Business

TOKYO — Japan's economy grew slightly in the second quarter, recovering from a slowdown at the start of the year despite continuing virus surges and restrictions, data showed on Monday.

The world's third-largest economy contracted at the beginning of the year as a new wave of infections forced the government to impose virus restrictions that slowed consumption.

But despite continued virus worries and restrictions that have lasted most of this year, Japan's economy grew a better-than-expected 0.3 per cent in the three months to June, data from the Cabinet office showed.

That slightly exceeded the expectations of economists surveyed by Bloomberg, who had forecast just 0.1 per cent quarter-on-quarter growth.

The data released by the cabinet office also showed a slight upwards revision for the first quarter, when the economy shrank 0.9 per cent, compared with a previous estimate of 1.

Japan has seen a smaller virus outbreak than many developed economies, with 15,400 deaths despite avoiding harsh lockdowns.

But for much of this year Tokyo and several other regions have been under virus states of emergency, limiting alcohol sales and restaurant and bar opening hours.

Experts have warned the measures are losing their effectiveness, with signs the rules are being increasingly flouted.

Stefan Angrick, a senior economist at Moody's Analytics covering Japan, said consumption proved surprisingly resilient despite the restrictions.

"The Japanese economy eked out some moderate growth in the second quarter of the year, avoiding a technical recession thanks to a combination of stronger consumption and business investment," he said in a note.

"Despite the improvement, we expect growth to remain under pressure in the third quarter as spending and production continue to struggle amidst disruptions from the pandemic."

Japan is also playing catch-up with its vaccine programme, which began much later and more slowly than those in many other developed economies.

The roll-out has now picked up speed and around a third of Japanese are now fully vaccinated but infections are at record levels, with nationwide daily cases topping 20,000 in recent days.

The surge in cases, driven by the more contagious Delta variant, has clouded the chances for a strong and fast vaccine-driven recovery.

Analysts said there was still hope on the horizon.

"Output only edged higher in the second quarter and won't do much better this quarter as the Delta-driven fifth wave holds back consumer spending," wrote Tom Learmouth, of Capital Economics.

"But with the vaccine rollout still moving fast, a strong recovery in Q4 [fourth quarter] remains on the cards."

He noted that the 0.8 per cent quarter-on-quarter rise in private consumption was stronger than expected and offset most of the fall in the previous quarter. 

As throughout the pandemic though, uncertainty remains.

"With severe cases surging, the risks to our forecast that consumer spending will tread water in Q3 are currently tilted to the downside," Learmouth acknowledged.

Still, he said the solid pace of the vaccination programme now would leave Japan "well-placed" for a strong rebound in the final part of the year.

WASHINGTON — When Romain Daubec and his wife Monica left San Francisco last summer for Denver, Colorado, they thought their telework hundreds of miles from their offices would last no more than a half-year.

But the stunningly rapid spread of the Delta variant of COVID-19 has them settling in for a new way of life that now, they say, feels more "natural".

Across the United States, a growing number of companies are delaying their employees' return to the office out of concern over the new wave of disease.

But like the Daubecs — he is French, she is American — more and more people across the country have settled in for a second year of telework — willingly this time, with little desire to return to the office, content and comfortable with their new personal and professional lifestyle.

The Delta variant, now dominant in the United States, has taken a heavy toll. An average of nearly 113,000 new daily cases of COVID-19 were registered over the previous seven days — a 24 per cent increase over the prior week, Rochelle Walensky, director of the US Centres for Disease Control and Prevention, said Thursday.

One employer taking note was Facebook, which on that same day announced that it would not require workers to return to the office before January 2022. 

"Data, not dates, is what drives our approach for returning to the office," a Facebook spokesperson said in response to an inquiry, saying the company's prime concern was "everyone's safety".

Only weeks earlier, the popular social network had been pushing for a quicker return to normal, saying it would completely reopen its offices by October — while requiring all employees to be masked and vaccinated. 

Facebook thus joined Microsoft, Amazon, American Express and NBC in delaying, to October or January, the full reopening of offices. 

