other Western nations pledged unwavering support for Ukraine after 28 civilians were killed in several Russian attacks, including a missile strike on a crowded shopping centre.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YE018&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Russia denies targeting civilians in what it calls is a &#8220;special military operation&#8221; to disarm Ukraine and protect it from fascists. Kyiv and its allies in the West say the war is an unprovoked act of aggression.



(Reporting by Parisa Hafezi in Dubai and Lidia Kelly in Melbourne; additional reporting by Adam Jourdan in Buenos Aires; editing by Richard Pullin)

Iranian Army exercise in the coastal area of the Gulf of Oman

Iran applies to join BRICS group of emerging countries

The Group of 7 has announced a new infrastructure funding program that could rival China’s Belt and Road Initiative. One expert says the G-7′s plan offers hope to developing countries but it remains to be seen whether it can match the BRI.



On Sunday, the U.S. and the other members of the G-7 including Canada, Germany and Japan formally launched the Partnership for Global Infrastructure and Investment which aims to raise about $600 billion for global infrastructure projects in low- and middle-income countries in the next five years.



“It does promise something the BRI perhaps did not have at the beginning,” said Choi Shing Kwok, CEO of Singapore-based research institute ISEAS-Yusof Ishak Institute. “It promises hard and soft infrastructure, it promises a more holistic approach.”



The BRI is China’s ambitious program to build physical and digital infrastructure connecting dozens of countries spanning from Asia to Europe and the Middle East. It is the centerpiece of Chinese President Xi Jinping’s foreign policy.



“It is questionable whether at this stage the scale [of the G-7 initiative] can match that of the BRI but that is something to be seen later,” Choi told CNBC’s “Street Signs Asia” on Monday. 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107080814-1656263971911-g7-820x461.jpg" alt="" class="wp-image-418105" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107080814-1656263971911-g7-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107080814-1656263971911-g7-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107080814-1656263971911-g7-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107080814-1656263971911-g7-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107080814-1656263971911-g7-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107080814-1656263971911-g7.jpg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>U.S. President Joe Biden, center, attends a working lunch with other G7 leaders to discuss shaping the global economy. The Group of Seven leading economic powers are meeting in Germany for their three-day annual gathering. Kenny Holston | The New York Times via AP, Pool</figcaption></figure>



Choi acknowledged that it might not be entirely fair to compare the two projects especially since the BRI has had a 10-year headway and there were scant details in the G-7′s partnership proposal.



In the past decade or so, China has signed more than 170 BRI cooperation agreements with 125 countries and 29 international organizations across Asia and Europe, as well as Africa, Latin America and the South Pacific, Chinese official data showed. 



Nearly $800 billion in investments have been undertaken within the BRI, surpassing the investments currently&nbsp;pledged by the G-7. Trillions more dollars were expected to be invested through China’s infrastructure project into the network comprising six development corridors.&nbsp;



The G-7′s infrastructure project “is better than the initial approach for the BRI, which was done in a rather decentralized, I’d say piecemeal, approach,” Choi said.&nbsp;



The BRI “didn’t have the rigor in ensuring all the projects are economically sound and environmentally friendly,” he said, adding that the G-7′s plan appears to be more climate friendly and designed to ensure receiving countries benefit from the investments.



“But having said that, China has revamped its approach to the BRI in recent years and more of the money is now flowing to projects that are more sound.”



It has taken Western economies more than 10 years to come up with a program that could compete with the BRI, Choi said, adding it was initially dismissed as “a Chinese project.”



Still, the U.S. and the other members appear to be taking it seriously now, as seen with the latest infrastructure partnership, he said.&nbsp;



“Its scale is significant. It’s not quite the scale of the BRI but they are trying to match it so that it is not far off [from the BRI],” Choi said. 



When asked if the partnership is nothing more than “geopolitical battle lines being drawn” by the U.S. against China, Choi says the way the G-7 plan is delivered will signal its intentions.



“There are certain motivations for launching the partnership. It does offer alternatives to the BRI in a very deliberate way,” Choi said.&nbsp;



“In the end, if the implementation is done in such a way that it does not force countries to factor in&nbsp; geopolitics — to go with partnership or BRI — then it will be acceptable.”



<h2 class="wp-block-heading" id="h-who-could-benefit"><a></a>Who could benefit?</h2>



With major economies now stepping up their infrastructure support for developing countries, places like India, Brazil and Indonesia are likely to herald more economic growth, Riedel Research Group founder David Riedel told CNBC’s “Squawk Box” on Monday.&nbsp;



He said it did not matter who was the one investing, as long as more efforts were being expended but pointed out that outcomes would not be apparent overnight.&nbsp;



“It doesn’t mean much near term but longer term, investors need to appreciate the importance the investments made into infrastructure no matter who’s making it,” Riedel said. 



According to the OECD, Asia alone needs around $26 trillion to pay for infrastructure building, including green projects until 2030. 



If more money were offered to developing countries, places like Brazil, India and Indonesia would stand to gain, Reidel added.



Brazil has a large population and big economy and could do with more infrastructure to boost growth while Indonesia, being an energy exporter, would grow if more money was being invested in its energy project, he said.

