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Israeli bombardment severely weakened Gaza economy: Report – Al Jazeera English

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The UN, EU, and World Bank report estimates the cost of damage to the Gaza Strip after the 11-day May offensive between $290m and $380m.

The socioeconomic situation in the Gaza Strip has been severely weakened as a result of the Israeli offensive in May, a report (PDF) by the United Nations, the European Union and the World Bank has found.

The Gaza Rapid Damage and Needs Assessment (RDNA) report published on Tuesday estimated that the damage caused by the 11-day bombardment was between $290m and $380m, while the recovery needs are projected at between $345m and $485m.

“Following the hostilities, 62 percent of the population of Gaza is food insecure,” the report said, adding that unemployment was already at 48 percent and poverty rates above 50 percent before the escalation.

The offensive killed at least 260 Palestinians, including 66 children, and caused widespread damage to infrastructure and residential areas. On the Israeli side, 13 people were killed by rockets fired from Palestinian armed groups in the coastal enclave, including two children.

The Gaza Strip is one of the world’s most densely populated areas, where two million Palestinians – half of them below the age of 18 – live in 365 square kilometres (141sq miles) of the coastal territory. It has been under blockade by Egypt and Israel for 14 years, which resulted in a dire humanitarian situation that a UN report had predicted would be “unlivable” in 2020.

At least 800,000 people do not have access to clean water, and electricity runs for only a few hours a day. Furthermore, the coronavirus pandemic has exacerbated an already weak healthcare system, with medical equipment and medicine in short supply.

The RDNA report found that most of the damage in Gaza from Israel’s bombardment in May was caused to social sectors such as housing, health, education, and social protection and jobs, at an estimate of $180m.

“The housing sector alone represents almost 93 percent of the total damages to the social sectors,” the report said.

The report recommended that the international community increase its support for cash assistance programmes for the Palestinians in Gaza, ensure the delivery of humanitarian aid, and transfer critical medical cases and patients outside of Gaza.

“In the short-term, socioeconomic recovery in Gaza will be determined by two factors: the level of available financing, including from donors, for reconstruction activities; and the extent of the restrictions on movement and access of people and goods entering Gaza, particularly the supply of essential reconstruction materials,” the report said.

The report also called on Israel to provide access to some vital materials for reconstruction that Israel has dubbed as “dual use materials” such as cement, chemicals, and pipes.

It also called on Israel to establish a financing mechanism, and to allow sufficient quantities of fuel to enter Gaza.

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China's economy didn't bounce back in the second quarter, China Beige Book survey finds – CNBC

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China’s exports surged by 16.9% in May from a year ago, two times faster than analysts expected. Pictured here on June 15, 2022, are workers in Jiangsu province making stuffed toy bears for export.
Si Wei | Visual China Group | Getty Images

BEIJING — Chinese businesses ranging from services to manufacturing reported a slowdown in the second quarter from the first, reflecting the prolonged impact of Covid controls.

That’s according to the U.S.-based China Beige Book, which claims to have conducted more than 4,300 interviews in China in late April and the month ended June 15.

“While most high-profile lockdowns were relaxed in May, June data do not show the powerhouse bounce-back most expected,” according to a report released Tuesday. The analysis found few signs that government stimulus was having much of an effect yet.

Shanghai, China’s largest city by gross domestic product, was locked down in April and May. Beijing and other parts of the country also imposed some level of Covid controls to contain mainland China’s worst outbreak of the virus since the pandemic’s initial shock in early 2020.

In late May, Chinese Premier Li Keqiang held an unprecedentedly massive videoconference in which he called on officials to “work hard” — for growth in the second quarter and a drop in unemployment.

Transportation, construction companies aren’t telling you they’re getting new products. They’re telling you they’ve slowed investment, their new projects have actually slowed.
Shehzad H. Qazi
Managing Director, China Beige Book

Between the first and second quarters, hiring declined across all manufacturing sectors except for food and beverage processing, according to the China Beige Book report.

