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Quest Means Business
IMF: A Third Of Global Economy Facing Recession In 2023; China Finally Opening Up As Zero-COVID Abandoned; Croatia Adopts Europe, Joins Schengen Zone; Restoring Brazil's Natural Beauty After Years Of Abuse; Ukraine Strikes Back At Russian Troops; Jeremy Renner Critically Injured In Snow Plowing Accident. Aired 3-4p ET
Aired January 02, 2023 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: And is the start of a New Year, and as always, at the beginning of the year, we look into the crystal ball and
work out what are we likely to see markets? Economies? Energy? How will things go in 2023?
Well, we've already got one prediction.
The IMF Chief is predicting one-third of the world's economy will be in recession during the year.
Will Lula da Silva succeed in reducing poverty in Brazil? Inflation could easily get in the way.
And Croatia at the start of a New Year joins the Euro.
Predictions and forecasts from the Central Bank Chief of Croatia, in a moment.
We are live in New York on Monday, it's January the 2nd. It's a bit murky in this ball. I'll polish it up to see that we get clear predictions.
I am Richard Quest, as we start a New Year together, we mean business.
We begin with a sobering warning from the IMF Managing Director, Kristalina Georgieva says 2023 will be even tougher than last year, and she is
predicting a third of the global economy will enter a recession during the year. It will be severe, more severe in Europe, the energy crunch is going
to plunge half of European economies into recession.
And Georgieva says the world's biggest three -- US, EU, China -- are all slowing down simultaneously, and that has consequences as she discussed on
CBS "Face the Nation."
(BEGIN VIDEO CLIP)
KRISTALINA GEORGIEVA, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: The US is most resilient. The US may avoid a recession. We see the labor market
remaining quite strong. This is however mixed blessing because if the labor market is very strong, the Fed may have to keep interest rates tighter for
longer to bring inflation down.
The EU, very severely hit by the war in Ukraine. Half of the European Union will be in recession next year. China is going to slow down this year
(END VIDEO CLIP)
QUEST: Raghuram Rajan, one of great economic thinkers was Governor of the Reserve Bank of India, now Professor at the University of Chicago's Booth
School of Business, and he is with me now. The interesting thing about what the IMF Chief was saying is, anybody in economics really isn't that
surprised, are you?
I mean, the medicine has been doled out throughout the mid to late 2022. So now, the medicine takes effect.
RAGHURAM RAJAN, FORMER GOVERNOR OF THE RESERVE BANK OF INDIA: Absolutely. I think, though, you know, each of the areas you mentioned, is going to
slow for a different reason, right?
In the United States, what the Fed wants to do is create some slack in labor markets, that is create some unemployment so that wages don't move up
as strongly, and that means it will keep, you know, rates high until it sees that happen. And that's probably not going to be till it sees some
inkling of at least a significant slowdown if not a mild recession. So that's the US.
Europe is high energy prices, eating into consumer budgets, and they don't, you know, increasingly have the money to spend on everything else. And so
there it's a supply driven constraint. Of course, the ECB is doing its job. But there, it is not strong demand, it is supply constraints and energy
prices, which are causing the slowdown.
In China, of course, it's a mix of COVID which is creating a severe problem right now, but also the previous problems they had which is the private
sector as well as the property sector.
QUEST: So on this, one of the big issues as we went through both of the great financial crisis and COVID was this fear that government borrowings
at justifiably high levels and interest rates at justifiably low levels would mean that if a recession came along, there wouldn't be the firepower
to actually help things out.
QUEST: Well, clearly here, global interest rates, as we're looking on the chart are higher for the -- they are doing, if you like the hard Yeoman
work of bringing down inflation, but there isn't the headroom for fiscal expansion, because budgets are tight and debts are high.
RAJAN: That's true, though, governments are finding some ways to spend still. I mean, as you can see, in Europe, a number of countries have
announced energy subsidies, protections for people.
The better targeted this is, the less they have to spend. But of course, governments nowadays are willing to spend without too much targeting. Now,
on the other side, it is true interest rates are high, which gives you some cushion if the economy slows down considerably.
You know, Central Banks can cut rates. That medicine takes time to work also. So ideally, you wouldn't want to slow down the economy so much that
you have to now reinvigorate it, but they have the medicine. They have the firepower as things go on and they keep rates high.
