By Ann Saphir and Michael S. Derby

(Reuters) – Federal Reserve Chair Jerome Powell on Tuesday foreshadowed key elements of the central bank’s upcoming rate-setting meeting: A half-point increase is on the table and updated policymaker forecasts are likely to feature a high point for rates above the 5.1% in their last projections in December.

Economic data released since the Fed’s last meeting, held Jan. 31-Feb. 1, has surprised consistently to the upside, suggesting the 4.5 percentage points of rate hikes since March 2022 have yet to sufficiently slow the economy to beat back inflation.

“Nothing about the data suggests to me that we’ve tightened too much – indeed, it suggests that we still have work to do,” Powell said. “It’s hard to make a case that we’ve over-tightened. It means we need to continue to tighten.”

Just how high and how fast Powell and his colleagues are willing to go will hinge on a clutch of key reports between now and the rate-setting Federal Open Market Committee’s March 21-22 meeting, starting with employment data due this week.

“We have two or three more very important data releases to analyze before the time of the FOMC meeting,” Powell told the Senate Banking panel Tuesday. He is set to testify to the House of Representatives Financial Services Committee on Wednesday.

“Those are going to be very important in the assessment we have of this relatively recent data,” he said, noting that if the “totality” of data warrants, the Fed would be prepared to speed up its rate-hike pace.

The remarks together lay the groundwork for the Fed to keep raising rates until they touch 6%, and induce a recession along the way, SGH Macro Advisors’ Tim Duy said.

“Powell didn’t open the door to a 50-basis-point rate hike without intending to follow through with that outcome at the March FOMC meeting,” Duy said. “Only surprisingly weak data will prevent that outcome now.”

The Fed’s policy rate is now in a range between 4.50% and 4.75%.

Here’s what to watch for between now and March 21 when policymakers deliver their rate decision in Washington:

JOBS REPORT, DUE FRIDAY

Graphic: Payroll growth remains strong Payroll growth remains strong https://www.reuters.com/graphics/USA-FED/JOBS/byvrjgewnve/chart.png

The U.S. Labor Department’s last monthly report, published just days after the Fed delivered its smallest rate hike in a year, showed a gain of more than half a million jobs in January, though a slowdown in hourly wage growth tempered concern over the impact on inflation.

Economists estimate 203,000 jobs were added in February, a significant cooling, but they also expect a return in average hourly earnings growth to the 4.8% seen in December. That’s far above the 3.5% wage growth that Fed policymakers often point to as being consistent with their 2% inflation goal.

Powell said Tuesday the labor market has to soften if inflation is to recede. He also said he does not expect the rise in the unemployment rate over the course of this round of rate hikes to be much more than the one percentage point the Fed estimated in December.

Economists expect the report to show the unemployment rate, which was 3.4% in January, rose to 3.5% in February.

INFLATION, DUE MARCH 14

Graphic: As goods inflation eases, services step in As goods inflation eases, services step in https://www.reuters.com/graphics/USA-FED/INFLATION/lbvgndazapq/chart.png

The Bureau of Labor Statistics’ consumer price index, the most widely followed gauge of U.S. inflation, is expected to show a slight slowdown in price pressures, easing to a month-over-month gain of 0.4% in February from 0.5% in January.

Either way, that’s far above the Fed’s goal, which requires an average monthly CPI gain of under 0.2%, analysts estimate.

Analysts will be particularly focused on the strength of services not tied to housing, which accounts for a little more than half of the inflation index. That has remained hot even as goods inflation has eased.

RETAIL SALES, DUE MARCH 15

Graphic: Consumers resumed spending in January in a big way https://www.reuters.com/graphics/USA-ECONOMY/RETAIL/gkvlwlzlopb/chart_eikon.jpg

Estimates are still preliminary, but economists expect retail sales, which exploded expectations by rising 3% in January, eased to a 0.2% gain in February. It’s not clear what level of retail sales would be seen as sufficiently cool for the Fed. Consumer spending makes up two-thirds of the U.S. economy. The Fed’s rate hikes are designed to slow demand and spending by consumers and businesses.

INFLATION EXPECTATIONS, DUE MARCH 17

An unexpectedly high reading from the University of Michigan on longer-term consumer inflation expectations last June helped spur the first of four straight 75-basis-point rate hikes, propelling what had begun as a more staid round of tightening into the most aggressive rate-hike campaign since the 1980s.

