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Three months in, deaths mount and diplomats vie to stop Gaza war’s spread

Toy soldiers, Hamas and Israel flags are seen in this illustration taken, Oct. 15, 2023. — REUTERS

JERUSALEM/AMMAN — Top international diplomats discussed strategies for keeping the Gaza war from spreading beyond Israel and the Palestinian territories on Sunday, exactly three months after the start of the conflict, as Palestinian and Israel authorities claimed thousands of military and civilian deaths.

US Secretary of State Antony Blinken and the European Union’s top diplomat, Josep Borrell, were on separate trips to the region to try to quell spillover from the three-month-old war into Lebanon, the Israeli-occupied West Bank and Red Sea shipping lanes.

Israel and Hezbollah often trade fire across the Lebanese border, the West Bank is seething with anger, and the Iran-aligned Houthis in Yemen seem determined to continue attacks on Red Sea shipping until Israel stops bombarding Palestinians in Gaza.

Mr. Blinken was in Amman, Jordan, after stops in Turkey and Greece. Mr. Borrell was on a Jan. 5-7 trip to Lebanon. Both told reporters their priority was quelling spillover from the fighting. “We have an intense focus on preventing this conflict from spreading,”

Mr. Blinken told reporters before heading to Jordan from Chania, Greece, on his fourth trip to the region since Oct. 7, when Hamas launched a cross-border attack on Israel.

Israeli military spokesperson Rear Admiral Daniel Hagari gave a roundup on Saturday, the eve of the three-month anniversary, as Israel has signaled a shift recently to scale down forces while facing international pressure over the mounting civilian death toll and humanitarian crisis in the Gaza strip.

Mr. Hagari said Israeli forces had completed dismantling the Hamas militant group’s “military framework” in northern Gaza and killed around 8,000 militants in that area. “We are now focused on dismantling Hamas in the center of and south of the (Gaza) strip,” he said in an online briefing.

“Fighting will continue during 2024. We are operating according to a plan to achieve the war’s goals, to dismantle Hamas in the north and south,” Mr. Hagari said.

Israel’s bombing and incursions of Gaza began after Hamas militants from the strip attacked Israel on Oct. 7, killing 1,200 people and taking 240 hostage, according to Israeli officials.

More than 100 hostages are still believed to be held by Hamas.

Israel’s offensive, aimed at wiping out Hamas, had killed 22,722 Palestinians by Saturday, according to Palestinian health officials, and devastated the tiny Gaza enclave. 

Palestinian health ministry casualty figures do not differentiate between fighters and civilians, but the ministry has said that 70% of Gaza’s dead are women and people under 18. The fighting has displaced most of Gaza’s 2.3 million population, with many homes and civilian infrastructure left in ruins amid acute shortages of food, water and medicine.

‘THEY STILL BOMBED US’
On Saturday, fighting raged on in Gaza, especially in and near the southern city of Khan Younis, where the Israeli military said it had killed members of Hamas, which rules the densely populated coastal strip.

The Palestinian Red Crescent reported heavy shelling near the Al-Amal Hospital in Khan Younis. Shrapnel flew into the medical facility amid the sound of firing from drones, it said on social media.

The official Palestinian news agency WAFA said an Israeli air strike on a residential building on Saturday night had killed at least 12 people and wounded 50, and another strike on a school in central Gaza had killed as many as four.

The Israeli military said its commandos had killed several militants and found military equipment used by Hamas.

Standing outside a morgue in Khan Younis, 11-year-old Mahmoud Awad said Israeli airstrikes had killed his parents and siblings. “We were in al-Shati refugee camp and they dropped fliers saying Gaza is a battlefield, so we fled to Khan Younis because it was a safe place, and they still bombed us,” he said.

Israel denies targeting civilians and says Hamas fighters embed themselves among civilian populations, working from tunnels beneath facilities like hospitals. Hamas, which is backed by Iran and is sworn to Israel’s destruction, denies using civilians as human shields.

Mr. Blinken met the leaders of Turkey and Greece on Saturday at the start of a week-long trip that will also take him to Israel, the Israeli-occupied West Bank, Jordan, Qatar, the United Arab Emirates, Saudi Arabia and Egypt.

In Istanbul, Blinken held talks with Turkish Foreign Minister Hakan Fidan and President Tayyip Erdogan, a fierce critic of Israel’s military actions in Gaza. Turkey, which unlike most of its NATO allies does not class Hamas as a terrorist organization, has offered to mediate.

Mr. Blinken said he would spend the next few days discussing with allies and partners how they can use their influence to protect civilians and maximize humanitarian aid.

