Economic challenges

South Africa’s unemployment rate climbs, over 8 million jobless

Business /

South Africa’s unemplyment rate increased by 0.6 percentage points from 32.9% in Q1 2024 to 33.5% in Q2 2024, the government’s statistics office reported Tuesday. Africa’s most industrialized economy has struggled to create jobs in recent years due to a long recession and most recently the Covid-19 pandemic.  About 8.4 million people were out of work, up from 5.2 million in 2014. The number of employed persons fell by 92,000 to 16.7 million in Q2 2024. The sectors which saw the most job decreases include trade, agriculture and construction.  Only manufacturing, social services and utilities added jobs.  The figures are the first to be released since the May elections which brought in a coalition government which put reviving the ailing economy top of its agenda.  Unemployment was a key political issue in the vote, likely contributing to the loss of an absolute majority by the African National Congress (ANC).  The statistics affice said that the most significant decrease in employment was observed in the Western Cape, Mpumalanga and KwaZulu-Natal provinces.

South Africa’s unemployment rate climbs, over 8 million jobless Read More »

Businesses in Addis Ababa are struggling with soaring inflation

Business /

Businesses in Addis Ababa are struggling to keep pace with soaring inflation following the government’s shift to a flexible exchange rate policy implemented late last month. Since the policy change, the Ethiopian birr has lost 60% of its value against the dollar as of Monday, leading to increased prices for basic goods and prompting some businesspeople to hoard supplies. At the Samra Hotel, prices now fluctuate daily, or even hourly, to keep up with the changing market conditions, as noted by Rahel Teshome, an employee at the hotel. Many supermarkets in Addis Ababa are hoarding products in warehouses and selling only small quantities in-store to avoid penalties from city authorities, who are cracking down on hoarders. Consumers seeking bulk purchases face inflated prices and must retrieve products from warehouses. In Merkato, the city’s largest open-air market, guards are stationed to prevent businesses from raising prices. Recently, police raided warehouses, seizing 800,000 liters (210,000 gallons) of edible oil, which was later distributed at previous prices to local cooperatives. Over 3,000 stores accused of hoarding have been closed across the country. The Addis Ababa City Trade Bureau has warned of further actions against those exploiting the floating birr to hike prices. The new exchange rate policy represents a significant shift in Ethiopia, where the government had long controlled foreign currency prices, fostering a black market. Now, commercial banks set foreign exchange rates, and non-bank entities are allowed to operate foreign exchange bureaus. The International Monetary Fund (IMF) approved a four-year, $3.4 billion credit facility in conjunction with Ethiopia’s reforms. The IMF has committed to disbursing $1 billion immediately to address urgent needs, with Managing Director Kristalina Georgieva calling the reforms a “landmark moment for Ethiopia.” In response to foreign currency shortages, authorities have imported 14 million liters (3.7 million gallons) of edible oil to ease consumer pressure. However, these measures have had limited impact given the rising prices of other essential goods. Experts warn that Ethiopians, particularly those on fixed incomes, face uncertain times ahead. Getachew T. Alemu, a public policy specialist in Addis Ababa, notes that the immediate IMF funding may not be sufficient to alleviate the strain, suggesting that without careful policy actions, conditions could worsen. The government’s efforts to curb price speculation have also been challenged by its own actions. Last week, authorities raised the cost of ordinary passports from 2,000 to 5,000 birr, leaving individuals like Almaz Teferi, who was in the process of obtaining a passport, shocked by the sudden increase. Teferi, who is preparing to work as a domestic laborer in the Gulf states, had been saving to cover the passport fee but found the cost had risen significantly within days.

Businesses in Addis Ababa are struggling with soaring inflation Read More »

Egyptian pound falls against foreign currencies

Business /

The Egyptian pound is declining against foreign currencies, nearing 50 per U.S. dollar following recent hikes in metro fares and fuel prices. On Tuesday, the currency was valued at 49.16 per U.S. dollar, according to the Central Bank of Egypt. After fluctuating between 47 and 48 per dollar in June and July, the pound has lost approximately 60% of its value since its initial public offering in March, falling to around 30 per dollar. This new exchange rate comes a week after the International Monetary Fund (IMF) completed its third review of Egypt’s financial situation, authorizing the release of $820 million as part of an $8 billion bailout package. This loan aims to support Egypt’s struggling economy, which faces challenges such as a foreign currency shortage, soaring inflation, and unrest in the Red Sea due to attacks by Yemen’s Houthi rebels. The IMF noted last week that while inflation remains high, it is decreasing, and a flexible exchange rate is central to the country’s economic strategy. Egyptians are dealing with significant inflation, with the oil ministry recently announcing a 10% increase in fuel prices. The last fuel price hike occurred in March, attributed to rising costs due to Red Sea attacks and the currency’s depreciation. The Houthis have targeted commercial ships in the Red Sea in response to Israel’s actions in Gaza, impacting global trade routes. Oil, natural gas, and grain passing through these sea lanes are crucial to the Suez Canal, which handles 12% of world trade. Additionally, Cairo Metro fares increased last week, now ranging from 2 to 5 Egyptian pounds, as reported by the National Tunnels Authority. This fare increase aligns with Egypt’s agreement with the IMF to double its bailout, which now totals $8 billion. The price adjustments are part of the conditions set by the IMF for continued financial aid.

