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Quest Means Business
Stocks Drop as Central Bank Chiefs Sound Alarm on Inflation; Swedish Finance Minister says Russian Invasion Changed Everything; France Issues Arrest Warrant For Former Renault-Nissan Chief; Calls Grow For E.U. To Ban Russian Energy Imports; E.U. Calls For Humanitarian Corridor In Mariupol. Aired 3-4p ET
Aired April 22, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN BUSINESS HOST: Shocking day on the markets, the worst day of the year so far.
In fact, the markets are arguably, well, here they are, at their lowest point. Look at the Dow, and you'll see we're up over 800 points with every
possibility that this is going to get worse in the final half hour of trade. I'll show you the triple stack, which is also down sharply.
NASDAQ stocks are being heard hurt. Dow off two and a half percent, NASDAQ off similarly, S&P 500 -- in fact, the S&P 500 is just about the same.
The markets and the main events of the day that we are following. The reason, well, there is a connection of course, a narrow, volatile path.
You'll hear tonight from the E.C.B., the President of the E.C.B., and the Governor of the Bank of England, both of whom tell me inflation is their
Germany is warning of a major economic hit if Europe boycotts Russian gas. You'll hear tonight from the Austrian Finance Minister, and decision dome
for Sweden. The country's Finance Minister tells me it has got the cash for NATO membership.
We are live in Washington tonight, it is the 22nd of April. We are at the I.M.F. and World Bank meetings. I am Richard Quest and yes, I mean
It is a glorious day in Washington, the sun that I had been promised, and it is absolutely beautiful, warm, but not too hot, sunny, and the trees are
out and the pollen is high, I'll be whistling and sneezing my way during the course of the program, all of which, at the same time as we have a
terrible day on the market with the Dow off 800-plus points, all the major averages are down two percent and Europe also closed off two percent.
And the reason of course, is inflation. On both sides of the Atlantic, inflation is not just rearing its head, it is galloping ahead.
Europe's top Central Bankers now say they are walking a very narrow line between taming inflation and slowing growth.
On tonight's program, you'll hear the E.C.B. and the Bank of England Chief saying that Ukraine war has turbo charge prices, both at the wholesale
level, the consumer level, and now the concern, of course is about wage inflation.
The Bank of England Governor tells us that the U.K. faces second round in effects, so-called consumer driven inflation.
Christine Lagarde of the E.C.B. says the uncertainty over the war in Ukraine makes the tightening policy that they were hoping to do much
harder, whether it is July, whether it is September, whether it is later this year.
In fact, President Lagarde of the E.C.B. told me, the war has derailed the COVID recovery and the crisis exist wherever you look.
CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: I would say crisis over crisis, because we had crisis after crisis. It's crisis over crisis.
It's like a mille-feuille.
QUEST: It is overlapping crises. So how difficult is it now for the E.C.B. to manage this with the war, with inflation, with of course, low growth?
LAGARDE: It makes our job a bit more complicated because of the tradeoff that we have between taming inflation, and making sure that we deliver on
our mandate of price stability, while at the same time being attentive to not put any kind of break on growth, which is slowing down as a result of
We were on a path to recovery. It was going nicely and the war arrived on February 24th, and from there on, you know, growth has been weakened and
inflation has been strengthened.
QUEST: Do you expect the war to change how you and the Governing Council will view monetary policy?
LAGARDE: We have to be attentive to the impact of the war on the economy and in particular the impact of the war on inflation. For the moment, there
is an upside risk to inflation and a downside risk to growth, which means that inflation will be propped up by commodity prices, by energy prices,
added to which consumers are going to see some of the disposable income eaten up by the price of energy.
So we have to pay attention to all of that, but we are riveted by the single compass that we have to use which is price stability defined as two
percent inflation medium term, that's what we have to look at.
QUEST: If that's your compass, Madam President, then I think I know the answer to the next question. You're still looking at tightening the policy
rate before the end of the year.
LAGARDE: We're not looking at tightening, we're looking at normalizing monetary policy.
QUEST: That's the same thing, definition-wise.
LAGARDE: No, it is not. No, no, no, no, no, no, no, it's not at all.
QUEST: Raising rates.
LAGARDE: No, because if you look at real rates, even if we were to hike interest rates, which we might very well do, okay, we would not be
tightening, because of the inflation where it is. It would still be very accommodative.
If you want to take out a loan, if you want to borrow, you are still going to benefit something from some incredibly attractive and low rates, in
spite of what I just said.
