Business

PEOPLES DAILY, MONDAY, JANUARY 2, 2023 PAGE 19 BU$IN€SS

By Abubakar Yunus Abuja

Goldman Sachs, a multinational investment bank, projects that global economic growth will slow next

GTBank suspends int’l transactions on naira cards Dec 31

Guaranty Trust Bank (GTBank) says it will suspend international transactions on its naira Mastercard from Saturday, December 31, 2022.

The bank, who made this known in a statement to its customers ,said customers will be unable to make international automated teller machine (ATM), and point of sales (POS) transactions on their naira Mastercards.

“We write to inform you that you will no longer be able to use your naira Mastercard for international online and POS transactions effective 31st December 2022,” the statement reads.

“Kindly note that you can use your GTBank dollar card for all your international spending requirements.”

According to the statement, the bank’s dollar card allows a daily $1,000 (or equivalent in the transaction local currency) withdrawal limit on ATM transactions.

It added that there would be no withdrawal limit on “annual spend and POS transactions” for the dollar cards.

The development is not the first time financial institutions are reducing spending limits or suspending international transactions on their cards.

In February and March, Zenith Bank and the United Bank for Africa (UBA) reduced the international spending limit on their naira cards from $100 to $20 a month.

Also, in July, Standard Chartered Bank suspended international transactions on its naira visa debit card.

Flutterwave, Eversend and other fintech platforms had also stopped virtual card services for international transactions.

Operating a multiple exchange rate system, Nigeria has been battling a foreign exchange crisis.

Recently, the country’s foreign reserves depleted from $3.0 billion in 2014 to zero in 2022.

Godwin Emefiele, governor of Central Bank of Nigeria (CBN), had said there is a shortage of foreign exchange to meet citizens’ needs.

Amid Nigeria’s FX shortage issues and its resultant effect on banks’ decision to limit international transactions, citizens’ ability to pay for services abroad and online has been impacted.

Goldman Sachs forecasts slow global economic growth at 1.8% in 2023

year.

The firm’s projection contained in its report titled ‘macro outlook 2023: this cycle is different’.

Goldman Sachs said the world’s economy is expected to grow at a slower-than-expected pace of 1.8 percent in 2023 as the United States’ resilience contrasts with a European recession and a bumpy reopening in China.

The projection is lower than the 2.7 percent estimated by the International Monetary Fund (IMF).

“Global growth slowed sharply through 2022 on a diminishing reopening boost, fiscal and monetary tightening, China’s ongoing Covid restrictions and property slump, and the energy supply shock resulting from the Russia-Ukraine war,” the report reads.

“We expect the world to continue growing at a below-trend pace of 1.8 percent in 2023, with a mild recession in Europe and a bumpy reopening in China but also important pockets of resilience in the US and some EM early hikers, such as Brazil.”

The investment bank also predicted that the US was likely to narrowly avoid a recession in 2023.

“The US should narrowly avoid recession as core PCE inflation slows from 5 percent now to 3 percent in late 2023 with a 1⁄2pp rise in the unemployment rate,” Goldman Sachs explained.

“To keep growth below potential amidst stronger real income growth, we now see the Fed hiking another 125bp to a peak of 5-5.25 percent. We don’t expect cuts in 2023.

“How can core inflation fall so much with such a small employment hit? The reason, we think, is that this cycle is different from prior high-inflation periods.

“First, post-pandemic labor market overheating showed up not in excessive employment but in unprecedented job openings, which are much less painful to unwind.

“Second, the disinflationary impact of the recent normalisation in supply chains and rental housing markets still has a long way to go.

“And third, long-term inflation expectations remain wellanchored.”

Meanwhile, Goldman Sachs said the Euro area and the United Kingdom were probably already in recession, mainly because of the real income hit from surging energy bills.

“But we expect only a mild downturn as Europe has already managed to cut Russian gas imports without crushing activity and is likely to benefit from the same postpandemic improvements that are helping [to] avoid US recession,” it explained.

“Given reduced risks of a deep downturn and persistent inflation, we now expect hikes through May with a 3 percent ECB peak.”

According to Goldman Sachs’ research economists, economic growth is likely to start 2023 on the weak side across most of the AsiaPacific as a fading reopening boost, slowing global manufacturing cycle, and past monetary tightening weigh on activity.

“China is likely to grow slowly in H1 as an April reopening initially triggers an increase in Covid cases that keeps caution high, but should accelerate sharply in H2 on a reopening boost,” the bank said.

“Our longer-run China view remains cautious because of the long slide in the property market as well as slower potential growth (reflecting weakness in both demographics and productivity).

“Several central banks in Central/Eastern Europe and Latin America started hiking rates well before their DM peers. While none has clearly achieved a soft landing yet, activity has been resilient and inflation is now coming down in some countries, especially Brazil.

“CEE is in a more difficult position because of its commodity exposure, high inflation, and ongoing monetary tightening.”

Earlier this month, there were reports that Goldman Sachs was planning to fire about 4,000 employees next year over ebbing profits.

FG should get involved in Jet A1 availability to save airlines from collapse – Expert

The Federal Government has been advised to get itself involved in the Jet A1 crisis rocking the Nigerian aviation industry or risk the collapse of many indigenous airlines.

A former Rector of the Nigerian College of Aviation Technology (NCAT), Capt. Samuel Caulcrick made the call over the weekend during an interview with Nairametrics.

Caulcrick noted that the Federal Government had performed creditably well in the industry in 2022, but warned that the Jet A1 scarcity and its attendant high cost may negatively affect the country’s aviation industry.

The At the moment, Jet A1, otherwise known as aviation fuel in local parlance, is sold at N800 to N850 per litre, depending on the quantity and the airport an airline is buying from.

At the beginning of the year, the commodity sold for N250 to N300 per litre. But since the outbreak of the war in Ukraine, the prices have skyrocketed, thereby affecting the operating costs of airlines.

Peoples Daily gathered that aviation fuel makes up over 60% of the total operating cost for airlines, a huge leap from 30% at the beginning of the year.

According to Caulcrick, the government could get involved in the supply chain, not as an importer, but through subsidy of the product to operators.

He opined that the government could purchase the product from the major oil marketers and sell to operators in the industry at a subsidised rate, arguing that the government would benefit more through taxes in the long run.

Besides, the former NCAT helmsman explained that the government through the Nigeria Air Force had some Jet A1 reserves, which it could tap into to feed the airlines in case of the scarcity and high cost of the product as it is presently happening in the sector. He said:

“Also, when it comes to Jet A1, the government doesn’t want to get involved, but I think the government should get involved, but not as an importer. The government has a Jet A1 reserve for the Air Force because of security. So, the Air Force cannot rely on suppliers for Jet A1 to fly their jets.

“Government should be able to look into that reserve at times to save the commercial sector especially when the scarcity of the product is alarming or if there is a price hike and the government wants to subsidise it.

“The government can also call the fuel marketers and buy the product from them and sell at a subsidised rate for the airlines. This is necessary because the government is taking money back from every airline that flies. After all, the airlines are paying charges.

“Definitely with this, the government would make its money back because if they don’t fly, the government cannot make money. For every hour the airlines fly, the government gets some money too, which would have been zero if they don’t fly. So, the government has to be very flexible.”