External Affairs Minister S Jaishankar chaired a parliamentary consultative committee meeting on Sri Lanka's situation. On another side, Sri Lanka's central bank governor said that the country could have averted the crisis if it had gone to the International monetary fund sooner.

Sri Lanka's economic meltdown continues to worsen

Thousands of Sri Lankans are queuing up outside oil stations hoping for just a drop of fuel. The oil crisis has immobilized the island nation, citizens are unable to drive their cars and public transport has also been severely affected.

Sri Lanka's fuel crisis worsens as thousands queue outside gas stations

The Bank of England has hiked rates amid slowdown worries for the UK economy. Inflation is soaring while the economy is contracting in England at present.

Slowdown blues for the UK economy: Bank of England hikes rates

The island nation of Sri Lanka is battling its worst economic crisis since independence. Amid the crisis, Sri Lankans seek passports for a better life as they try to flee the crisis

Sri Lanka economic crisis: Sri Lankans seek passport to better life

Sri Lanka Fuel Crisis: Lack of oil, LPG & fuel leaves citizens high and dry

Pakistan's federal minister for planning and development has urged the people in Pakistan to reduce the amount of tea that they drink. He believes that sipping fewer cups a day would cut Pakistan's high import bills. For more details, we're joined by WION's Anas Mallick.

One less cup of tea can save Pakistan's fate?

In Sri Lanka, the government is toiling hard to pull the country out of the energy crisis and in the latest measure the cabinet has approved a proposal to declare Friday as holiday for public sector employees.

Sri Lanka declares Friday a holiday for the public sector as it approves a 4-day work week

The UK economy slowed down in the month of April, adding to the fears of recession. It's the second month that economic output has declined, GDP fell by 0.3% in April.

UK GDP falls for second month running

Sri Lanka's cash-strapped government has approved several measures, including imposing a 2.5 per cent social contribution tax on companies based on their turnover and declaring Fridays as holidays for most public sector employees, to facilitate the economic recovery and mitigate energy and food crisis.

Sri Lanka is currently facing its worst economic crisis since independence from Britain in 1948.

Also read |&nbsp;<a href="https://www.wionews.com/south-asia/nearly-10-per-cent-of-sri-lankas-population-faced-food-shortages-before-covid-19-pandemic-report-487811">Nearly 10 per cent of Sri Lanka’s population faced food shortages before COVID-19 pandemic: Report</a>

The economic crisis has prompted an acute shortage of essential items like food, medicine, cooking gas and other fuel, toilet paper, and even matches, with Sri Lankans being forced to wait in lines lasting hours outside stores to buy fuel and cooking gas.

The Cabinet at a meeting held on Monday approved a bill to impose a 2.5 per cent tax on companies with an annual turnover of Rs&nbsp;120 million.

The new tax named the social contribution levy will be applicable to businesses in imports, manufacturing, service providers, wholesalers and retailers, according to an official statement.

Watch |&nbsp;Fuel crisis worsens in Sri Lanka as Lankan government plans fuel-rationing scheme

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In another measure aimed at mitigating the ongoing energy crisis, the Cabinet has approved to declare Fridays as holidays for the public sector employees.

This, however, would not be applicable to the employees in the health, power and energy, education and defence sectors.

The Cabinet also approved a move to grant government officials one leave per week for the next three months to engage in agriculture to mitigate the approaching food crisis.

Minister of Home affairs and Public Administration Dinesh Gunawardena said that fuel consumption will be reduced because of this move.

We have decided to make Fridays a holiday for all public servants because of the transportation issues that have popped up as a result of the fuel scarcity.

Also read |&nbsp;<a href="https://www.wionews.com/south-asia/sri-lanka-risks-full-blown-humanitarian-emergency-un-agency-says-487716">Sri Lanka risks full-blown humanitarian emergency, UN agency says</a>

"Public servants can stay at home and focus on growing food crops on Fridays",&nbsp;he said.

Gunawardena said that Monday&nbsp;was made a holiday for all public servants so that they will not have to spend their resources and come to Colombo and go back again to their villages for the Poson Holiday on Tuesday.

Sri Lanka is experiencing long queues for refueling at pumping stations as the government finds it difficult to finance fuel imports to retain a reserve adequate for a minimum of three months.

A move to ration fuel is to be implemented from next month as the forex crisis gets worsened.

The nearly bankrupt country, with an acute foreign currency crisis that resulted in foreign debt default, announced in April that it is suspending nearly USD 7 billion foreign debt repayment due for this year out of about USD 25 billion due through 2026.

Sri Lanka's total foreign debt stands at USD 51 billion.

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Sri Lanka's cash-strapped government has approved several measures, including imposing a 2.5 per cent social contribution tax on companies based on their turnover and declaring Fridays as holidays for most public sector employees, to facilitate the economic recovery and mitigate energy and food crisis.

