Business

UK economy grows sluggishly in 1st quarter as double-digit inflation curbs consumers spending

Published

1 year ago

May 12, 2023

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The U.K. economy grew sluggishly during the first three months of the year as double-digit inflation curbed consumer spending and labor unrest curtailed output in industries ranging from transportation to healthcare and education.

Gross domestic product, the broadest measure of economic activity, increased 0.1% in the first quarter compared with the previous three months, the Office for National Statistics said Friday. The figure matched the growth rate during the fourth quarter of last year and was in line with economic forecasts.

The figures come a day after the Bank of England approved a 12th consecutive interest rate increase as it struggles to curb inflation that has remained at around 10% since July. The bank also upgraded its economic outlook, saying the “underlying picture is more positive” than it was earlier this year.

“Let’s be clear, whilst the Bank of England may believe the U.K. economy will now avoid the predicted recession entirely, the country is not in good health,” said Danni Hewson, head of financial analysis at AJ Bell, a U.K.-based investment platform.

“Rising prices, rising interest rates and strike action have created a cocktail that’s pretty unpalatable.”

On a monthly basis, the picture was even more grim. Output fell 0.3% from the previous month in March.

The British economy has been hard hit by Russia’s invasion of Ukraine, with stubbornly high inflation triggering a wave of strikes by workers who have seen their wages eroded by rising prices. The U.K. inflation rate was 10.1% in March, compared with 5% in the U.S. and 6.9% in the countries sharing the euro.

Those strikes contributed to quarterly declines in output from the transportation, public administration, healthcare and education sectors, the ONS said.

Overall output from the service sector, which accounts for about 80% of the U.K. economy, rose 0.1%.

One optimistic note came from manufacturing and other productive industries, where output grew 0.1% following no growth in the previous quarter and five consecutive quarters of decline before that.

Construction output increased 0.7%, rising for a sixth straight quarter.

While inflation is expected to fall rapidly in the coming months as last year’s big increases in energy and food prices drop out of the annual calculation, some economists are beginning to raise concerns about the steep rise in interest rates.

Higher rates increase borrowing costs for business and consumers, which tends to curb spending and control inflation. But that also slows economic growth.

Central bankers have struggled to balance those competing pressures amid efforts to slow price increases without slamming the brakes on economies that are still recovering from the effects of the coronavirus pandemic.

“There’s still no recession, but with the full drag from higher interest rates yet to be felt, it is too soon to sound the all-clear,” said Ruth Gregory, deputy chief UK economist at Capital Economics, after the figures were released.

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Business

Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

1 day ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

1 day ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

1 day ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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