107080814-1656263971911-g7

G-7′s infrastructure funding plan offers an alternative to China’s BRI in a ‘deliberate way’

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="550" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1234985015-820x550.jpg" alt="" class="wp-image-418082" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1234985015-820x550.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1234985015-300x201.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1234985015-134x90.jpg 134w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1234985015-768x515.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1234985015-1536x1030.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1234985015-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>UKRAINE &#8211; 2021/08/31: In this photo illustration a Prosus logo is seen on a smartphone and a pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)</figcaption></figure>



JOHANNESBURG/AMSTERDAM June 27 (Reuters)&nbsp;&#8211;&nbsp;Dutch technology investor Prosus NV&nbsp;PRX.AS,&nbsp;PRXJn.J&nbsp;on Monday announced it will gradually sell down its massive stake in Tencent&nbsp;0700.HK, reversing a pledge to retain the holding for a couple of years and knocking shares in the Chinese tech giant.



Prosus will use proceeds to repurchase shares, a move aimed at closing a gap between the market value of Prosus and parent Naspers and the market value of the 28.9% stake in Tencent they own, which is currently worth about $136 billion.



Prosus itself is currently worth less at some 109.8 billion euros ($116.2 billion).



&#8220;This will efficiently unlock immediate value for shareholders because we&#8217;re selling (Tencent) shares at full value and we&#8217;re buying back our stock at a considerable discount,&#8221; CFO Basil Sgourdos said.



Prosus shares, which are down 27% in the year to date, jumped 10% on the news to 58.36 euros in Amsterdam as of 0750 GMT.



Shares in Naspers in Johannesburg were up 13% while shares in Tencent were down 1.5% in Hong Kong.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YE08T&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The share sale plan came as a surprise as Prosus had agreed not sell further Tencent shares after selling a 2% stake worth $15 billion in 2021.



Asked about whether violating the lock-up pledge was a problem, Sgourdos said no.



&#8220;It&#8217;s something we had to consider in arriving at this decision. (But) we think that this is the right thing for our shareholders. And, you know, we have Tencent support in this decision.&#8221;



Tencent said it expects the impact of the share sale to be &#8220;limited&#8221;.



&#8220;We support our long-term shareholders on their initiative to increase their net asset value per share through a share repurchase program,&#8221; it said.



Prosus and Naspers shares have fallen sharply over the past year amid a&nbsp;government crackdown on Chinese tech companies.



But Sgourdos said the company is still committed to China.



&#8220;We still have a very strong belief in Tencent and the Chinese economy and its ability to grow,&#8221; he said.



Investors say the complicated cross-holding structure between Prosus and Naspers has also been a factor in depressing their share price.



In addition to Tencent, Prosus houses all of&nbsp;Naspers&#8217; overseas investments in online classifieds, food delivery, fintech and education software.



Both the companies reported a fall in trading profit for the full year ending March 31, as their portfolio of investments boosted sales while losses increased.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N2YE09F&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Revenue and profit earned from Tencent dwarf the contributions from Prosus/Naspers&#8217; other businesses.



The current discount of Prosus to the value of assets it owns is 54% and Naspers is 65%, according to company-provided figures based on analyst reports and market valuations of their stakes in listed companies.



($1 = 0.9446 euros)



(Reporting by Promit Mukherjee in Johannesburg and Toby Sterling in Amsterdam, Donny Kwok and Josh Ye in Hong Kong, Miyoung Kim in Singapore.Editing by Shri Navaratnam and Kim Coghill)

In this photo illustration a Prosus logo is seen on a

Tencent stock falls as Prosus/Naspers to sell shares to fund buybacks

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-820x547.jpeg" alt="" class="wp-image-416636" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-1536x1025.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Powell says taming inflation ‘absolutely essential,’ and a 50 basis point hike possible for May</figcaption></figure>



Wall Street and the Federal Reserve appeared to enter a new reality this week, and the result for investors was big losses with no obvious end point in sight.



The S&amp;P 500 posted its 10th down week in the last 11, and is now well into a bear market. On Thursday, all 11 of its sectors closed more than 10% below their recent highs. The Dow Jones Industrial Average fell below 30,000 for the first time since January 2021 this past week.



Unlike recent drawdowns for stocks, however, the central bank will not be putting a bottom in the market. Instead, the Fed raised interest rates by three-quarters of a percentage point on Wednesday — its biggest since 1994 — and signaled continued tightening ahead. Chair Jerome Powell will testify before Congress next week and is expected to hold firm on his plan for a more aggressive Fed until inflation is brought to heel.



Bank of America equity strategist Ajay Singh Kapur said in a note to clients on Friday that it is time for investors to stop fighting the Fed and give up the buy-the-dip mentality.



“In a bear market, heroism is punished. Valor is unnecessary, and cowardice is called for in portfolio construction — that is the way to preserve capital and live to fight another day, waiting for the next central bank panic, and better valuations and a new earnings upcycle,” Kapur wrote.



Tech stocks, which are sensitive to interest rates, have been hit particularly hard, as have cyclical plays such as airlines and cruise lines.



But the dramatic declines have not been limited to stocks. Bitcoin dropped more than 30% in a week amid reports about blowups of crypto-focused trading firms. Treasury yields, which move opposite of bond prices, have spiked.



Markets briefly rallied on Wednesday afternoon after the Fed’s announcement, but that optimism was quickly dashed and the gains reversed on Thursday. Many strategists are warning that markets and sentiment could have further to fall, pointing to Wall Street earnings estimates that curiously still show solid growth in the coming year.



“These people need to fight inflation as fast as possible and as hard as possible.&nbsp;And the market has consistently been behind the curve on trying to understand how aggressive this Fed was going to be,” said Andrew Smith, chief investment strategist at Delos Capital Advisors.