Sri Lanka's cash-strapped government has approved several measures, including imposing a 2.5 per cent social contribution tax on companies based on their turnover and declaring Fridays as holidays for most public sector employees, to facilitate the economic recovery and mitigate energy and food crisis. Sri Lanka is currently facing its worst economic crisis since independence from Britain in 1948. Also read | Nearly 10 per cent of Sri Lanka’s population faced food shortages before COVID-19 pandemic: Report The economic crisis has prompted an acute shortage of essential items like food, medicine, cooking gas and other fuel, toilet paper, and even matches, with Sri Lankans being forced to wait in lines lasting hours outside stores to buy fuel and cooking gas. The Cabinet at a meeting held on Monday approved a bill to impose a 2.5 per cent tax on companies with an annual turnover of Rs 120 million. The new tax named the social contribution levy will be applicable to businesses in imports, manufacturing, service providers, wholesalers and retailers, according to an official statement. Watch | Fuel crisis worsens in Sri Lanka as Lankan government plans fuel-rationing scheme In another measure aimed at mitigating the ongoing energy crisis, the Cabinet has approved to declare Fridays as holidays for the public sector employees. This, however, would not be applicable to the employees in the health, power and energy, education and defence sectors. The Cabinet also approved a move to grant government officials one leave per week for the next three months to engage in agriculture to mitigate the approaching food crisis. Minister of Home affairs and Public Administration Dinesh Gunawardena said that fuel consumption will be reduced because of this move. We have decided to make Fridays a holiday for all public servants because of the transportation issues that have popped up as a result of the fuel scarcity. Also read | Sri Lanka risks full-blown humanitarian emergency, UN agency says "Public servants can stay at home and focus on growing food crops on Fridays", he said. Gunawardena said that Monday was made a holiday for all public servants so that they will not have to spend their resources and come to Colombo and go back again to their villages for the Poson Holiday on Tuesday. Sri Lanka is experiencing long queues for refueling at pumping stations as the government finds it difficult to finance fuel imports to retain a reserve adequate for a minimum of three months. A move to ration fuel is to be implemented from next month as the forex crisis gets worsened. The nearly bankrupt country, with an acute foreign currency crisis that resulted in foreign debt default, announced in April that it is suspending nearly USD 7 billion foreign debt repayment due for this year out of about USD 25 billion due through 2026. Sri Lanka's total foreign debt stands at USD 51 billion. WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Sri Lankan cabinet approves several measures to facilitate economic recovery

UK's economy has slowed down in month of April, this has economic output declined for second month in a row. Data for months showed UK economy has stalled as decade high inflation accelerated and supply deceptions hit manufacturing hard.

UK: Economic output declined for the second month

UK's economy has been dealt with a big blow as it contracts in the month of April. Economic output declined for the second month and supply disruptions have hit manufacturing hard.

UK economy contracts in April: Economic output declined for the second month

Amid the worsening fuel crisis in Sri Lanka, the Lankan government plans a fuel-rationing scheme. The new plan is likely to be rolled out next month. Meanwhile, there is a special holiday in Lanka today amid a severe economic crisis.

Fuel crisis worsens in Sri Lanka as Lankan government plans fuel-rationing scheme

In an interview to Palki Sharma, Sri Lankan Prime Minister Ranil Wickremesinghe said that becoming the Prime Minister amid economic crisis is the most challenging appointment he ever had. Here is an excerpt from that exclusive conversation.

Sri Lankan PM Ranil Wickremesinghe on WION: 'This is the most challenging appointment I ever had'

Amid the worst ongoing economic crisis, Sri Lanka has received a new financial package from neighbour India. India has Extended a new line of credit to the island nation to buy urea fertilizers.

Sri Lanka Economic Crisis: India extends a new line of credit to Sri Lanka to buy urea fertilizers

US treasury secretary Janet Yellen has said she did not expect the US economy to tip into a recession but growth would slow down and gasoline prices were unlikely to fall anytime soon.

Americans pessimistic about the economy: Combating inflation US President Joe Biden's first priority

There looks to be no sign of elections in the island nation of Sri Lanka. Sri Lanka is currently battling its worst economic crisis.

Sri Lanka faces worst economic crisis: No elections in Sri Lanka for now

Pakistan is devising ways to tackle the energy crisis in the country in a bid to reduce the energy and fuel consumption. The economically beleaguered country has reduced its official work week to five days from six and now a proposal to shut down markets early is also under consideration.

Pakistan tackles energy crisis

Japan's economy shrank slightly less than initially reported in the first quarter as private consumption remained resilient in the face of resurgent covid19 infections and companies rebuilt their stock. Now while the slow contraction is welcome news for the policy makers.

Japan: Q1 GDP falls; economy shrinks less than expected

Pakistan Finance Minister Miftah Ismail has reportedly said that the country would need USD 41 billion in the next 12 months.

"We have to pay back USD 21 billion in the next year. I am guessing that the outside limit of the current account deficit will be USD 12 billion. I think that we should have reserves of at least three months. So we need USD 41 billion over the next 12 months and I think it will happen," he said as quoted by Pakistani news outlet Dawn.

The finance minister's statement came as he addressed the Pre-Budget Business Conference organised by the government in Islamabad. During the conference, Ismail said that Shehbaz Sharif government had re-engaged with the International Monetary Fund (IMF).

"We talked to them and we are very, very confident that we will soon have an agreement with the IMF. We are very, very confident of that," he said.

