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Pakistani professionals struggle with higher costs as economy on edge of collapse

Naureen Ahsan earns more than twice the average wage in Pakistan, but the school administrator says she has no choice but to homeschool her daughters and delay their London-board certified final exams because she can’t afford their education.

Like most people in the nation of 220 million, Ahsan and her husband, who owns a car servicing business, are struggling to cope with a surge in living costs triggered by the government’s devaluing the currency and removing subsidies to pave the way for the latest tranche of an International Monetary Fund (IMF) bailout needed to stave off economic collapse.

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Pakistan is no stranger to economic crises – this is its fifth IMF bailout since 1997 – but economists say the latest measures, which include higher taxes and fuel costs, are hurting educated professionals. Many say they are cutting down on necessities to make ends meet.

“We don’t eat out any more,” Ahsan told Reuters. “We no longer buy meat, fish. I’ve cut down on tissue paper and detergent. We don’t see friends, we don’t give gifts. Occasionally, we scream at each other.”

The government-mandated minimum wage is about 25,000 rupees, but with inflation at a record 31.5 percent in February, its highest rate in nearly 50 years, many people who earn much more than that say their salaries do not last the month.

Abhi Salary, one of Pakistan’s biggest fintech firms, which allows its 200,000 or so subscribers to withdraw wages in advance, says transactions have increased by more than a fifth every month for the last three months. Most people spend two-thirds of the money on groceries as they rush to stock up before prices rise again, Abhi CEO Omair Ansari said.

“Unfortunately the poor in Pakistan are left with nothing to lose,” said Abid Suleri, the Sustainable Development Policy Institute of Pakistan, an economic think tank. “Educated professionals… find their purchasing power and savings eroded, and daily consumption either unaffordable or out of reach.”

Ramadan, which began this week, is likely to add to price pressures in Muslim-majority Pakistan. Analysts predict inflation to rise to at least 35 percent a month in March and April.

During the holy month, Muslims traditionally break their daylong fast with special foods and at large family gatherings, culminating in the Eid al-Fitr festivities. This year, for many people, Ramadan means more belt tightening.

“We’re cutting down on the number of meals and the food,” said Ahmed, a senior manager at a multinational company who declined to give his family name because he was worried about possible backlash from his employer. “It will be more difficult to buy sweets and gifts for Eid, which is a break from our family tradition.”

The economic turmoil is driving some professionals out of the country. Khaliq, a doctor who also didn’t want to be give his full name because he was embarrassed by his financial situation, said he and his wife, who is also a doctor, work as much as they can to save up for exams to qualify them to work in Britain.

“We think twice about eating out or using the car,” he said, adding that the weakening rupee was making the cost of their exam, which is in British pounds, higher by the day. “We plan to pass the exams and move out ASAP.”

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China’s home-grown, narrow-body C919 completes first commercial passenger flight

China Eastern Airlines Corp Ltd entered China’s home-grown narrow-body C919 jet into passenger service on Sunday and completed its first commercial flight, marking a milestone in the country’s effort to become more self-reliant.
The C919 is the product of state-backed Commercial Aviation Corp of China (COMAC) which began developing the jet 15 years ago to rival Airbus SE’s A320neo and Boeing Co’s 737 MAX single-aisle jet families.

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President Xi Jinping has hailed the project as a triumph of Chinese innovation, while on Sunday state media trumpeted the plane as a symbol of industrial prowess and national pride.
“After generations of endeavor, we finally broke the West’s aviation monopoly and rid ourselves of the humiliation of ‘800 million shirts for one Boeing’,” Beijing Daily wrote, referring to the early years of economic reform around 40 years ago when China manufactured mainly low-value goods.
The C919 took off at 10:32 a.m. (0232 GMT) from Shanghai Hongqiao International Airport where COMAC and China Eastern Airlines are headquartered, and landed two hours later at Beijing Capital Airport, showed flight tracker app Variflight.
“I’m confident about the plane. The flight was smoother than ex-pected,” one of about 130 passengers told state broadcaster CCTV as he disembarked.
The plane is scheduled to return to Shanghai on Sunday, then make a longer two-way flight to the southwestern city of Chengdu on Monday.
Lv Boyuan, a 21-year-old student and aviation enthusiast, was at Shanghai’s airport on Sunday to fly to Chengdu from where he planned to return on the C919 the following day.
“I’ve been really looking forward to its flight, especially because it’s a new-generation aircraft, unlike Boeing and Airbus equiva-lents which have been around for a number of years now,” said Lv.
The C919 made its first flight in 2017 after years of delays and has undergone numerous test flights since.
State-backed China Eastern Airlines ordered five of the jets in March 2021. It took delivery of the first in December and has said it expects to receive the remainder this year.
In total, COMAC had won 1,035 orders from 32 customers as at 2022-end. A company official has since told media the figure exceeds 1,200.
The planemaker expects annual production to reach 150 C919 jets within five years, domestic media reported in January.
Though assembled in China, the C919 relies heavily on Western components, including engines and avionics, from firms including General Electric Co, Safran SA, and Honeywell International Inc.
Li Hanming, an independent expert on Chinese aviation, said most C919 orders were letters of intent from domestic customers. Its few foreign customers include lessor GE Capital Aviation Services Ltd.
“For the C919, the domestic market is big enough,” Li said.
The international market is questionable given that neither European nor US regulators have certificated the aircraft, said Greg Waldron, Asia managing editor of industry publication FlightGlobal.
“Until this happens, key international markets will be closed to the C919,” he said.
The C919’s predecessor, the ARJ21, is a short-haul 90-seat aircraft that entered commercial operation in 2016 and is flown by major Chinese airlines as well as Indonesia’s TransNusa.
The ARJ21’s use in Indonesia indicates the C919’s international future lies mainly in the developing world, Waldron said.
COMAC is also developing a CR929 wide-body jet in collaboration with Russia.