The survey will next publish on the Friday before the Fed meeting, and could again prove key. The latest read showed one-year inflation expectations increased to 4.2%, from 3.9% in January, while the five-year inflation outlook remained at the bottom of the narrow 2.9-3.1% band that has prevailed for 18 of the last 19 months. Powell and his colleagues are watching those closely, along with market-based indications of expectations.

If inflation continues, Powell said Tuesday, at some point both individuals and businesses “will come to expect high inflation, and that will make it more self-perpetuating.”

(Reporting by Ann Saphir and Michael S. Derby; Editing by Dan Burns and Leslie Adler)

By Praveen Menon and Scott Murdoch

SYDNEY (Reuters) -Investment firm GQG Partners Inc founder Rajiv Jain will meet clients and investors in Australia this week and will explain its investment into embattled Indian conglomerate Adani Group, among other things, the company said on Tuesday.

GQG Partners bought shares worth $1.87 billion in four Adani group companies, marking the first major investment in Adani since a short-seller’s critical report in January sparked a stock rout.

The report by U.S based Hindenburg Research alleged stock manipulation and improper use of tax havens by Adani, and flagged concerns over its debt levels. Adani has rejected the allegations and denied any wrongdoing.

The stake purchase has raised queries from an Australian pension fund client of GQG, at a time when major investors, including Norway’s sovereign wealth fund, were selling Adani shares.

Jain is meeting some of GQG’s clients in person while doing conference calls with others, two sources separately told Reuters, declining to be named as they were not allowed to discuss private information.

“Rajiv Jain is visiting Australia this week to meet with investors.  The trip was planned well in advance of the Adani purchase,” the statement to Reuters said.

“It’s also an opportunity to respond to any questions they have about the business including the Adani investment,” GQG said, adding it’s Jain’s first visit to Australia since the company listed on the ASX in 2021.

GQG bought 3.4% of Adani Enterprises for about $662 million, 4.1% of Adani Ports and Special Economic Zone for $640 million, 2.5% of Adani Transmission for $230 million and 3.5% of Adani Green Energy for $340 million.

It purchased the stock from the Adani family trust, according to the Indian firms’ filings.

GQG, whose investment was seen by some analysts as a sign of investor confidence in Adani, manages equity funds for institutional investors such as mutual funds, private funds, public agencies and sovereign funds in and outside the U.S.

Morningstar said in a report last month that it expected GQG’s funds under management to grow at a mid-teens CAGR (compound annual growth rate) and exceed $180 billion by 2027, compared to $92 billion as of January 2023.

More than two-thirds of funds under management of the Australia-listed investment firm comes from the Americas, as per its filings. GQG attracted net flows of $3 billion in January and February, more than two-thirds the haul for all of 2022.

(Reporting by Praveen Menon, Scott Murdoch and Lewis Johnson in Sydney; Editing by Sumeet Chatterjee and Muralikumar Anantharaman)

By David Milliken and Andy Bruce

LONDON (Reuters) -Bank of England rate-setter Swati Dhingra said on Wednesday that it would be prudent not to raise interest rates further, as previous increases in borrowing costs are yet to feed through into an already weak economy.

Despite recent signs that Britain’s economy may be holding up better than some economists had feared, Dhingra stuck to her view that the BoE risked harming the economy unnecessarily by raising rates too high.

“In my view, a prudent strategy would hold policy steady amidst growing signs external price pressures are easing, and be prepared to respond to developments in price evolution,” Dhingra said a speech to the Resolution Foundation think tank.

“This would avoid overtightening and return the economy sustainably to our 2% inflation target in the medium-term,” she added, in her first major speech since joining the BoE’s Monetary Policy Committee in August.

Along with Silvana Tenreyro, Dhingra voted last month to leave interest rates on hold at 3.5%, while the other seven members of the Monetary Policy Committee voted through an increase to 4%.

Financial markets now fully price in a further 0.25 percentage point increase on March 23 and see a greater than 50% chance that BoE rates will reach 5% later this year after Federal Reserve chief Jerome Powell signalled further interest rate hikes in the United States were likely.