The minister further said that an average debt during the PTI government`s tenure was Pakistani rupees (PKR) 5,177 billion, while for the PML-N it was PKR 2,132 billion which was used for infrastructure development.

He said that over the span of 71 years, the country`s rulers -- including military dictators -- took out loans of PKR 25,000bn while former premier Imran took out loans worth PKR 20,000bn over a span of four years.

"This is 80 per cent of all loans taken by the entire government of Pakistan in the previous 71 years," he said, adding that this had resulted in an increase in debt servicing.&nbsp;

"The more you borrow, the more you have to pay."

(With inputs from agencies)

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Pakistan Finance Minister Miftah Ismail has reportedly said that the country would need USD 41 billion in the next 12 months. "We have to pay back USD 21 billion in the next year.

Pakistan Finance Minister Miftah Ismail has reportedly said that the country would need USD 41 billion in the next 12 months. "We have to pay back USD 21 billion in the next year. I am guessing that the outside limit of the current account deficit will be USD 12 billion. I think that we should have reserves of at least three months. So we need USD 41 billion over the next 12 months and I think it will happen," he said as quoted by Pakistani news outlet Dawn. The finance minister's statement came as he addressed the Pre-Budget Business Conference organised by the government in Islamabad. During the conference, Ismail said that Shehbaz Sharif government had re-engaged with the International Monetary Fund (IMF). "We talked to them and we are very, very confident that we will soon have an agreement with the IMF. We are very, very confident of that," he said. The minister further said that an average debt during the PTI government`s tenure was Pakistani rupees (PKR) 5,177 billion, while for the PML-N it was PKR 2,132 billion which was used for infrastructure development. He said that over the span of 71 years, the country`s rulers -- including military dictators -- took out loans of PKR 25,000bn while former premier Imran took out loans worth PKR 20,000bn over a span of four years. "This is 80 per cent of all loans taken by the entire government of Pakistan in the previous 71 years," he said, adding that this had resulted in an increase in debt servicing. "The more you borrow, the more you have to pay." (With inputs from agencies) You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here. WATCH WION LIVE HERE ×

Pakistan needs USD 41 billion in next 12 months, says finance minister

The OECD warned Wednesday that the world economy will pay a "hefty price" for Russia's invasion of Ukraine as it slashed its 2022 growth forecast and projected higher inflation.

The Paris-based organisation, which represents 38 mostly developed countries, is the latest institution to predict lower GDP growth due to the conflict, which has sent food and energy prices soaring.

In its latest economic outlook, the Organisation for Economic Co-operation and Development said global gross domestic product would grow by three percent in 2022, down sharply from the 4.5 percent estimated in December.

Also read |&nbsp;<a href="https://www.wionews.com/world/world-bank-lowers-2022-global-growth-forecast-to-29-from-41-in-january-486030">World Bank lowers 2022 global growth forecast to 2.9% from 4.1% in January</a>

The OECD also doubled its forecast for inflation among its members -- which range from the United States to Australia, Japan, and Latin American and European nations -- to 8.5 percent, its highest level since 1988.&nbsp;

"The world is set to pay a hefty price for Russia's war against Ukraine," wrote the OECD's chief economist and deputy secretary-general, Laurence Boone, adding that a "humanitarian crisis is unfolding before our eyes".

"The extent to which growth will be lower and inflation higher will depend on how the war evolves, but it is clear the poorest will be hit hardest," Boone said.

"The price of this war is high and will need to be shared."

Before the war broke out, the outlook had appeared "broadly favourable" for 2022-23, with growth and inflation expected to return to normal after the devastating Covid-19 pandemic, said the OECD.

However, "the invasion of Ukraine, along with shutdowns in major cities and ports in China due to the zero-Covid policy, has generated a new set of adverse shocks," it said.

Food shortage risk

The OECD was supposed to publish its outlook in March, but it delayed its detailed assessment until now due to uncertainty over the war. At the time, it said the conflict could cut global GDP growth by "over one percentage point".

The World Bank revised its own figures on Tuesday, lowering its global growth forecast from 4.1 percent to 2.9 percent. The IMF cut its forecast by nearly one point to 3.6 percent in April.

The OECD cut its growth forecast for the United States from 3.7 percent to 2.5 percent and that of China, the world's second biggest economy, from 5.1 percent to 4.4 percent. The eurozone's GPD is now seen growing by 2.6 percent instead of 4.3 percent while Britain's outlook was lowered to 3.6 percent from 4.7 percent.

The OECD noted that commodity prices had risen, hitting real income and spending, "particularly for the most vulnerable households".

"In many emerging-market economies the risks of food shortages are high given the reliance on agricultural exports from Russia and Ukraine," it said.

The report warned that the "effects of the war in Ukraine may be even greater than assumed", raising as an example a scenario of Russia cutting gas supplies to Europe.

As central banks tighten their monetary policies to counter inflation, the report said sharp increases of interest rates could also hit growth more than anticipated.

Covid risk

The Covid pandemic, meanwhile, could take another turn for the worse.

"New more aggressive or contagious variants may emerge, while the application of zero-Covid policies in large economies like China has the potential to sap global demand and disrupt supply for some time to come," the OECD said.