QUEST: Emerging markets are going to feel the effect. I mean, obviously, there's the oldest, the flight to quality, the dollar strengthening, all
the usual. But so many EMs are saddled with dollar denominated debt, and we know the World Bank is but -- well, the World Bank is involved, and
obviously the IMF as well. How worried do you think we should be of an EM debt crisis?
Well, it's always something you have to keep at the back of your mind, after such a long period of easy policy and low interest rates, which have
led to a significant debt buildup in many emerging markets and developing countries, I would say more developing countries this time, the poorer
countries rather than emerging markets. Many emerging markets have sort of learned the lesson of the past and limited the amount of borrowing, not
all. Sri Lanka is an example of a country that has borrowed a lot.
Now going forward, I think there are three things they have to worry about. One is, of course, the prices of food and fuel, which are important inputs
to their people's well-being. The second of course, is interest rates. And the last element which people are paying less attention to is liquidity.
One of the nice things about the last 10 years is the plentiful liquidity. Of course, as Central Banks shrink their balance sheets, liquidity is also
going to start drying up, and that will be another factor to keep in mind as we look at the debts of emerging markets and developing countries,
harder to rollover, when liquidity is tight.
QUEST: So the year moves forward and we will have higher rates probably -- I mean, it doesn't really matter where the ceiling is in terms of when the
tightening ends. There will be until probably the spring.
At what point do you believe that light at the end of the tunnel? And specifically relating to that, of course, the ability of Central Banks to
stick to the two percent target?
RAJAN: Well, so I think we are seeing inflation already coming down and a slowing in inflation is definitely on the cards over the course of the
year, provided we don't see any unpleasant surprises, for example, in the energy or commodity markets because of an expansion, the war, or something.
But that said, what, as you said, Central Banks want to do is bring it close enough to their target range that they can say, okay, we've done most
of the job and now a momentum, we will take the inflation rate within the target range. We can, at this point, certainly not just pause, but maybe
even cut rates. When will that come? Probably not for many Central Banks during the course of next year, much of next year is going to be to get it
closer to the target range.
The Fed is going to probably be able to get it to three, three and a half by the end of the year. But remember, it wants to go down to two and that
last mile is often the hardest because that is when, you know, all the easy stuff is done and you have to really get people's expectations down. You
have to squeeze the wage demands. That might require a mild recession at the very least.
QUEST: Okay, right so final thought. As a former Central Banker, once you're down at three and a half percent, if you were in charge of one of
the major Central Banks again, would you keep going for that last one, one and a half percent, or would you do a pivot?
RAJAN: I wouldn't raise interest rates at that point if I see the momentum taking us down, but I would not cut rates also. I would wait until it is
close enough and then I would start cutting because I don't want to do this twice. That would be the death knell, to have to raise interest rates again
and that is what many Central Banks are worried about, that we want to do once and done, not once and repeat.
QUEST: Thank you, sir. Happy New Year. We will talk many times I hope over the next 12 months on different issues. Thank you, sir. Grateful to see
RAJAN: Happy New Year to yours and to your viewers.
QUEST: Thank you.
Now, China. Well, the next few months clearly will be amongst the toughest. This is what the IMF is projecting to put it into perspective, 2.7 percent
for the global economy overall, but China will be at or below that figure and that hasn't happened for the best part of 40 years.
In China, the economy has weakened dramatically because of stuff that you and I have been talking about all year: The government's response to COVID.
Things will get worse in the short term. People across China are dearly hoping that as the country begins to reopen, their lives also return to
How is this possible? Well, Selina Wang is our correspondent in Beijing.
SELINA WANG, CNN INTERNATIONAL CORRESPONDENT (voice over): People in China will take any opportunity to celebrate. The country is finally opening up
after years of lockdowns, abandoning its Zero-COVID Policy.
There is hope that 2023 will look more like that.
This year, China even managed to pull off the Beijing Winter Olympics.
WANG (on camera): Here we go. We're taking off.
WANG (on camera): I flew into Beijing for my previous posting in Tokyo to cover the games in January.
WANG (voice over): The first thing I saw walking off the airplane is a sea of hazmat suits.
With literal walls separating us from the rest of China.
WANG (on camera): They said the police will take me if I were to walk out of the gate.