So we are normalizing monetary policy, we are gradually removing quantitative easing. We stopped the emergency program related to the
pandemic. We are looking at putting an end to the net asset purchases during the course of the third quarter, somewhere in between the first of
July and the 30th of September, high probability that it will be early rather than late in the quarter, and then we will be looking sequentially
at rates and what we do with rates.
QUEST: Andrew Bailey at the Bank of England has been very blunt in basically warning people in Britain, that living standards are likely to
fall or at least the hit to personal incomes, both from higher interest rates and from higher inflation, and in fact, the numbers suggest that it
could be the worst fall in terms of living standards for decades, would you say the same with across the Eurozone?
LAGARDE: I think what fiscal authorities have decided to do is precisely intended to target those people who are at risk of losing income as a
result of energy prices, commodity prices and inflation that is generated by this supply shock.
You know, if you take the five largest Euro area countries, they've already committed an extra 0.4 percent of fiscal support in order to help those
that are most exposed and most vulnerable.
So I think that the concern that is legitimate about you know, losing income is addressed by the fiscal measures, which is the right tool to use.
QUEST: Right, but you on the monetary side, you have to do that which is necessary. I mean, Bailey said it, Powell has said it, Kristalina Georgieva
said it today that inflation has to be the target.
LAGARDE: Price stability has to be the target. That's what we have to deliver, because that's the only way to have an economy that that can work
in confidence with certainty.
You know, you look at the U.S., it is an economy where demand is heating up, where there is no slack out there, where jobs are plentiful, and where
there is hardly any unemployment.
The situation in the Euro area is not quite the same. We are not facing an inflation that is demand driven, but that is supply shocked. Okay.
We are not facing a job market where you have 3.4 percent unemployment. We have, you know, roughly seven percent unemployment. There is still slack
QUEST: Christine Lagarde, you'll hear more from her later in the program. All the major Central Banks will be tightening in some shape or form before
the end of the year. The Bank of England, Governor Andrew Bailey told me the bank can tame inflation without doing economic damage.
On our panel this morning, I asked him whether it really was possible to affect a soft landing.
(BEGIN VIDEO CLIP)
ANDREW BAILEY, GOVERNOR, BANK OF ENGLAND: So, you know, you can walk down a narrow path, and I'm very clear that you can walk down a narrow path, but
there is a lot of uncertainty around it, which is why I think, you know, it's very clear to me that at each meeting we have, we are going to have to
come back to this judgment and see how it develops because it is say, A., a very -- it would always be a very narrow path given these forces at work.
B., there is, as I was saying earlier, illustrating with the gas price illustration, there is a huge amount of uncertainty around this path as
(END VIDEO CLIP)
QUEST: That's the Bank of England Governor. Colby Smith is with me, the U.S. economics editor for "The Financial Times." Good to see you.
COLBY SMITH, U.S. ECONOMICS EDITOR FOR "THE FINANCIAL TIMES": Good to see you.
QUEST: The market is down very heavily. It is all about inflation and its worries in the U.S., whether or not there is going to be a half a
percentage point rise.
The Fed is now making it clear, come what may, they are going to tighten, Bank of England the same, E.C.B. the same?
SMITH: Absolutely. I mean, they need to do something to address the inflation situation that they are facing and they are in an exceedingly
different pole position at the moment.
I mean, they are facing the highest inflation in decades at this time and you know, before the invasion, it was already, a really, you know
incredibly difficult problem and that has gotten only worse since those events.
QUEST: Is the consensus now that the Fed will do half a point at the next meeting?
SMITH: I think that's what markets are really expecting and pricing in at the moment, and it is not just in May, it's in June, and potentially even
July as well.
QUEST: Have they lost control of inflation?
SMITH: I think if you look at inflation expectations --
QUEST: Which we've got numbers overnight on that.
SMITH: Which we did -- we did see a slight increase, but I think more broadly, people are not looking at this destabilizing, de-anchoring of
inflation expectations would make people under the assumption that the Fed had lost control.
So I think that there is still some expectation that they will be able to contain inflation, but the question is, is how significant are those job
losses really going to be?
QUEST: And there is a view now, particularly in the U.S. where it is a very tight labor market, and the U.K. and Christine Lagarde said that isn't
quite the same in E.C.B., that unemployment has to rise and the market has to fall if slowdown is to be affected. This is very difficult for them.
SMITH: Absolutely. I mean, this is exactly what the Fed is trying to avoid, is a hard landing, as you kind of described here where you've get this very
sharp contraction and growth, you see massive job losses.
Now, Jay Powell, the Chair has expressed some optimism that the Fed will be able to bring down inflation without this adverse reaction, but the longer
and higher inflation stays at these levels, the more difficult that will be.
