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Impending recession for US market?
Source: Reuters (https://www.reuters.com/business/finance/part-us-yield-curve-just-inverted-does-that-mean-recession-is-coming-2022-03-28/)
The pandemic turned the world upside down, and the global economy took a hit. The US markets are facing a new risk as an aftermath of the prolonged pandemic. From falling employment rates to rising inflation, a slow but eventual recession is predicted in late 2023 by those running Wall Street. The country is facing its worst inflation since 1982, leading to rising interest rates, which could prove detrimental to uncertain situations. The growing oil and natural gas prices and the ongoing Russia-Ukraine war are making it worse. Housing markets are predicted to be severely impacted by growing interest and falling employment rates. While some are taking the risk of a probable recession seriously, some are still negating it. For instance, Bank of America and Deutsche Bank agree that a recession will happen, while JP Morgan and UBS deny the possibility. The stock market isn’t doing well, and big companies must be prepared, but over-hyping and pre-emptive cost-cutting could also prove disastrous.
By Ruchhika Dasgupta - Batch 20-22
Turkey expresses reservations on NATO’s Nordic Expansion
Foreign ministers pose for a family photo at a NATO meeting in Berlin, Germany on May 15, 2022.
Source: REUTERS/Michele Tantussi (https://www.reuters.com/world/europe/nato-expects-turkey-not-hold-up-finland-sweden-membership-bids-2022-05-15/)
Finland has confirmed its intention to join NATO (North Atlantic Treaty Organization), while Sweden's ruling party, Social Democrats, dropped their opposition to joining the Atlantic military alliance that will enable the country to formally apply for NATO membership within days.
However, Turkey expressed its hesitation over the accession of the Nordic pair to NATO and has laid down certain demands. Turkey wants the Nordic countries to halt support for Kurdish military groups present in their territory and lift the ban on some arms sales to Turkey. Any decision on NATO enlargement needs to be approved by all thirty allies and their parliaments. Turkey, a NATO member for seventy years, is under pressure to approve Finland and Sweden's entry into the alliance.
Despite the Turkish demands, the U.S Secretary of State Anthony Blinken and NATO Secretary-General Jens Stoltenberg expressed confidence that Turkey's reservations would not delay the Nordic pair's membership.
Sweden and Finland maintained neutrality throughout the Cold War, and therefore, their decision to join NATO is indeed historic. Meanwhile, Moscow has responded to the NATO membership of Finland and Sweden by threatening retaliation.
By Yasmeen Cheema - Batch 20-22
India bans wheat exports
Days after India’s speculation of achieving a record shipment of wheat this year, the Government of India banned Wheat export on 14th May 2022, with immediate effect.
Due to the ongoing Ukraine-Russia war, India had big trade plans for wheat, but the scorching heatwave had some other plans. This year, the government was confident wheat production would be record high beating the last year’s figure of 119.20 million tons. However, the record-breaking, uncalculated, high temperature during mid-March resulted in the failure of crops around the country.
Lesser than anticipated production and combined with steep inflation, the government abruptly stopped exporting wheat. The government of India clarified that this is not an absolute ban, deals made before the decision will be honoured, and special requests will be considered.
The decision to ban wheat export received some harsh words from the German agriculture minister- Cem Ozdemir, who spoke on behalf of the G7. New Delhi defended the move by arguing that such a measure was necessary to control inflation in India and asserted that there is no wheat supply crisis in India.
By Pradyut Das - Batch 20-22
Can Africa be the solution to Europe’s gas woes?
A view of a gas plant seen from the desert road of Suez outside Cairo, Egypt September 1, 2020.
Source: REUTERS/Amr Abdallah Dalsh (https://www.bbc.com/news/world-africa-61334470)
With the ongoing war between Ukraine and Russia, the Kremlin has halted all gas supplies to Bulgaria and Poland as they refuse to pay in rubles. This move by the Kremlin gave a stark reminder of the threat to the Eurozone. Russia has been the biggest exporter of natural gas and accounts for almost 40% of Europe’s imports. Only a few months ago, world leaders pledged to stop funding new fossil fuel projects as a move against climate change. Europe’s transition to 100% green energy would eventually lead to them severing ties with Moscow, but now with the war transpiring, everything has changed. Natural gas supplies are now heavily strained, leading to Europe looking at Africa to fill the gap to compensate for the loss of Russian natural gas.
Italy was one of the first to sign a new major deal with Algeria to increase their imports by around 40% and find an alternative. With Europe looking at Africa now, this puts the countries in Africa under pressure to increase gas supply and meet the demands as this opportunity will open several doors for greater investment in gas pipeline infrastructure, benefitting Africa, as Europe is desperate. However, the lack of infrastructure in Africa is an issue. Nigeria and Mozambique may possess vast reserves of natural gas, but concerns have arisen due to the political situation and growing domestic consumption. In the long term, one will witness greater investments to bring gas to Europe, but in the short term, it is limited because it takes several years to materialize gas projects.
By Sanjana Gupta - Batch 20-22
Going according to plan- Why cannot President Putin cannot admit the reality?
Source: The Economic Times
President Putin's problem at present is that his failures are becoming too evident and glaring even for Russia's propaganda machine to hide. He attacked Ukraine in part to keep NATO from expanding; however, presently, NATO has already begun the process of admitting two new members- Finland and Sweden as a result of his aggression in Ukraine.
The strategic military operation has clearly not gone to plan, and the reason it cannot be accepted is manifold. Admitting failure would further lower the morale of the Russian armed forces, which have already been depleted a lot in Ukraine. It could even lead to a coup to depose him as the President, and of course, power is too precious for President Putin to let go of, but even more than this, it would destroy his cult of personality and damage his reputation, which he also seems quite obsessed with. One can only hope that President Putin feels he is doing fine in Ukraine otherwise, he could take even more extreme steps to add to the misery Ukraine is already facing.
By Rishav Gupta - Batch 21-23