WANG (voice over): In 2022, China became a giant sanitized bubble under constant high tech surveillance. The country growing more isolated, as ties
fray with the West and grow tighter with Russia, military tensions rise over Taiwan.
While the man who is calling the shots, Xi Jinping stepped into an unprecedented third term as China's Supreme Leader this year, his goal is
to make China great again and turn it into a technological superpower.
And not just on Earth, this year, China's successfully launched crewed missions to its new space station, fueling national pride.
2022 also marked a milestone for China's national animal, 15 panda cubs were born at Chengdu Panda Research Base alone. And next year, China is
preparing to host the Asian Games, an event that people hope will boost the COVID-battered economy and morale.
There is relief and joy that people have their freedom back. Finally in 2023, there is hope people in China can party and travel without fear, just
like they used to.
Selina Wang, CNN, Beijing.
QUEST: The Euro zone has a new member, Croatia, is now switching or has switched to the euro. It has joined also the Schengen zone.
The Governor of Croatia's Central Bank, the Reserve Bank is with me after the break.
QUEST MEANS BUSINESS live in New York.
QUEST: Croatia kicked off 2023 by tying itself closer to its EU neighbors, finishing off if you will, the European project.
The Commission President Ursula von der Leyen was in Zagreb for the occasion. The country has now joined the euro and the open border Schengen
zone with the rest of the country Croatia became a member of the EU in 2013 and the 20th country to adopt the euro.
The ECB President, Christine Lagarde says it shows the EU's currency has lasting appeal.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: For us at the ECB, this New Year's Day is especially important because we are welcoming a new
member in our family, Croatia. Welcome.
Croatia has shown incredible commitment at every step of the journey towards joining the Euro family, and it is a real joy to have you with us
as our 20th member.
(END VIDEO CLIP)
QUEST: Now, Boris Vujcic is the Croatia Central Bank Governor and joins me from Zagreb. Sir, good to have you. Congratulations on being now a member
of the Eurozone.
There is a plus and a minus. In a sense, it makes economic sense for a relatively small country, like Croatia, which does have large tourism flows
and trade flows to use the same currency as your major trading partners, doesn't it?
BORIS VUJCIC, CROATIA CENTRAL BANK GOVERNOR: Yes, absolutely. We are happy that we have joined the Eurozone, because for us, it makes all the sense.
We have been for the last 30 years basically tying our exchange rate policy to first Deutsche Mark, and then the euro, and in that sense, as they
usually say, you don't have too much degrees of freedom for the independent monetary policy, and you do not reap the benefits of being a part of the
large currency area, the second largest currency in the world, like we will have from yesterday on when we joined the Eurozone.
QUEST: Yes, I always sort of think whenever I talk to Central Bank Governors from Euro countries, as you say, on the one hand, you have
limited power now. I mean, you don't have the fundamental power of running the monetary policy, but you have the difficulty of dealing with a
government that might decide to go fiscally rogue.
VUJCIC: Well, I think that one of the benefits for Croatia, of joining the Eurozone -- on the path to join the Eurozone was exactly that the fiscal
policy has done a lot. That was the main challenge, actually.
The monetary was always in place in the sense that our inflation rate was very close or exactly the same as in the Eurozone for four decades.
Basically, the exchange rate was aligned also with the euro as we were pegging to euro, and the interest rates were also on the path of joining
the Eurozone, the Maastricht criteria.
But the fiscal was basically the one that was needed to be tackled, and the government has then done huge reduction in the public debt in order to get
us into the Eurozone. I think this is in addition to the good thing we have --- we came down from 84 percent of our debt to GDP ratio down to 71 before
the pandemic broke out, and then in 2022, the public debt went up to 86 percent again, and we expect it at the end of the 2022 to be again below
the 70 percent, 69 percent.
QUEST: Will you be -- the IMF -- the head of the IMF said that she expects half of Europe will be in recession in 2023. Are you one of the countries
that will be in recession this year?
VUJCIC: No, we expect that we will have a modest growth of 1.4 percent in 2023. After the very strong growth in 2022, which we expect to be at 6.3
QUEST: Are you going to be a dove or a hawk on the Governing Council when it comes to monetary policy? Are you going to be seeing inflation around
VUJCIC: Well, I don't expect myself to be either a dove or a hawk. I expect myself to be a reasonable policymaker as I think I have been,
throughout my career which lasts in Central Banking since 2020 and we, as Central Bankers, definitely have a single most important goal and that is
to bring the inflation to the target -- medium term target. Now, this is what I will argue for.