Lower wages 

but also taxes 

For 34-year-old Romain Daubec, a financial analyst for a subsidiary of French bank BNP Paribas, and Monica, who works for Facebook, a return to the office is no longer an option.

While Monica saw her earnings cut by 10 per cent because of the move, "that was largely compensated for" by a greater quality of life and more affordable housing — less than half as expensive in Colorado as in California — as well as by lower taxes, Romain said.

Above all, Monica no longer has to spend three hours on a bus every day.

For Oren Klachkin, an economist with Oxford Economics, it took a bit longer to make the decision to leave New York for Boulder, Colorado.

But when a new wave of COVID-19 struck last fall, he saw the silver lining: It was a "once-in-a-lifetime opportunity to live somewhere else, maintain our jobs, try living in a different place", he said.

Space was a big draw: He and his wife Nicole, a 35-year-old consultant, had been sharing a cramped Manhattan apartment.

In Boulder, not far from Denver, the couple now has a "small house" where each has a separate room for work.

"I like the new life that I have here," Klachkin said, especially "having access to outdoor activities" in a scenic region near the Rocky Mountains.

Telework in Colorado has allowed him to strike a better balance between work and home life and saved him from having to "waste" up to two hours a day in the subway, he said. 

But "there are certain downsides, of course", Klachkin added, notably the inability to interact in person with colleagues. 

That is partially offset by "the availability of different online software to essentially allow us to see each other... even though we're not physically in the same space".

A tacit deal 

To Romain Daubec, where one works matters less than how one works.

"As far as I'm concerned, I just need a good internet connection and have to work on San Francisco's time zone," he said, while acknowledging that not every job lends itself to distance work. 

Fundamentally, Daubec added, telework succeeds when built on a basis of trust between employer and employee: Companies allow telework because they save on fixed costs like office rent, while workers tacitly agree to work as seriously as if their boss were standing in the same room.

Klachkin, for his part, says he is more productive than ever — no longer having to spend long, wearying hours commuting every week.

BEIRUT — Michael Hamati emerged from a long queue at a Beirut bakery sweat dripping from his forehead, as Lebanon's economic collapse sparks increasing shortages including over bread.

"There's nothing left in this country," said the 72-year-old, as dozens of people clamoured behind him in the simmering heat for their turn.

Lebanese flocked to bakeries before dawn on Friday, desperate to find affordable bread in a country where fuel and medicine are already in critically short supply.

The rush came after the central bank on Wednesday said it could no longer afford to subsidise fuel in Lebanon.

The country, struggling with political turmoil since 2019, has also been hit by the worst global economic crisis in 150 years, according to the World Bank.

At least 78 per cent of the more than six-million-strong population lives below the poverty line and businesses can barely stay afloat.

The Lebanese pound has lost more than 90 per cent of its value against the dollar on the black market in less than two years.

Many bakeries have already closed down because they cannot afford the rising cost of fuel needed to power private generators as electricity cuts last for around 20 hours a day.

Those that remain open have rationed production to make the subsidised flour they receive from the state last longer, leading to shortages in stores and supermarkets. 

Hamati arrived at a Beirut bakery early in the morning, bracing for a long wait.

"This is the first time I come to this bakery. There isn't any bread left in stores," he said.

"Is there anything left at all" in Lebanon? He asked.

Queues from 3 am 

Lebanon has been gripped by a fuel crisis since the start of summer, with importers blaming shortages on a delay by the government in opening credit lines to fund imports.

The authorities have accused distributors of hoarding stock to sell it at higher rates on the black market or across the border in Syria. 

"Bakeries don't have the means to secure fuel oil... and we don't know if we will receive any" from the state, said Ali Ibrahim, who heads the syndicate of bakery owners.

"They just give us enough for two days... though bakeries and mills should be receiving enough for a month."

In Beirut's Nabaa district, Jacques Al Khoury looked flustered as he tried to organise a queue of dozens of people waiting outside his bakery for bread.

The line started as early as 3:00am — just as he started baking for the day.

"All the bakeries in this area have closed and the pressure is all on me," he said.