Mr. Borrell expressed alarm in Beirut about exchanges of fire between Israel and Hezbollah forces in Lebanon and the risk that Lebanon could be dragged into the Gaza conflict.

“Diplomatic channels have to stay open. War is not the only option – it’s the worst option,” Borrell said. — Reuters

Cathay Pacific cuts flights to avoid cancellations

MDS AYON

SEOUL — Hong Kong’s Cathay Pacific Airways will cut a dozen flights a day on average until the end of February, the airline said on Sunday, in a move to avoid cancellations as the busy Lunar New Year travel season approaches.

Cathay had to cancel some flights over the peak travel period for Christmas and the year end because its operations were stretched, it said in a statement.

“(Cathay) has consolidated on average six flight pairs per day for the rest of January and February, focusing on routes with multiple daily frequencies, where possible,” it added.

The carrier said it had reviewed its flight schedule and increased the numbers of pilots on standby to avoid disruption in coming weeks.

Cathay, which said in November it intended to recruit 5,000 more staff during 2024, had pruned employees drastically in response to the COVID-19 pandemic, and changed staff contract terms and conditions.

Last month, the Hong Kong Aircrew Officers Association (HKAOA), which represents some of its pilots, said Cathay’s passenger business had 58% of the pilots it had before the pandemic.

In a November briefing to analysts, Cathay dropped a goal of rebuilding to pre-pandemic levels its cargo and passenger capacity by the end of 2024, giving no new date.

In October, passenger capacity was 62% of 2019 levels, and cargo operations were at 79%, the airline said. — Reuters

Trump demands release of those jailed for 2021 Capitol attack

Supporters of U.S. President Donald Trump climbed the walls at the U.S. Capitol in Washington, D.C. in this file photo taken on Jan 6, 2021. — REUTERS

CLINTON, Iowa — Donald Trump on Saturday downplayed his role in the siege of the US Capitol on the third anniversary of the attack, arguing that those prosecuted for storming the building should be freed.

Speaking at a campaign event in Clinton, Iowa with the first Republican nominating contest little more than a week away, Mr. Trump called those jailed in the wake of the Jan. 6, 2021 attack “hostages” and said they had been mistreated by the Biden administration.

“They’ve suffered enough,” Mr. Trump said. “I call them hostages. Some people call them prisoners.”

Speaking to more than a thousand supporters in a school gymnasium, Mr. Trump repeated his unfounded claims that the 2020 election was fraudulent and cast himself as a victim of political persecution.

“I got indicted because I challenged the crooked election,” Mr. Trump told the crowd.

Mr. Trump faces a bevy of state and federal charges for his attempts to subvert the election, but has not been charged with instigating the 2021 insurrection, when a mob of Trump supporters stormed the Capitol as legislators were certifying President Joseph R. Biden’s 2020 election victory.

Mr. Biden has repeatedly called Mr. Trump a threat to democracy on the campaign trail, and that messaging has emerged as a central theme of his campaign so far. Vice President Kamala Harris spoke of the Jan. 6 assault at length during an event in South Carolina on Saturday.

At recent campaign events in Iowa, Mr. Trump’s supporters — and even supporters of other Republican presidential hopefuls — have downplayed the significance of Jan. 6, and many have embraced conspiracy theories regarding the events of that day.

Mr. Trump himself has suggested during previous campaign stops that undercover FBI agents played a significant role instigating the attack, an account not supported by official investigations.

More than 1,200 people have been charged with taking part in the riot, and more than 900 have either pleaded guilty or been convicted following a trial.

“It wasn’t really an insurrection,” said Hale Wilson, a Trump supporter from Des Moines who attended a campaign event in Newton, Iowa earlier in the day. “There were bad actors involved that got the crowd going.”

At the Clinton event, Erin George, a local county commissioner, said the prison sentences handed down to the rioters “were 100 percent unwarranted.”

Mr. Trump was in Iowa to curry support ahead of the state’s Republican caucus on Jan. 15, which is the first contest of the Republican presidential nominating contest. He currently leads all competitors by more than 30 percentage points in the state, according to most polls. — Reuters

Japan prosecutors make first arrest in political funding scandal

OFFICE BUILDINGS are seen in the night at a business district in Tokyo, Japan, Nov. 10, 2016. — REUTERS

TOKYO — A lawmaker from Japan’s ruling party was arrested on Sunday for suspected fundraising violations, media reported, the first arrest in a scandal that has battered support for Prime Minister Fumio Kishida.

Tokyo prosecutors arrested Yoshitaka Ikeda, public broadcaster NHK and Kyodo News said, escalating the biggest fundraising scandal to engulf Kishida’s Liberal Democratic Party (LDP) in decades.

