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EU Braces for Recession

FILE: European Union flags flutter outside the EU Commission headquarters in Brussels. Taken September 28, 2022

The EU warned Friday the eurozone was set to fall into recession this winter as Brussels hiked inflation forecasts for 2022 and 2023 on the back of high energy prices.

The EU's executive arm said increased uncertainty and prices "are expected to tip" the eurozone and most of the bloc's member states into recession in the last quarter of this year.

"The contraction of economic activity is set to continue in the first quarter of 2023. Growth is expected to return to Europe in spring," the European Commission said.

"With powerful headwinds still holding back demand, economic activity is set to be subdued, with GDP growth reaching 0.3 percent in 2023."

Europe is reeling from the economic shockwaves unleashed by Russia's war on Ukraine, which fueled a spike in energy costs and hit the wallets of consumers around the continent.

Overall eurozone GDP growth for 2022 was put at 3.2 percent after early strong months of the year.

But the EU's economy commissioner Paolo Gentiloni said "the impact of soaring energy prices, rampant inflation, are now taking their toll."

"We have some difficult months ahead of us," Gentiloni said.

He cautioned that "the potential for further economic disruptions due to Russia's war is far from exhausted."

Brussels predicted that the EU's biggest economy Germany would fare the worst of the member states with a contraction of 0.6 percent next year.

The downbeat forecast came as the commission sharply raised its predictions for inflation in this and next year.

It said eurozone inflation was expected to stand at 8.5 percent for 2022, a point higher than earlier forecast, and 6.1 percent in 2023, over two points higher than predicted previously.

"Inflation has continued to rise faster than expected, but we believe that the peak is near. Most likely at the end of this year," Gentiloni said.

"We are projecting a very gradual reduction of inflation because inflation next year is still projected to be quite high."

He warned however that inflation could end up two points higher in 2023 if the EU "fails to prepare" adequately in advance for next winter by filling up its gas stores.

The baseline prediction put inflation in 2024 at 2.6 percent, still higher than the European Central Bank's (ECB) target of two percent.

The ECB in October forecast a recession was on the way, as it announced another jumbo interest rate hike

Gentiloni said that one "bright spot" remained the resilience of the EU's labour market and that there was only expected to be a "moderate" increase in unemployment before a decline in 2024.

The aggregate government budget deficit is expected to rise again from 3.4 percent in 2022 to 3.6 percent in 2023 as the EU debates reforming its fiscal rules.


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Pyramids Become Show "Props"

FILE: the Pyramid of Khufu, the largest of the Great Pyramids of Giza, on the outskirts of Cairo, Egypt. Taken November 8, 2015.

Egypt is using the ancient grandeur of its pyramids as a backdrop for modern pop concerts and fashion shows, hoping to boost its image, tourism and the luxury brand sector beloved by its moneyed elite.

French fashion house Dior debuted its latest collection Saturday at the Giza pyramids, after Italian designer Stefano Ricci held a show at Luxor's dramatic Temple of Hatshepsut in October.

Dior CEO Pietro Beccari told AFP the fashion house chose the pyramids as far more than "just a useless background", drawing on Egyptian astrology for the collection named "Celestial".

Before that, American pop bands Maroon 5 and the Black Eyed Peas performed at the Giza Necropolis, where contemporary art was also recently shown at the latest Art d'Egypte exhibition.

The modern cultural push is a new direction for Egypt's image.

Showcasing Egypt's heritage in a new context "will encourage other brands and international cultural figures to come to Egypt," said art historian Bahia Shehab.

Fashion photographer Mohsen Othman agreed that such glamorous events are "vital".

Big brands like Dior "come in with a huge budget," employ local talent and "support young creators who can put Egypt on the global fashion map."

Iman Eldeeb, whose agency cast two Egyptian models for Saturday's show, told AFP it was a "long-awaited step for the fashion world in Egypt."

Egypt's bubble of super rich has helped create a home-grown fashion design scene whose pioneers have recently ventured onto the catwalks of Milan and Paris.

