Hello and welcome to our ongoing coverage of the global economy, financial markets, eurozone and business.
The International Monetary Fund’s board approved $1.4 billion in emergency funding for Ukraine and predicted a “deep recession” in Ukraine this year. In one declarationhe expressed his “strong support for the Ukrainian people”.
IMF Managing Director Kristalina Georgieva said that once the war is over, the country will likely need additional “great support”.
The Russian military invasion of Ukraine has been responsible for a massive humanitarian and economic crisis.
Funding needs are large, urgent and could increase significantly as the war continues.
Vladyslav Rashkovan, deputy executive director of Ukraine, gave a moving speech at the board meeting about the devastation caused by the war and the impact on Ukrainians, Reuters reported. His remarks were met with spontaneous applause, a rare occurrence at such meetings.
Russian executive director Aleksei Mozhin, who is the longest serving member of the board and is its honorary dean, spoke only briefly, saying, “I pray for peace.”
The Ukrainian authorities canceled the previous stand-by arrangement and expressed their desire to work with the IMF to design an economic program aimed at rehabilitation and growth, when conditions permit.
The World Bank’s board on Tuesday approved a $723 million loan and grant package for Ukraine.
Meanwhile, Lawmakers in the U.S. House of Representatives voted in favor of a $13.6 billion aid package that would increase military and humanitarian support for Ukraine and its European allies. The aid includes $6.5 billion for U.S. costs of sending troops and weapons to Eastern Europe and equipping allied forces there, and $6.8 billion for s occupy refugees and provide economic support to allies. Senate approval is expected within days. The House also passed a bill banning imports of Russian oil.
Asian stocks joined yesterday’s rally in European and US markets after recent heavy lossesEuropean markets posting their biggest one-day gain since March 2020, with the DAX standing out, while US markets rose at their fastest pace since November 2020. Japan’s Nikkei closed nearly 4% higher while South Korea’s Kospi is ahead 2.2% and Hong Kong’s Hang Seng rose 0.5%.
Oil prices also fell sharply yesterday after an aide to Ukrainian President Zelenskiy said the country was open to Russia’s demand for neutrality, assuming it gets cast iron security guarantees. Today, Brent Crude was up around 3% at $114.58 a barrel while US Light Crude is ahead 1.7% at $110.6 a barrel.
European stocks are expected to open lower after yesterday’s rebound. While Ukraine will undoubtedly remain in focus, markets will also be watching the European Central Bank’s midday rate decision, as well as US inflation for February, where we expect an annual rate of 7. 9%, compared to 7.5% the previous month.
Joining the growing number of companies suspending operations in Russia, Japan Hitachi today said it would suspend operations there – but refrained from linking the decision to pressure from Ukraine. Two days ago, Ukrainian Deputy Prime Minister Mykhailo Fedorov urged the conglomerate to take action on Twitter, with an image of its letter to Hitachi boss Toshiaki Higashihara attached.
The company, which produces and sells construction machinery in Russia, said it would halt exports and cease most operations in the country except for vital electrical installations.
A spokesperson told Reuters:
We considered several factors, including the supply chain situation, when making the decision.
The Russian government plans to order local airlines to pay for leased planes in rubles and ban them from returning planes to foreign companies if the leases are cancelled, according to a draft law published today. Western sanctions have forced Russian airlines to cancel international flights.
The ruble has fallen sharply since Russia invaded Ukraine.
- 12:45 GMT: European Central Bank decision on interest rates
- 1:30 p.m. GMT: ECB press conference
- 1:30 p.m. GMT: US inflation for February (forecast: 7.9%)
- 2:30 p.m. GMT: ECB macroeconomic projections