Ikeda allegedly received a kickback of some 48 million yen ($330,000), the largest among the LDP faction of the late former Prime Minister Shinzo Abe, which is at the centre of the scandal, NHK said.

A person answering the phone at the Tokyo prosecutor’s office said no one was available to comment. The office has previously told Reuters it could not comment on any ongoing investigation.

No one responded to calls to Ikeda’s offices in Tokyo and his base in central Japan. Footage on NHK showed a sign on the door of Ikeda’s offices saying they were temporarily closed.

The scandal last month forced the resignations of Abe faction heavyweights Hirokazu Matsuno as Mr. Kishida’s chief cabinet secretary, Yasutoshi Nishimura as trade and industry minister and Koichi Hagiuda as LDP policy chief.

The three have not commented on media reports about their involvement.

Prosecutors suspect the Abe faction failed to report as much as 500 million yen ($3.5 million) in funds over five years, while the smaller Nikai faction was believed to have not reported 100 million yen, NHK has reported.

Media reports have said prosecutors were examining whether other LDP factions, including the one Kishida previously headed, were involved in the scandal. The prime minister has vowed to “consider appropriate measures at the right time to restore public trust”.

His support had sunk to around 20% in mid-December in media public opinion surveys, the lowest for any prime minister in more than a decade.

The investigation centers on money raised from ticket sales to party events, some of which was allegedly given directly to lawmakers by the party and left off the books, despite requirements to report such payments under the Political Funds Control Act. — Reuters

Philippines remains open to diplomatic discussions with China – national security adviser

PHILIPPINE COAST GUARD/HANDOUT VIA REUTERS

MANILA (UPDATE) – The Philippines remains open to diplomatic discussions with China and believes the two nations can achieve a resolution to disputes over the South China Sea through peaceful dialogue, its national security adviser said in a statement on Friday.

Eduardo Ano’s remarks came after a Chinese foreign ministry spokesperson on Thursday called recent joint patrols by the United States and the Philippines in the South China Sea “provocative” and “irresponsible”.

“Our joint patrols with the United States and potential future activities with other allied countries shows our mutual commitment to a rules-based international order and for promoting peace and stability of the region,” Mr. Ano said.

The Chinese embassy in Manila repeated the foreign ministry spokesperson’s comments when asked to respond to Mr. Ano’s remarks.

Two Chinese navy vessels had shadowed Philippine and U.S. ships conducting the recently concluded joint patrols, the Philippine military said on Thursday.

The two-day maritime exercises involved four vessels from the Philippine navy and four ships from the U.S. Indo-Pacific fleet, including Nimitz-class aircraft carrier USS Carl Vinson. The patrols ended on Thursday and the U.S. vessels called at the port of Manila on Friday.

The joint patrols were the second held by the Philippines and the U.S. in less than two months in the South China Sea, where tensions over disputed territorial claims are flaring.

“The Philippines remains open to diplomatic discussions with China and reaffirms its commitment to fostering good relations with all nations,” Mr. Ano said.

“We believe that through peaceful dialogue and adherence to international law, we can achieve a resolution that serves the best interest of all parties involved in the region,” he said.

China lays claim to almost the entire South China Sea, a conduit for more than $3 trillion in annual ship commerce. China’s claims of sovereignty overlap territorial waters claimed by the Philippines, Vietnam, Indonesia, Malaysia and Brunei.

In 2016, the Permanent Court of Arbitration in the Hague said China’s claims had no legal basis. China has rejected that ruling. — Reuters

Wholesale goods price growth slows to 4.2% in November

PHILIPPINE STAR/ MICHAEL VARCAS

By Abigail Marie P. Yraola, Researcher

GROWTH in wholesale prices of general goods eased in November, its weakest pace in five months, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary data from the PSA showed the general wholesale price index (GWPI) slowed by 4.2% year on year, significantly lower than the 7.2% in November 2022 and 4.4% in October.

The November reading was the slowest since the 4% recorded in June 2023.

Year to date, GWPI averaged 4.9%, lower than the 7.4% a year ago.

Robert Dan J. Roces, chief economist at Security Bank Corp. said that the November might be a result of the economy adjusting post-pandemic and spending patterns returning to normal, which could lead to reduced demand pressures.

“Improved supply chain conditions, which may have reduced logistical costs and supply shortages that previously drove prices higher, as well as stabilization or decline in global commodity prices, particularly if the goods are imported or influenced by global markets,” he said in a Viber message.

Additionally, he said a possible cause for the slowdown in bulk prices is the government or central bank policies that may have reduced inflationary pressures, such as adjusting import tariffs or providing subsidies.

The indicator could also be indicating base effects from a year earlier, Mr. Roces added.