<h2 class="wp-block-heading" id="h-recession-ahead"><a></a>Recession ahead?</h2>



The impact of the Fed’s rate hikes on the market has been magnified by deteriorating economic data, as investors and strategists appear to be losing confidence in the central bank’s ability to achieve a soft landing.



The housing market appears to be cooling rapidly, with housing starts and mortgage applications plummeting. Consumer sentiment is plumbing record lows. Jobless claims are beginning to trend higher as reports of layoffs at tech firms grow. And all oil prices show no signs of falling back below $100 per barrel as the summer travel season kicks off.



In a note to clients on Friday, Bank of America global economist Ethan Harris described the U.S. economy as “one revision away from recession.”



“Our worst fears around the Fed have been confirmed: they fell way behind the curve and are now playing a dangerous game of catch up. We look for GDP growth to slow to almost zero, inflation to settle at around 3% and the Fed to hike rates above 4%,” Harris wrote.



Even among more optimistic economists, the outlook calls for a rather bumpy landing. JPMorgan’s Michael Feroli said in a note Friday that he expected Powell to be “largely successful” in balancing fighting inflation with economic growth, but a recession is a distinct possibility.



“This desired soft landing is not guaranteed, and Fed chair Powell himself has noted that achieving this goal may not be entirely straightforward. And with a tight labor market and the economy dealing with the shocks of tighter financial conditions and higher food and energy prices, recession risks are notable as we think about the next few years,” Feroli wrote. “Our models point to 63% chance of recession over the next two years and 81% odds that a recession starts over the next three.”



<h2 class="wp-block-heading" id="h-coming-up"><a></a>Coming up</h2>



Powell will be in the hot seat again next week, as he returns to Capitol Hill to testify before both houses of Congress, and he is unlikely to soften his stance over the weekend.



The Fed Chair said on Wednesday that he and his committee members were “absolutely determined” to keep inflation expectations from rising. The central bank said in a report to Congress on Friday ahead of the hearings that its commitment to price stability is “unconditional.”



Inflation has risen to a top political issue, as well as an economic one, and the Fed’s raised forecast for unemployment could also come under scrutiny from lawmakers.&nbsp;



“As they’re going to 2.5%, 3.5% [Fed funds rate], if the economy is slowing toward a recession, I don’t think they’re going to stand on the throat of the economy to get inflation to go down,” said Robert Tipp,&nbsp;chief investment strategist for PGIM Fixed Income. ”&#8230;Otherwise, in order to get inflation down from 3.5% to 2%, you’re going to have to lose your job. That’s going to be the message: We’re going to have to get some job losses and recession. And I don’t think that trade-off is going to be worth it for them.”



On Friday, investors will get an updated consumer sentiment reading from the University of Michigan. That measure has now taken on increased significance after Powell pointed to it this week as one of the reasons the Fed decided to raise its rate hike this month.



The survey’s preliminary reading for June showed a record low for sentiment, and confirmation of that number — or even further deterioration — would likely serve as further proof that the Fed will not waver in the coming months. The inflation expectations part of the survey, which rose in the preliminary reading, will be watched closely.



Outside of those events, next week is relatively light for economic events, with U.S. stock markets closed on Monday for Juneteenth. Investors will be looking for insight into the U.S. economy in earnings reports from a few bellwether stocks, such as Lennar on Tuesday and FedEx on Thursday.

106999520-16419153682022-01-11t153007z_1471999278_rc23xr9k3c5b_rtrmadp_0_usa-fed-senate-powell

Look for more selling pressure next week as investors learn the hard way not to fight the Fed

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="531" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106899017-16239532812021-06-17t180407z_2120766641_rc2i2o9sh2p8_rtrmadp_0_health-coronavirus-usa-vaccines-820x531.jpeg" alt="" class="wp-image-417920" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106899017-16239532812021-06-17t180407z_2120766641_rc2i2o9sh2p8_rtrmadp_0_health-coronavirus-usa-vaccines-820x531.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106899017-16239532812021-06-17t180407z_2120766641_rc2i2o9sh2p8_rtrmadp_0_health-coronavirus-usa-vaccines-300x194.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106899017-16239532812021-06-17t180407z_2120766641_rc2i2o9sh2p8_rtrmadp_0_health-coronavirus-usa-vaccines-139x90.jpeg 139w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106899017-16239532812021-06-17t180407z_2120766641_rc2i2o9sh2p8_rtrmadp_0_health-coronavirus-usa-vaccines-768x497.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106899017-16239532812021-06-17t180407z_2120766641_rc2i2o9sh2p8_rtrmadp_0_health-coronavirus-usa-vaccines-1536x994.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106899017-16239532812021-06-17t180407z_2120766641_rc2i2o9sh2p8_rtrmadp_0_health-coronavirus-usa-vaccines-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Vials with Pfizer-BioNTech and Moderna coronavirus disease (COVID-19) vaccine labels are seen in this illustration picture taken March 19, 2021. Dado Ruvic | Reuters</figcaption></figure>



The Food and Drug Administration on Friday authorized&nbsp;<a href="https://www.cnbc.com/quotes/MRNA" target="_blank" rel="noreferrer noopener">Moderna</a>’s and&nbsp;<a href="https://www.cnbc.com/quotes/PFE" target="_blank" rel="noreferrer noopener">Pfizer</a>’s Covid-19 shots for children as young as 6 months old, which makes nearly every person in the U.S. now eligible for vaccination.



