AFP

The “seismic” impact of the war in Ukraine is spreading worldwide, causing the IMF on Tuesday to sharply downgrade its 2022 global growth forecast to 3.6 percent.

That slowdown, 0.8 points lower than its previous estimate released in January, comes amid surging prices, shortages and rising debt levels, the IMF said in its latest World Economic Outlook.

The fallout has been felt most acutely in the poorest nations, threatening to erase recent gains as the world had begun to recover from the Covid-19 pandemic, and the risks and uncertainty remain high, the Washington-based lender warned.

“The economic effects of the war are spreading far and wide — like seismic waves that emanate from the epicenter of an earthquake,” IMF chief economist Pierre-Olivier Gourinchas said in the report.

Russia invaded Ukraine in late February, devastating the country’s infrastructure and ability to produce grain and other goods, while stiff sanctions on Moscow sent fuel prices higher.

The conflict also sparked a flood of refugees into neighboring countries.

The crisis will be the focus of global finance officials who gather in Washington this week — virtually and in person — for the spring meetings of the International Monetary Fund and World Bank.

The report shows Ukraine suffering a 35 percent collapse of its economy this year, while Russia’s GDP will fall 8.5 percent — more than 11 points below the pre-war expectations.

European nations will see much slower growth as the war drives up fuel and food prices, pushing inflation higher around the world and keeping it high for longer than expected.

The United States and China also will feel the effects of the war and the ongoing impact of the Covid-19 pandemic, with US growth expected to slow to 3.7 percent, and China’s to 4.4 percent.

– Surging inflation –

The official cautioned that the overall outlook is highly uncertain, and things could get drastically worse if the war is prolonged and tougher sanctions imposed on Moscow.

“Growth could slow significantly more while inflation could turn out higher than expected if, for instance, sanctions aimed at ending the war extend to an even broader volume of Russian energy and other exports,” he said.

Meanwhile, the pandemic is continuing, and lockdowns in China to defeat renewed coronavirus outbreaks are slowing activity, including in manufacturing hubs, which “could cause new bottlenecks in global supply chains.”

The latest crisis hit as the global economy “was on a mending path but had not yet fully recovered from the Covid-19 pandemic,” Gourinchas said.

That has fueled an acceleration of inflation — expected to hit 5.7 percent in advanced economies this year and 8.7 percent in developing nations — which endangers the gains of the past two years.

And inflation will be elevated for “much longer” than previously expected the report said.

The price pressures have prompted central banks in many countries to begin to raise interest rates to tamp down inflation, but that will hurt highly indebted developing nations, the report noted.

Rising prices were a concern even before the conflict and now shortages caused by the war “will greatly amplify those pressures, notably through increases in the price of energy, metals and food,” Gourinchas said.

The official dismissed comparisons with the wage-price spiral seen in the 1970s, but “nevertheless, inflation is a serious concern right now in the US and in other countries,” he told reporters during a briefing. 

And if price pressures continue to mount “that would call for much more forceful action” from central banks.

– Debt distress –

That would hit developing nations that have seen debt loads increase with rising interest rates.

Gourinchas added his voice to the call to help countries restructure their debt by improving the G20 Common Framework adopted last year, which was meant to offer a path to restructure large debt loads.

A key hurdle has been the lack of information on the size of debt owed to China, as well as some other lenders, by private companies as well as governments, and the need for private creditors to participate in the debt relief.

It’s in the interest of the borrowing country and the creditors “to have an expeditious process,” he told reporters.

“We need a process that works much faster and much better in dealing with situations of insolvencies.”

World Bank President David Malpass, who has been outspoken on the issue, has said 60 percent of low-income countries already face debt distress or are at high risk.

The New York Times on Tuesday announced the appointment of veteran journalist Joe Kahn as its next executive editor, the top newsroom position at the powerful US paper.

Kahn — currently the Times’s number two-ranked editor — will succeed Dean Baquet, whose eight-year reign is due to end in June, the daily said.