Faced with these challenges, governments needed to protect the most vulnerable from the economic shockwaves, it added.

Also read |&nbsp;<a href="https://www.wionews.com/videos/kyrgyzstan-endures-soaring-inflation-and-poverty-residents-struggle-to-find-work-486128">Kyrgyzstan endures soaring inflation and poverty, residents struggle to find work</a>

In the short term, "temporary, timely and well-targeted" fiscal measures would help the poorest households, the OECD said.

Over the medium- and long-term, governments would have to invest more in clean energy and defence spending.

"The world is already paying the price for Russia's aggression," wrote Boone.

"The choices made by policymakers and citizens will be crucial to determining how that price will be distributed across people and countries."

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The OECD warned Wednesday that the world economy will pay a "hefty price" for Russia's invasion of Ukraine as it slashed its 2022 growth forecast and projected higher inflation.

The OECD warned Wednesday that the world economy will pay a "hefty price" for Russia's invasion of Ukraine as it slashed its 2022 growth forecast and projected higher inflation. The Paris-based organisation, which represents 38 mostly developed countries, is the latest institution to predict lower GDP growth due to the conflict, which has sent food and energy prices soaring. In its latest economic outlook, the Organisation for Economic Co-operation and Development said global gross domestic product would grow by three percent in 2022, down sharply from the 4.5 percent estimated in December. Also read | World Bank lowers 2022 global growth forecast to 2.9% from 4.1% in January The OECD also doubled its forecast for inflation among its members -- which range from the United States to Australia, Japan, and Latin American and European nations -- to 8.5 percent, its highest level since 1988. "The world is set to pay a hefty price for Russia's war against Ukraine," wrote the OECD's chief economist and deputy secretary-general, Laurence Boone, adding that a "humanitarian crisis is unfolding before our eyes". "The extent to which growth will be lower and inflation higher will depend on how the war evolves, but it is clear the poorest will be hit hardest," Boone said. "The price of this war is high and will need to be shared." Before the war broke out, the outlook had appeared "broadly favourable" for 2022-23, with growth and inflation expected to return to normal after the devastating Covid-19 pandemic, said the OECD. However, "the invasion of Ukraine, along with shutdowns in major cities and ports in China due to the zero-Covid policy, has generated a new set of adverse shocks," it said. Food shortage risk The OECD was supposed to publish its outlook in March, but it delayed its detailed assessment until now due to uncertainty over the war. At the time, it said the conflict could cut global GDP growth by "over one percentage point". The World Bank revised its own figures on Tuesday, lowering its global growth forecast from 4.1 percent to 2.9 percent. The IMF cut its forecast by nearly one point to 3.6 percent in April. The OECD cut its growth forecast for the United States from 3.7 percent to 2.5 percent and that of China, the world's second biggest economy, from 5.1 percent to 4.4 percent. The eurozone's GPD is now seen growing by 2.6 percent instead of 4.3 percent while Britain's outlook was lowered to 3.6 percent from 4.7 percent. The OECD noted that commodity prices had risen, hitting real income and spending, "particularly for the most vulnerable households". "In many emerging-market economies the risks of food shortages are high given the reliance on agricultural exports from Russia and Ukraine," it said. The report warned that the "effects of the war in Ukraine may be even greater than assumed", raising as an example a scenario of Russia cutting gas supplies to Europe. As central banks tighten their monetary policies to counter inflation, the report said sharp increases of interest rates could also hit growth more than anticipated. Covid risk The Covid pandemic, meanwhile, could take another turn for the worse. "New more aggressive or contagious variants may emerge, while the application of zero-Covid policies in large economies like China has the potential to sap global demand and disrupt supply for some time to come," the OECD said. Faced with these challenges, governments needed to protect the most vulnerable from the economic shockwaves, it added. Also read | Kyrgyzstan endures soaring inflation and poverty, residents struggle to find work In the short term, "temporary, timely and well-targeted" fiscal measures would help the poorest households, the OECD said. Over the medium- and long-term, governments would have to invest more in clean energy and defence spending. "The world is already paying the price for Russia's aggression," wrote Boone. "The choices made by policymakers and citizens will be crucial to determining how that price will be distributed across people and countries." WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

OECD doubles 2022 inflation forecast in 38-nation group to 8.5%

Sri Lanka is going through a severe economic crisis. Watch this ground report from Sri Lanka's capital. There is a livelihood crisis for tuk-tuk drivers.

Ground report from Sri Lanka's capital: Livelihood crisis for tuk-tuk drivers

Sri Lankan President Gotabaya Rajapaksa said that he can't go as a failed president amid the ongoing economic crisis in the south Asian nation.

Gotabaya says can't go as a failed president amid the ongoing economic crisis in Sri Lanka

Sri Lankan PM has warned of job losses amid the ongoing economic crisis. Meanwhile, India has sent more assistance to the island nation.

Sri Lankan PM warns of job losses amid the ongoing economic crisis

When it comes to the economy, more is usually better.

Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy. Growth might not be sufficient to ensure widespread prosperity, but it is necessary — making any loss of momentum a worrying sign that the economy could be losing steam or, worse, headed into a recession.