Dhingra on Wednesday stressed that the risk of too-high interest rates were a larger threat than the risk of embedded inflation pressure.

“My conclusion is that, given little evidence of further cost-push inflation, further tightening is a bigger risk to output and the medium-term inflation target,” she said.

Her views contrast with those of Catherine Mann, another external member of the MPC, who on Tuesday doubled down on her view that higher interest rates are likely needed to lessen the risk that double-digit inflation becomes ingrained.

Dhingra – an associate professor at the London School of Economics who specialises in trade issues – said her analysis of supply chains suggested more of Britain’s inflation overshoot was due to global factors than domestic pressures than previously thought.

INFLATION EXPECTATIONS

The BoE is currently divided over how great the risk is that inflation falls more slowly than forecast, for example if last year’s surge in energy prices leads to persistent upward shifts in wage growth and businesses’ price setting.

Pay excluding bonuses in the final quarter of 2022 grew at its fastest rate since records began in 2001, excluding distortions during the COVID-19 pandemic.

Businesses surveyed by the BoE last month expect inflation in a year’s time to be 5.9%, and 3.4% in three years in contrast to the BoE’s forecast last month that inflation would be below its 2% target by the second half of next year.

Dhingra said she did not think either wage growth or inflation expectations offered good evidence of persistent domestically generated inflation pressures.

Wage growth tended to lag broader economic developments, and more forward-looking wage data was slowing. Better data on productivity and businesses’ profit margins were needed to gauge its inflation impact.

Inflation expectations were often driven by current inflation, rather than having predictive power, she said.

“Those who put too much weight on those numbers, I think should have that in mind as well,” she said.

(Reporting by David Milliken; Editing by Toby Chopra)

By Devjyot Ghoshal and Uditha Jayasinghe

COLOMBO (Reuters) -The Export-Import Bank of China has told Sri Lanka it will try to finalise in the months ahead how it treats debt owed by the crisis-hit nation, according to a letter seen by Reuters which also reiterated a moratorium for debt due in 2022 and 2023.

The International Monetary Fund said on Tuesday that Sri Lanka had secured financing assurances from China, India and all its major bilateral creditors, setting the stage for final approval of the IMF’s $2.9 billion, four-year bailout for the island nation on March 20.

Sri Lanka is facing its worst economic crisis in more than seven decades and a shortage of dollars has disrupted imports of essentials, though the situation has improved this year from last year when protesters ousted its president.

China has extended its “firm support to Sri Lanka through a debt treatment”, EXIM Bank wrote in the letter to the Sri Lankan government on March 6.

The bank’s Vice President, Zhang Wencai, said in the letter that the island nation would not have to immediately repay the principal and interest due on its loans for the two years, “so as to help relieve your short-term debt repayment pressure”.

“Meanwhile, we would like to expedite the negotiation process with your side regarding medium- and long-term debt treatment in this window period, with a view to finalising the specifics of a debt treatment in the coming months. We will make our best efforts to contribute to the debt sustainability of Sri Lanka.”

The letter mirrors what EXIM Bank sent to Sri Lanka in January, except for the target of finalising debt-treatment specifics in the coming months.

By end-2020, Sri Lanka owed EXIM $2.83 billion, or nearly 9% of external central government debt, according to IMF data.

The letter added that China would call on “commercial creditors to provide debt treatment in an equally comparable manner, and encourage multilateral creditors to do their utmost to make contributions to help you better respond to the crisis and emerge from it”.

A Chinese foreign ministry spokesperson confirmed the contents of the letter.

“It fully reflects our sincerity and efforts to support Sri Lanka in achieving debt sustainability, and we hope that relevant parties will respond positively to Sri Lanka’s loan application as soon as possible,” Mao Ning told a regular news conference.

LONG TALKS WITH CHINA

Sri Lanka’s international bonds slipped on Wednesday with most issues down around 1 cent on the dollar, though that only partially offset stellar gains in the previous session, Tradeweb data showed.

Winning the support of China, the world’s and Sri Lanka’s biggest sovereign creditor, was crucial for the IMF deal to go ahead.

Sri Lankan President Ranil Wickremesinghe told parliament on Tuesday that the government received the China letter on Monday night and soon after, he and the central bank governor sent a letter of intent to the IMF.

A source at Wickremesinghe’s office said the president had been expecting the letter from EXIM Bank from Thursday.