The 57-year-old will be tasked with shaping the digital future of the Times, a leading liberal voice in world journalism, as it vies for audiences around the globe.

Kahn said securing readers’ trust “in a time of polarization and partisanship” was one of his top priorities.

“We don’t know where the political zeitgeist will move over time,” the Times quoted Kahn as saying.

“Rather than chase that, we want to commit and recommit to being independent,” he said.

Kahn has been managing editor of the Times since 2016 and has been credited with helping guide the paper into the digital era.

In recent years the Times has moved heavily into podcasts and TV documentaries, while its games section is another key source of revenue.

Kahn previously led the Times’s international coverage and in 2006 shared a Pulitzer Prize for reporting in China.

Baquet was the first Black executive editor of the Times and his tenure brought 18 Pulitzer Prizes.

He oversaw hard-hitting expose pieces on Donald Trump’s finances and the sexual misconduct of disgraced former Hollywood mogul Harvey Weinstein.

But he also grappled with controversies, including an internal investigation which found that the paper’s award-winning podcast “Caliphate” had failed to meet editorial standards.

The Times said Baquet has reached the age when Times executive editors usually step down: 65. The paper said he would stay on “to lead an exciting new venture.”

Ride-hailing companies Uber and Lyft removed mask requirements on riders and drivers on Tuesday following a federal ruling striking down the mandate.

“You can now ride without a mask and use the front seat if you need to,” Uber announced on Twitter. 

“While mask usage is still recommended, we’ve updated our Covid safety policies. Let’s move forward, safely together.”

Uber’s rival, Lyft, also said it was making masks optional.

The company will also remove a restriction on riders in the front seat, and will no longer include health safety reasons — such as not wearing a mask — as a reason to cancel a ride, Lyft said.

“We know that everyone has different comfort levels, and anyone who wants to continue wearing a mask is encouraged to do so,” Lyft said in a blog post.

On Monday, US federal judge Kathryn Kimball Mizelle said the mask mandate exceeds the statutory authority of the Centers for Disease Control and Prevention.

Several major carriers, including American Airlines, Delta Air Lines and United Airlines, dropped mask mandates on domestic flights and some international flights following the ruling.

A Paris court on Tuesday fined the British meal delivery group Deliveroo after ruling it was guilty of “undeclared labour” for using freelance riders who should have been classified as employees, depriving the state of millions of euros in payroll taxes.

It was the latest move by European courts to recognise the rights of “gig economy” workers used by start-ups and other firms, which often claim they are simply go-betweens for clients and independent contractors.

The court ordered the maximum fine of 375,000 euros ($405,000) sought by prosecutors and also handed suspended one-year prison sentences and 30,000-euro fines to two former French executives at Deliveroo.

A third executive got a suspended four-month sentence and a 10,000-euro fine for complicity in the system, and Deliveroo was also ordered to pay 50,000 euros each in damages to five labour unions who joined the case as plaintiffs.

State prosecutor Celine Ducournau had sought in vain to question Deliveroo’s American founder and CEO Will Shu over a “fraud” that gave “all the benefits to the employer… without any of the inconveniences.”

“The question is not to determine if the status of independent contractor is appropriate, but to acknowledge that in this instance, Deliveroo used a fake legal arrangement that did not correspond to the reality of how the delivery riders work,” the presiding judge said in her ruling. 

A Deliveroo spokesman said the company “categorically contested” the decision and said it was considering an appeal.

“Our business model offers our deliverers the flexibility they need and which they tell us they appreciate,” he said. 

– Legal gray area –

Over 100 Deliveroo riders were plaintiffs in the case prosecutors opened in 2015 but which got fresh impetus in 2020, when France’s URSSAF agency in charge of employer social security collections demanded millions of euros in back payments.

Several riders told the court they had sought jobs that offered scheduling freedom only to find intense pressure to work at peak meal times, strict oversight of their routes and days off, and penalties if orders weren’t delivered fast enough.