QUEST: From your knowledge of the party. I mean, Janet Yellen enormously experienced, Jay Powell have been there a long time, the Fed Governors,
again, all enormously experienced.
What do you sense from them?
SMITH: I mean, I think that they know the task at hand, which is to bring down inflation, and they have the tools to do so. The big question about
monetary policy is that how blunt of an instrument really is that? And what does that mean for the economy more broadly?
QUEST: But in the U.S., particularly? I mean, well, let's take the I.M.F. meetings here. There seem to be -- there seems to be a depth to their
problems that's almost unsolvable.
SMITH: It's a tricky position, and then I do not envy the people that have to be making these policy choices at the moment. And one could say the
E.C.B. has an even more difficult position than the Federal Reserve, frankly, because at the same time, they are facing high inflation, they're
also facing a more sizable slowdown in growth.
So if the E.C.B. is going to react to high inflation, it could very well be the case that they are worsening the growth slowdown.
QUEST: Finally, Gita Gopinath, the first Managing Director, former chief economist at the Fund, she told me this morning that a recession was not on
their forecast, a U.S. recession. However, more and more private economists are saying exactly that mid to late next year.
I do sort of wonder, when do they wake up and smell the coffee and realize what's happening? Same as transitory inflation?
SMITH: Absolutely. I mean, some of these things take quite a long time to become the base case. But I think it's quite evident that that's the
direction that we're heading in potentially.
QUEST: So finally, difficult days.
SMITH: Difficult days ahead.
QUEST: Thank you very much indeed.
SMITH: Thank you.
QUEST: Good to see you again, Colby Smith from the FT. We'll talk more, as this continues. Thank you very much indeed.
As we continue tonight on QUEST MEANS BUSINESS, from Washington, you're going to hear from the Swedish and the Danish Finance Ministers. In the
case of Sweden, it's a question of NATO membership. And how much will that cost? He will tell us yes, we have the money, after the break.
QUEST: If it is not the tulips, it is the pansies that are out. So the Spring Meetings are underway at the I.M.F. and World Bank. Clearly, the
gardeners around the two large buildings HQ one and two, having had a busy time making things look beautiful, and why not two?
There's lots that have many different agenda items. For instance, NATO and the question of Swedish and Finnish membership of the organization. The
Finance Minister of Sweden, Mikaela Damberg says that Sweden does have the money if the country decides to join and would need to at the same time
also undertake a massive energy transition.
MIKAELA DAMBERG, SWEDISH FINANCE MINISTER: I didn't expect Russia to invade Ukraine, and that has changed the whole dynamic. But of course, my family,
my mother comes from Finland, my grandfather died in the war against Russia.
My grandmother had to leave my mother to Sweden because of the war that the Soviet Union attacked Finland, so we've seen some of these attacks before.
QUEST: Did you find it strange, bordering on a bit perverse that Europe continues to spend 800 to a billion a day on Russian oil and gas for
whatever good reason. But at the end of the day, Europe is funding and financing the war.
DAMBERG: That's why Sweden is in a totally different position, we don't have any almost import of gas and very little oil. So for us, we don't have
a dependence on Russia. Our energy system is actually 100 percent fossil free, and this transition away from fossil energy needs to take place now
QUEST: I understand the significance of maintaining European Union unity, but at some point hasn't someone got to say, "This is ridiculous."
You know, Germany, Austria, Italy, you're going to have to take an economic hit.
DAMBERG: I think Sweden is in a position where we can say we are for stronger sanctions against Russia, but we also say that we need to have
unity in Europe and with Americans, because this is the only way to take pressure for Russia for real, and I think the questions for Germany,
Austria, and some other countries that are really dependent on that on energy, their argument is that if they want to have public support for real
tough actions on Russia for a long time, they also have to take that into account.
QUEST: Isn't that exactly the internal contradiction that is going to make it impossible to do what is necessary. This idea of we know what has to be
done, we just can't do it.
DAMBERG: For Sweden, it's not a problem to go further, and we are open for it. So, it's not a problem, but it has to hurt the Russians more than it
perhaps hurts Europe, otherwise, it might be counterproductive.
QUEST: The difficulty now economically is huge. Inflation, which you are telling me is not as high in in Sweden, but the spillover effects from
other countries, which is now starting to really affect the labor markets, the difficulties of dealing with economic policy now.
DAMBERG: It's more difficult. It's before and after the invasion. Russia has really put the pressure on us.
QUEST: Do you believe that it has fundamentally changed the geopolitical mold, if you will?
DAMBERG: Yes, for a very long time, Russia will not go back to -- Europe will not go back to the U.S., I think we're in relationship with Russia as
we have had for a very long time now.