QUEST: Okay, but I was I was interested, I was talking to, of course, Raghuram Rajan, former Central Bank Governor of India a moment ago, who
you'll know, and he says that the real issue is once you get down to the last mile, once you get to one and a half, one percent and that is when
people like you, because by then the public will be feeling the pain, unemployment may have risen, some will be in recession, will you have the
stamina to see it all the way down to two percent?
VUJCIC: We need to see down all the way to two percent because inflation simply is not good. It's not good for the growth, it's not good for the
standard of living, otherwise, we would not have had such a target as Central Bankers. So we need to bring it down to two percent.
What is needed to be done needs to be done. And in my view, if we create a right type of momentum, by increasing the interest rates and the inflation
rate comes down to two percent, then at some point, obviously, we will stop tightening and let the inflation come down.
But we should not stop earlier than necessary in order to bring it down to our medium term goal of two percent.
QUEST: Governor, I look forward to talking with you more about this, maybe in Dubrovnik, certainly maybe the IMF and World Bank meetings.
Good to have you with us, sir. Thank you. Happy New Year.
VUJCIC: Thank you.
QUEST: In Brazil well, of course a lot is going on with stocks sharply down as President Lula da Silva starts his first day in office.
The Sao Paulo market is on track to close three percent lower, hardly a vote of confidence by the way to the new President. While shares in
Petrobras, the state-owned company are down around six percent.
And now you want to know why. Well, one of Lula's first moves was to extend a fuel tax exemption. It is going to cost his government about $10 billion
a year. His Finance Minister promised fiscal discipline.
Lula says he plans to take a more hands-on approach to managing the Brazilian economy, inheriting a country with crippling debt and more
poverty than when he left more than a decade ago.
He is undoing the policies of his predecessor, Jair Bolsonaro. For instance, tightening gun controls and curbing gold mining on indigenous
lands in the Amazon.
CNN Brasil's anchor, William Waack is with me. Good to see you, William. Thank you.
I mean, this is hardly a rousing vote of confidence in a new government, however elected when the stock market falls very sharply and we know that
Lula has a more liberal economic agenda.
WILLIAM WAACK, CNN BRASIL ANCHOR: Richard, nice talking to you.
I was laughing when you said this is not a rousing vote of confidence. Not at all.
It is no surprise, Richard, we have mixed signs coming from Lula himself. Apparently, all decisions are Lula's decisions, and it is the same Lula
that we saw 20 years ago when he was first elected as Brazil's President.
The ideas are the same, strong role for the state. He is against privatizations. He is antagonizing the markets, which he understands it is
a small group of people conspiring against him, it is not.
The market is millions of people taking their own decisions, whichever they are in terms of economy. So these mixed signs are extracting a political
price, no doubt.
QUEST: Right, now, as it moves forward, though, the ability of the basically, industry to grow while the rest of the world goes into recession
of one sort or another, does Brazil have the firepower, the economic firepower to withstand what could be a very bad recession?
WAACK: Richard, I think our main problem is a political one, it is not an economic one. We have enough resources, we can teach a lesson to the world
about renewables in terms of energy, and, and, and, and. So, it's a political question. It's how to explore the opportunity Brazil has so far.
Foreign investors are very much looking to Brazil with a more condescending look, I would say. They see Brazil on international comparison when we are
talking about emerging markets and see our country's splendid opportunities.
Now, domestic politics is the issue. The Brazilian society is deeply divided, as you may imagine, whether you have experience in the United
States, here it is even worse. So it's a political problem, not an economical one.
QUEST: Okay. What about cleaning up corruption? It has been there for so long, and arguably under the last administration became a great deal worse.
Do you see any realistic efforts? The Petrobras scandal, of course, has just gone on for decades. But do you see any realistic ability to improve
the transparency of the system?
