Business

MECCA, Saudi Arabia — "Business is back", exclaims Abdullah Mekhlafi at the shop where he sells prayer mats in Islam's holiest city, which is preparing for the biggest influx of Hajj pilgrims since the coronavirus pandemic started.

Two years of drastic restrictions on the number of pilgrims who could perform the Hajj emptied shops and hotels across the Saudi Arabian city of Mecca. But business owners are hoping for a quick recovery as hundreds of thousands of worshippers flock to the region this week.

"We had few customers [during the last two Hajj seasons], but today business is back, thanks to God. It's the same as before, and even better," 30-year-old Mekhlafi said.

One million people, including 850,000 from abroad, will be allowed at this year's Hajj, one of five pillars of Islam which all able-bodied Muslims with the means are required to perform at least once in their lives.

In 2019, about 2.5 million people took part in the rituals, which include circling the Kaaba at the Grand Mosque in Mecca, gathering at Mount Arafat and "stoning the devil" in Mina.

The following year, after the pandemic took hold, foreigners were barred and the total number of worshippers was capped at 10,000 to stop the Hajj from turning into a global super-spreader.

That figure rose to 60,000 fully vaccinated Saudi citizens and residents in 2021.

Restoring old glory 

The Hajj, which costs at least $5,000 per person, and umrah pilgrimages that occur at other times of year are usually a significant revenue earner for Saudi Arabia, especially its tourism sector.

In normal times, they generate about $12 billion (11.5 billion euros) annually, keeping the economy humming in Mecca.

The city has seen a construction boom in recent years that has brought new shopping malls, apartment buildings and luxury hotels — some offering spectacular views of the sacred Kaaba, the large black cubic structure at the centre of the Grand Mosque towards which all Muslims pray.

But these projects were starved for clients during the pandemic, meaning their owners were cheered by scenes already unfolding in Mecca on Monday, two days before the Hajj officially starts. 

White-robed worshippers were flocking to souvenir and barber shops across the city of two million.

The main shopping centre near the Grand Mosque, where many hotels are located, was buzzing with pilgrims again, a far cry from a year ago when the area looked nearly abandoned. 

Amin, a perfume shop owner, was bullish about his prospects, saying his losses could be recovered this year.

"There is a huge difference between this year and past ones. This year we can see a lot of pilgrims who are bringing back the glory to the Grand Mosque," he said. 

"The losses were big, but now things are better."

Boom times 

The changes in Mecca track the recent economic fortunes of Saudi Arabia.

During the pandemic, the kingdom faced a sharp downturn in oil prices due to a collapse in global demand, which triggered austerity measures including the tripling of a value added tax and cuts to civil servants' allowances.

Particularly after Russia's invasion of Ukraine in February, things seem to have changed.

In early May, Saudi Arabia reported its fastest economic growth rate in a decade, as a surging oil sector fuelled a 9.6 per cent rise in the first quarter over the same period of 2021.

"The impact of the losses during the last two years was significant, but we are starting to see a recovery on the business level, and this year's [Hajj] is good news," said Salem Ali Shahran, operations manager at the biggest hotel chain in Mecca.

"The current numbers have reached 40 per cent of their 2019 levels. We hope for bigger numbers in the coming years."

Saudi Arabia's GDP is expected to grow by 7.6 per cent in 2022, the International Monetary Fund said in April.

The world's biggest oil exporter is trying to diversify its economy, a main pillar of the Vision 2030 reform agenda pushed by Crown Prince Mohammed Bin Salman. 

Tourism is a crucial component of that plan, making a booming Hajj all the more important.

The current goal is for Saudi Arabia to triple foreign tourism this year as pandemic restrictions ease, Ahmed Al Khateeb, the tourism minister said in an interview last month.

Of the 100 million foreign and domestic tourists targeted for 2030, 30 million are expected to be making religious trips, largely to Mecca and Medina, Islam's two holiest sites.

BEIJING — Chinese authorities said on Tuesday they could dip into pork reserves and ordered suppliers to slaughter more pigs in a bid to rein in the cost of the staple meat, after prices soared by almost a third year-on-year.

Beijing's top economic planner was forced to respond after pork prices in the country spiked, with regulators blaming suppliers for "blindly holding supplies" and being reluctant to sell.

The National Development and Reform Commission said that reluctance was aimed at boosting profits, ordering major suppliers to kill pigs at a "regular pace" and stop hoarding, Xinhua said.

Late last month, the meat sold for 32 per cent more than in June 2021, it added.

On Tuesday, the commission said it was "looking into a release of central pork reserves".

It has also instructed local governments to release supplies "in a timely manner" to guard against sharp price increases.

The Chinese government keeps massive stores of frozen pork in warehouses, occasionally releasing reserve meat to stabilise prices, especially during periods of peak demand including Lunar New Year.