“Sri Lanka has been talking, discussing and negotiating with China EXIM Bank for weeks, mostly virtually, because that was what we were tasked with doing,” said the source, declining to be identified as he was not authorised to talk to the media.

He said the support from the international community, especially Japan and the United States talking to the Chinese government, helped Sri Lanka. Sri Lanka’s case was also boosted by a G20 meeting in India last month, said the source.

Sri Lanka cabinet spokesperson and transport minister, Bandula Gunawardena, told a weekly news briefing that the possible final IMF approval was a “great achievement”.

“Sri Lanka has worked hard and spent months to fulfill requirements for the IMF programme, at certain times the president engaged at personal level to get support,” he said.

“Without the IMF programme, Sri Lanka cannot turn around its economy.”

(Reporting by Devjyot Ghoshal and Uditha Jayasinghe; Additional reporting by Liz Lee in Beijing and Karin Strohecker in London; Writing by Krishna N. Das; Editing by Kim Coghill, Muralikumar Anantharaman and Sharon Singleton)

By Steve Scherer

OTTAWA (Reuters) – The Bank of Canada is expected to keep rates on hold on Wednesday, becoming the first of the world’s major central banks to suspend their tightening campaign, after economic growth stalled in the fourth quarter of last year.

When the bank last met to set policy in January, it lifted rates by 25 basis point, as expected, to 4.50%, and said it would seek to leave rates unchanged for a while to let previous rate hikes sink in.

Over the past year, the bank raised rates by a total of 425 basis points to tame inflation, which peaked at 8.1% and slowed to 5.9% in January, still almost three times the 2% target.

“We expect the Bank of Canada to be the first G10 central bank to hold rates,” said Jay Zhao-Murray, a forex analyst at Monex Canada.

The majority of the 32 economists surveyed by Reuters last week said the Bank of Canada (BoC) would likely keep rates on hold through the end of this year, and all of them forecast the bank to stay on hold on Wednesday.

Money markets expect the policy rate to be left on hold on Wednesday but are pricing in another tightening by September.

While some data have been particularly strong since the bank’s last policy meeting, including a blockbuster January jobs report, gross domestic product stalled in the fourth quarter – far weaker than the 1.3% annualized growth forecast by the BoC.

“Look for the Bank of Canada to point to slowing GDP growth and inflation when justifying its decision to maintain the level of rates,” said Royce Mendes and Tiago Figueiredo, Desjardins economists, in a note.

“The central bank is unlikely to do much to endorse the view that further rate hikes will be necessary,” they said.

Macklem has left the door open to raising rates further, but he has also said that if inflation comes down as the bank has forecast, then higher borrowing costs will not be needed.

Macklem said in January inflation would slow to about 3% by mid-year, and then reach 2% in 2024. He also said he expects near-zero growth for the first three quarters of 2023.

Senior Deputy Governor Carolyn Rogers will deliver a speech, titled “Economic Progress Report” and take questions from the media on Thursday in Winnipeg. There will be no speech or news conference on Wednesday after the rate decision.

Minutes from this week’s meeting are due to be published on March 22.

(Reporting by Steve Scherer, additional reporting by Fergal Smith in Toronto; Editing by Nick Zieminski)

By Ludwig Burger and John Stonestreet

(Reuters) -Shares in Givaudan and Symrise took a beating on Wednesday after the Swiss antitrust agency named them as part of a quartet of companies in the crosshairs of international competition watchdogs.

Swiss competition commission COMCO said its probe was targeting market leaders Givaudan, domestic rival Firmenich, which is merging with Dutch chemicals group DSM, U.S.-based International Flavors & Fragrances and Germany’s Symrise.

The more than $5 billion scents industry creates and makes fine fragrances for brands including Calvin Klein, Hugo Boss and Gucci, while also designing the smell of household products of global companies such as Procter & Gamble and Colgate-Palmolive.

News of the probe into the supply of fragrances and fragrance ingredients broke late on Tuesday, when Givaudan confirmed it was being investigated. The Swiss authorities were the first to name all companies involved.

Shares of Symrise, which on Wednesday forecast a 2023 core profit margin slightly below market expectations, dropped 2.6% at 1158 GMT, though the company’s chief executive said he did not expect the firm to be affected and its role was primarily that of a witness.