At this year's Paris Fashion Week, Cairo-based luxury brand Okhtein showed a resin-made bustier that evoked Egyptian alabaster at French fashion house Balmain's show.

It was a rare success story for Egypt's creative sector, where "most people are self-taught, working hard with scarce resources to try and meet international standards," said Othman, the photographer.

Ismail said the country's luxury clothing and jewelry market "has gone from under 100 Egyptian brands to more than 1,000 today", fueled by "a huge pool of young creative talent".

International events offer rare exposure, but getting them to the country is still a challenge.

"It is a big step for the government to authorize Art d'Egypte and Dior to organize events at the foot of the pyramids," the art show's curator, Nadine Abdel Ghaffar, told AFP.

Red tape and tight restrictions can still get in the way, she suggested, conceding that "the legislative framework is complicated."

Long a cultural powerhouse in the Arab world, with wildly popular singers and movie stars especially in its heyday in the 1950s-70s, Egypt has set its sights on its ancient heritage to attract the global spotlight once more.

A harbinger of the new embrace of ancient culture and history was a "golden parade" last year of 22 pharaohs that crossed Cairo from an old to a new museum in a carnival-style grand spectacle.

It was part of a push by President Abdel Fattah al-Sisi's government to revive tourism, which accounts for 10 percent of GDP and some two million jobs but has been hammered by political unrest, economic upheaval and the Covid pandemic.

Shehab, the art historian, said many realise that Egypt, known for its timeless architectural marvels in the desert, needs to project an updated image of itself.

"There's more and more awareness about the need for soft power and for culture as a representation for the country," she said, cautioning however that Egypt still requires "better infrastructure" to make this happen.

She even dared dream that Egypt could draw in Hollywood productions, if it only starts granting permits.

"We have lost count of the number of international productions that have resorted to shooting in Morocco, Jordan or Saudi Arabia," she said.

The latest Egypt-themed production was a Disney+ TV miniseries, Marvel Comics' "Moon Knight," for which two entire Cairo city blocks were built from scratch -- on a set in Budapest.


Ghana Swaps Debt Hoping to Recover

FILE: Ghana Finance Minister Ken-Ofori-Atta. Taken October 5, 2022

Ghana will launch a domestic debt exchange on Monday, its Finance Minister Ken Ofori-Atta said, expressing confidence that the move would help restore macroeconomic stability and end the West African country's worst economic crisis in a generation.

Under the domestic debt exchange, local bonds will be exchanged for new ones maturing in 2027, 2029, 2032 and 2037 and their annual coupon will be set at 0% in 2023, 5% in 2024 and 10% from 2025 until maturity.

President Ofori-Atta said in a video address on Sunday that Ghana's government had finished its debt sustainability analysis, but he did not provide any information on plans for foreign debt that are anxiously awaited by international creditors.

"We are confident that these measures will contribute to restoring macroeconomic stability," he said.

Ofori-Atta said the government wanted to minimise the impact of the debt swap on small investors so would not apply the terms to Treasury bills or to holders of individual bonds. There will also be no haircut to the principal of the bonds, he said.

The president said the government would set up a financial stability fund with the support of development partners to help domestic financial institutions, including banks and pension funds, weather the swap.

"I say to you, nothing will be lost, nothing will be missing, and nothing will be broken. We will, together, recover all," he said.

The government is in talks with the International Monetary Fund for a support program to relieve its debt distress.

"It should ... reinforce expectations that Ghana is on its way to an IMF staff-level agreement. We expect the Ghana cedi to benefit as a result," said Razia Khan, Chief Africa Economist at Standard Chartered.

"There was little question that Ghana needed LCY (local currency debt) coupon reductions to restore macro sustainability. By excluding retail investors, this is likely to be more politically palatable," she added.

How the plan will impact individuals is still to be determined as many hold bonds through mutual and pension funds.