It's different and that will influence the world and I think the coalition between United States, Europe, and other countries around the world is very
strong during this crisis. So, I think it will continue.
QUEST: The issue of course, amongst many of them is one of NATO membership. Where do you think the nation is on this at the moment?
DAMBERG: We see the opinion polls, it is shifting the opinion polls, more in favor of NATO, since the war, the Russian war on Ukraine, this is a new
security situation for Europe and for Sweden.
So we have an inquiry, a process in Parliament with all political parties involved, and they will land in new analysis of the security situation for
QUEST: Once that's done and the public has spoken, when would you expect for those of us who are not familiar with the Swedish sort of minutiae of
policymaking mode, when would you expect an outcome?
DAMBERG: Our process is very linked to the Finnish process because Finland is having their debate on the same question. So I think it's quite near in
time, we have to make decisions both in Finland, and in Sweden, where to go.
QUEST: If you do join, that has certain implications for the budget, the requirement to spend two percent of GDP on defense, what will be -- how
will you manage?
DAMBERG: First of all, all political parties have already agreed before the decision on NATO to actually increase spending up to two percent as soon as
possible, so this is nothing question when it comes to NATO membership. We will increase our defense spending to two percent anyway.
So this process on finance will continue in Parliament, both when it comes to how fast we now pay off our national debt, and how much income we have
to ensure to make the increase in Defense spending possible.
QUEST: President Putin saber rattles, threatens. He's already said and warned Finland and Sweden, be careful, do not do this. Are you frightened?
DAMBERG: We're not frightened, but we know that he has been lying for months about the war in Ukraine, and we are prepared and we are
strengthening our Defense, both now and for the future and we have a great cooperation with Finland on security issues. And now we also have our
security discussions on NATO.
So for us, this is long term, it is strategic. We will not be affected by what Russia is saying.
QUEST: Sweden's Finance Minister there, also calling for tougher sanctions. For the internal contradiction that we talked off, those tougher sanctions,
including oil and gas embargoes against Russia would have dramatic economic effects in Europe.
The I.M.F.'s second in command, Gita Gopinath told us exactly today, what the cost of banning Russian energy would look like.
(BEGIN VIDEO CLIP)
GITA GOPINATH, FIRST DEPUTY MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: We have looked at a scenario where oil and gas prices go up much more
significantly, we should be tied to some kind of an embargo, and in that environment, GDP in Europe, in the European Union will be down by a further
three percent for 2023. That's the estimate that we have.
But there is tremendous uncertainty around it, and of course, a lot depends on how it is exactly done.
(END VIDEO CLIP)
QUEST: How it is done, and whether it is done. Danish Finance Minister Nicolai Wammen, also like his Swedish counterpart, is urging Europe to get
tougher, and yet at the same time, the internal contradiction wants to maintain European unity.
NICOLAI WAMMEN, DANISH FINANCE MINISTER: We have applied the toughest sanctions ever on Russia.
QUEST: But not the sanction that is necessary.
WAMMEN: And from the Danish side, we have said very clearly we are prepared to go as far as the European Union is prepared to go.
QUEST: Would you be in favor of an outright ban on Russian fossil fuels now?
WAMMEN: Denmark wants the strongest possible sanctions against Russia that can unite the European Union. What that will be the next steps have that
remains to be seen, but we want to go further and we want to be tougher.
But we also believe it is important that it is not a few countries within the European Union, but all countries that stands together.
QUEST: Isn't that the problem? Isn't that exactly the problem with the E.U.'s position, which is as long as Germany, Netherlands, and say for
example, Austria, are reluctant to do sanctions on oil and gas, you are fighting with one hand behind your back.
WAMMEN: I think the European Union is fighting with the most hot sanctions ever seen against a country. What we have seen from the E.U. side and the
U.S. and other countries against Russia is having a clear effect.
From a Danish perspective we would like to go even further, but we also believe in E.U. unity on this one.
QUEST: Hello, I'm Richard Quest, there is a lot more QUEST MEANS BUSINESS from Washington, D.C. to bring to your attention.
Christine Lagarde will tell us that the end of globalization as we know it, I guess that does beg the question what comes next? She'll answer that and
you'll hear it here.
And Germany is warning of an economic slowdown as gas is embargoed from Russia, gas from Russia is embargoed. The Austrian Finance Minister will be
with us to talk about that.
It's all after the news headlines because of course, this is CNN, and on this network, the news always comes first.