WAACK: Well, the system became more transparent because a lot of people were in jail, including Lula himself. He describes what happened to him as
some kind of law fair, as a victim of persecution, unlawful persecution, as he describes it, but a big chunk of the Brazilian society doesn't see it
They see the period in which PT party, Lula's party was in power, it saw the best part of 15 years as very much involved in corruption scandals of
And this has to do with a sort of Brazilian way to do politics, which is to distribute perks, ports, and money and places on state enterprises which
are very much regarded as a you know, something that they use privately, political parties, not only the PT.
So transparency, it is, but it will become only worse this way that the Brazilian legislative works.
QUEST: Very good to have you, sir. We'll talk more as the year moves on, wishing you and your colleagues at CNN Brasil all the very best for the New
Year, and thank you for joining us. Thank you.
Now, President Lula says stopping deforestation is going to be one of his priorities as well.
Paula Newton went to Sao Paulo State to see how some Brazilians are taking on that challenge.
PAULA NEWTON, CNN CORRESPONDENT (voice over): To save the planet, Luis Pinto says you don't have to go to the Arctic or even the Amazon. This sky
high perch will do.
What was once degraded pasture is now after 15 years, an eco-paradise, two miles of forest restoration.
LUIS PINTO, SOS AMAZONIA: This project doesn't change a big landscape, but it shows it is possible to bring back life, to bring back water, to bring
back biodiversity to the center of the City of Sao Paulo.
NEWTON (voice over): Pinto walks us through the effort to revive the Atlantic Forest, home to more than 145 million Brazilians and yet about
three quarters of it has already been wiped out.
This is an effort to bring some of it back and it works like an eco-lab. By planting trees, the forest provides for clean air and water bringing back
eco diversity for plants and animals.
PINTO: So we need a lot of technology and knowledge and research to know which species to plant and how.
NEWTON (voice over): Projects like these are now at a crossroads of climate and political history in Brazil, a country that is one of the
planet's most significant stores of biodiversity.
For four years, the government of President Jair Bolsonaro was accused of undoing the environmental progress of former President and now President
Lula da Silva.
Brazil's National Institute for Space Research estimates that in the Amazon alone, deforestation nearly doubled since Bolsonaro came to office in 2018.
Ricardo Salas was Bolsonaro's Environment Minister.
NEWTON (on camera): You know too many environmentalists you're as good as the devil. You're a bad guy.
RICARDO SALAS, FORMER BRAZILIAN ENVIRONMENT MINISTER: Yes, no. People don't understand that what we did was to show that the solution for the
environmental challenges in Brazil include as a main path for the solution, the economic equation.
NEWTON (voice over): Salas now speaks as a newly elected lawmaker in a majority conservative congress in Brazil. His policies are still clearly
popular with many here.
UNIDENTIFIED FEFMALE: And I was so scared, you know.
NEWTON: Indigenous leader Txai Surui says she and her people that (INAUDIBLE) Surui tribe have been threatened and harassed when trying to
protect Brazil's fragile environment. And she accuses the Bolsonaro government of dismantling key environmental protections.
TXAI SURUI, INDIGENOUS ACTIVIST (through translator): I think you don't but I say that we don't need to destroy to develop, we can do that in harmony
with nature. And it's the indigenous peoples who teach that.
NEWTON: It is that fundamental struggle on climate action that so threatens progress in Brazil.
LUIS PINTO, SOS AMAZONIA SPOKESMAN: We need to understand us as a nation that is key for the planet, and the decisions we make will be important for
us but also for others.
NEWTON: And so, watch this space, Brazil's future climate action and its debate over environmental policy will be consequential, far beyond its
Paula Newton, CNN in Sao Paulo state, Brazil.
QUEST: It is QUEST MEANS BUSINESS. Together we're starting a new year and after a holiday weekend it was marked by relentless Russian attacks. Now
Ukraine's hitting back against Russian troops. It could have been one of the deadliest strikes so far in Kyiv. That's what will be next, QUEST MEANS
QUEST: Hello, I'm Richard Quest. Together a lot more QUEST MEANS BUSINESS. I'm going to tell you about Dubai. Now, they're preparing to drop financial
restrictions on alcohol to new and the tourists or at least keep them coming and compete with Gulf neighbors. We'll give you the gist of that
story. And the crystal ball predictions for the global economy in 2023. Still cloudy. But I'll give you all of that after the news headlines
because this is CNN and here the news must come first.