Khoury, 60, said he receives 36 tonnes of state subsidised flour per month — but with demand for bread increasing it only lasts a week.

In the northern city of Tripoli, Lebanon's poorest, many bakeries have been forced to close while supermarkets have stopped selling bread.

'Stale bread' 

The few Tripoli bakeries that have remained open are also struggling to keep up with demand.

"We are rationing the amount of bread we distribute to stores," an employee at one of the city's largest bakeries said.

"We are providing them with half the usual amount."

In one bakery in the southern city of Sidon, residents were only allowed to buy one bag of flat white bread each.

According to the United Nations, food prices have increased by up to 400 per cent. 

The cost of a basic food basket for a single family is now five times the national minimum wage, the Crisis Observatory at the American University of Beirut says. 

"Once we've paid rent, we have no money left," said Mohammad Abdul Qader, a pastry shop employee who needs to provide for five children.

He said food has become so expensive, he can no longer afford meat.

"I gaze at the butcher's from a distance, and then go on my way," he said.

"Yesterday, I ate stale bread" with onion and tomato, he added.

PARIS — Cryptocurrency investors have been transfixed over the past few days by the antics of a mysterious hacker who stole more than $600 million — before giving some of it back.

But is the thief a good samaritan who stole the money to expose a dangerous security flaw, or did they simply realise they were about to be caught?

The hacker struck Poly Network, a company that handles cryptocurrency transfers, on Tuesday in one of the biggest thefts of digital monies in history.

By Thursday they had returned some $342 million — still far short of the total, but enough to raise furious speculation over their motives.

In messages embedded in the transactions, the thief insisted they stole with good intentions.

"I am not very interested in money!" they wrote, adding it was "always the plan" to return the stolen funds.

Digital sleuths 

Despite their volatility and concerns over the huge waste of electricity they generate, cryptocurrencies like Bitcoin and Ethereum have soared in popularity in recent years.

Their combined market value currently stands at nearly $2 trillion, creating alluring prospects for hackers. 

Most notoriously, thieves stole 850,000 Bitcoins from Japanese exchange Mt. Gox in 2014. Worth around $470 million at the time, the coins would today be worth a staggering $38 billion.

Another Japanese exchange, Coincheck, was hacked for nearly $500 million in 2018.

But in both cases, the technology that cryptocurrency uses allowed some of the funds to be traced — even though for Mt. Gox, it came too late to save the company. 

Cryptocurrencies use blockchains, digital ledgers that record every transaction made.

Pawel Aleksander, an expert in tracking stolen cryptocurrency, said thieves typically try to cover their tracks by splitting the money up and moving it around — "sometimes using hundreds of thousands of consecutive transactions". 

But his company Coinfirm is among a growing number that specialise in following dizzyingly complicated blockchain transactions, helping law enforcement agencies and investors to trace stolen assets. 

While some crypto-aficionados are hailing the Poly hacker as a hero, others suspect they began handing the money back because sleuths were on their trail.

The returns began after SlowMist, another investigative firm, claimed to have identified some of the hacker's personal details, including their email.

"It's hard to say what the hacker's initial intention was," said Aleksander's colleague Roman Bieda.

"The hacker could be simply afraid of action taken against him," he suggested, although he added that "white hat" ethical hackers do often seek to publicly shame companies for their security flaws.

Some investors would also consider it a "fair bargain" for the hacker to keep some of the money, as a reward for finding the security flaw, Bieda said.

End of the Wild West? 

Crimes involving cryptocurrencies are on a downward trend, despite spectacular thefts like this one and concerns about their use by criminal gangs.

A report this month by security firm CipherTrace estimated global crypto crime losses at $1.9 billion last year, down from $4.5 billion in 2019. 

It did, however, warn of an alarming rise in hacking and fraud linked to de-centralised finance, or "defi" — a form of crypto-financing, including loans, designed to cut out intermediaries like banks. 

The Poly heist is part of that trend, with the company calling it the biggest hack "in defi history". 