With the Ukraine war now in its second phase, Russia's military is looking to take full control over Southern Ukraine. Russian state media is
reporting a top military Commander says the aim is to establish a land corridor between the Eastern Donbas region and Russia annexed Crimea.
Final campaign rallies are taking place in France. The second and final round of the presidential election is this Sunday. Pre-election polls now
show President Emmanuel Macron in the lead because he is facing the far- right candidate Marine Le Pen.
France has issued an international arrest warrant for the former Renault- Nissan chief executive Carlos Ghosn.
According to French media reports, the warrants targets more than 15 million euros in suspect payments from Renault to an Omani vehicle dealer.
Ghosn who is living in Lebanon is already wanted for alleged financial misconduct. He maintains his innocence.
It is part of the job of policymakers to not only put out today's fires, but also plan tomorrow's houses. And the problem now, of course, is that
the Russian invasion on Ukraine has completely rewritten the architectural rules. The end of globalization is how the president of the ECB Christine
Lagarde put it. And also we discussed the French elections. Well, sort of.
CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: I believe that the combination of what our economies have suffered as a result of COVID. The
disruption of supply chain, the interruption of relationships caused by lockdown of countries, of ports of infrastructure, combined with the
geopolitical shamble caused by the terrible war started by Russia against Ukraine is going to put an end to globalization as we know it.
And I would say, you know, globalization is dead, long live to globalization, but it's going to be a different kind of globalization. It's
going to be based on different principles that will move away from pure efficiency, to security, reliability, and partnership. And I think that
Europe stands a really good chance to demonstrate that-- yes, it is laborious, yes, it might be a little more costly, but working and trading
with people that respect the same basic principles, as you is probably a safer route than to trade at any cost provided that they are low.
QUEST: Finally, let us remove Madam President's hat. And let us put on Christina Lagarde (INAUDIBLE)
LAGARDE: The beret.
QUEST: The beret. If I'd sit back here -- thank you. OK. So, how worried are you this weekend? How worried are you about the result? You saw the
debate, it wasn't where -- it wasn't a knockout either side, I would say, but how worried?
LAGARDE: I'm not going to give you a political answer nor a personal answer, but I'll give you the answer of somebody who believes in democratic
principles. I very, very much hope that my compatriots wherever located will actually go to vote. I hope they will not be a level of abstain that,
you know, expresses lack of interest, lack of trust, contempt for what is so precious which is the right to say yes, or no one or the other or maybe
nothing at all but go and express views.
QUEST: And on that point, you expressed your view yesterday when you walked out.
LAGARDE: Yes, I did. I did. I did because --
QUEST: You just -- you couldn't -- you just felt. I cannot sit there.
QUEST: I cannot sit there and listen to this mass.
LAGARDE: Yes. Yes. I have to tell you that I walked away again today because I couldn't bear to see the face of Siluanov, the Minister of
Finance of Russia explain in a very matter of fact, way, what the situation of the economy was. No. I'm sorry. No.
QUEST: No, from Christine Lagarde. There'll be more walkouts. Now much of the show, we still got another group of seven, we've got other G20s before
the end of the year. Well, the Austrian finance minister before we're finished today, talking about embargoes and oil and the costs to Europe.
Were live tonight in Washington, D.C. It's the Spring Meetings of the IMF and World Bank. And to be honest, in 30 odd years of covering them, I can
honestly say I've never seen a meeting quite like this. QUEST MEANS BUSINESS.
QUEST: We may have the big beasts in the world of finance here in Washington, but then nothing compared to the big cats that we've been
showing you this week. And tonight, protecting that habitat corridor for Jaguars in Belize. It's key to saving their lives. On tonight's program,
the Rolex laureate Shafqat Hussain who is our guest editor on Call to Earth is reviewing and looking at the various measures. Saving big cats around
BILL WEIR, CNN CORRESPONDENT (voice-over): Growing up surrounded by forest in rural Belize, Reynold Cal heard stories of an animal sacred and
REYNOLD CAL, MANAGER, RUNAWAY CREEK NATURE RESERVE: I'm a Kekchi Maya, one of the three Maya tribes in Belize. So, I would go in the forest at a very
young age and when I saw those big jaguar tracks, it usually gave me a fear in my heart.
WEIR: Now, Cal's job is to track and protect these animals.
CAL: These are ancient Maya drawings. The jaguar is the symbol for strength and might.
WEIR: It's a passion that's more than skin deep.
CAL: These tattoos are from actual jaguar patterns. This one is from a jaguar that we call Romeo. It has a hardship. It's part of me now.