The FDA decision comes after its committee of independent vaccine experts v<a href="https://www.cnbc.com/2022/06/15/covid-shots-for-kids-under-5-move-closer-to-fda-authorization-after-committee-backs-shots.html">oted unanimously to recommend the shots</a>&nbsp;after weighing their safety and effectiveness during an all-day meeting Wednesday that was open to the public.



The FDA authorized Pfizer’s three-dose vaccine for children 6 months to 4-years-old, and Moderna’s two-dose vaccine for children 6 months to 5-years-old. Children under age 5 were the only people left in the U.S. not eligible for vaccination. Many parents have been waiting months for the FDA to authorize the vaccines for their kids.



The FDA on Friday also authorized&nbsp;<a href="https://www.cnbc.com/2022/06/14/fda-committee-recommends-moderna-covid-vaccine-for-kids-age-6-to-17.html">Moderna’s vaccines for kindergarteners through high schoolers</a>. Previously, Pfizer’s vaccine was the only Covid shot available for this age group.



However, there is still one more step left before vaccinations of children under age 5 can begin. The Centers for Disease Control and Prevention’s committee will meet on Saturday to vote on guidelines for pharmacies and doctors’ offices. CDC Director Dr. Rochelle Walensky then has to sign off on those guidelines before kids can start receiving the shots.



The White House expects vaccinations to begin as soon as Tuesday. Appointments might be limited initially but every parent who wants to get their child vaccinated should be able to do so within weeks, according to Dr. Ashish Jha, who oversees the Biden administration’s&nbsp;<a href="https://www.cnbc.com/coronavirus/">Covid</a>&nbsp;response.



The federal government has made 10 million Pfizer and Moderna doses available to state and local authorities.



Dr. Arnold Monto, acting chair of the FDA committee, said it took longer for the agency to authorize the shots for infants through preschoolers than for other ages because they are a vulnerable group that requires special care to make sure the shots were safe and effective.



Pfizer’s and Moderna’s vaccines for infants through preschoolers differ in the number of shots they use, the dosage level and the eligibility age to receive them. Pfizer’s vaccine also appeared more effective than Moderna’s shots with children under 5, though the data is preliminary.



Pfizer’s vaccine is administered in three doses for children 6 months to 4 years old. The shots are dosed at 3 micrograms, one-tenth the level of what adults receive. Three shots were about 75% effective at preventing infection from omicron in 6-month- to 2-year-olds and 82% effective in 2- to 4-year-olds.



However, it is crucial that parents who opt for Pfizer make sure their kids get the third shot to have protection against the virus. Two doses were only about 14% effective at preventing infection for kids under age 2, and 33% effective for those ages 2 to 4.



Moderna’s vaccine is administered in two doses for children 6 months to 5 years old. The shots are dosed at 25 micrograms, one-fourth the level that adults receive.



Moderna’s vaccine was about 51% effective at preventing infection from omicron for kids 6 months to 2 years old, and about 37% effective for kids ages 2 to 5 years old. However, the company expects the vaccine to provide strong protection against severe illness because the kids had higher antibody levels than adults who received two doses.



The most common side effects from the vaccines were pain at the injection site, irritability and crying, loss of appetite and sleepiness, according to the FDA. Very few children who received either shot developed a fever higher than 102 degrees Fahrenheit, and there were no cases of myocarditis, a type of heart inflammation, in Pfizer’s or Moderna’s trials.

106899017-16239532812021-06-17t180407z_2120766641_rc2i2o9sh2p8_rtrmadp_0_health-coronavirus-usa-vaccines

FDA authorizes Pfizer and Moderna’s Covid vaccines for children as young as 6 months

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106882214-16208517468072-SMWB-OB-Photo-210512-PRESS-24-jpg-820x547.jpg" alt="" class="wp-image-417783" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106882214-16208517468072-SMWB-OB-Photo-210512-PRESS-24-jpg-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106882214-16208517468072-SMWB-OB-Photo-210512-PRESS-24-jpg-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106882214-16208517468072-SMWB-OB-Photo-210512-PRESS-24-jpg-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106882214-16208517468072-SMWB-OB-Photo-210512-PRESS-24-jpg-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106882214-16208517468072-SMWB-OB-Photo-210512-PRESS-24-jpg-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/106882214-16208517468072-SMWB-OB-Photo-210512-PRESS-24-jpg-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Photo: via CNBC</figcaption></figure>



LONDON — Global stock markets are falling sharply after May’s U.S. inflation print reignited fears that central banks will be forced into aggressive monetary policy tightening.



Friday’s highly-anticipated consumer price index report came in hotter than expected at 8.6% annually, resurfacing market concerns that action from the Federal Reserve and other central banks could risk tipping the economy into recession.



Major averages in the U.S. closed out their biggest weekly declines since January on Friday, and futures point to further losses on Wall Street when the opening bell sounds on Monday.



Shares in Asia-Pacific plunged on Monday, with Hong Kong’s Hang Seng index, Japan’s Nikkei 225 and South Korea’s Kospi all falling more than 3%. European stocks also tumbled in early trade, with the pan-European Stoxx 600 shedding 2% as a sea of red swept through global risk assets.



Meanwhile, the U.S. 2-year Treasury rate hit its highest level since 2007 on Monday morning and edged closer to an inversion with the benchmark 10-year rate – seen by many as a sign of an impending recession.