But these are not normal times. With nearly twice as many open jobs as available workers and companies struggling to meet record demand, many economists and policymakers argue that what the economy needs right now is not more, but less — less hiring, less wage growth and above all less inflation, which is running at its fastest pace in four decades.

Jerome Powell, the Federal Reserve chair, has called the labor market “unsustainably hot,” and the central bank is raising interest rates to try to cool it. President Joe Biden, who met with Powell on Tuesday, wrote in an opinion article this week in The Wall Street Journal that a slowdown in job creation “won’t be a cause for concern” but would rather be “a sign that we are successfully moving into the next phase of recovery.”

“We want a full and sustainable recovery,” said Claudia Sahm, a former Fed economist who has studied the government’s economic policy response to the pandemic. “The reason that we can’t take the victory lap right now on the recovery — the reason it is incomplete — is because inflation is too high.”

But a cooling economy carries its own risks. Despite inflation, the recovery from the pandemic recession has been among the strongest on record, with unemployment falling rapidly and incomes rebounding fastest for those at the bottom. If the recovery slows too much, it could undo much of that progress.

“That’s the needle we’re trying to thread right now,” said Harry Holzer, a Georgetown University economist. “We want to give up as few of the gains that we’ve made as possible.”

Economists disagree about the best way to strike that balance. Powell, after playing down inflation last year, now says reining it in is his top priority — and argues that the central bank can do so without cutting the recovery short. Some economists, particularly on the right, want the Fed to be more aggressive, even at the risk of causing a recession. Others, especially on the left, argue that inflation, while a problem, is a lesser evil than unemployment and that the Fed should therefore pursue a more cautious approach.

But where progressives and conservatives largely agree is that evaluating the economy will be particularly difficult over the next several months. Distinguishing a healthy cool-down from a worrying stall will require looking beyond the indicators that typically make headlines.

“It’s a very difficult time to interpret economic data and to even understand what’s happening with the economy,” said Michael Strain, an economist with the American Enterprise Institute. “We’re entering a period where there’s going to be tons of debate over whether we are in a recession right now.”

Slower job growth could be good (or bad).

The jobs report for May, which the Labor Department will release Friday, will provide a case study in the difficulty of interpreting economic data right now.

Ordinarily, one number from the monthly report — the overall jobs added or lost — is enough to signal the labor market’s health. That is because most of the time, the driving force in the labor market is demand. If business is strong, employers will want more workers, and job growth will accelerate. When demand lags, then hiring slows, layoffs mount and job growth stalls.

Now, though, the limiting factor in the labor market is not demand but supply. Employers are eager to hire: There were 11.4 million job openings at the end of April, close to a record. But there are roughly 500,000 fewer people either working or actively looking for work than when the pandemic began, leaving employers scrambling to fill available jobs.

The labor force has grown significantly this year, and forecasters expect more workers to return as the pandemic and the disruptions it caused continue to recede. But the pandemic may also have driven longer-lasting shifts in Americans’ work habits, and economists are not sure when or under what circumstances the labor force will make a complete rebound. Even then, there might not be enough workers to meet the extraordinarily high level of employer demand.

Most forecasters expect the report Friday to show that job growth slowed in May. But that number alone will not reveal whether the mismatch between supply and demand is easing. Slowing job growth coupled with a growing labor force could be a sign that the labor market is coming back into balance as demand cools and supply improves. But the same level of job growth without an increase in the supply of workers could indicate the opposite: that employers are having an even more difficult time finding the help they need.

Many economists say they will be watching the labor force participation rate — the share of the population either working or looking for work — just as closely as the headline job growth figures in coming months.

“One can unambiguously root for higher labor force participation,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Beyond that, nothing else is unambiguous.”

Wage growth may need to slow.

Another number will be getting a lot of attention from economists, policymakers and investors: wage growth.

Employers have responded to the hot competition for workers exactly the way Econ 101 says they should: by raising pay. Average hourly earnings were up 5.5% in April from a year earlier, more than twice the rate they were rising before the pandemic.

Normally, faster wage growth would be good news. Persistently weak pay increases were a bleak hallmark of the long, slow recovery that followed the last recession. But even some economists who bemoaned those sluggish gains at the time say the current rate of wage growth is unsustainable.

“That’s something that we’re used to saying pretty unequivocally is good, but in this case, it just raises the risk that the economy is overheating further,” said Adam Ozimek, chief economist of the Economic Innovation Group, a Washington research organization. As long as wages are rising 5% or 6% per year, he said, it will be all but impossible to bring inflation down to the Fed’s 2% target.

Fed officials are watching closely for signs of a “wage-price spiral,” a self-reinforcing pattern in which workers expect inflation and therefore demand raises, leading employers to increase prices to compensate. Once such a cycle takes hold, it can be difficult to break — a prospect Powell has cited in explaining why the central bank has become more aggressive in fighting inflation.

“It’s a risk that we simply can’t run,” he said at a news conference last month. “We can’t allow a wage-price spiral to happen. And we can’t allow inflation expectations to become unanchored. It’s just something that we can’t allow to happen, and so we’ll look at it that way.”