Givaudan dropped 2.8% and DSM lost 3.1%, underperforming a 1% decline in the STOXX Europe 600 Chemicals index, while U.S.-listed International Flavors & Fragrances (IFF) was down 2.9% at Tuesday’s close.

COMCO said several raids were carried out in conjunction with the European Commission, the U.S. Department of Justice Antitrust Division and the UK Competition and Markets Authority.

The Swiss agency added it acted on suspicion the companies “coordinated their pricing policy, prohibited their competitors from supplying certain customers and limited the production of certain fragrances”.

It said that the ingredients in question are used in cosmetics, personal care products, detergents and cleaning products.

“If these concerns prove true it would mean a substantial reputational damage for the fragrance sector and also Givaudan, next to potential fines and future weaker negotiating power,” analysts at Swiss brokerage Vontobel said.

The British watchdog on Tuesday set a deadline of early 2024 for analysing and reviewing information gathered from the companies.

Firmenich confirmed that antitrust authorities carried out unannounced inspections at its offices in France, Switzerland and Britain.

The company said it was closely monitoring the situation and fully cooperating with the investigators.

Spokespeople at Symrise and IFF also said the firms were cooperating with authorities.

Symrise said on Wednesday it had a 12% share of the combined market for fragrances, flavours, aroma chemicals and cosmetic ingredients last year, with Givaudan, IFF and Firmenich accounting for 18%, 22% and 11%, respectively.

The German company added that fragrances accounted for 13.2% of the 39 billion-euro overall market, working out to 5.1 billion euros ($5.37 billion) in industry fragrance revenue in 2022.

The upper limit of fines imposed for breaking EU competition law is 10% of a company’s global revenue.

($1 = 0.9492 euros)

(Reporting by Ludwig Burger in Frankfurt, John Stonestreet in London, Patricia Weiss in Frankfurt and Paul Arnold in Zurich; Editing by Jason Neely and Shounak Dasgupta)

BEIRUT (Reuters) – Lebanon’s commercial banks do not have enough liquidity to pay back depositors, the secretary general of the country’s banking association said on Wednesday in a letter that laid out the banks’ positions.

The letter was signed by the Association of the Banks of Lebanon (ABL)’s Fadi Khalaf and served as the introduction to the ABL’s monthly report. Khalaf said it represented his “opinion and personal analysis”.

The letter said commercial banks had approximately $86.6 billion deposited at Lebanon’s Central Bank as of mid-February, and a net negative position with correspondent banks of $204 million as of Jan. 31, 2023.

“These numbers show without a doubt that the banks have no liquidity,” Khalaf wrote.

Lebanon has been in the throes of a financial meltdown that has cost the local currency more than 98% of its value and pushed more than 80% of the population below the poverty line.

The crisis erupted in 2019, following decades of corrupt government, profligate spending and financial mismanagement, and saw banks impose restrictions on withdrawals and transfers although a capital controls law had not been adopted.

That sparked snowballing anger against the financial institutions, but the banks say the policies of the state and the Central Bank are to blame.

Lebanon’s caretaker deputy prime minister Saade Chami, the architect behind the country’s stalled recovery roadmap, told Reuters last year that banks should “go first” in absorbing the losses stemming from the financial sector.

Those losses are estimated at around $72 billion.

Lebanon is working to address the crisis through talks with the International Monetary Fund to gain access to $3 billion that could kickstart the economy.

But the IMF said last year that Lebanon’s progress in implementing required reforms remained “very slow”, with the bulk yet to be carried out.

(Reporting by Maya Gebeily; Editing by Peter Graff, William Maclean)

By Uditha Jayasinghe and Andrea Shalal

COLOMBO/WASHINGTON (Reuters) – Sri Lanka looks set to get a sign-off on a long-awaited $2.9 billion four-year bailout from the International Monetary Fund (IMF) on March 20 after the crisis-hit country secured new financing support from China.

The IMF and the island nation confirmed on Tuesday that Sri Lanka had received assurances from all its major bilateral creditors, a key step to deploy financing and an important moment for the country engulfed in its worst economic crisis since independence from Britain in 1948.