<h3 class="wp-block-heading" id="h-punch-in-the-gut">‘Punch in the gut’</h3>



Central to the adverse market reaction to Friday’s CPI reading is the fear that inflation expectations have broadened and become entrenched, beyond the well-documented ephemeral drivers such as supply chain bottlenecks and energy shocks.



“I do think that the probability of falling into a bear market and indeed a recession has undeniably increased as a result of Friday’s punch in the gut, in a way,” Fahad Kamal, chief investment officer at Kleinwort Hambros, told CNBC on Monday.



Kamal added that there was “very, very little good” in Friday’s inflation report, which he said indicated that inflation has not peaked and has instead broadened throughout the economy.



“It’s talked about less in the sex and violence of oil and commodity prices and other things, but actually, rent is very sticky and it’s a huge part of the index. There seems to be upward momentum there as well, implying that inflation is going to be with us higher and longer than we expected even last week,” he said.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2021/the-fed-is-in-early-stages-of-a-campaign-to-prepare-markets-for-tapering-its-asset-purchases/">The Fed is in early stages of a campaign to prepare markets for tapering its asset purchases</a></h3>



Richard Kelly, head of global strategy at TD Securities, told CNBC Monday that both the bond and stock markets were now signalling that a recession is coming down the pike, most probably in the fourth quarter of 2022 and first quarter of 2023.



“Overall, if you look at equity markets, they’re telling you the ISM (U.S. economic activity index) probably falls to 50 or sub-50 over the next two to three months, and in part this is what the Fed and central banks have to do to get inflation back under control,” Kelly said.



The 50 mark separates expansion from contraction in a purchasing managers’ index reading, a reliable gauge of economic activity.



“While (the Fed) can’t sit there and say their job is to end job creation for the moment, that is basically what they need to do if they are going to get inflation back under control now,” Kelly added.



<h2 class="wp-block-heading"><a></a>All eyes on the central banks</h2>



The coming week will be pivotal in the battle against soaring inflation for global central banks and markets.



Federal Reserve officials will meet on Tuesday and Wednesday to discuss their next monetary policy move. The Federal Open Market Committee is widely expected to announce at least a 50-basis-point hike on Wednesday, having already raised rates twice this year, though market bets for a 75 basis point hike have risen in light of Friday’s CPI figure.



The Bank of England’s Monetary Policy Committee will announce its latest interest rate decision on Thursday, while the Bank of Japan, Swiss National Bank and Brazil’s BCB also meet this week.



Investors will also be digesting a slew of economic activity data, including Chinese industrial production and retail sales, U.K. industrial production, employment and retail sales, and U.S. producer price inflation, retail sales and industrial production.



U.K. GDP shrank by 0.3% month-on-month in April, official figures showed Monday, falling short of economist expectations for a 0.1% expansion and furthering fears of an economic slowdown ahead of the Bank of England’s Thursday decision.



“In broad terms, the run of data will be combed for recessionary signals, with the added irony that any signs of activity strength are likely to be a case of ‘good news’ being bad (i.e. putting further upward pressure on rate expectations), while the pressure on central banks is to retain some semblance of control over rate trajectory narratives, despite having been proved hopelessly wrong on inflation,” said Marc Ostwald, chief economist and global strategist at ADM Investor Services International.

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Global markets are tanking ahead of a huge week for central banks

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-820x461.jpeg" alt="" class="wp-image-417738" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107011988-1644249906080-gettyimages-1368409609-tl1_1909_f9481bd2-d808-4b33-9365-aa2f4778ed3c.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>The European Central Bank faces a tough balancing act, with inflation running at record highs while the war in Ukraine casts a shadow over the growth outlook. Thomas Lohnes | Getty Images News | Getty Images</figcaption></figure>



The European Central Bank on Thursday confirmed its intention to hike interest rates at its policy meeting next month and downgraded its growth forecasts.



Following its latest monetary policy meeting, the Governing Council announced that it intends to raise its key interest rates by 25 basis points at its July meeting.



The ECB expects a further hike at the September meeting, but said the scale of that increment would depend on the evolving trajectory of the medium-term inflation outlook.



For now, the interest rates on the main refinancing operations, marginal lending facility and deposit facility remain unchanged at 0.00%, 0.25% and -0.50% respectively.



“Beyond September, based on its current assessment, the Governing Council anticipates that a gradual but sustained path of further increases in interest rates will be appropriate,” the ECB said in a statement on Thursday.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/european-central-bank-poised-to-signal-july-rate-hike-as-inflation-jumps-to-fresh-record-high/">European Central Bank poised to signal July rate hike as inflation jumps to fresh record high</a></h3>



“In line with the Governing Council’s commitment to its 2% medium-term target, the pace at which the Governing Council adjusts its monetary policy will depend on the incoming data and how it assesses inflation to develop in the medium term.”



Annual consumer price inflation across the 19-member euro area hit a fresh record high of 8.1% in May, but the ECB in its previous guidance indicated that a first rate hike would only come following the formal end of its net asset purchases on July 1.



Markets had been eagerly awaiting the meeting in Amsterdam on Thursday, the Governing Council’s first outside of Frankfurt since the onset of the coronavirus pandemic, for signs of how aggressive the shift in interest rates will have to be in the coming months.



Policymakers face the challenge of reining in inflation without compounding the economic slowdown resulting from the war in Ukraine and the associated sanctions and embargoes imposed between the European Union and Russia, previously a key source of energy imports for the bloc.



