The Economist - UK (2022-02-19)

6 TheEconomistFebruary19th 2022
The world this week Business

Stockmarketsremained

jittery amid the possibility of a

Russian invasion of Ukraine.

The s&p 500dropped by

almost 2% in a day and the

Nasdaq by almost 5% over two

days as America warned that a

Russian invasion was immi­

nent. The disquiet spread to

European markets, where

share prices of airlines, which

would see flight schedules

disrupted by no­fly conflict

zones over eastern Europe,

were hit particularly hard.

Trading seesawed in reaction

to the latest diplomatic moves. 

Russia’s belligerence also

caused a spike in oil prices. A

barrel of Brent crude hit close

to $97 a barrel, the highest in

seven years. Energy markets

are hypersensitive to any

disruption in oil­and­gas flows

from Russia. In America the

White House said it was open

to the idea of suspending the

fuel tax on petrol until next

year. With annual consumer­

price inflation in America now

at 7.5% the Democrats are

looking at myriad ways to ease

spiralling household costs. 

Investors were also on high

alert for signs of the Federal

Reserve quickening the pace of

interest-rate rises. The min­

utes of the Fed’s latest meeting

showed it discussing a faster

timetable. Goldman Sachs

forecast that it will raise rates

seven times this year. 

Russia’scentral bank in­

creased interest rates for the

eighth consecutive time, lift­

ing its key rate from 8.5% to

9.5%. Annual inflation is

running at close to 9%. The

rouble has weakened as mar­

kets weigh the effect of crip­

pling sanctions if Russia in­

vades Ukraine. The Bank of

Russia says more rate rises are

possible over coming months. 

The lifting of a covid­19 state of

emergency in September and

resulting surge in consumer

spending helped Japan’s econ-

omyexpand by 1.3% in the last

three months of 2021 com­

pared with the previous quar­

ter, when it had shrunk by

0.7%. Japanese gdpgrew by

1.7%forthewholeof2021.New

restrictions,however,came

intoforceatthestartofthis

yearwiththeoutbreakofthe

Omicronvariant.

Fallingfoodprices,notablyfor

pork,laybehinda dropin

China’sofficialconsumer­

inflationrateto0.9%inJanu­

ary,yearonyear.Manufactur­

ingcostsalsoeased.Thepro­

ducer­priceindexroseby9.1%.

Thatwasdownfrom10.3%in

December,helpedbya soft­

eningofcoalandsteelprices.

Britain’sannualrateof

inflationhit a new 30­year

high, as consumer prices rose

by 5.5% in the 12 months to

January. Inflation is expected

to rise to 7% in April when the

regulator’s price cap on energy

tariffs increases. As in other

countries, household­energy

costs are soaring. Electricity

bills rose by 19% in the year to

January and gas bills by 28%.

Ahomefromhome

Airbnbreportedrecordrev­

enuesfor2021,aspandemic

restrictionseased.Although

thereweresignsofitsrenters

returningtocities,growthwas

strongerinbookingsforover­

nightstaysinnon­urbanareas.

Airbnb’susersarealsostaying

intheirrentedabodesfor

longer.Long­termstaysof 28

nightsormorearethecom­

pany’sfastest­growingcatego­

rybytriplength,nowaccount­

ingfora fifthofnightsbooked.

Thisyearhasseena surgeof

interestinsummertravel.

Flutterwaveraised$250mina

roundoffundraising,bringing

itsestimatedvalueto$3bnand

makingit Africa’smostvalu­

ablestartup.Thefintechfirm,

basedinLagosbutwithhead­

quartersinSanFrancisco,

enablescross­borderpay­

mentsamongbusinesses

acrossAfricaandwantsto

expandintotheMiddleEast

and Latin America. 

Another takeover was

announced in the chip

industry, as Intelagreed to pay

$5.4bn for Tower Semicon-

ductors, an Israeli “foundry”

company that makes chips and

circuit boards for other firms,

including Panasonic and

Samsung, without designing

them.Intelisexpandingits

foundrybusinessamida

globalshortageofchipsaspart

ofa turnaroundplan,which

includesinvesting$20bnina

newhubinOhio.

Texaslauncheda lawsuit

againstMeta,Facebook’s

parentcompany,claimingthat

theuseoffacial­recognition

onthesocialnetworkresulted

in“tensofmillionsof

violations”ofthestate’s

privacylaw.Metapulledits

facial­recognitionsystemlast

yearasthethreattoitsbusi­

nessfromsuchlawsuits

increased.Texasisseeking

billionsofdollarsfromMeta.

Marketspirits

India’ssecuritiesandexchange

regulatorfineda formerhead

oftheMumbaibourse

$400,000forsharingsensitive

informationwithherguru.

TheregulatornotedthatChitra

Ramkrishna’sunnamedyogi

lived in the Himalayas, and

that she had described him as

having “spiritual powers” that

did not require “physical co­

ordinates and would manifest

at will”. That didn’t stop her

from allegedly emailing the

mystical mountain man about

confidential business plans.

The regulator said she had

been a “puppet in his hands”. 

Inflation

Britain, % increase on a year earlier

Source:ONS

6

4

2

0

2021 2022

CPI without energy

Consumer-price

index (CPI)