Sri Lankan President Ranil Wickremesinghe told parliament there were signs the economy was improving, but there was still insufficient foreign currency for all imports, making the IMF deal crucial so other creditors could also start releasing funds.

“Sri Lanka has completed all prior actions that were required by the IMF,” Wickremesinghe said, and that he and the central bank governor had sent a letter of intent to the IMF.

“I welcome the progress made by Sri Lankan authorities in taking decisive policy actions & obtaining financing assurances from all their major creditors, incl. China, India & the Paris Club,” IMF chief Kristalina Georgieva said on Twitter, adding that she looked forward to presenting the IMF-supported program to the executive board on March 20.

Approval is expected since the board generally will not add items to its agenda unless its members are ready to act.

The country’s international debt and currency soared higher on the news, with bonds adding around 3 cents in the dollar, while the Sri Lankan rupee jumped as much as 7.8% to a 10-month high. Stocks closed more than 2% higher.

A new letter by the Export-Import Bank of China (EXIM) sent on Monday to Sri Lanka resolved the stalemate. Sources close to the talks said EXIM provided “specific and credible” financing assurances for a debt restructuring, with a specific link to the IMF program and clear language on debt sustainability.

The first tranche of funding was expected to be released shortly after the board meeting, the sources added.

In a letter in January, EXIM had offered Sri Lanka a two-year debt moratorium, but sources said this was not enough to meet IMF conditions.

“This is a positive development: it might be the first time that China provides textbook financing assurances to the IMF outside of a Common Framework process,” said Theo Maret, senior research analyst at Global Sovereign Advisory, in Paris.

By end-2020, Sri Lanka owed EXIM $2.83 billion, or 3.5% of its central government debt, according to IMF data. In total, Sri Lanka owed Chinese lenders $7.4 billion, or nearly a fifth of public external debt, by end-2022, calculations by the China Africa Research Initiative showed.

IMF financing provides an anchor for countries to unlock other funding sources. Sri Lanka was in negotiations with India, its second biggest creditor, to extend a $1 billon credit line due to expire by March 17, two sources said.

Sri Lanka needs to repay about $6 billion on average each year until 2029 and will have to keep engaging with the IMF, Wickremesinghe said.

Countries in debt distress such as Zambia and Sri Lanka have faced unprecedented delays in securing IMF bailouts as China and Western economies have clashed over how to provide debt relief.

Sri Lanka has been waiting for about 187 days to finalise a bailout after reaching a preliminary deal. This compares to a median of 55 days it took low- and middle-income countries over the past decade to go from preliminary deal to board sign-off, according to data compiled by Reuters.

“Debt restructurings both within and outside the Common Framework have been taking longer than usual due to issues with creditor coordination and foot-dragging by China,” said Patrick Curran at Tellimer. “The restructurings in Sri Lanka and Zambia are likely to set important precedents for future restructurings.”

Chinese Foreign Minister Qin Gang said on Tuesday that Beijing would continue to participate in the settlement of international debt problems in a constructive manner.

Responding to a question on the sidelines of an annual parliament meeting, Qin also said China should be the last to be accused of causing debt traps and called on other parties to share the burden.

(This story has been corrected to say central government debt instead of external debt in paragraph 12)

(Reporting by Juby Babu in Bengaluru and Uditha Jayasinghe in Colombo; Additional reporting by Jorgelina do Rosario in London; Writing by Krishna N. Das and Karin Strohecker; Editing by Christopher Cushing, Raju Gopalakrishnan, Ed Osmond and Shounak Dasgupta)

KYIV (Reuters) -An International Monetary Fund mission was scheduled to start policy discussions with the Ukrainian authorities on Wednesday, the IMF’s resident representative to Ukraine said.

The representative, Vahram Stepanyan, said the IMF team would be led by Gavin Gray, the IMF mission chief for Ukraine.

“An IMF mission, led by Gavin Gray, starts policy discussions today with the Ukrainian authorities on a potential Fund-supported program,” Stepanyan said in a brief statement that provided no further details.

Ukrainian officials have said they hope to agree a $15-billion multi-year program with the IMF, in what could be the largest loan package for the country since Russia’s full-scale invasion a year ago.

Ukraine’s central bank said it hoped for a four-year program that would be structured in two stages – during the war and after the war.