Economists have been torn on whether to expect hikes of 25 basis points or 50 basis points at the July and September meetings, with the ECB broadly expected to climb out of negative rate territory by the end of September from its current historic low of -0.5%.



<h3 class="wp-block-heading" id="h-slowing-growth-higher-inflation">Slowing growth, higher inflation</h3>



The ECB also downgraded its growth forecasts and upwardly revised its inflation projections. Annual inflation is now expected to hit 6.8% in 2022, declining to 3.5% in 2023 and 2.1% in 2024. This marks a substantial increase from its March projections of 5.1% in 2022, 2.1% in 2023 and 1.9% in 2024.



Growth forecasts were revised down significantly to 2.8% in 2022 and 2.1% in 2023, and revised up slightly to 2.1% in 2024. This compares to projections at the ECB’s March meeting of 3.7% in 2022, 2.8% in 2023 and 1.6% in 2024.



Randall Kroszner, professor of economics at the University of Chicago and former governor of the Federal Reserve System, told CNBC ahead of Thursday’s meeting that it was “very important” that the ECB began to move on interest rates.



The U.S. Federal Reserve began hiking rates in March and implemented a 50 basis point hike in May, its largest in 22 years, with FOMC meeting minutes pointing to further aggressive hikes ahead. The Bank of England has hiked rates at four consecutive meetings to take the base interest rate to a 13-year high.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2021/the-fed-is-in-early-stages-of-a-campaign-to-prepare-markets-for-tapering-its-asset-purchases/">The Fed is in early stages of a campaign to prepare markets for tapering its asset purchases</a></h3>



“Inflation is very high, it has the potential to become entrenched unless [ECB policymakers] move, and they move aggressively and make it clear that they are going to be moving further,” Kroszner told CNBC’s “Squawk Box Europe” on Thursday.



“They run the risk of inflation becoming entrenched, inflation expectations becoming unanchored, and having to raise rates much higher than they otherwise would have to.”



However, Kroszner expressed empathy with the difficult position in which the Governing Council finds itself, given Europe’s proximity to the war in Ukraine, interdependence with Russia and therefore state of economic peril.



“The concern that they have is that there are so many negative shocks coming from the war, sanctions, uncertainty, that the economy is going to slow down even without raising rates, so the inflationary pressures are going to come off,” he said.



“But there is sufficient inflationary pressure and sufficient risk of inflation expectations becoming unanchored, that they have really got to get moving.”

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European Central Bank confirms July rate hike plans, raises inflation projections significantly

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-820x461.jpeg" alt="" class="wp-image-417726" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/107072159-1654612804938-gettyimages-1240891252-DAVOS_WEF_2022.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Christine Lagarde, president of the European Central Bank, seen during a panel session at the World Economic Forum in Davos, Switzerland, on Wednesday, May 25, 2022. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



The European Central Bank is expected to confirm its intention to raise interest rates next month, as policymakers meet in Amsterdam Thursday for their first policy meeting outside of Frankfurt since the onset of the coronavirus pandemic.



While inflation for the 19-member euro area hit another record high in May, a rate hike would only come in July as the ECB first needs to formally end its net asset purchases, according to its forward guidance.



The key question is how aggressive the shift will be over the coming months — some analysts have moved their estimates for a larger hike in September at the latest.



“A handful of Governing Council members are already open to a 50bp hike,” said Mark Wall, a chief economist with Deutsche Bank, in a research note.



“We believe the ECB is continuing to underestimate inflation and we expect support for a 50bp hike will increase as the summer progresses.”



The ECB will also publish new staff projections for growth and inflation this week — and market participants are likely to closely monitor the 2024 inflation print as this constitutes the ECB’s medium-term price target.



The ECB is also expected to downgrade its growth forecasts and upwardly revise its inflation projections, with the 2024 inflation number probably hitting 2%, the medium-term target of the ECB.



<h3 class="wp-block-heading" id="h-read-more-the-fed-is-in-early-stages-of-a-campaign-to-prepare-markets-for-tapering-its-asset-purchases">Read more: <a href="https://www.cnbcafrica.com/2021/the-fed-is-in-early-stages-of-a-campaign-to-prepare-markets-for-tapering-its-asset-purchases/">The Fed is in early stages of a campaign to prepare markets for tapering its asset purchases</a></h3>



Persistently high inflation is the top concern for policymakers on the ECB’s Governing Council.



“Inflation is not only too high, but also too broad,” Francois Villeroy de Galhau, France’s central bank governor, said last week at a conference in Paris. “This requires a normalization of monetary policy — I say normalization and not tightening.”



While inflation, and the fight against it, is of course the core mandate of the ECB, the topic of fragmentation risk will most likely be addressed this week as well.



Bond markets have already reacted to the end of the asset purchases and reassessed the different risks associated with different euro zone countries.



As a result, the spread between German and Italian bonds has been widening. The 10-year spread was above 200 basis points on Monday, compared with less than 140 basis points at the start of the year



“Fragmentation makes life complicated for the ECB. This is not to say that these considerations will overrule whatever the inflation picture dictates in terms of policy tightening,” Dirk Schumacher, an ECB watcher with Natixis, said in a research note.



“But it is nevertheless an important implicit argument for gradualism,” he added.