Pope Emeritus Benedict is laying in stage at the Vatican. It's in Peter's Basilica. The Pope -- the Pope Emeritus passed away on Saturday at the age
of 95. The Italian President Sergio Mattarella, and the Prime Minister Giorgia Melania both paid their respects. The police say 65,000 people have
paid their respects so far. In Brazil, a 24-hour public wakes underway for Pele, the football star who died last week.
Thousands of people are paying respect ahead of a funeral on Tuesday. His coffin has been placed at the center of the pitch at the club where he rose
to fame in the 1950s.
The American Actor Jeremy Renner is in a critical but stable condition after being injured while using a snowplow in Nevada. Renner who has been
treated in hospital is best known for playing Hawkeye in Marvel's Avengers movies.
Ukraine's government says a large number of Russian troops were killed in strikes in a school that was housing Russian soldiers. It happened in the
Russian-occupied region of Donetsk. The school is actually an ammunition storage site which reportedly exploded and a salvo of rockets hit. The
strikes followed unprecedented three straight days of bombardment of Ukraine's civilian infrastructure over the New Year.
Ben Wedeman is in Kyiv. Ben is with me now. This is -- this is dramatic. And if Ukraine is responsible, is likely to have a ferocious response from
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, Richard. There's a very good possibility that it's going to be the case because if you look
at the numbers, even the Russian numbers, which are probably a lower number that is probably the real number. This is by -- almost certainly the
deadliest Ukrainian attack on Russian forces since the beginning of this war.
WEDEMAN (voice over): A Russian army barracks reduced to rubble. In the first hours of 2023, Ukraine's army delivered one of the world's deadliest
strikes, killing scores of Russian conscripts stationed in the occupied city of Makiivka in Eastern Donetsk. Moscow said 63 died here, but the
Ukrainians claimed the death toll is much higher. Some military bloggers in Russia are outraged, asking why troops were allegedly housed next to a
stash of ammunition which exploded under fire.
A daring the assault came after Russian missiles hit the Ukrainian capital at the start of the New Year holiday.
Kyiv's mayor said that two people were killed and many others wounded Saturday when rockets hit a hotel and residential neighborhoods.
A new reminder if needed that this war threatens Ukrainian lives far from the front line.
Many in Kyiv spent the last day of 2022 sheltering in metro stations and underpasses. Others put on a brave face to venture out.
I guess this is how they congratulate us with the New Year, Veronica Kulahina (ph) said. We were very close to where the first explosion
happened. It was very frightening.
(INAUDIBLE) shelling people on this day is nothing but villainous. They're just animals.
Russian shelling continued Sunday hitting a children's hospital in the southern city of Kherson according to local officials.
In Monday, Kyiv faced its third straight day of attacks, as more than three dozen drones were launched overnight at the Capitol. The Ukrainian military
says they intercepted 39 of them but the falling debris causing damage and injury.
WEDEMAN: Now official -- Russian officials are saying they believe that this attack on this vocational school was by U.S.-supplied HIMARS. Those
are High Mobility Artillery Rocket Systems. Now the Ukrainians haven't commented on what weapon system they used. However, two hours ago the
Ukrainian defense ministry put out a tweet saying don't tease our HIMARS, they bite. Richard?
QUEST: Ben Wedeman, we will have much to talk about in the days and weeks ahead. Thank you, sir. Keep safe.
Dubai is scrapping its 30 percent tax on alcohol.
There's strong reasons for doing so to maintain its position. One of the goals top tourist destinations that gist of the decision next.
QUEST: Dubai rang in the new year with fireworks. And for those that like a triple or three, there was plenty to celebrate. Next year, it'll be cheaper
to raise your drink in celebration. In fact, it'll be cheaper to raise your drink to celebrate Easter or indeed any birthday or any other celebration
throughout the course of the year. The destination is dropping its tax on alcohol. Now there was a 30 percent levy on personal likkle -- personal
liquor licenses for experts will now be free.
So now, they're going to charge you to get a license so you can have a bevy. It's a yearlong trial. And it's designed to change the pace for
Dubai's foreign-born population. It is also at its core to keep the UAE as an attractive place for visitors and workers, bearing in mind the
significance of tourism.
So, for somebody who lives there, our correspondent Eleni Giokos gives us the gist.