Some economists, especially on the left, say there is little evidence that wage growth is feeding inflation, let alone that a wage-price spiral is developing. They contend that the recent pay gains reflect a rare moment of worker power in the labor market and that the Fed would be wrong to snuff it out.

But wages, on average, are not keeping up with inflation, meaning that many workers are losing ground despite the strong labor market. For workers to prosper, their wages need to be rising after adjusting for inflation — which almost certainly requires inflation to come down.

“What people are feeling is real,” said Darrick Hamilton, an economist at the New School in New York. “A wage increase that’s not as high as the increase in the price of milk does not make you better off.”

Hamilton argues that the Fed is right to try to rein in inflation but that it needs to design its policies with the recognition that it will be Black workers, along with other disadvantaged groups, who suffer most if the recovery falters. “The question that we should be asking is, who bears the burden” of the Fed’s policies, he said.

Keep an eye on job openings.

Historically, even small increases in the unemployment rate have almost always signaled the start of a recession. Should that relationship hold in the current environment, it suggests that if policymakers want to tame inflation without causing a downturn, they will have to find a way to cool off the labor market without causing a large number of layoffs.

Powell and other officials argue that is possible, partly because so many jobs are available right now. In a speech in Germany this week, Christopher Waller, a Fed governor, argued that as demand slows, employers are likely to start posting fewer jobs before they turn to layoffs. That could result in slower wage growth — since with fewer employers trying to hire, there will be less competition for workers — without a big increase in unemployment.

“I think there’s room right now for inflation to come down a significant amount without unemployment coming up,” said Mike Konczal, an economist at the Roosevelt Institute.

The Fed’s efforts to cool off the economy are already bearing fruit, Konczal said. Mortgage rates have risen sharply, and there are signs that the housing market is slowing as a result. The stock market has lost almost 15% of its value since the beginning of the year. That loss of wealth is likely to lead at least some consumers to pull back on their spending, which will lead to a pullback in hiring. Job openings fell in April, though they remained high, and wage growth has eased.

“There’s a lot of evidence to suggest the economy has already slowed down,” Konczal said. He said he was optimistic that the United States was on a path toward “normalizing to a regular good economy” instead of the boomlike one it has experienced over the past year.

But the thing about such a “soft landing,” as Fed officials call it, is that it is still a landing. Wage growth will be slower. Job opportunities will be fewer. Workers will have less leverage to demand flexible schedules or other perks. For the Fed, achieving that outcome without causing a recession would be a victory — but it might not feel like one to workers.

When it comes to the economy, more is usually better. Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy.