WEIR: Cal is the manager of Runaway Creek Nature Reserve in Central Belize. It's part of a crucial wildlife trail called the Maya Forest Corridor which
connects protected habitats in the north and south of the country. Corridors like this offer a lifeline for far-roaming jaguars, to more prey,
mates and territory.
Today, Cal's working with Emma Sanchez of Panthera, a global wildcat conservation organization and they are on the prowl for jaguars.
Conservation experts say that jaguar populations are declining across their range from Mexico to Argentina. But not here, says Sanchez.
EMMA SANCHEZ, BELIZE JAGUAR PROGRAM COORDINATOR, PANTHERA: We consider Belize a stronghold for jaguar population because they're found in all of
the protected areas and even outside the protected areas.
ELMA KAY, MANAGING DIRECTOR, BELIZE MAYA FOREST TRUST: Populations of wildlife need genetic diversity to be able to survive. You get that by
having mixing of jaguars from the northern part of Belize, with jaguars of the southern part of Belize. And that means that wildlife need to find
their way through that tiny sliver of forest.
WEIR: Once surrounded by jungle, the Maya Forest Corridor is now a bottleneck less than six miles wide.
Over the past 10 to 15 years, biologist Elma Kay has seen much of the forest chopped away.
KAY: Imagine you're getting squeezed on both sides, right? It's mostly due to large-scale, mechanized, mono crop or agriculture that's taking place.
UNIDENTIFIED FEMALE: The last remaining gateway for those animals --
WEIR: Kay has been working with a coalition of local and international supporters to buy up patches of Belize for conservation.
KAY: We are here at the Cox Lagoon wetland which is actually a very critical and important part of a 30,000-acre parcel of land that we have
just purchased to protect in perpetuity for the people and government of Belize.
WEIR: Thanks to this effort and existing conservation sites like Runaway Creek. Kay says just under half of the Maya Forest Corridor is now
KAY: Hope is the last thing to keep you standing. We have to get up and do the things that we want to see happen.
WEIR: She is hopeful that one day, this whole precarious patchwork of jaguar habitat will be safe from destruction.
QUEST: Fascinating series of reports on the big cats of the world. Let us know what you're doing. You know, the usual is the #calltoEarth.
QUEST: There is only one area of real full agreement. I suspect they're in Washington. And that is that the level of economic problems, the number of
crises are just stacking up.
(BEGIN VIDEO CLIP)
DAVID MALPASS, PRESIDENT, WORLD BANK: These are remarkable times. There's overlapping crises. There's COVID. There's inflation and the Russian
invasion of Ukraine.
LAGARDE: I would say crisis over crisis because we had crisis after crisis. It's crisis over crisis. It's like a middle failure.
GITA GOPINATH FIRST DEPUTY MANAGING DIRECTOR, IMF: We are getting hit with one shock after another. We could see energy prices going up again. We're
not out of the woods with the pandemic.
KRISTALINA GEORGIEVA, MANAGING DIRECTOR, IMF: We have a crisis on top of a crisis. And what it means says growth is down, inflation is up, central
banks have to tighten.
GEORGIEVA: When they do then they may throw cold water on what is already unsatisfactory growth level.
(END VIDEO CLIP)
QUEST: With me is Benjamin Diokno, the governor of the Central Bank of the Philippines, we're just hearing their crisis after crisis on top of crisis.
How are you negotiating them?
BENJAMIN DIOKNO, GOVERNOR, THE CENTRAL BANK OF THE PHILIPPINES: No, the Philippines actually is on its way to full recovery. We -- from a recession
in 2020, it bounced back to six 5.7 last year. And we're looking at a growth rate of seven to nine percent this year.
QUEST: But the spillover effects and I was talking to Malaysia, your opposite number in Malaysia.
QUEST: And she was telling me about the concerns of the spillover effects and how they are being navigated at the moment. They are commodity related,
they are difficult to do.
DIOKNO: Not so in the Philippines, the impact of the Ukraine -- Russia- Ukraine war is indirect through maybe higher oil prices. That will be the mechanism. But we've factored that in in our most recent analysis and it
will have -- it will adjust our upward up our inflation rate to maybe around 4.3.
QUEST: And what about the follow on from China, the numbers were OK in China.
QUEST: The slowdown though is there and we can only believe the numbers up to a certain point anyway. And you've got this issue of the lockdowns,
which is having a knock on effect.
DIOKNO: Nowhere, the lockdown is history. The --
QUEST: Not in China itself.
DIOKNO: Not in China. It --
QUEST: That's what I'm saying. But their lockdowns are creating spillover effects for the whole of the Asia Pacific region.