ELENI GIOKOS, CNN ACNHOR: Well, Richard, Dubai has always tried to position itself as an attractive destination, and now it's changing policies to stay
competitive. The 30 percent scrapping of this municipal tax on alcohol is one step in that direction in a region where you're seeing other countries
trying to position themselves to attract a lot more tourists. Whether it's Saudi Arabia, whether it's Qatar, Oman of Bahrain.
And also, the 200 dirhams or the $54.00 U.S. that you pay for one of these, which is an alcohol license has also been scrapped. That's for non-Muslims.
Dubai has been changing policies over the past few years to stay ahead in the region.
QUEST: Eleni Giokos. 2022 was the worst year for U.S. financial markets since 2008. Investors have reasons to be cautiously optimistic. You'll
heard some of them. So, as we continue the crystal ball on what's likely to come next. Still a bit cloudy.
QUEST: Wall Street traders and investors enjoying the last day off before U.S. markets reopen in 2023. That's on Tuesday. So, this year 2023, well,
it -- hopefully has to be, well, it doesn't have to be better than last year. So last year was the market's worst year since 2008. We start the
year with the Dow down nine percent. The S&P down 20 percent and the NASDAQ down 34 percent. But there is reason to be optimistic.
So, the crystal ball and in 2023 These are some of the reasons. Firstly, the momentum from an historic jobs recovery could help the U.S. skirt a
recession. That's why the IMF didn't say the U.S. would be. Inflation may have peaked and seems to be cooling the latest numbers suggesting that. Gas
prices considerably lower from last year's highs. But then of course, you've got the problem of Ukraine.
Real wages are growing faster than consumer prices. That's good at one level more power. But of course, that boosts inflation as well. And the Fed
has signal they could slow rate increases. Rana is with me. The associate editor at the Financial Times. Now I'm not having any miserableness, no
misery here. We're looking forward with optimism and bon vivre.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, all right. Let me be optimistic to start. The U.S. won't do as badly as the rest of the world.
That's optimistic, right? You know, we're seeing a little bit of wage growth, we're seeing a little less inflation. You know, we've already seen
a 20 percent collapse in the market. So, how much more can we get this year? Probably not that much more.
But Richard, I mean, a third of the world is going to be in recession. So, we can't be too optimistic about 2023.
QUEST: OK. The day -- the worrying part about that will come to the rest of the world. I want to stay with the U.S. for one second. This -- we're
bouncing along the bottom, arguably of the market. And I suppose the only issue is whether we test last June or October's lows. You can see them on
the chart. We can see them on the chart again. It was November when we tested new lows. Are we likely to see and test those again? We don't know.
FOROOHAR: We don't know. And you know, one of the things that I'm watching really closely is a lot of corporate debt is going to start coming due this
year or this coming year or next year.
And that's one of those points where as Warren Buffett says, you know, you see who's been swimming without their shorts on. I do worry that if you
start to see a bigger hit in the -- in the stock market in particular, that that starts to hit us growth at a more fundamental level. Because Richard,
over the last few decades, we have become such an asset-based economy here in the U.S. that when asset prices go down, that's going to have a real
effect in the real economy.
QUEST: This is really the first full throttle bear market in decades in a sense. I mean, I don't count the pandemic because, you know, that was an
exogenous event with a sharp blip back. 2008 arguably, but even then, you know, things but this reel in the trenches sludging our way through hasn't
happened for decades.
FOROOHAR: No, and that's such an important point, you know, as so much financial reporting is about, oh, we're going to be in a recession this
quarter, next quarter. Well, we haven't really felt, as you say, that hardcore slowdown until, you know, since arguably the great financial
crisis. Certainly, COVID was not that because there was so much fiscal stimulus in the system. So, the sad truth is, we're due for a big hit.
Now, that said, a lot of balance sheets are in better shape than they were at, you know, previous points in history, like the financial crisis.
QUEST: Now, I see -- that I'm going to take that as a really good point. Because when I think of all the debate and discussion over, I mean, highly
technical things that the BIS on ratios and bank ratios and all of those things, the reality is, neither the pandemic nor this recession has had, at
least in the developed economies, maybe the U.K. had a -- had a wobble low on pensions.
QUEST: But you know what I mean. But there's be no systemic risk to the system.
FOROOHAR: That's right. And, you know, I guess we could say that's the legacy of 2008. Banks cleaned up their apps.