When it comes to the economy, more is usually better. Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy. Growth might not be sufficient to ensure widespread prosperity, but it is necessary — making any loss of momentum a worrying sign that the economy could be losing steam or, worse, headed into a recession. But these are not normal times. With nearly twice as many open jobs as available workers and companies struggling to meet record demand, many economists and policymakers argue that what the economy needs right now is not more, but less — less hiring, less wage growth and above all less inflation, which is running at its fastest pace in four decades. Jerome Powell, the Federal Reserve chair, has called the labor market “unsustainably hot,” and the central bank is raising interest rates to try to cool it. President Joe Biden, who met with Powell on Tuesday, wrote in an opinion article this week in The Wall Street Journal that a slowdown in job creation “won’t be a cause for concern” but would rather be “a sign that we are successfully moving into the next phase of recovery.” “We want a full and sustainable recovery,” said Claudia Sahm, a former Fed economist who has studied the government’s economic policy response to the pandemic. “The reason that we can’t take the victory lap right now on the recovery — the reason it is incomplete — is because inflation is too high.” But a cooling economy carries its own risks. Despite inflation, the recovery from the pandemic recession has been among the strongest on record, with unemployment falling rapidly and incomes rebounding fastest for those at the bottom. If the recovery slows too much, it could undo much of that progress. “That’s the needle we’re trying to thread right now,” said Harry Holzer, a Georgetown University economist. “We want to give up as few of the gains that we’ve made as possible.” Economists disagree about the best way to strike that balance. Powell, after playing down inflation last year, now says reining it in is his top priority — and argues that the central bank can do so without cutting the recovery short. Some economists, particularly on the right, want the Fed to be more aggressive, even at the risk of causing a recession. Others, especially on the left, argue that inflation, while a problem, is a lesser evil than unemployment and that the Fed should therefore pursue a more cautious approach. But where progressives and conservatives largely agree is that evaluating the economy will be particularly difficult over the next several months. Distinguishing a healthy cool-down from a worrying stall will require looking beyond the indicators that typically make headlines. “It’s a very difficult time to interpret economic data and to even understand what’s happening with the economy,” said Michael Strain, an economist with the American Enterprise Institute. “We’re entering a period where there’s going to be tons of debate over whether we are in a recession right now.” Slower job growth could be good (or bad). The jobs report for May, which the Labor Department will release Friday, will provide a case study in the difficulty of interpreting economic data right now. Ordinarily, one number from the monthly report — the overall jobs added or lost — is enough to signal the labor market’s health. That is because most of the time, the driving force in the labor market is demand. If business is strong, employers will want more workers, and job growth will accelerate. When demand lags, then hiring slows, layoffs mount and job growth stalls. Now, though, the limiting factor in the labor market is not demand but supply. Employers are eager to hire: There were 11.4 million job openings at the end of April, close to a record. But there are roughly 500,000 fewer people either working or actively looking for work than when the pandemic began, leaving employers scrambling to fill available jobs. The labor force has grown significantly this year, and forecasters expect more workers to return as the pandemic and the disruptions it caused continue to recede. But the pandemic may also have driven longer-lasting shifts in Americans’ work habits, and economists are not sure when or under what circumstances the labor force will make a complete rebound. Even then, there might not be enough workers to meet the extraordinarily high level of employer demand. Most forecasters expect the report Friday to show that job growth slowed in May. But that number alone will not reveal whether the mismatch between supply and demand is easing. Slowing job growth coupled with a growing labor force could be a sign that the labor market is coming back into balance as demand cools and supply improves. But the same level of job growth without an increase in the supply of workers could indicate the opposite: that employers are having an even more difficult time finding the help they need. Many economists say they will be watching the labor force participation rate — the share of the population either working or looking for work — just as closely as the headline job growth figures in coming months. “One can unambiguously root for higher labor force participation,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Beyond that, nothing else is unambiguous.” Wage growth may need to slow. Another number will be getting a lot of attention from economists, policymakers and investors: wage growth. Employers have responded to the hot competition for workers exactly the way Econ 101 says they should: by raising pay. Average hourly earnings were up 5.5% in April from a year earlier, more than twice the rate they were rising before the pandemic. Normally, faster wage growth would be good news. Persistently weak pay increases were a bleak hallmark of the long, slow recovery that followed the last recession. But even some economists who bemoaned those sluggish gains at the time say the current rate of wage growth is unsustainable. “That’s something that we’re used to saying pretty unequivocally is good, but in this case, it just raises the risk that the economy is overheating further,” said Adam Ozimek, chief economist of the Economic Innovation Group, a Washington research organization. As long as wages are rising 5% or 6% per year, he said, it will be all but impossible to bring inflation down to the Fed’s 2% target. Fed officials are watching closely for signs of a “wage-price spiral,” a self-reinforcing pattern in which workers expect inflation and therefore demand raises, leading employers to increase prices to compensate. Once such a cycle takes hold, it can be difficult to break — a prospect Powell has cited in explaining why the central bank has become more aggressive in fighting inflation. “It’s a risk that we simply can’t run,” he said at a news conference last month. “We can’t allow a wage-price spiral to happen. And we can’t allow inflation expectations to become unanchored. It’s just something that we can’t allow to happen, and so we’ll look at it that way.” Some economists, especially on the left, say there is little evidence that wage growth is feeding inflation, let alone that a wage-price spiral is developing. They contend that the recent pay gains reflect a rare moment of worker power in the labor market and that the Fed would be wrong to snuff it out. But wages, on average, are not keeping up with inflation, meaning that many workers are losing ground despite the strong labor market. For workers to prosper, their wages need to be rising after adjusting for inflation — which almost certainly requires inflation to come down. “What people are feeling is real,” said Darrick Hamilton, an economist at the New School in New York. “A wage increase that’s not as high as the increase in the price of milk does not make you better off.” Hamilton argues that the Fed is right to try to rein in inflation but that it needs to design its policies with the recognition that it will be Black workers, along with other disadvantaged groups, who suffer most if the recovery falters. “The question that we should be asking is, who bears the burden” of the Fed’s policies, he said. Keep an eye on job openings. Historically, even small increases in the unemployment rate have almost always signaled the start of a recession. Should that relationship hold in the current environment, it suggests that if policymakers want to tame inflation without causing a downturn, they will have to find a way to cool off the labor market without causing a large number of layoffs. Powell and other officials argue that is possible, partly because so many jobs are available right now. In a speech in Germany this week, Christopher Waller, a Fed governor, argued that as demand slows, employers are likely to start posting fewer jobs before they turn to layoffs. That could result in slower wage growth — since with fewer employers trying to hire, there will be less competition for workers — without a big increase in unemployment. “I think there’s room right now for inflation to come down a significant amount without unemployment coming up,” said Mike Konczal, an economist at the Roosevelt Institute. The Fed’s efforts to cool off the economy are already bearing fruit, Konczal said. Mortgage rates have risen sharply, and there are signs that the housing market is slowing as a result. The stock market has lost almost 15% of its value since the beginning of the year. That loss of wealth is likely to lead at least some consumers to pull back on their spending, which will lead to a pullback in hiring. Job openings fell in April, though they remained high, and wage growth has eased. “There’s a lot of evidence to suggest the economy has already slowed down,” Konczal said. He said he was optimistic that the United States was on a path toward “normalizing to a regular good economy” instead of the boomlike one it has experienced over the past year. But the thing about such a “soft landing,” as Fed officials call it, is that it is still a landing. Wage growth will be slower. Job opportunities will be fewer. Workers will have less leverage to demand flexible schedules or other perks. For the Fed, achieving that outcome without causing a recession would be a victory — but it might not feel like one to workers.