“We aim to reach an agreement with the IMF mission on the program for extended financing during March and submit the agreement for the consideration of the IMF’s board of directors,” central bank governor Andriy Pyshnyi said in a statement.

“We are determined to have a productive discussion and search for common solutions.”

(Reporting by Pavel Polityuk and Olena Harmash; Editing by Timothy Heritage)

By Maria Martinez

BERLIN (Reuters) – When Spanish Economy Minister Nadia Calvino found out she would be the only woman lined up for a photo call to promote the high-profile Madrid Leaders Forum last May, she walked out.

“We can no longer consider it normal that 50% of our population is not present,” said Calvino, who months earlier had vowed to not attend events where she was the only woman, in protest at the lack of female representation in economics and business.

There seems to be a lot to celebrate on International Women’s Day in the field of economics. Women head the International Monetary Fund, the World Trade Organization, the U.S. Treasury and the European Central Bank. However, more broadly women remain a small minority in a field that is still seen by many as being dominated by men in suits and churning out policy divorced from the real world.

“The pervasive underrepresentation of women in economics is systemic and structural,” Ngozi Okonjo-Iweala, the first woman to head the World Trade Organization, told Reuters. “It is not just a matter of fairness but one of long-term global prosperity.”

The Women in Economics Initiative seeks to advance gender equality in the discipline. According to its 2022 Index, women represent from 10% to 24% of the top global positions in economics, covering academia and the private and public sectors.

“There are no women in the textbooks and most big names in economics are men,” said Sandra Kretschmer, economics researcher and member of the Women in Economics Initiative.

Friederike Welter is the head of the Bonn-based Institute for Small and Medium Enterprises (IfM) – the so-called “Mittelstand” sector key to Germany’s export successes.

She said the lack of women in top economic roles in itself discouraged other women to choose the field as a career.

“When I became head of this institute, automatically we had way more applications from women,” said Welter, who was appointed ten years ago and is now considered one of Germany’s leading economists.

Janet Yellen, the first woman to head the Treasury and chair the U.S. Federal Reserve, makes frequent reference to the issue. At a banknote printing event last December she said more progress was needed.

It all starts early on. At university in both the U.S. and Germany women represent about a third of those studying economics.

The reasons are complex. Economics entails a lot of mathematics and analytical thinking and there is a cliché that men are better at those, which can make women reluctant to choose this discipline, said Katharina Wrohlich, leader of the Gender Economics research group at the German Institute DIW.

Guido Friebel, from the Goethe University Frankfurt, said another factor could be the culture. “There is an extremely competitive culture in economics, it’s aggressive,” he said.

Later, there is a “leaky pipeline” between junior and senior ranks. While 40% of the positions are filled with women at the PhD level and the level of assistant professors and lecturers, the share of women falls to 27% at the senior level, according to a global study by Goethe.

That has led to an over-concentration on some subjects at the expense of others. Women and men tend to have different research interests, said Alisa Weinberger, economics researcher at Goethe. Women are doing more research in health, labour and education, while men focus on economic theory, macroeconomics and finance.

“We need more women choosing economics as a major, but we also need to keep these young women in the field,” Goethe Professor Nicola Fuchs-Schuendeln said. “Greater diversity would diversify the questions we ask as social scientists.”

In the higher ranks of the public sphere, only one in 10 central bank governors is a woman and only 15% of finance ministers, the index of the Women in Economics Initiative shows.

Women have held just 12% of the top jobs at 33 of the biggest multilateral institutions since 1945, and more than a third of those bodies, including all four large development banks, have never been led by a woman, a study showed this week.

The World Bank is taking a proactive approach to create a more positive environment and remove obstacles for female economists, said Kathleen Beegle, lead economist in the Human Development Team of the bank’s Development Research Group. 

“Studies show women economists face a variety of hurdles in the profession, such as a lack of role models and a hostile work culture,” she said. The World Bank’s Research Group arranges mentoring opportunities and offers home-based work options to accommodate family care responsibilities, Beegle said.

Christine Lagarde, president of the European Central Bank, said in an event on Tuesday that more needed to be done.

“There are incredible opportunities that are wasted if women are left to the side of the economic road,” she said.

(Reporting by Maria Martinez. Additional reporting by Andrea Shalal, Belen Carreno and Emma Farge. Edited by Mark John and Rosalba O’Brien)