Sluggish global growth, a higher risk of borrowers defaulting on loans and pressure on profitability mean that banks face a negative outlook in 2024, credit rating agency Moody’s said on Monday. Prior rate hikes by central banks and rising unemployment in advanced economies will weaken asset quality, Moody’s Investors Services said in an outlook report, adding that real estate exposures in the United States and Europe posed a growing risk. Pockets of stress in property markets in the Asia-Pacific region were also likely to continue, the report said. Global banks have reported mixed performances this year, as their consumer revenues have benefitted from higher rates set by central banks to curb inflation, at the same time as investment banking revenues have been dented by a deep dealmaking slump. Moody’s said in its report that it expected money to remain tight next year, lowering economic growth even as central banks are expected to start cutting rates. China’s growth is also set to slow amid muted spending by consumers and businesses, weak exports and an ongoing property crunch, the report said. Read more: Reuters
Ratings agency Moody’s downgraded its outlook on China’s government credit ratings to negative from stable, expecting Beijing’s support and possible bailouts for distressed local governments and state-owned enterprises to diminish China’s fiscal, economic and institutional strength. Moody’s though retained China’s “A1” long-term rating on the country’s sovereign bonds, while expecting China annual GDP growth to slow to 4% in 2024 and 2025 and average 3.8% from 2026 to 2030. Structural factors including weak demographics will drive a decline to 3.5% by 2030, it said. The move underscores concerns over rising debt levels and the impact on broader growth in the world’s second-largest economy as Beijing resorts to fiscal stimulus to support local governments and contain the spiraling debt crisis among the country’s property developers. Read more: CNBC
The African Development Bank Group has unveiled its proposed $1 billion initiative aimed at offering insurance coverage to over 40 million farmers across Africa, protecting them from the severe impacts of climate change. According to an AfDB statement, the facility received extensive acclaim from the World Food Programme (WFP), development agencies, insurance companies, and the private sector at a side event held during COP28 in Dubai. Akinwumi Adesina, President of the African Development Bank, announced that the Africa Climate Risk Insurance Facility for Adaptation (ACRIFA) is designed to mobilize $1 billion in concessional financing, high-risk capital, and grants to bolster the African insurance industry in addressing climate-related risks and adaptation efforts. This aligns with AfDB’s $25 billion food security goal of achieving a $25 billion food security target, having already produced $12 billion worth of food. AfDB aims to eliminate food insecurity in Africa within five years. Read more: Business Insider
By 2035, Africa exports are set to experience a remarkable surge, approaching nearly USD1 trillion. The driving force behind this economic milestone is the African Continental Free Trade Area (AfCFTA), a collaborative effort encompassing 54 markets, poised to augment exports by an additional 29 per cent. According to the Future of Trade 2023 report, robust intra-regional trade growth is anticipated for West and East Africa. West Africa, in particular, presents significant potential for the establishment of value chains, especially in agricultural products like shea butter and cocoa beans. Initiatives such as the West Africa Regional Communications Infrastructure Project are expected to enhance connectivity, facilitating increased trade activities. In East Africa, extensive cross-border infrastructure projects like the Lapsset Corridor Project, linking Ethiopia, Kenya, and South Sudan, are anticipated to fuel substantial trade growth in the coming decades. Despite their current size, the West Africa-Central Africa (WA-CA) and the East Africa-Central Africa corridors (EA-CA) are projected to experience double-digit export growth until 2035. Notably, the WA-CA corridor is expected to thrive due to robust trade between Nigeria and Cameroon. Read more: Business Insider |
|