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European Central Bank poised to signal July rate hike as inflation jumps to fresh record high

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="517" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-820x517.jpg" alt="" class="wp-image-415106" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-820x517.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-300x189.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-143x90.jpg 143w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54-768x484.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/GNZ4EKIZHBJMHAHGTKTLUHIQ54.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>A 3D-printed oil pump jack is seen in front of displayed OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/File Photo</figcaption></figure>



DEAD SEA, Jordan June 8 (Reuters)&nbsp;&#8211;&nbsp;Efforts by OPEC+ oil producers to boost output are &#8220;not encouraging&#8221;, UAE energy minister Suhail al-Mazrouei said on Wednesday, noting the group was currently 2.6 million barrels per day short of its target.



&#8220;According to last month&#8217;s report, we have seen the conformity (to output cuts) of the OPEC+ group and the conformity was more than 200%,&#8221; Mazrouei told an energy conference in Jordan.



Conformity above 100% means a country is producing less than what it is supposed to be as OPEC+ looks to gradually remove its production curbs.



&#8220;The risk is when China is back,&#8221; Mazrouei said in an apparent reference to Chinese demand.



Prospects for demand growth in China, which is relaxing lockdowns, have been buoying crude prices recently.



This is a developing story&#8230;



(Reporting by Suleiman Al-Khalidi and Nadine Awadalla; writing by Maha El Dahan; editing by Toby Chopra and Jason Neely)

GNZ4EKIZHBJMHAHGTKTLUHIQ54

OPEC+ efforts to boost oil output ‘not encouraging’, UAE minister says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-820x461.jpg" alt="" class="wp-image-417701" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/06/GettyImages-1209645576-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>The Maersk Line freighter stands at sunset in the Mediterranean port of Limassol. Cyprus, Friday, April 10, 2020. Global shipping giant Maersk has suspended its 2020 full-year guidance on earnings citing the severe impact of COVID-19 on international transport market and supply chains. (Photo by Danil Shamkin/NurPhoto via Getty Images)</figcaption></figure>



The Organization for Economic Cooperation and Development has become the latest international institution to cut its predictions for global growth this year, but has downplayed the possibility of a prolonged period of so-called “stagflation.”



The OECD estimates that global GDP will hit 3% in 2022 — a 1.5 percentage point downgrade from a projection done in December.



“The invasion of Ukraine, along with shutdowns in major cities and ports in China due to the zero-COVID policy, has generated a new set of adverse shocks,” the Paris-based organization said in its latest economic outlook Wednesday.



Russia’s invasion of Ukraine is having massive ramifications on the global economy, but China’s zero-Covid policy — a strategy Beijing uses to control the virus with strict lockdowns — is also a drag on global growth given the importance of the country in international supply chains and overall consumption.



The World Bank said Tuesday that it had also turned more negative on global growth prospects. The institution said global GDP would reach 2.9% this year — an estimate lower from its 4.1% forecast in January.



The OECD said in its report Wednesday that the downgrade, in part, “reflects deep downturns in Russia and Ukraine.”



“But growth is set to be considerably weaker than expected in most economies, especially in Europe, where an embargo on oil and coal imports from Russia is incorporated in the projections for 2023,” it said.



The European Union in late May moved to impose an oil embargo on Russia, after agreeing the previous month to also stop coal purchases from the country. The bloc has been heavily dependent on Russian fossil fuels and cutting some of these supplies overnight will have a significant economic impact.



Nonetheless, the euro zone, the 19-nation region that shares the euro, and the United States do not differ much in terms of their economic outlook. The OECD said the former will grow 2.6% this year and the U.S. will expand by 2.5%.



For the United Kingdom, where the cost of living crisis is also an economic issue, GDP is seen at 3.6% this year before slumping to zero next year.



“Inflation [in the U.K.] will keep rising and peak at over 10% at the end of 2022 due to continuing labour and supply shortages and high energy prices, before gradually declining to 4.7% by the end of 2023,” the OECD said.



The global macro picture has darkened for emerging economies, notably because they are expected to be hurt the most from food supply shortages.



“In many emerging-market economies the risks of food shortages are high given the reliance on agricultural exports from Russia and Ukraine,” the OECD said. China is seen growing by 4.4% this year, India by 6.9% and Brazil by a marginal 0.6%.



<h2 class="wp-block-heading" id="h-no-stagflation"><a></a>No stagflation?</h2>



Mathias Cormann, secretary general of the OECD, said that despite the difficult economic environment, it’s unlikely that the global economy is heading into a period of stagflation — where an economy sees high inflation and high unemployment alongside stagnant demand as experienced in the 1970s.



“We do see some parallels with the experience in the 1970s but we do not use the term stagflation, we do not believe it is the right term to describe what we are observing in the global economy now,” he told CNBC’s Charlotte Reed.



“Essentially most countries have gone through four quarters of very strong growth and yes we have inflation, we expect elevated inflation to last for longer, but we do expect it to subside throughout the second half of 2022 to the end of 2023,” Cormann added.



The World Bank had said Tuesday that risks were growing on potential stagflation and warned that this would make the lives of those in middle and low-income economies even harder.

Cyprus Economy

OECD slashes global growth prediction on Ukraine war and China’s zero-Covid policy

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-820x547.jpg" alt="" class="wp-image-416491" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/P64ABSGIEBNHJMWOUR3LEQZUCU-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FILE PHOTO: British Prime Minister Boris Johnson takes questions in Parliament, in London, Britain June 23, 2021. UK Parliament/Jessica Taylor/Handout via REUTERS</figcaption></figure>



The U.K.’s Prime Minister Boris Johnson will face a vote of confidence later on Monday amid increasing dissatisfaction in his leadership.