"The imagination of fraudsters in this industry is constantly developing," said Syedur Rahman, a British lawyer who specialises in cases involving cryptocurrencies. 

But he added that tighter regulations are increasingly forcing cryptocurrency exchanges to verify users' identities, while law enforcement agencies are growing more experienced in handling crypto crimes.

Hackers extracted a $4.4 million ransom in Bitcoin from oil company Colonial Pipeline in May, but the FBI was able to track down most of the coins and seize them. 

Retrieving stolen crypto-assets can still be difficult, however. 

"Criminal activities in crypto are very much multinational," said Aleksander.

"It's typical that the victims sit in different jurisdictions, and the exchanges are registered in different jurisdictions."

Victims' battle to claw back money stolen in the Mt. Gox hack has been bogged down in years of international litigation. 

Hiring sleuths to trace stolen assets is an expensive option that is often out of reach for individual investors hit by hackers.

"When you have a consumer who has lost a nominal sum, there's not much that can be done," said Rahman. 

SAN FRANCISCO — Samsung unveiled two upgraded folding smartphones on Wednesday as the South Korean sector leader sought to head off rising competition from Chinese firms in a fast-evolving market.

The Galaxy Z Fold3 and Z Flip3 offer sleeker designs, improved water resistance and more durable screens are available for pre-ordering for delivery later this month in the United States, Europe and South Korea.

The new devices come with Samsung facing heightened competition from Chinese manufacturers including Xiaomi, which grabbed the number two position in the second quarter.

The Flip3, with a 17 centimetres display, will start at $999, in line with other premium and flagship devices, and the 19 centimetres Fold3 at $1,799.

"Samsung is once again redefining the possibilities with foldable smartphones that empower users with the flexibility and versatility needed for today's fast-paced world," said TM Roh, head of Samsung mobile.

"These devices equip consumers with technologies that unlock new ways to maximise and enjoy every moment with an ecosystem built on openness and innovation."

The Flip3 aims to offer an affordable foldable, and the Fold3 aims to replace the large-screen devices and will include a retractable pen than can be used on the screen.

A recent survey by the research firm Canalys showed Chinese electronics firm Xiaomi has overtaken Apple as the number two global smartphone maker in a market in turmoil due to a global chip shortage and consumers emerging from lockdowns.

The Canalys survey showed worldwide smartphone sales up 12 per cent, with South Korea's Samsung holding its top position with a 19 per cent market share.

Xiaomi meanwhile surged to the number two position for the first time ever with a 17 per cent share as sales jumped 83 per cent, according to Canalys.

Apple dropped to number three with iPhone sales up just one per cent, after getting a lift from last year's new models.

Chinese makers Oppo and Vivo held fourth and fifth place in the global market, each with around 10 per cent, according to Canalys.

Smartphone sales were up 11 per cent from last year but down from the first quarter as manufacturers struggled with a global shortage of semiconductors, according to the research firm.

SAN FRANCISCO — TikTok was the world's most downloaded app last year, overtaking Facebook and its messaging platforms, market tracker App Annie said on Tuesday.

The Chinese-owned video app surged in popularity despite efforts by former president Donald Trump to ban it or force a sale to US-based investors, according to the research firm.

TikTok, owned by China-based ByteDance, is believed to have one billion users worldwide including more than 100 million in the United States, and its short-form videos are especially popular with young smartphone users.

In June, US President Joe Biden revoked executive orders from his predecessor seeking to ban TikTok and Chinese-owned WeChat from US markets on national security concerns but ordered a review of the potential risks of foreign-owned Internet services.

While political debate about the video-snippet sharing sensation roiled, TikTok climbed from the fourth most downloaded app in 2019 to the top spot last year, according to App Annie data.

On the way, TikTok stepped over Facebook and two of the US internet giants texting apps Messenger and WhatsApp, the market tracker determined.

TikTok's popularity has prompted Facebook-owned Instagram to add video features to ride the hot trend.

Meanwhile, TikTok last month began letting users post videos up to three minutes in length, tripling the prior cap to stay ahead of competitors.