The employment situation likely won’t start to improve until China stimulates its economy more in the fall, China Beige Book Managing Director Shehzad H. Qazi said Wednesday on CNBC’s “Squawk Box Asia.”

So far, there’s been little sign that stimulus has kicked in, especially in infrastructure, said Qazi who is based in New York.

“Transportation, construction companies aren’t telling you they’re getting new products,” he said. “They’re telling you they’ve slowed investment, their new projects have actually slowed.”

Inventories surge, orders drop

Unsold goods piled up, except in autos. Orders for domestic consumption and overseas export mostly fell in the second quarter from the first. Orders for textiles and chemicals processing were among the hardest-hit.

The only standout domestically was IT and consumer electronics, which saw orders rise during that time. Orders for export grew in three of seven manufacturing categories: electronics, automotive and food and beverage processing.

“Weak domestic orders and expanding inventories indicate the presumed second-half improvement will be unpleasantly modest,” the report said.

The authors noted the services sector saw the greatest reversal. After accelerating in growth in the first quarter, services businesses saw revenue, sales volumes, capex and profits drop in the second quarter.

Across China, only the property sector and the manufacturing hub of Guangdong saw any year-on-year improvement, the China Beige Book said.

Official second-quarter gross domestic product figures are due out July 15. GDP grew by 4.8% in the first quarter from a year ago.

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U.S. Economy Shrank Worse-Than-Expected 1.6% Last Quarter As Recession Fears Grow – Forbes

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Topline

The economy last quarter posted its worst annualized showing since the pandemic-induced recession in 2020, the government said in an updated release Wednesday, blaming an unexpected decline in economic activity on the omicron variant of Covid-19 and decreased government assistance.

Key Facts

The U.S. economy shrank at an annual rate of 1.6% in the first quarter of 2022—the first decline since the second quarter of 2020, the Bureau of Economic Analysis reported Wednesday in a worse-than-expected update to last month’s figure, which showed a decline of 1.5%.

The update primarily reflected softer-than-expected spending on business inventories and residential investments, which was only partially offset by an uptick in consumer spending, the government said.

In the first quarter, a record wave of Covid-19 cases spurred by the omicron variant resulted in continued restrictions and business disruptions, while government assistance programs including forgivable loans to businesses and social benefits to households expired or tapered off—further preventing growth, according to the release.

Broad declines in exports, government spending and business inventories, along with increased imports, spurred the overall decline, the government said.

The overall drop stands in stark contrast to the economy’s better-than-expected growth of 6.9% in the fourth quarter, the fastest rate in nearly 40 years, thanks in part to a jump in exports and increased inventory investments by car dealers.

What To Watch For

Economists are widely calling for a return to growth this quarter, thereby avoiding the two consecutive quarters of negative GDP growth that constitute a technical recession, but a growing wave of experts have warned odds of a recession next year are growing. In a research note on Monday, analysts at S&P Global Ratings said aggressive Federal Reserve policy to combat ongoing price spikes will usher in low economic growth this year and potentially risk a recession, warning: “What’s around the bend next year is the bigger worry.” S&P put the odds of a recession in 2023 at 40%—more than the 35% odds Morgan Stanley issued last week.

Key Background

Though the economy quickly bounced back after the Covid recession in 2020, the Fed’s withdrawal of pandemic stimulus measures, Russia’s invasion of Ukraine and lingering Covid restrictions have heightened market uncertainty this year. Last quarter, the stock market posted its worst showing since the market crash in early 2020, with the S&P falling 5% and the tech-heavy Nasdaq 9%. “Recession risks are high—uncomfortably high—and rising,” Mark Zandi, chief economist at Moody’s Analytics, said in a recent note. “For the economy to navigate through without suffering a downturn, we need some very deft policymaking from the Fed and a bit of luck.”

Crucial Quote

In an email after April’s initial report, which estimated a 1.4% decline despite expectations for 1% growth, Bankrate analyst Mark Hamrick said the lackluster performance serves as a reminder of the “volatile and complicated times in which we live,” but that the contraction is “less worrisome” because key drivers of economic growth, such as consumer and business spending, have been holding up despite the widening trade deficit and big swings in business inventories.