Egyptian pound falls against foreign currencies Read More »

Global markets recovered after historically high selling pressure

Business /

After concerns that economic activity in the US may slow down more sharply than expected led to deepening selling pressure in global markets on Monday, risk appetite increased in the markets on Tuesday. The effects of concerns that the Fed’s decision to cut interest rates in the near future could raise concerns about the course of the economy, causing panic in the markets, were also felt intensely. The emergency rate cut decision could be interpreted as the Fed losing control over the markets, analysts pointed out, adding that the bank should clarify the steps it will take in the short term. On the other hand, the Purchasing Managers’ Index (PMI) for the service sector in the US provided some relief in July, while the Institute for Supply Management (ISM) service sector (PMI) increased by 2.6 points on a monthly basis to 51.4 in July, in parallel with market expectations. “It doesn’t make sense to maintain a restrictive policy stance if the economy is weakening,” said Chicago Fed President Austan Goolsbee, a closely followed Fed officials, in an interview on Tuesday. “The employment numbers came in weaker than expected, but it doesn’t look like a recession yet,” he added Goolsbee refrained from commenting on whether the Fed would go to an emergency meeting and cut interest rates, saying that this is a very big table, so everything is always on the table, such as rate hikes and rate cuts.  With these developments, forecasts for the Fed to cut interest rates by 50 basis points in September have also strengthened. In the Eurozone, the composite Purchasing Managers’ Index (PMI), which was 50.9 in June, fell to 50.2 in July, the lowest level in the last five months. The service sector PMI in the Eurozone, which was 52.8 in June, fell to 51.9 in July, the lowest level in the last four months. In Germany, service sector PMI, which was 53.1 in June, fell to 52.5 in July, the lowest level in the last four months. In the region, the Producer Price Index (PPI) increased by 0.5% on a monthly basis in June, while it decreased by 3.2% annually. While cryptocurrency markets also recovered, Bitcoin increased by 2.1% to $55,506. Reflecting the decline in technology stocks yesterday.  Nvidia’s shares, one of the companies that attracted attention in the artificial intelligence rally, fell 6.36%. Apple’s shares also dropped 4.82%, while Berkshire Hathaway, where US investor Warren Buffett is the Chief Executive, halved its shares in the company. Microsoft’s shares declined 3.27%, Meta’s shares fell 2.54%, Alphabet’s shares fell 4.61% and Amazon’s shares fell 4.1%, while Tesla’s shares fell 4.23%. While banking stocks also decreased with recession fears, Citigroup’s shares fell 3.42%, Wells Fargo’s shares fell 2.14%, JPMorgan Chase’s shares fell 2.13% and Morgan Stanley’s shares fell 3.94%. US markets saw a slight downbeat on Monday, with the Nasdaq index fell 3.38%, the S&P 500 dropped 3%, and the Dow Jones decreased by 2.60%. The US 2-year bond yield closed at 3.97% while Brent crude oil prices have stood at $76,9 per barrel. The US 10-year bond yield closed at 3.84%, and gold prices down by 0.3% to $2,403 an ounce. As for the VIX volatility Index, also known as the fear index, fell to 38.57. European stock markets continued to follow a mixed trend. The FTSE 100 index in the UK dropped 2.04%, France’s CAC 40 index 1.42%, Germany’s DAX 40 index decreased 1.82% and, Italy’s MIB 30 index 2.27% on Monday.  In Türkiye, the BIST 100 index in Borsa Istanbul closed at 9,893.41 points, down 5.54% from the previous close. The USD/TRY exchange rate traded at 33.3502 at the opening of the interbank market on Monday. On the other hand, the Consumer Price Index (CPI) increased by 3.23% and the Domestic Producer Price Index (D-PPI) by 1.94% on a monthly basis in July. Annual inflation realized as 61.78% in consumer prices and 41.37% in domestic producer prices. In Asian markets, which experienced a historic decline on Monday due to rising recession concerns, some of the losses experienced with the upward trend were compensated on Tuesday. The investments made in high-yielding assets with Japanese yen borrowing on Monday triggered the selling pressure in the regional markets with the BoJ’s interest rate hike and the rapid appreciation of the Japanese yen, analysts said. Thus, both the yen, which strengthened with the hawkishness of the BoJ, and the concern that the increasing recession concern in the world could negatively affect the performance of exporting Japanese companies played an important role in deepening the selling pressure in Japanese stock markets. On the other hand, Japan’s Finance Ministry, Financial Services Agency and BoJ officials are expected to meet today to discuss the state of the markets. In addition, the Reserve Bank of Australia left the policy rate unchanged at 4.35 percent. Near the close, Japan’s Nikkei 225 index rose 8.9%, South Korea’s Kospi index 4%, while the Hong Kong’s Hang Seng composite index fell 0.1% and China’s Shanghai index decreased 0.3%.

Global markets recovered after historically high selling pressure Read More »

Scroll to Top