“Middle East conflict could drive up inflation in Europe…”

Middle East conflict could drive up inflation in Europe

The International Monetary Fund (IMF) has warned that the conflict in the Middle East between Hamas and Israel could drive up inflation as central banks continue the battle to bring it down.

During a media conference in Brussels, Alfred Kammer, the Director of the European Department at the IMF, said in his opening remarks that inflation could surprise on the upside.

“The Israel – Gaza conflict has already impacted energy prices, which could drive up inflation in Europe more generally,” he said at the meeting to coincide with the publication of the IMF’s new Regional Economic Outlook report for Europe.

Euronews asked Mr Kammer to further expand on the potential economic impact, including on oil and gas prices in Europe.

“The Initial impact on oil prices has now fully reversed. We saw an increase in natural gas prices by 10%. The conflict has had a limited impact so far on European economies on the price side and further impact will depend on the duration and intensity of the Middle East conflict,” he said.

“If it continues as we see, the impact will remain limited on Europe. On the pricing side with energy prices, something has realised but not in a dramatic fashion,” he added.

“Flat growth” in 2023 and a “lacklustre recovery” in 2024

During the meeting in Brussels, Mr Kammer was also asked about the possibility of a technical recession in the eurozone.

“We are not foreseeing a recession in the eurozone in our projections. We see flat growth during 2023 and a lacklustre recovery in 2024.”

He also noted how the continent has overcome the COVID-19 pandemic and weathered the war-inflicted energy shock better than expected.

“Growth is slowing this year, in part reflecting central banks having raised interest rates to fight high inflation triggered by the energy and food price shocks. There has been success on the inflation front and most of Europe is not expected to fall into recession,” he said.

Mr Kammer further noted headwinds to economic growth, including the geo-economic fragmentation and high energy prices.

“These add to older headwinds – from low productivity growth and an ageing workforce. The green and digital transitions pose additional challenges. All of this comes as fiscal buffers have been drained,” he added.

Europe’s top experts discuss future of AI in Brussels

The one-day International Artificial Intelligence Summit in the heart of the EU seeks to find answers to many of the questions around global AI regulatory cooperation, and what it will mean in practice.

The International Artificial Intelligence Summit 2023 in Brussels, organised by Euronews, has launched with a series of keynote interviews, panel discussions, and expert conversations, kickstarting one of the most important conversations of the year.

The rise of artificial intelligence and its ever-increasing presence in our daily lives has sparked a plethora of debates.

Among those, the question of its governance has emerged as one of the most pressing issues of our time, with Brussels at the forefront of the race to regulate AI with its flagship AI Act.

However, regulation does not come without its own hurdles, and solutions are bound to determine the future of tech and Europe’s citizens alike.

“AI is a global challenge that doesn’t recognise borders,” Ireland’s Minister for Enterprise, Trade and Employment Simon Coveney said in his keynote address.

“The EU can’t do it alone. It must build an alliance and it must at least try to reach a global consensus.”

The first panel’s experts also flagged the need for regulation to be future-proof.

“Regulation shouldn’t be created on something that we don’t fully understand yet. Over-regulation also stifles innovation,” CEO of Radix Davio Larnout pointed out.

And the effect is predicted to be enormous. “The regulations that are created now have a direct impact on what businesses will invest in now and in the future,” Amazon’s Vice President & AGC Bob Kimball said.

Throughout the day, the summit will also feature a closing keynote speech by European Commission Vice-President Věra Jourová.

Malta:

BOV announces profit before tax of €163.5 million as at September 2023

Bank of Valletta Group continued to deliver robust financial performance in the third quarter of 2023 with strong net interest income and capital generation, alongside resilient asset quality. Profit before tax for the nine months was €163.5 million compared with a loss before tax of €48.7 million, as restated, in the comparative period. The favourable performance for the first three quarters of 2023 was attributable mainly to the improvement in the Group’s operating revenues totalling €315.9 million, a growth of €113.7 million or 56% compared with the same period in 2022 (9M 2022: €202.3 million).

Net Interest Income continued to be the dominant catalyst with €253.8 million (9M 2022: €137.3 million), an increase of €116.5 million or 85% compared to the same period in the prior year. This was primarily driven by strong growth in the Bank’s personal and business lending business with the loan portfolio exceeding the € 6 billion mark (December 2022: €5.6 billion). In addition, improved returns from the Bank’s treasury portfolio as well as the positive impact of higher rates of interest on the euro have equally contributed to the strong returns. Net Fees and Commissions, Exchange and other revenues amounted to €62.1 million, down by €2.8 million or 4% (9M 2022: €65.0 million). Net commissions declined by €0.8 million, or 2% vis-à-vis the same period last year mostly due to the removal of deposit-related fees to corporate customers and a persisting slowdown in investment-related commissions as a result of the continued volatility in the world’s capital markets driven by the geopolitical tensions which is in turn dampening investor sentiment.

Operating costs in the first three quarters of the year amounted to €139.0 million (9M 2022: €132.3 million) an increase of €6.7 million or 5% compared to the same period in 2022. Net Expected Credit Losses (‘ECL’) for the period to September 2023 was a net charge of €13.1 million (9M 2022: €10.1 million net charge). As at 30 September 2023, the ECL coverage for credit-impaired assets stood at 53.6% (December 2022: 53.8%) while the ratio of non-performing to the total credit portfolio stood at 4.0% (December 2022: 3.5%).  An allocation of an additional €6.7 million was made in the first nine months of 2023 (9M 2022: €6.6 million) for the execution of strategic actions.

The share of profit from insurance associates for the first three quarters of 2023 amounted to €6.4 million, aligned with the recently adopted IFRS 17 standard implemented by the associates (9M 2022: €1.5 million restated).

October brings more than 770,000 passengers through Malta International Airport’s doors

–   October traffic registers a 9.6 per cent increase over 2019 levels

–   At 84.7 per cent, the seat load factor remained high

–   7.8 million passengers expected by the end of 2023

October marked the end of summer for the aviation industry and brought 771,253 passengers through Malta International Airport’s doors. This total represents an increase of 9.6 per cent over 2019 figures.

In parallel, seat capacity saw an increase of 6.4 per cent. Despite this increase in the seats available on flights, strong travel demand throughout October led to a monthly seat load factor (SLF) of 84.7 per cent.

October’s top markets were Italy, the United Kingdom, Germany, France and Spain. While Italy (+47 per cent), France (+53 per cent) and Spain (+3 per cent) outperformed their respective 2019 results, the United Kingdom’s (-17 per cent) and Germany’s (-23 per cent) slow recoveries continued into October.

The strong results registered between January and October together with the positive outlook for November and December gave Malta International Airport the confidence to revise its traffic forecast. The Airport now expects to welcome 7.8 million passengers by the end of 2023.

Malta Company Announcements:

PG plc

PG plc announced that its Board of Directors is scheduled to meet on Wednesday, 29^th November 2023 to consider the distribution of an interim dividend.

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