In its December policy meeting, the Bangko Sentral ng Pilipinas (BSP) decided to maintain its benchmark interest rate at a 16-year high of 6.5%.
The decision came after the BSP had raised rates by a cumulative of 450 basis points between May 2022 and October 2023 in its efforts to control inflation.

The PSA said that the downtrend seen in November is due to the downtrend in the index of mineral fuels, lubricants, and related materials which contracted by 6.7% from a 3.7% decline in October.

This was followed by miscellaneous manufactured articles (3.3% from 3.6%) and chemicals including animal and vegetable oils and fats (1.5% from 1.8%).

Other commodities that logged slower growth were the heavily weighted food index (6.8% from 7%) and machinery and transport equipment (1.3% from 1.5%).

Meanwhile, manufactured goods classified chiefly by materials remained at 4.6%.

On the other hand, beverages and tobacco stood at 6.2% from 6% in October while a slower annual decline was logged in the index of crude materials, inedible except fuels at 1.9% in November from its 3.5% decline a month earlier, the PSA said.

Bulk prices growth in Luzon and the Visayas slowed while it further rose in Mindanao.

Wholesale price growth in Luzon eased by 4.1% during the period from 7.4% in November 2022 and 4.4% in October last year.

In the Visayas, GWPI likewise slowed by 5.2% in November, significantly lower from 6.5% in the same month in 2022 and 5.3% in October 2023.

On the other hand, price growth in Mindanao grew by 3.6% against the 4.8% in November 2022. It also picked up from the 3.3% in October 2023.

“If the trends observed in November continue and barring any unforeseen supply shocks or significant policy changes, the general trajectory of wholesale prices might remain stable or continue to ease slightly,” Mr. Roces said.

Inflation further eases to 3.9% in December

A vendor arranges fruits at a market in Malate, Dec. 19, 2023. -- Edd Gumban/ The Philippine Star

By Keisha B. Ta-asan, Reporter

Inflation slowed to 3.9% in December, settling within the central bank’s 2-4% target range for the first time in nearly two years, amid easing prices of food and utilities.

Preliminary data from the Philippine Statistics Authority (PSA) showed the overall year on year increase in prices of widely used goods and services eased to 3.9% in December, from 4.1% in November and 8.1% a year ago.

December’s inflation print was the slowest reading in 22 months or since the 3% reading in February 2022.

The latest consumer price index (CPI) is a tad lower than the 4% median estimate in a BusinessWorld poll last week. It also settled within the 3.6% to 4.4% forecast for the month given by the Bangko Sentral ng Pilipinas (BSP).

However, inflation averaged 6% for 2023, slightly higher than the 5.8% in 2022. This marked the second straight year that inflation breached the BSP’s 2-4% target band.

The 6% print was the highest in 14 years or since the 8.2% full-year average in 2008, at the height of the global financial crisis.

“The latest inflation outturn is consistent with the BSP’s projections that inflation will likely moderate in the near term due to easing supply-side price pressures and negative base effects,” the BSP said in a statement.

Core inflation, which discounted volatile prices of food and fuel, stood at 4.4% percent in December — slower than the previous month’s 4.7% and the 6.9% a year earlier.

For the entire year, core inflation averaged 6.6%, much faster than the 3.9% print in 2022.

At a press briefing, National Statistician Claire Dennis S. Mapa said December inflation print was due mainly the 1.5% growth in prices of housing, water, electricity, gas and other fuels, which was slower than the 2.5% in November.

This was followed by the 5.4% rise in the food and non-alcoholic beverages index, easing from 5.7% in November.

Food inflation alone went down to 5.5% in December, from 5.8% in November and 10.6% a year ago.

However, rice inflation quickened to 19.6% in December from 15.8% in November. It was also the most significant contributor to December inflation, adding 1.7 percentage points (ppt) to the headline print.

At 19.6%, rice inflation was the highest since the 22.9% recorded in March 2009.

Mr. Mapa said the average price of regular milled rice last month went up to P48.50 per kilo from P46.73 per kilo in November. The average price of well-milled rice also rose to P53.82 per kilo in December from an average of P51.99 per kilo a month earlier.

Year on year, prices of regular milled rice and well-milled rice grew by 22.3% and 22.4%, respectively.

In a statement, the National Economic and Development Authority (NEDA) said the extension of the Executive Order (EO) No. 50, which extended the Most Favored Nation (MFN) reduced tariff rates for key agricultural commodities like pork, corn, and rice, is crucial to ensure a stable food supply in the Philippines.

“Amid an uptrend in international rice prices and the expected negative impact of the El Niño phenomenon, the Interagency Committee on Inflation and Market Outlook will closely monitor the situation and propose further temporary tariff adjustments, if necessary,” NEDA Secretary Arsenio M. Balisacan said.