Pork is the most commonly consumed meat in China, with the average person in the country eating more than 25 kilogrammes per year, according to data of the Organisation for Economic Cooperation and Development.

The world's second largest economy has mostly been spared the impact of a global surge in food prices caused by Russia's war in Ukraine.

But pork prices were hit hard after the country's herds were devastated by African swine fever in recent years, causing consumer inflation to spike.

In 2019, authorities said they would free up land to restore production to pre-swine fever levels, and officials have since released supplies from stockpiles to rein in costs.

"As the prices of hogs continue to rise, pig farmers are turning losses into profits... farmers are now profiting about 60 yuan [about $9] per head," ministry of agriculture and rural affairs hog expert Wang Zuli told state broadcaster CCTV in an interview in June.

"We can say the darkest days for pig farmers are over," Wang said, adding that supplies were expected to grow.

Even Pay, an agriculture analyst at consultancy Trivium China, told AFP it was common during periods of rising pork prices for pig farmers to "delay sales of pigs that are ready for slaughter now, assuming they'll be able to make more next week, and the week after".

"But if the rise in pig prices is driven by real market factors rather than mostly by speculation, the reserve releases won't have much of an impact," Pay said, pointing to high feed and energy costs as well as rebounding demand from restaurants post-lockdown.

Beijing is keeping a close eye on food prices as COVID disruptions, on top of higher fertiliser and fuel costs and issues with access to equipment, threaten the autumn harvest of key crops such as soybean and corn.

TUNIS — Officials from the International Monetary Fund (IMF) started a visit to Tunisia on Monday to start negotiations over a bailout package for the North African country's economy, the central bank said.

The Tunisian central bank's press office said the two-week visit would involve officials from the bank and the finance ministry.

The talks will examine a reform plan presented by the Tunisian government which aims to meet IMF conditions for a loan experts say is likely to be worth around two billion euros.

The North African country, the birthplace of the 2011 Arab Spring uprisings, has been suffering under a grinding economic crisis and exploding public debt exacerbated by the coronavirus pandemic and the war in Ukraine.

The government of President Kais Saied, who last year staged a dramatic power grab, has proposed a reform package that includes freezing the public wage bill, cutting some subsidies and restructuring state firms.

But the "powerful" UGTT trade union, which staged a nationwide public sector strike last month over pay, has rejected "painful options" aimed at meeting IMF demands.

"We support reforms, but we don't share the vision of reforms supported by this government," UGTT head Noureddine Taboubi said.

Saied met the IMF's regional chief Jihad Azour last month, telling him he "recognised the need to introduce major reforms", but insisting that such changes must "take social impacts into account".

An IMF team said in March that the country faced "major structural challenges", with low growth and investment, along with high unemployment and gaping inequality.

Those woes have become ever more acute as the war in Ukraine has sent prices of key energy and food imports soaring.

LONDON — European and Asian stocks mostly advanced on Monday as investors tentatively regained some optimism following the heavy losses in the financial markets last week on fears that rising interest rates could spark a recession.

London stocks won 0.9 per cent, with rising crude prices supporting the share prices of energy firms BP and Shell.

Paris added 0.4 per cent but Frankfurt slipped 0.3 per cent. 

Tokyo and Shanghai also advanced but Hong Kong nudged lower. The dollar traded mixed.

Wall Street was closed for the Independence Day holiday.

'Sliver of optimism' 

"A sliver of optimism has broken through on global markets at the start of the week," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Europe's investors on Friday absorbed news of record-high eurozone inflation that reinforced expectations of a major European Central Bank interest rate hike in July.

Markets have suffered sharp losses in recent weeks on fears that global rate hikes — aimed at fighting soaring inflation — could send economies into a downturn.

"Overall caution is still the name of the game as investors nurse wounds from a bruising first half of the year," Streeter said.

City Index analyst Fawad Razaqzada cautioned that global markets might yet have further to fall.

'Pinch of salt' 

"Nothing has changed fundamentally to suggest the markets have bottomed out," Razaqzada said.

"It is a quiet day with the US out and economic calendar light. So anything we see today should be taken with a pinch of salt."

Chris Beauchamp, chief market analyst at online trading platform IG, said investors were also watching what US President Joe Biden does as some of the punishing tariffs imposed under Donald Trump start to expire on July 6.

The imposition of tariffs to protect US manufacturers from what Washington said were unfair Chinese trade practices was politically popular.

But with US inflation now at 40-year highs, Biden is scrambling to find ways to relieve price pressure and has said that lifting some tariffs is under consideration. 

"A potential easing of China tariffs by the US might be the kind of thing to give equities a much-needed break," said Beauchamp.

"President Biden hopes that a rollback of restrictions might give a lifeline to both economies, as well as repair some of the diplomatic fallout from China's pro-Russian stance over the Ukraine war," he added.

Back in Asia, data showing a flare-up of fresh COVID-19 cases in China revived concerns about the government's policy of locking down towns and cities to eradicate the disease, despite the economic cost.