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JPMorgan names Omar Fichtali as new investment banking head in Saudi Arabia: Report

JPMorgan Chase & Co. has appointed Omar El Amine Fichtali as head of investment banking in Saudi Arabia, according to an internal memo seen by Bloomberg News.

The move comes weeks after one of the lender’s top bankers in the kingdom, Fahad al-Deweesh, left to join Citigroup Inc. as competition for banking talent in the region’s biggest economy heats up.

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El Amine Fichtali joined JPMorgan’s London office in 2007 with a focus on technology, media and telecommunications investment banking and has worked in various roles with the Middle East and North Africa investment banking team in Dubai and Riyadh.

He will work closely with Bader Alamoudi, senior country officer for Saudi Arabia, and Khalid Fayez, head of corporate banking for JPMorgan in the Kingdom.

A spokeswoman for the bank confirmed the contents of the memo.

Saudi Arabia is becoming an increasingly important market for global banks as the Kingdom embarks on a plan to diversify its economy away from oil by selling stakes in state-owned companies and investing in new industries.

Even as the global financial community contends with layoffs and lower bonuses, banking jobs remain plentiful in the kingdom and salaries are surging.

Wealth funds such as the Public Investment Fund are also actively recruiting.

JPMorgan is working on Saudi Arabia’s biggest initial public offering of the year so far, the $336 million float of generic drugmaker Jamjoom Pharmaceuticals Factory Co.

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China industrial profits slide as weak demand weighs on economy

Profits at industrial firms in China kept falling in the first four months of the year, underlining cooling demand and deepening factory-gate deflation in the world’s second-largest economy.

Industrial profits fell 20.6 percent in the January-April period from the same time frame in 2022, data published Saturday by the National Bureau of Statistics showed.

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The drop was slower than a decline of 21.4 percent logged in the first quarter.

Profits for the single month of April were up 3.7 percent from a year earlier, according to NBS figures. That compared with March’s decline of 19.2 percent.

“The weak recovery of effective demand has continued to weigh on the capacity utilization rate, which, coupled with the difficulty to bring down costs, means more patience is needed for the rebound in industrial profit,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc. “The year-on-year growth may not return to the positive territory until the fourth quarter.”

More policy support and stimulus are needed for a full-year gain in industrial profit, Pang said.

China’s post-Covid recovery is faltering, recent data has shown, with export growth weakening and industrial deflation worsening in April.

Falling profits bode ill for the economy’s outlook, and are set to weigh on already weak sentiment among businesses — thus holding them back from investing.

Industrial enterprises in China have been struggling to rebound from last year’s Covid-induced slump, even though factory activity has picked up somewhat.

Still, demand for goods remains sluggish, with the economic rebound mainly led by consumer spending in services. Foreign purchases of Chinese products are slowing as the US and other developed economies seek to “de-risk” from China.

Deteriorating producer deflation has also undercut factories’ ability to boost prices, hurting profits. The producer price index fell 3.6 percent on year in April, the biggest decline since May 2020.

Foreign firms registered a 16.2 percent drop in profits in the January-April period, compared with a 24.9 percent decline in the first quarter.

Profits at private firms fell 22.5 percent in the first four months, while those at state-owned enterprises slipped 17.9 percent, according to NBS data.

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