“We will also push for trade facilitation measures to reduce other non-tariff barriers. While our medium-term objective to boost agricultural productivity remains, it is important to augment domestic supply to ease inflationary pressures on consumers, particularly those in low-income households,” he added.

Meanwhile, transport inflation inched up 0.4% in December, reversal from the 0.8% contraction in November.

PSA’s Mr. Mapa said passenger transport by road such as jeepney and tricycle fares increased 2.9% in December from 2.4% a month prior.

Prices of diesel decreased by 13% year on year, but lower than the 18.4% decline in November. Gasoline also recorded a -3.9% inflation rate from the -4.8% seen in the previous month.

In December alone, pump price adjustments stood at a net increase of P0.3 per liter for gasoline. Diesel and kerosene prices had a net decrease of P0.35 and P0.51 respectively.

Meanwhile, inflation for the bottom 30% income households edged higher to 5% in December from 4.9% in a month prior. Year to date, the inflation rate for this income group stood at 6.7%.

Inflation in the National Capital Region (NCR) decelerated to 3.5% in December from the 4.2% print in November and 7.6% a year ago.

Outside of NCR, consumer prices slowed to 4% from 4.1% in November and 8.2% in December 2022.

STILL HAWKISH OUTLOOK

The BSP said risks to the inflation outlook remains significantly on the upside, citing possible inflationary pressures from higher transport charges, increased electricity rates, rising oil prices, and elevated food prices due to strong El Niño conditions.

“Looking ahead, the Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident,” the BSP said.

“The BSP will continue to monitor inflation expectations and second-round effects and take appropriate action as needed to bring inflation back to the target, in keeping with the BSP’s price stability mandate,” it added.

HSBC economist for ASEAN (Association of Southeast Asian Nations) Aris Dacanay in a note said export prices of rice increased to $659 per metric ton amid lingering El Niño risks to supply.

“Not only is this the highest since 2008, but we have yet to see global rice prices peak. And with rice being a heavy component of the Philippines’ CPI basket, elevated export prices will likely put a floor under how much inflation can moderate,” he said.

Inflation may also quicken to above the 2-4% target in the second quarter due to unfavorable base effects.

“But once these base effects wear off, we expect headline CPI to immediately ease on a year-on-year basis and average within 3-3.5% in the second half,” he said.

“Keeping inflation more manageable is the extension of EO 50, which rolls over the low tariff rates for key food items such as rice and pork. The BSP’s tight monetary stance will also continue to stem any price pressures coming from core items such as rent and housing,” he said.

HSBC lowered its full-year headline inflation forecast to 3.5% in 2024 from 4.1% previously.

“The BSP now has more leg room to adjust monetary policy with the inflation outlook more benign. The larger concern now is the differential between BSP and Fed rates,” Mr. Dacanay said.

Mr. Dacanay said he expects the BSP to cut policy rates alongside the US Fed starting second quarter this year.

“We then expect the BSP to clock a similar pace as the Fed by cutting its policy rate by 25bp in each quarter until the benchmark rate reaches 5% in the third quarter of 2025,” he added.

The BSP has kept its benchmark interest rate unchanged at a 16-year high of 6.5% during its December policy meeting. This was after it hiked 450 basis points (bps) from May 2022 to October 2023 to tame inflation.

On the other hand, the US Federal Reserve kept borrowing costs unchanged at 5.25-5.5% in December, following the 525-bp rate hikes it did from March 2022 to July 2023.

Citi Economist for the Philippines Nalin Chutchotitham said even though upside risks remain, inflation expectations are now better anchored.

“We expect the BSP to maintain its policy rate through the first half of 2024, to help anchor inflation at around the mid-point of the policy target. We expect gradual rate cuts from third quarter onwards as inflation shows a steady declining trend,” she said.

Ms. Chutchotitham also noted that the BSP will likely maintain at least a 50-bp interest rate gap with the Fed to help ensure the peso’s stability against the dollar.

“We forecast the key rate at 5.5% at end-2024, and at 4.5% at end-2025,” she said.

The Monetary Board is scheduled to have its first policy review this year on Feb. 15.

ESPN, NCAA agree to new eight-year, $920 million deal for media rights

ESPN and the National Collegiate Athletic Association (NCAA) have agreed to a $920 million, eight-year extension to their media rights deal that covers 40 championships including international rights to the “March Madness” college basketball tournament.

The deal has an annual average value of $115 million, which more than triples the amount ESPN paid on average each year to the association under the previous 14-year agreement, the NCAA said.