Why a not-so-hot economy might be good news

Sri Lanka seeks to secure around $5 billion in funding this year to cover repayments for fuel imports and other items bought through credit lines, and another $1 billion to bolster its foreign reserves. Out of these they seek $3 Billion from the IMF.

Sri Lanka Economic Crisis: Colombo seeks to secure $3 Billion from the IMF

According to provisional data released by the National Statistical Office (NSO), the Indian economy grew at 8.7% in 2021-22 with 4.1% growth in the fourth quarter of the financial year, which is better than private forecasts.

India's GDP growth better than expected

In worrying signs for the Japanese economy, Retail sales rise more than expected in April. Whereas, April output fall much weaker than expected.

Worrying signs for Japanese economy: Retail sales rise more than expected in April

Sri Lanka is reeling under a severe economic crisis. Acute fuel & food shortage has gripped the island nation amid the worst economic crisis since its independence.

Sri Lanka: Acute fuel & food shortage grips the island nation amid worst economic crisis

The offices in Shanghai have opened up after two months of complete lockdown. Shanghai, is the economic hub of the country and saw a huge decline in economy in the last two months due to the restrictions because of rising Covid 19 cases.&nbsp;

From June 1st the business also doesn't need to take any sort of permission, an official said to Reuters.&nbsp;

The city is planning to have regulations in place to curb down Covid cases as well as boost the economy.

Also read |&nbsp;<a href="https://www.wionews.com/world/china-seals-deal-with-samoa-causing-fresh-jitters-in-western-sphere-482892">China seals deal with Samoa causing fresh jitters in western sphere</a>

The small businesses will get loans and financial support from the government to revive business. The action plan will consist of 50 economic policies. The real estate projects are also supposed to green signal and resume the industry.&nbsp;

&nbsp;

&nbsp;

Watch |&nbsp;China: Beijing eyes 10 Pacific islands, announces 5-year deal

<div class="videoWrapper trancodeVideo"><iframe allowfullscreen="" autoplay="1" class="includeVideo" frameborder="0" height="350" src="https://www.wionews.com/videos/china-beijing-eyes-10-pacific-islands-announces-5-year-deal-483111/embed" style="width:100%;max-width:560px;" width="560"></iframe></div>

A 10,000 yuan subsidy will also be granted to people looking to switch to an electric vehicle.&nbsp;

The taxes on purchase of electric vehicles will be reduced. Even in 2021, to boost the economy the passenger number plates were increased to 135,000. This year they have increased to 40,000.

Also read |&nbsp;<a href="https://www.wionews.com/world/china-seals-deal-with-samoa-causing-fresh-jitters-in-western-sphere-482892">China seals deal with Samoa causing fresh jitters in western sphere</a>

The authorities will be taking care of the companies that have been impacted by providing subsidies and giving them more time for insurance and rent deposit.&nbsp;&nbsp;

The industries impacted the most, like e- commerce, cultural, tourism etc will be given handout vouchers.&nbsp;

According to a report by Reuters, "In short, we will do our best to help all kinds of enterprises... and work together to restore and revitalize Shanghai's economy," said Wu.

WATCH WION LIVE HERE

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You can now write for wionews.com and be a part of the community. Share your stories and opinions with us <a href="https://www.wionews.com/content-contribution-registration-form">here</a>.

The offices in Shanghai have opened up after two months of complete lockdown. Shanghai, is the economic hub of the country and saw a huge decline in economy in the last two months due to the restrictions because of rising Covid 19 cases.

The offices in Shanghai have opened up after two months of complete lockdown. Shanghai, is the economic hub of the country and saw a huge decline in economy in the last two months due to the restrictions because of rising Covid 19 cases. From June 1st the business also doesn't need to take any sort of permission, an official said to Reuters. The city is planning to have regulations in place to curb down Covid cases as well as boost the economy. Also read | China seals deal with Samoa causing fresh jitters in western sphere The small businesses will get loans and financial support from the government to revive business. The action plan will consist of 50 economic policies. The real estate projects are also supposed to green signal and resume the industry. Watch | China: Beijing eyes 10 Pacific islands, announces 5-year deal A 10,000 yuan subsidy will also be granted to people looking to switch to an electric vehicle. The taxes on purchase of electric vehicles will be reduced. Even in 2021, to boost the economy the passenger number plates were increased to 135,000. This year they have increased to 40,000. Also read | China seals deal with Samoa causing fresh jitters in western sphere The authorities will be taking care of the companies that have been impacted by providing subsidies and giving them more time for insurance and rent deposit. The industries impacted the most, like e- commerce, cultural, tourism etc will be given handout vouchers. According to a report by Reuters, "In short, we will do our best to help all kinds of enterprises... and work together to restore and revitalize Shanghai's economy," said Wu. WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Shanghai opens up offices

The International Monetary Fund has warned against “geo economic fragmentation” as policymakers and business leaders gather at the World Economic Forum in Davos, Switzerland.

Davos World Economic Forum: Global economy faces its biggest test since World War 2, says IMF Chief

While Sri Lanka is still without finance minister, President Gotabaya Rajapaksa swore in nine new ministers today in an effort to ensure stability in Sri Lanka.

Sri Lanka President Gotabaya Rajapaksa swears in nine new ministers

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