Deliveroo France had already been found guilty of undeclared labour in a civil case in February 2000, when a court sided with a rider seeking to be recognised as an employee and not a contractor.

URSSAF is seeking to recover some 9.7 million euros from Deliveroo, and a court had already ordered in 2020 the seizure of three million euros in Deliveroo’s account while the case was ongoing.

The ruling comes as the European Union is taking aim at the business model of gig economy companies like Deliveroo and the ride-sharing service Uber, with plans that could force them to reclassify their workers as fully-fledged employees.

The companies insist the workers are self-employed, and courts across Europe have issued contradictory decisions — sometimes forcing companies to provide workers with standard contracts, at other times upholding their status as independent contractors.

In December, Deliveroo won a case in Belgium where a court found that riders did not have to be requalified as employees, with the requisite social security and tax obligations.

China reported seven more Covid-19 deaths in Shanghai on Tuesday, as major firms such as Tesla forged ahead to resume production after a damaging weeks-long lockdown.

Supply chains have clogged and businesses have been forced to halt production in the metropolis of 25 million, as authorities cling to a zero-Covid approach to combat China’s worst outbreak since the virus first emerged in late 2019.

Beijing’s strategy of eliminating clusters as they surface — through hard lockdowns and mass testing — has kept fatalities low, but the measures are taking a toll on economic growth.

Authorities have called for a “whitelist” of key industries and companies to be drawn up so production can continue, with over 600 firms identified for early work resumption in Shanghai.

US electric car giant Tesla “officially resumed production” on Tuesday, state media reported, after suspending work at its multi-billion-dollar “gigafactory” in the city for over 20 days.

But this will take place in a “closed-loop system”, with staff sleeping on site and being tested for Covid, Bloomberg News reported.

Chinese automaker SAIC Motor said this week it was “launching production resumption stress tests”.

– Seven new deaths –

Tuesday’s fatalities bring Shanghai’s death toll since its lockdown to 10.

Some have cast doubt on official figures in a nation where the vast elderly population has a low vaccination rate. 

By comparison, Hong Kong — which also has a high number of unvaccinated people over the age of 60 — has tallied nearly 9,000 deaths among 1.18 million Covid-19 cases since the Omicron variant surged there in January.

Unverified social media posts have claimed Shanghai’s deaths are going unreported, and the messages have been quickly scrubbed from the internet.

Shanghai health officials said Sunday that less than two-thirds of residents over 60 had received two Covid jabs and under 40 percent had received a booster.

The seven newly reported deaths were all unvaccinated patients, city health official Wu Qianyu told a press conference on Tuesday.

They were aged between 60 and 101, and suffered from underlying conditions such as heart disease and diabetes, according to the Shanghai Municipal Health Commission.

The patients “became severely ill after admission to hospital, and died after ineffective rescue efforts, with the direct cause of death being underlying diseases”, the commission said.

Shanghai logged more than 20,000 new and mostly asymptomatic Covid cases Tuesday, defying officials’ efforts to stamp out the infection.

Many of the city’s residents have been confined to their homes since March, with some flooding social media with complaints of food shortages, spartan quarantine conditions and heavy-handed enforcement.

Protest footage has circulated faster than government censors can delete it.

Chinese officials have scrambled in recent weeks to contain an outbreak spanning multiple regions, largely driven by the fast-spreading Omicron variant.

By one estimate on Monday, at least 44 cities are currently under some form of lockdown in China, affecting around 350 million people.

A Paris court on Tuesday handed the food delivery group Deliveroo a fine of 375,000 euros ($405,000) after finding it guilty of “undeclared labour” by using freelance delivery riders who should have been considered employees.

It was the latest move by courts to recognise the rights of “gig economy” workers who are often classified as independent contractors by start-ups and other firms, and thus ineligible for health insurance and other benefits.

The court ordered the maximum fine sought by prosecutors and also handed suspended one-year prison sentences to two former French executives at the Britain-based Deliveroo.

A third executive got a suspended four-month sentence and a 10,000 euro fine for complicity in the system, and Deliveroo was ordered to pay 50,000 euros each in damages to five labour unions who joined the case as plaintiffs.