The agreement deepens ESPN’s commitment to college sports, which have been part of the network’s DNA since its launch in 1979. The new NCAA deal includes domestic rights to 21 women’s and 19 men’s championship events, including the high-profile women’s basketball championship game, which last year drew 9.9 million viewers. It adds coverage of Division I men’s and women’s tennis team championships and the collegiate men’s gymnastic championship.

In total, the deal encompasses 24,000 college games spanning more than 20 conferences – enough to provide content across a portfolio of media properties, including the ABC network, ESPN and the ESPN+ streaming service.

Live sports have proven a resilient audience draw, even at a time when television audiences are shrinking. In October, ESPN clinched the U.S. broadcast rights for TGL – a new prime-time golf league created by Tiger Woods and Rory McIlroy.

The new NCAA agreement expands ESPN’s digital rights, setting the stage for the network’s eventual transition to streaming. Disney has said it is seeking minority partners, as the marquee sports network makes its digital leap.

“The NCAA has worked in earnest over the past year to ensure that this new broadcast agreement provides the best possible outcome for all NCAA championships, and in particular women’s championships,” said NCAA President Charlie Baker.

With the increase in value of the agreement, the association will explore revenue distribution units for the women’s basketball tournament, the NCAA said.

The tie-up between the association and ESPN began in 1979, the year of ESPN’s original network launch. – Reuters

German budget savings shrink as farm subsidy cuts delayed

REUTERS

 – Chancellor Olaf Scholz’s coalition, racing to finalize a 2024 budget draft that was delayed by a court ruling, has made unexpected changes, including modifying plans to cut subsidies for agriculture after a backlash from farmers.

The changes will result in 2.5 billion euros ($2.7 billion) less in savings than initially anticipated, but will not affect plans to adopt the budget at the start of February, a government spokesperson said.

The revisions follow weeks of haggling over how to fill a 17 billion euro gap in the budget after a November court ruling threw the government’s financing framework into turmoil.

The gradual phase-out of agricultural diesel subsidies, the postponement of a plastic levy and additional funds for the national railway were among the changes the government announced on Thursday following an agreement between Scholz, Economy Minister Robert Habeck and Finance Minister Christian Lindner.

“We have been talking to each other intensively again in the last few days because we can see the burden on farmers,” Mr. Habeck said.

“Counter-financing has been found” for the amended plan, he added.

Rather than abruptly ending the farmers’ tax break on agricultural diesel, the subsidy will be reduced by 40% this year, by 30% in 2025, and will end from 2026.

The abolition of preferential treatment in vehicle tax for forestry and agriculture is also no longer planned, the government spokesperson said.

“Together we have found a solution that avoids a disproportionate burden being put on the agricultural and forestry industry,” Agriculture Minister Cem Oezdemir said.

Hundreds of farmers protested in central Berlin last month at the prospect of losing the tax break and the president of the German Farmers’ Association (DBV) said the changes were not enough.

“This can only be a first step. Our position remains unchanged: both proposals for cuts must be taken off the table,” said Joachim Rukwied. “This is clearly also about the future viability of our industry and the question of whether domestic food production is still desirable at all.”

Nearly a third of the remaining spending gap from Thursday’s proposed changes is to be compensated for by making proceeds from 2023 off-shore wind projects available for the 2024 budget.

Additional cuts at the agriculture ministry and the “leeway resulting from updated economic and budgetary data in the federal budget” will cover the rest, the statement said. – Reuters

Weekly US jobless claims fall to two-month low; labor market steadily cooling

FREEPIK

 – The number of Americans filing new claims for jobless benefits dropped to a two-month low last week, pointing to underlying labor market strength even as demand for workers is easing.

With the report from the Labor Department on Thursday also showing the number of people on unemployment rolls remained elevated towards the end of December, financial markets continued to anticipate that the Federal Reserve would start cutting interest rates in March.

The government reported on Wednesday that job openings fell to a near three-year low in November. Labor market resilience is expected to again shield the economy from recession this year.

“The labor market is not too hot and not too cold at the moment,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The total number of Americans on the jobless rolls receiving benefits remains elevated relative to prior year levels, but at the moment there is not enough unemployment to say the economy is on the downward slope to recession.”

Initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 202,000 for the week ended Dec. 30, the lowest level since mid-October. Economists polled by Reuters had forecast 216,000 claims for the latest week.

Claims data tend to be volatile around this time of year because of holidays. They have largely bounced around in the lower end of their 194,000-265,000 range for 2023.

Unadjusted claims fell 6,820 to 268,020 last week. Claims plunged by an estimated 7,572 in California and tumbled 6,080 in Texas. That helped to more than offset notable increases in Pennsylvania, New Jersey, Michigan, Massachusetts and Connecticut.