Further Reading

Cathie Wood Claims Economy Already In A Recession—Warns Inflation And Inventories Pose ‘Big Problem’ (Forbes)

Unemployment Will Rise And ‘Extreme’ Price Pressures Continue As Fed Hikes Risk Recession, S&P Warns (Forbes)

Major Bank Is First To Forecast A Recession—More Could Follow (Forbes)

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Sudan’s economy dominated by military interests: Report – Al Jazeera English

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C4ADS report says crackdown on patronage networks was a contributing factor to last October’s coup.

The Sudanese military and security forces have a sprawling monopoly over the country’s economy, a system that must be tackled to restore the country’s transition to democracy, a report has concluded.

The report, by the Center for Advanced Defense Studies (C4ADS), was published on Wednesday alongside a database that identifies 408 entities controlled by security elites, including agricultural conglomerates, banks, and medical import companies.

Under Sudan’s former civilian-military transitional government, which was tasked with guiding Sudan’s transition towards democracy, an anti-corruption committee was formed to confiscate assets from figures who made a fortune under the former President Omar al-Bashir.

Observers have argued that the confiscations struck at the core of the military’s patronage networks and played a significant role in compelling senior officers to topple the civilian administration in a coup last October, which has been followed by months of protests.

But C4ADS said that countries that seek to support democracy in Sudan have the tools to weaken the country’s “deep state”.

“Governments, non-governmental organizations (NGOs), and private companies have a role in dismantling Sudan’s deep state through economic sanctions, de-risked aid, and increased due diligence around private investments,” the authors of the report said.

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Economic Monopoly

The report zoomed in on two major banks, Omdurman National Bank (ONB) and Khaleej Bank, which the military and security forces use to access global financial networks, respectively.

The military – through a web of front charities – owned 86 percent of the shares in the former, according to the report.

Khaleej Bank, meanwhile, was controlled mainly by joint ventures that belong to the United Arab Emirates and the Rapid Support Forces (RSF) – two players that have strong political and economic relations.

The latter is a paramilitary force that evolved out of tribal militias that rebel forces called the Janjaweed, which committed massacres in the western province of Darfur.

The report estimated that the family of RSF leader Mohamad Hamdan Dagalo – better known as Hemeti – controls 28.35 percent of the shares in Khaleej Bank.

The report also reviewed Zadna International Company for Investment Ltd, a majority-army-owned agricultural conglomerate, on whose board of directors Hemeti’s brother, Abdel Rahim Dagalo, sits.

The company has run numerous irrigation schemes and leased out plots of land to private investors, according to Suleiman Baldo, an expert on the predatory economy in Sudan and the founding director of the Sudan Transparency and Policy Tracker.

“The story about Zadna is that it was a public company that was simply taken over by the military, which is monopolising its revenue and not giving the ministry of finance access to any of it. That’s the problem with Zadna,” Baldo said.

Reputational Damage

The spokesperson for Sudan’s military, Nabil Abdullah, denied accusations that the army has a monopoly over civilian sectors in the economy, and said that Sudan’s former civilian administration was unwilling to assume partial control of military-owned companies.

“[The army] has no economic control [of the country]. This is a lie and misleading,” Abdullah told Al Jazeera.

The report by C4ADS said otherwise. The nonprofit followed policy experts, rights groups, and United States officials in calling for targeted sanctions on enterprises owned by the military and the RSF.

Baldo acknowledged that such a move could unintentionally hurt everyday civilians who are already struggling to survive after billions of dollars worth of development assistance and debt relief were halted in response to the coup.

He added that sanctions may not be necessary since the US has already released a business advisory that warns of reputational risks to Western companies that try to partner with military enterprises in Sudan. The findings published by C4ADS could further deter foreign companies and institutions from conducting business in the country.

“Even without the sanctions, the deterrence effect that sanctions cause already exists,” Baldo said.

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