The jump in new COVID cases weighed on sentiment among investors who fear a return to the painful lockdowns in major cities including Shanghai, which hammered the world's number-two economy.

STOCKHOLM — Scandinavian airline SAS said on Monday that negotiations between the carrier and the pilots' union had failed to reach an agreement, prompting some 900 pilots to strike.

"How on earth is a strike in the busiest week of the last two-and-a-half years going to help us find and attract investors," SAS chief executive, Anko van der Werff, told reporters, criticising what he called a "strike culture" among pilots.

The pilots are protesting against salary cuts demanded by management as part of a restructuring plan aimed at ensuring the survival of the company, which has suffered a string of losses since the start of the coronavirus pandemic in early 2020. 

"We deeply regret that our customers are affected by this strike, leading to delays and cancelled flights," van der Werff said in a statement.

The airline said that the strike "is estimated to lead to the cancellation of approximately 50 per cent of all scheduled SAS flights," impacting around 30,000 passengers a day.

SAS management announced in February the savings plan, dubbed "SAS Forward", which was supplemented in June by a plan to increase capital by nearly one billion euros ($1.04 billion). 

Denmark and Sweden are the biggest shareholders with 21.8 per cent each. 

Denmark said in June it was ready to increase its stake to 30 per cent. Sweden has refused to provide fresh funds, but is willing to turn debt into capital. 

Norway, which left SAS in 2018, has said it is ready to return to the airline, but only by converting debt into equity. 

The strike at SAS comes as the summer is shaping up to be difficult for European airlines and airports, faced with staff shortages affecting traffic. 

After widespread job losses linked to COVID-19, airlines and airports are struggling to recruit new staff in many countries. 

BUENOS AIRES — Martin Guzman, Argentine economy minister, who led debt renegotiations with the International Monetary Fund (IMF), announced his resignation on Saturday, sparking fresh uncertainty in Latin America's third largest economy.

Guzman did not say why he resigned in his statement addressing President Alberto Fernandez, but called on the centre-left leader to mend internal divisions so that "the next minister does not suffer" the same difficulties he did.

"It will be essential that you work on an agreement within the ruling coalition," he added in the statement shared on Twitter.

His resignation comes two weeks after Vice President Cristina Kirchner, a former president who has been a constant critic of the government, gave a speech attacking Fernandez's economic management.

Political analyst Carlos Fara said that Guzman's resignation was "a check mate for the president's autonomy" and had given Kirchner the upper hand in their power struggle.

"The resignation will have a very bad effect in the markets. Even if the president and vice president reach a consensus on managing the economy, from now on everything will be conditioned by Cristina Kirchner's pressure."

As economy minister, the 39-year-old Guzman was tasked with renegotiating a $44 billion debt with the IMF that Argentina insisted it could not afford to repay.

The original debt of $57 billion — the last tranche of which Fernandez declined after succeeding his liberal predecessor Mauricio Macri, who had solicited the loan — was the largest ever issued by the IMF.

Despite resistance from Kirchner, Guzman managed to agree a deal and save Argentina from defaulting.

But Guzman was often faced with hostility from the Peronist Justicialist Party, the major force in the Frente de Todos (Everyone's Front) ruling coalition that counts both Fernandez and Kirchner as high profile members.

Kirchner's faction has gone after Guzman ever since Everyone's Front lost control of the senate during last year's midterm legislative election.

The IMF deal was only ratified by parliament thanks to support from the centre-right opposition, as a group of legislators in the ruling coalition led by the vice president's son Maximo Kirchner boycotted the vote.

'Growth crisis' 

Guzman said whoever replaces him will need "centralised management of the necessary macroeconomic political instruments to consolidate the progress made and face the challenges ahead".

While agricultural powerhouse Argentina has the third largest economy in Latin America, it has been in economic crisis for years, with inflation of more than 60 per cent in the last 12 months.

The country was already struggling with rising poverty, unemployment and a depreciating currency before the coronavirus pandemic exacerbated matters.

Earlier this week, Fernandez admitted the country was facing "a growth crisis" due to a shortage of foreign exchange.

The IMF deal included provisions to contain inflation and reduce the budget deficit from three per cent in 2021 to parity by 2025.

Guzman's detractors within the ruling coalition hit out at him over perceived excessive zeal in tackling the budget deficit and his monetary policy.

He complained several times that these criticisms sent worrying signs to already jittery markets, making his job ever harder.

In a recent report, the Eurasia Group political risk consultancy said the internal divisions would not be resolved any time soon.

"Infighting within the administration will continue to worsen, further hurting the administration's ability to develop a coherent policy plan," said Eurasia.

Although he did not reveal what his next post would be, Guzman said he would "continue working and striving for a fairer, freer and sovereign homeland".

Fernandez has yet to comment on the resignation of Guzman, who is one of his closest allies.