The labor market is steadily cooling following 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022. The unemployment rate, however, has remained below 4% as companies hoard workers following difficulties finding labor in the aftermath of the COVID-19 pandemic.

“The labor market is nowhere near a tipping point lower. That’s excellent news for consumption and the economy at large,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. “Recession calls get trampled by a strong, employed consumer and that’s currently where things stand.”

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. US Treasury yields rose.

 

LAYOFFS LOW IN DECEMBER

Low layoffs were underscored by a separate report from global outplacement firm Challenger, Gray & Christmas on Thursday that showed job cuts announced by U.S.-based employers dropped 24% to 34,817 in December.

Planned layoffs, however, jumped 98% to 721,677 in 2023, the highest annual count since 2020. That largely reflected cuts earlier in the year, with most of them in the technology, retail, healthcare and media sectors. Excluding the pandemic, it was the highest tally since 2009.

Financial markets are betting the Fed will begin cutting interest rates as early as March. Minutes of the U.S. central bank’s Dec. 12–13 policy meeting published on Wednesday showed officials viewed the labor market as remaining tight, but also continuing to “come into better balance.”

They also showed that “several participants noted the risk that, if labor demand were to weaken substantially further, the labor market could transition quickly from a gradual easing to a more abrupt downshift in conditions.”

The US central bank held its policy rate steady in the current 5.25%-5.50% range at last month’s meeting and policymakers signaled in new economic projections that the historic monetary policy tightening engineered over the last two years is at an end and lower borrowing costs are coming in 2024.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 31,000 to 1.855 million during the week ending Dec. 23, the claims report showed. The so-called continuing claims have mostly increased since mid-September, a trend blamed largely on difficulties adjusting the data for seasonal fluctuations after an unprecedented surge in filings early in the pandemic.

Economists expect the distortion will be smoothed out when the government revises the data this year.

The claims data have no bearing on the Labor Department’s employment report for December, which is scheduled to be released on Friday, as they fall outside the survey period. Nonfarm payrolls likely increased by 170,000 jobs in December, according to a Reuters survey of economists, after rising by 199,000 jobs in November.

The unemployment rate is forecast to rise to 3.8% from 3.7% in November.

Another report on Thursday showed private payrolls increased by 164,000 jobs in December, the biggest gain in four months, after a rise of 101,000 in November.

The ADP National Employment Report, however, has been unreliable in predicting the private payrolls count in the Labor Department’s monthly employment report. It showed wage growth continuing to slow, with salaries for workers staying at their current jobs rising 5.4% year-on-year in December after increasing 5.6% in November.

“The labor market is becoming less tight but not collapsing,” said Nancy Vanden Houten, lead US economist at Oxford Economics in New York. – Reuters

BSP to limit its forex intervention

BW FILE PHOTO

By Keisha B. Ta-asan, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to limit its foreign exchange intervention on markets by finalizing a new framework this year, its chief said on Thursday.

In his first public event this year at the Rotary Club’s weekly meeting, BSP Governor Eli M. Remolona, Jr. said the central bank aims to make the peso more competitive and reduce restrictions in the foreign exchange market.

“We’re developing a framework for intervention… We think intervention should only happen during times of stress. It’s meant to contain stress,” he said.

Mr. Remolona told reporters that BSP Senior Assistant Governor Edna C. Villa will head the central bank’s Financial Markets department, replacing retired Ma. Ramona Gertrudes D.T. Santiago. 

The foreign exchange framework will also be implemented this year, he said.

The BSP chief has instructed Ms. Villa to identify the Philippines’ peers in the region when it comes to movements against the dollar.

“We want to do things in the right way. We want to do things based on fundamentals and also based on what we know is going on in the markets,” he said.

Meanwhile, Mr. Remolona noted that October 2022 was a stressful episode for the central bank and the foreign exchange market. 

“Those are the events in which we want to intervene,” he said. “I think we’ve been intervening a bit too much. If it’s about containing stress, that also means intervention should be infrequent.”

In October 2022, the peso reached its record low of P59 against the dollar. This also caused the peso to add to inflationary pressures during that time, which prompted the BSP to intervene in the foreign exchange market and raise interest rates. 

The peso has since rebounded to the P55 level, closing at P55.50 against the dollar on Thursday.

To tame inflation, the Monetary Board hiked borrowing costs by 450 basis points (bps) from May 2022 to October 2023. This has brought the key interest rate to 6.5%, its highest in 16 years.

Mr. Remolona said the current 6.5% policy rate is still appropriate to ensure growth and tame inflation at the same time. 

“People say we’ve been tightening too much… that’s a very difficult challenge because we want to make sure that we don’t tighten unnecessarily,” he said.