State prosecutor Celine Ducournau also sought in vain to question Deliveroo’s American founder and CEO Will Shu over a “fraud” that gave “all the benefits to the employer… without any of the inconveniences.”

Over 100 Deliveroo riders were plaintiffs in the case prosecutors opened in 2015 but which got fresh impetus in 2020, when France’s URSSAF agency in charge of employer social security collections demanded millions of euros in back payments.

Several riders told the court they had sought jobs that offered “flexibility” in terms of scheduling, only to find intense pressure to work at peak meal times, strict oversight of their routes and days off, and penalties if orders weren’t delivered fast enough.

Deliveroo France had already been convicted of undeclared labour in a civil case in February 2000, when a labour court sided with a rider seeking to be recognised as an employee and not a contractor.

URSSAF is seeking to recover some 9.7 million euros from Deliveroo, and a court had already ordered in 2020 the seizure of three million euros in Deliveroo’s account while the case was ongoing.

A Deliveroo spokesman said after the verdict that the company was “considering” an appeal.

European stock markets slid Tuesday, catching up with losses in Asia and on Wall Street caused by slow growth concerns in China and rising US interest rates. 

Trading for the first time since Thursday, London’s benchmark FTSE 100 index was down 0.4 percent nearing the half-way stage.

Losses were steeper in the eurozone, with Frankfurt’s DAX index and the Paris CAC 40 shedding around one percent, also after an extended weekend.

“Despite the public holiday in most of Europe yesterday, this is shaping up to be another volatile and eventful week for global markets,” noted Lukman Otunuga, senior research analyst at FXTM.

“Later today, the International Monetary Fund will release its updated global economic outlook with markets expecting a downgrade for growth this year.”

Otunuga said “such a development may hit investor confidence, sweetening appetite for safe-haven assets”.

One traditional haven, the yen, struck a fresh 20-year low Tuesday at 128 to the dollar, with the Japanese currency heavily weighed down by diverging monetary policy in Japan and the United States.

High oil prices in Japan — a major importer of crude — have also pushed the currency lower, according to analysts.

Japan’s Nikkei 225 rebounded from losses Monday — and led other major Asian stock markets higher.

But Hong Kong plummeted by its largest margin in three weeks — knocked by concerns around Beijing’s tough tech-sector regulations and economic growth concerns in China.

Millions of residents are still cloistered in their homes in China’s financial capital Shanghai.

Investors were left weighing whether attempts to lift the economy by Chinese policymakers — who have held off cutting interest rates — would offset Beijing’s zero-Covid policies.

“The focus in Asia is on mainland policy easing to cushion the impact of lockdowns,” said Stephen Innes at SPI Asset Management.

China’s economic growth accelerated in the first quarter of the year to 4.8 percent, official data showed Monday, but the government warned of “significant challenges” ahead.

– Key figures around 1030 GMT –

London – FTSE 100: DOWN 0.4 percent at 7,586.79 points

Frankfurt – DAX: DOWN 0.9 percent at 14,036.68

Paris – CAC 40: DOWN 1.0 percent at 6,523.90

EURO STOXX 50: DOWN 1.1 percent at 3,807.47

Tokyo – Nikkei 225: UP 0.69 percent at 26,985.09 (close)

Shanghai – Composite: DOWN 0.05 percent at 3,194.03 (close)

Hong Kong – Hang Seng Index: DOWN 2.28 percent at 21,027.76 (close)

New York – Dow: DOWN 0.1 percent at 34,411.69 (close)

Dollar/yen: UP at 128.21 yen from 126.54 yen

Euro/dollar: DOWN at $1.0793 from $1.0802

Pound/dollar: FLAT at $1.3023

Euro/pound: FLAT at 82.87 pence

Brent North Sea crude: DOWN 1.3 percent at $111.68 per barrel

West Texas Intermediate: DOWN 1.6 percent at $106.49 per barrel