To trigger a vote of confidence, 15% of Conservative lawmakers (or 54 of the current 360 Conservative Party MPs) are required to write letters to Graham Brady, chairman of the 1922 Committee which oversees the party’s leadership challenges.



On Monday, Brady announced that threshold had been exceeded.



The vote will take place Monday evening local time, and between 6 p.m. and 8 p.m. London time (1 p.m. and 3 p.m. ET.)



Last month a report into several high-profile Covid-19 lockdown-breaking parties at Johnson’s office and residence was released, sparking calls for a confidence vote.



Soon after the confidence vote was announced, a Downing Street spokesperson released a short statement saying that the vote tonight “is a chance to end months of speculation and allow the government to draw a line and move on, delivering on the people’s priorities,” Sky News reported.



The statement added that the prime minister welcomed the opportunity to make his case to lawmakers, and “will remind them that when they’re united and focused on the issues that matter to voters there is no more formidable political force.”



Some senior Conservative lawmakers have already thrown their support behind the prime minister. Foreign Secretary Liz Truss tweeted Monday that Johnson had her “100% backing” in the vote.



“He has delivered on covid recovery and supporting Ukraine in the face of Russian aggression. He has apologised for mistakes made. We must now focus on economic growth,” she said.



If Johnson wins the vote, he will be protected from another vote of confidence for another 12 months, although there are reports that these rules could be changed.



If Johnson loses the vote, he will be forced to step down and a Conservative leadership contest will begin. In that eventuality, Johnson, as an ousted leader, will not be allowed to stand.



Johnson could also resign of his own accord, but despite previous rumblings of discontent among Tory MPs over Johnson’s colorful, and often controversial leadership, he has shown no signs of intending to do so.

British Prime Minister Boris Johnson takes questions in Parliament, in London

UK Prime Minister Boris Johnson to face vote of confidence on Monday

KEY POINTS



<ul class="wp-block-list"><li>Oil prices jumped after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year.</li><li>The embargo is part of the European Union’s sixth sanctions package on Russia since it invaded Ukraine.</li></ul>



Oil prices jumped after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year.



During Asia hours on Tuesday,&nbsp;<a href="https://www.cnbc.com/quotes/@CL.1">U.S. crude futures</a>&nbsp;for July were up 3.53% to $119.12, while&nbsp;<a href="https://www.cnbc.com/quotes/@LCO.2">Brent crude futures</a>&nbsp;rose 1.87% to $123.95. At one point, U.S. crude rose to $119.42 per barrel — a 12-week high, according to Refinitiv data.



Contracts for August also traded higher: WTI crude jumped 3.66% to $116.34, and Brent was up nearly 2% to $119.96 per barrel.



The agreement resolves a deadlock after Hungary initially&nbsp;<a href="https://www.cnbc.com/2022/05/30/eu-to-discuss-watered-down-oil-embargo-on-russia-as-hungary-holds-firm.html">held up talks</a>. Hungary is a major user of Russian oil and its leader, Viktor Orban, has been on friendly terms with&nbsp;<a href="https://www.cnbc.com/vladimir-putin/">Russia’s Vladimir Putin</a>.



Charles Michel, president of the European Council, said the move would immediately hit 75% of Russian oil imports.



The embargo is part of the European Union’s sixth sanctions package on&nbsp;Russia&nbsp;since it invaded Ukraine. Talks to impose an oil embargo have been underway since the start of the month.



“The European Council agrees that the sixth package of sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia into Member States, with a temporary exception for crude oil delivered by pipeline,” according to a&nbsp;<a href="https://www.consilium.europa.eu/en/press/press-releases/2022/05/31/european-council-conclusions-on-ukraine-30-may-2022/" target="_blank" rel="noreferrer noopener">May 31 statement from</a>&nbsp;the European Council.



The European Council added that in case of “sudden interruptions” of supply, “emergency measures” will be introduced to ensure security of supply.



That temporary exception covers the remaining Russian oil not yet banned, European Commission President Ursula von der Leyen said in a press conference.



“We have agreed that the Council will revert to the topic as soon as possible in one way or the other. So this is a topic where we will come back to and where we will still have to work on, but this is a big step forward, what we did today,” she said, referring to the temporary exemption.



Von der Leyen explained that the temporary exemption was granted so that Hungary, along with Slovakia and the Czech Republic — all connected to the southern leg of the pipeline — have access which they cannot easily replace.



Roughly 36% of the EU’s oil imports come from Russia, a country that plays an outsized role in global oil markets.



The ban could exacerbate worries over an already-tight energy market. Energy prices have soared over the past year, contributing to a heated inflationary environment in many countries.



“While pipeline imports were not included in this agreement, an embargo on seaborne oil imports is still significant, accounting for around two thirds of the EU’s oil imports from Russia,” Vivek Dhar, director of mining and energy commodities research at the Commonwealth Bank of Australia, wrote in a note following the news.



“A further ban on Russian Crude delivered by shipments will tighten already strained supply amid rising demand due to onset of driving season in [the] United States,” wrote Avtar Sandu, senior manager of commodities at trading platform Philip Nova.



Meanwhile, OPEC+ is expected to stick to its original plan of a modest increase of 432,000 barrels a day for July, Sandu added.

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OPEC+ efforts to boost oil output ‘not encouraging’, UAE minister says

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