However, the BSP chief said there are still upside risks to inflation, but he is hoping that inflation will settle within the 2-4% target range for most of 2024.

BSP sees inflation settling at an average of 6% in 2023, before easing to 3.7% in 2024 and 3.2% in 2025.

A BusinessWorld poll last week yielded a median estimate of 4% for December headline inflation, within the BSP’s 3.6-4.4% forecast for the month. This is slightly slower than 4.1% in November but significantly below 8.1% in December 2022.

If realized, December could mark the first time that inflation met the central bank’s 2-4% target after 20 straight months. It would also be the slowest since the 3% print in February 2022.

This would bring the 2023 inflation average to 6%, matching the BSP’s baseline forecast.

The Philippine Statistics Authority will release December consumer price index data on Friday.

PHL firms seen to hike salaries by 6.2% this year

Workers are seen installing steel at a construction site in Santa Cruz, Manila. — PHILIPPINE STAR/EDD GUMBAN

SALARY INCREASES are expected to be higher in the Philippines this year, amid growing demand for professionals and elevated inflation, according to global professional services firm Mercer.

In its Total Remuneration Survey conducted last year, Mercer said Philippine-based organizations projected a median salary hike of 6.2% in 2024, slightly higher than the actual 6% salary increase last year. 

It is also above the projected average median salary increase of 5.2% in Asia for 2024.

“The projected hike in median salary increment can be attributed to factors such as the rising demand for skilled professionals, the need to attract and retain top talent in a fiercely competitive job market, and persistent inflationary pressures,” Mercer said in a statement.

The expected median salary increase in the Philippines is the fourth highest in the region, just behind India (9.3%), Vietnam (7%), and Indonesia (6.5%).

The country surpassed the projected median salary increments in Mainland China (5.2%), Malaysia (5.1%), Thailand (4.7%), South Korea (4.4%), and Singapore (4.2%).

Meanwhile, Hong Kong SAR (2.6%), Taiwan (3.8%) and Japan (3.9%) reported the lowest projected median salary increments in the region.

Floriza I. Molon, business leader at Mercer Philippines, said that most industries are seen to ramp up hiring as businesses expand this year.

“The Philippines is poised for economic growth despite some global headwinds. Some industries will continue to hire as businesses, particularly in shared services and outsourcing industry, retail and consumer sectors expand,” Ms. Molon said.

Mercer said salary increases will likely be consistent in most industries this year, as firms seek to retain talent.

The energy sector is seen to raise salaries by 7% this year, the highest among industries in the Philippines, data from Mercer showed. This is the same as the 7% hike implemented in 2023.

The high-technology industry is expected to hike salaries by 6.8%, a tad higher than the actual 6.5% increase last year.

Firms in retail and wholesale will increase wages by 6.7%, slightly higher than last year’s 6.5%.

Consumer goods firms will hike wages by 6.5%, faster than the 6% implemented last year.

“Besides compensation, companies would need to reassess their total rewards programs focusing on the employee benefits and work experience,” Ms. Molon said.

Citing Mercer Global Talent Trends 2023 report, Ms. Molon said that employees prefer to stay with organizations that offer job security, work flexibility and high pay.

“Employees are also expecting benefits and career opportunities within their organizations. The ability to provide these creates a more holistic and strategic management on talent in the workplace,” she added.

China Banking Corp. Chief Economist Domini S. Velasquez said businesses will likely provide higher salary increases as inflation remains elevated.

The Bangko Sentral ng Pilipinas (BSP) expected inflation to have averaged 6% in 2023. It sees inflation averaging 3.7% in 2024.

“The rise in inflation could prompt businesses to provide higher compensation to offset the increased cost of living for Filipinos,” Ms. Velasquez said in a Viber message.

“Moreover, the approved minimum wage hikes in 2023 would further contribute to the upward trend in average wages for individuals earning above the minimum wage,” she added.

Ms. Velasquez said the wage increases should not “exacerbate” inflation and be balanced out by improving worker productivity.

“One key factor in achieving this balance is the improvement of worker productivity. As businesses recover from the impact of the pandemic and economic activities gradually increase, it is anticipated that Filipino workers will demonstrate higher productivity levels,” she said.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that implementing salary increases will not only allow businesses to be competitive but also allow the Philippines to catch up with its regional peers in terms of per capita income.

“Given the fact that the Philippines is still among the fastest-growing economies in Asia, it still has relatively lower per capita incomes and is yet to catch up with other neighboring countries,” he said.

“Essentially the demand-supply balance of talent is a major determinant for wage growth in view of local or overseas employment choices for local talents,” he added. — Justine Irish D. Tabile