DIOKNO: I understand. Their growth rate is 4.8. most recently and that could have an impact on the -- in the region and globally, being the second
largest economy in the world but the -- our trade with the Chinese may be number three. It's U.S., Euro and China. But in terms of remittances, it's
not a big source of remittance.
QUEST: What do you think policymakers here need to do now to address -- you know, the IMF keeps revising downwards. Growth. We've got potential further
shocks as a result of higher energy prices. What needs to happen in terms of coordinated policy?
DIOKNO: Well, that trick requires, number one, the responsibility should be on each individual nations. So, they don't impose so much on IMF because
IMF is really in trouble, right? And -- but there's really the need for international coordination at this time. Rather than -- for example, on oil
prices, I think there should be a coordinated expansion of output.
QUEST: Right. And so finally, so that -- so finally, there needs to be -- that agreement for expansion of oil -- of production and supply to the
DIOKNO: Correct. Correct. I mean, U.S. has to ramp up its short shot shale of production, some mid-Eastern countries have to expand their production
and so forth and so on. That's on the supply side. On the demand side, there should -- also be coordination, how do you reduce energy consumption.
QUEST: That is a subject for another day. Thank you very much, Governor. Good to see you. Thank you very much indeed.
DIOKNO: Thank you.
QUEST: The issues that we're talking about, of course, all come back to the war in Ukraine. And we can't talk about that without remembering the
humanitarian crisis that's underway. Matt Rivers now reports on the tens of thousands of people trapped in the bombarded cities of Mariupol, hoping to
reach the Lviv from where he sent us this report.
(BEGIN VIDEO CLIP)
MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: We actually just got back not too long ago from the train station here in Lviv. And we saw firsthand the
kind of tragedy, the horrific idea that not enough people are getting out of Mariupol that need to be getting out of Mariupol.
You talked about the horrific situation there right now. And there are tens of thousands of people that should be evacuated from that city. But the
fact of the matter is, despite the fact, that there have been multiple humanitarian corridors set up over the past week or so, the number of
evacuees getting out of that city due to Ukraine says, Russian shelling and Russia ignoring ceasefires. The number of people getting out is slowed to a
So, we went to the train station here in the Lviv, hoping to see people from Mariupol, getting off a train specifically designated for evacuees.
And it was just a handful of people getting off a train that could have easily held hundreds and hundreds and hundreds of people. And it was very
emblematic of what we've seen out of Mariupol over the past few days, just not enough people getting out.
(END VIDEO CLIP)
QUEST: So the call is for Europe to ban Russian oil and gas. But what will the cost of that be? The Bundesbank has given a warning. The cost of
banning Russian gas imports will be five percent hit the growth in Germany this year, that will be roughly $180 billion in lost output. Austria paid
just over two billion -- 2.3 for -- to Russia for fossil fuels in 2019. The vast majority for gas. And Austrian industries are warning an embargo would
With me is the Austrian Finance Minister Magnus Brunner. Minister, good to have you.
MAGNUS BRUNNER, AUSTRIAN FINANCE MINISTER: Thank you very much.
QUEST: Why not? I mean, I understand it. But at the -- what we've been talking about on this program throughout is this contradiction, we all say,
a billion a day is going to Russia being used to prosecute the war. Countries like Austria, Italy, Germany need to stop importing.
BRUNNER: Well, no, we have to -- I think we have to look at the -- at the sanctions in a different way. Because we of course, in line with all the
sanctions and with our partners in the E.U. but once the sanction hits yourself more than the ones targeted by the sanction, I think there's not
much use. That's why we -- and our industry is so much dependent on the Russian gas. So, we have no opportunity, no choice.
QUEST: But people say this, about it could hit one note. You know, but there's a difference, isn't there? There's a difference between hitting
European economic growth so that the ECB has to do more or there has to be greater fiscal spending. And hitting Russia so that it hurts to the point
where it changes its mind on the wall.
BRUNNER: Well, but if it hits us more than Russia, there's no -- not much sense in it. So we're behind all the other sanctions, of course, and in
line with all the other sanctions and with our partners, but if it hits us more in our economy more and our people more, there's not much sense in
doing it. So, that's why we're very sort of not very keen on -- especially at the gas embargo. All other sanctions are right with us. But not the gas
QUEST: So, what would happen if you'd -- there was a gas embargo? Let's just say there was a gas embargo here. And you're going to have to turn to
your public and say, this is an economic cost, you will have to bear. We will increase social spending, we will increase the deficit, we will do all
the things that we did during the pandemic, but we need to bear this.