Glencore to Pay DRC Over Corruption Claims

FILE - This picture shows the Glencore headquarters in Baar, Switzerland. Taken April 14, 2011

Swiss mining giant Glencore said Monday it has agreed to pay $180 million to the Democratic Republic of Congo to cover corruption allegations, the latest payment in a series of graft cases it has faced worldwide.

The company said the $180 million settlement with DRC covers "all present and future claims arising from any alleged acts of corruption" by the Glencore Group between 2007 and 2018.

The settlement with DRC is related to investigations by the country's authorities and the US Department of Justice, Glencore said.

Glencore disclosed in 2018 that the US Justice Department had launched a corruption investigation linked to the group's business in Nigeria, Venezuela and DRC.

A year later, Britain's Serious Fraud Office said it was investigating suspicions of bribery by the Glencore group of companies and staff in DRC.

Brazil also opened a probe in 2018 into Glencore and trading groups Vitol and Trafigura over alleged bribery of employees at state-run oil company Petrobras.

In May, the group reached a settlement with Brazilian, British and US authorities, pleading guilty to corruption in Africa and South America.

Glencore agreed to pay a $700 million fine to the United States for fraud and corruption in Brazil, Cameroon, Nigeria and Venezuela, and misappropriation of confidential information in Mexico.

The company was also hit with $486 million in fines and forfeitures for oil price contract manipulation.

Last month, a UK court ordered Glencore to pay £280 million ($313 million) following an investigation into bribes paid to gain preferential access to oil in several African countries.


IMF Chief Warns "Slow Growth"

FILE: A bureau de change operator counts U.S. currency notes in Abuja. Taken March 12, 2015.

IMF chief Kristalina Georgieva warned Thursday that the chance of global growth dropping below two percent -- last seen during the coronavirus outbreak and the global financial crisis of 2009 -- is increasing as major economies slow.

"The probability of growth slowing even further, falling below two percent was one-in-four," said Georgieva at the Reuters NEXT conference Thursday, referring to the fund's recent expectations for 2023.

"When we look at the most recent indicators, we are concerned that this probability may be going a bit further up," she added.

The International Monetary Fund expects more than a third of the global economy to shrink this year or next, with the United States, European Union and China stalling.

Georgieva added that slowing growth in China is particularly significant.

Her comments come as the world's biggest economies grapple with fallout from Russia's invasion of Ukraine, which sent food and energy prices soaring, along with a surging inflation and China's economic forecast.

This is worrying given that the world has relied on China for a boost, with "some 35, 40 percent of global growth" coming from expansion in the world's biggest second economy.

"This is not the case now, it's not going to be the case next year," she said.

The IMF is set to give an update on its economic outlook in January, and it is among key global institutions to visit China next week for talks.

According to World Bank figures, the global economy slumped 3.3 percent in 2020 and 1.3 percent in 2009.

Swedish Firm Paying For Eskom "Misconduct"

FILE - Smoke rises from the cooling towers of a coal-fired power plant operated by Eskom in South Africa Taken May 20, 2018.

Swedish-Swiss engineering giant ABB, which helped construct a huge power plant near Johannesburg, will pay reparations to South Africa over "criminal conduct" at the struggling power utility Eskom, prosecutors said Thursday.

"ABB has acknowledged liability and taken responsibility for the alleged criminal conduct of its employees involving contracts with Eskom," the National Prosecuting Authority (NPA) said in a statement.

It said it had finalized a settlement agreement with Asea Brown Boveri (ABB) to pay over more 2.5 billion rand ($144,000) in "punitive reparations" to South Africa.

In 2020, ABB returned 1.6 million rand ($92,000) it received for the construction of the coal-fired Kusile power station, commissioned by Eskom in 2007.

Construction of the plant, the fourth largest coal-fired generator in the world, has been fraught with allegations of graft.

"This settlement represents a bold and innovative step towards accountability... particularly in the form of restitution for the serious crimes committed at Eskom, during the state capture (corruption) period," said the NPA.

In October eight people, including the former CEO of Eskom, Matshela Koko, were arrested on corruption charges linked to a multi-million-dollar contract with the Swedish-Swiss firm.

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