Facebook has argued that the surge in TikTok's popularity undercuts claims from antitrust enforcers in the United States that the California group dominates social networking.

BERLIN — German train drivers voted to go on strike from Tuesday over a wage dispute, their union said, in a blow for summer vacationers and adding to logistics and supply woes already plaguing the industry.

The walkout will affect cargo trains from 7pm (17:00 GMT) on Tuesday, before extending to passenger traffic at 2 am on Wednesday, said the leader of the train drivers' GDL union, Claus Weselsky.

Some 95 per cent of union members had voted for the first round of industrial action, which is due to end on Friday.

Train operator Deutsche Bahn slammed the decision as an "unnecessary escalation on the back of rail customers".

"Just as people are travelling more again and using trains, GDL leaders are destroying the upswing that we urgently need given the huge damage from the coronavirus pandemic," said Martin Seiler, DB board member for human resources and legal affairs.

But Weselsky argued that the GDL "intentionally chose this timeframe in the week to limit the impact on weekend and holiday traffic" and that it was "never the best time" for a strike.

He in turn accused DB managers of "lining their pockets while the little guys are getting their pockets picked".

The strike would be the first hitting rail traffic since December 2018, when a stoppage was called for four hours.

It marked a new setback at the height of the key summer vacation season for the travel industry which was only starting to recover after months of shutdown over coronavirus infection risks.

With the walkout also due to affect rail cargo, Germany's industrial groups already hit by supply chain issues risk seeing further delivery delays for raw materials or components from timber to steel to computer chips.

Struggle for influence? 

The last major conflict between unions and DB took place between 2014 and 2015, when over nine months, GDL organised nine rounds of strikes to demand regulatory reforms. 

The stoppage in May 2015 of six consecutive days has held the record as the longest in the company's history.

This time, GDL argues that it was fighting for a better remuneration deal for train drivers. Among its demands are 1.4 per cent pay hike and a bonus of 600 euros ($704) for 2021, and a further wage rise of 1.8 per cent in 2022.

Deutsche Bahn had offered to phase in a 3.2 per cent wage increase in two steps but the two parties were unable to agree on when the hikes would apply.

Critics have accused GDL of using the strike to gain greater influence and attract members from larger union EVG — which covers railway workers and public transport employees.

The fight for influence was all the more critical due to a rule coming in force this year stipulating that the collective deal negotiated by the biggest union applies across the sector.

Deutsche Bahn was already contending with huge losses as demand for travel drastically shrank over the pandemic which erupted in March 2020.

It was also struggling to rebuild kilometres of tracks destroyed by deadly floods that struck western Germany in mid-July.

BEIJING — Chinese factory inflation rose more than expected in July, data showed on Monday, as surging commodity prices offset government measures to temper costs.

The world's second largest economy has largely bounced back from strict coronavirus lockdowns last year but a fresh spike in cases of the highly transmissible Delta variant has raised concerns about the recovery.

That has raised concerns that inflation could spike further if lockdowns in parts of the country cause supply problems.

The producer price index (PPI), which measures the cost of goods at the factory gate, rose to 9 per cent on-year, the same as May, which was a 13-year high, according to the National Bureau of Statistics (NBS).

That came despite moves by the government to temper the price increases by raising export tariffs on certain iron and steel products, temporarily exempting tariffs on pig iron and scrap steel, and canceling export tax rebates for some steel products, to increase supply in the domestic market.

"The price increase of industrial products expanded slightly, affected by sharp increases in the costs of crude oil, coal and related products," said NBS Senior Statistician Dong Lijuan in a statement.

While the PPI remains elevated, consumer inflation ticked down to 1 per cent, with officials stressing their work to stabilise prices in the wake of recent disasters including floods in central China and with companies appearing to absorb the increases instead of passing them on to consumers.

The slight fall in the consumer price index, a key gauge of retail inflation, came on the back of easing food prices as pork prices fell 43.5 per cent on-year, supported by China's pork reserves and rising supplies.

This was even as "extreme weather such as typhoons and heavy rainfall in some areas" bumped up the cost of fresh vegetable production, storage and transportation.