BRUNNER: But that's what we do anyway. We do -- we do spend a lot of money, one percent of the GDP in order to help the people, higher prices and other
things. So that's what we do anyway. And we have a tax reform where we -- where we cut taxes, especially for companies, but also for people. So, we
do -- we do a lot of things, but that that will go -- the gas embargo would go a bit too far because not only the people would suffer, but the whole
economy and the industry as we are so much dependent on the -- on the gas.
QUEST: How quickly can you get off that do you think?
BRUNNER: That's a good question. I think we are on the way of the transformation, climate transformation in general, but the energy
QUEST: But the widths are so tricky. But this -- for example, on this program, Sir Richard Branson said, well, look, if everybody turns their
radiators down, and air conditioning down, it everybody drives a bit slower on the motorway, if everybody does this, that you're --
BRUNNER: That's not enough. That's not enough. Because we -- if we have no gas anymore, we have no nuclear power in Austria. We have no -- we have no
oil or not much oil, coal. So we have so much dependent on gas, even though we have about 70 percent of renewables in Austria already because of the
hydropower and other things. But without gas, the industry that's not much sense.
And of course, you can always turn the heating down -- and down -- and we do that, yes.
QUEST: You've heard all these things.
BRUNNER: I heard all these things.
QUEST: You've heard all these things and you're sort of have a ray sort of nice try.
BRUNNER: Nice try and things we could do, of course, and will do maybe, but that's not enough, we need the gas.
QUEST: In which case we are facing this true dilemma. This of -- Russia will continue to get the money and therefore will continue to be able to
prosecute its war.
BRUNNER: Well, I don't think that's quite fair, because what can they do with the money, with the euro? They can't convert it actually. They pay
their soldiers with ruble and not with Euros. So, I think that connection is a bit, you know.
QUEST: Now let's talk about economic growth generally more, widely. Christine Lagarde, and I know you're going to tell me the ECB is
responsible for interest rates.
BRUNNER: I expect it.
QUEST: I know you are. But let's have a go at this anyway. It's a Friday. I'm feeling lucky. Are you worried? Are you -- because we're seeing now
that the markets down at the currently 900 points in the U.S. Two percent off in Europe today. There is a view that unemployment has to rise, markets
have to fall, there has to be a slowdown in European growth.
BRUNNER: There has to -- well, there will be and there is but we should do everything to avoid that in a sense. So, what can we do? The inflation is a
problem and the rising prices are the problem. And what can -- what can we do, the ECB can do something as he said before, has the competences of
fighting the inflation. We have a bit of a different situation from the U.S. also. U.S. and Europe are completely different.
BRUNNER: The core inflation is much higher in the U.S. than in Europe. Also we are quite -- our inflation is very much energy driven, energy prices
driven whereas in the U.S. it's a bit broader.
QUEST: Is this the most difficult economic times do you think?
BRUNNER: Oh, definitely, definitely. At least since I'm in this world, definitely.
QUEST: Just what to do and what to do about it. Thank you, sir.
BRUNNER: Thanks very much.
QUEST: Very glad that you came to see us. I appreciate it.
I'm going to show you very quickly the markets and how they have been trading. We are down 940 -- 933 points. Well, I -- it's a prediction I
don't particularly am not happy about but I did sort of feel it was going to add this way towards the last moment of trading. We've got barely five
minutes that wouldn't surprise me if we do go down to 1000 as the like. Nobody wants to be long in the weekend settling out of the positions,
making sure you have a clean book ahead of the weekend.
And the NASDAQ there -- actually the NASDAQ is not bearing the brunt of it today. It is the Dow and the S&P. Profitable moment after the break. QUEST
QUEST: Tonight's profitable moment. The true meaning of the word dilemma. It doesn't mean just two choices. It means choices of two equally
unappealing and attractive options. And that's exactly what this whole issue about banning oil and gas as far -- Russian oil and gas as far as
Europe is concerned. How far can you go without damaging yourself? Now you just heard the Austrian minister there say quite clearly, we cannot do
without Russian gas at the moment.
Not without making a situation worse for our people and our European economy. If this issue of what's better, what's worse, do you hurt them
more or hurt us more? But then the question become, what does hurting mean? It hurting means higher unemployment, greater social spending, a little
more difficulties in a developed economy versus hurting Russia, which could mean actually helping them lose the war in Ukraine.
Who knows? It's one of those great unknowns, but what we do know is that as long as Europe continues to buy that oil and gas, then Russia continues to
get the money, even if they can't spend it all immediately. This is the true meaning of a dilemma that's facing Europe, Russia and the
International gas community. And that is QUEST MEANS BUSINESS for tonight. I'm going to show you the Dow. We are down 1000 points on the Dow Jones as
we've come to the end tonight.