FOROOHAR: Consumers to the -- to the extent that they can clean up their apps. I think the only place that there's risk that we maybe don't
completely understand is the shadow banking sector. You know, we've seen -- we've seen private equity start to look a little shaky. Crypto, certainly
having a meltdown. So, some of those areas that are less regulated, maybe but I don't see this as a Lehman Brothers moment. I really don't.
I think that if we see a big hit, it's going to be more about the real economy pushing down markets and then that having an effect on consumer
spending, housing prices, et cetera.
QUEST: Rana, it's always lovely. thank you. Thank you for the service that you've done in the gone by and thank you in advance for all the times we're
going to talk to you over the year ahead. I don't know whether you'll be in Davos. If you are, we'll catch up then properly, so it'll be good to see
you whenever. Thank you.
2023 could also be the many people have their first experience with the metaverse. As we hear from CNN's Anna Stewart to some it'll feel like new
technology is still up the dial up days.
ANNA STEWART, CNN REPORTER (voice over): Remember this movie?
UNIDENTIFIED MALE: The oasis. A whole virtual universe.
STEWART: The concept of a virtual universe is rooted in science fiction. And for years, it's been just that, fiction. But now technology is
beginning to catch up. Bringing the idea of the metaverse to reality.
It's home to concerts, expensive digital real estate, and hugely popular games. But what exactly is the metaverse? What does it do? And why should
you care? Let's break it down.
NEIL STEPHENSON, AUTHOR, SNOW CRASH: It means a virtual environment.
STEWART: This is Neil Stevenson. He came up with the term metaverse back in 1992. But his book Snow Crash. Back to you, Neil.
STEPHENSON: Where large numbers of people can get together and interact with each other not as they are but through avatars which are kind of the
STEWART: Tadaa. For so long our experiences with the internet have been 2D. It's been something we look at. But the metaverse gives users the sense of
being transported into the internet like this.
ANDREW BOSWORTH, CHIEF TECHNOLOGY OFFICER, META: Hello.
STEWART: Meet Andrew Bosworth, also known as Boz. He works at Meta, formerly named Facebook.
Do we shake hands? How does this work?
BOSWORTH: We can do a high five.
This is Horizon Workrooms, the company's foothold in the metaverse. It's just one of the many ways into the metaverse that are currently available.
In these virtual worlds, you can play games, do business, and dance with strangers that turn into friends, except that this friend could be on the
other side of the world.
BOSWORTH: Is it as good as being together? No, and it probably never will be, but it's the next best thing.
STEWART: This all sounds exciting, until you realize that the technology for building this new iteration of the Internet is -- well, still being
Where are my legs?
BOSWORTH: We're also working on legs.
We are working on legs.
STEWART: Where are my legs?
BOSWORTH: We -- to be fair, we are working on legs.
It's one of the tricky things about V.R. We're so early on. Oops, she left me. I'm so sad. She is back, maybe. Oops, she left again.
STEWART: In short, it's difficult to define the metaverse because it's constantly evolving, just as the technology is.
What it is, is largely dependent on what it can do for us. And right now, its capabilities are just a fraction of what they might be in five, maybe
For now, it's this place where you can be whoever you want and immerse your virtual self into this alternative world that pushes past physical
barriers. To collaborate and interact with other virtual avatars, objects, and environments.
As promising as it all may sound, we still have a long way to go before we're living like this.
UNIDENTIFIED MALE: Where am I?
IOI Plaza (ph) your hologram in the real world.
STEWART: Anna Stewart, CNN, Dubai.
QUEST: For the first time I am understanding from that, something about the metaverse. Fascinating. And I'll have a profitable moment for you after the
break. QUEST MEANS BUSINESS.
QUEST: So, 30 percent of the world, or two-thirds of the world or however many of the world will be in recession over the course of 2023. And
there'll be rising unemployment in some places. All of which sounds a little bit grim one winner. So, some New Year's predictions from me.
What do I predict? Confidently predict, I confidently predict that we will be with you most nights during the working week. I confidently predict that
we will cover all these events and make sense of them. So, to help you understand what's happening so you can make your own financial decisions
for your best interest. I confidently predict we will be out and about somewhere showing you what the world looks like the real world of business.
And I confidently predict that we're going to have a bit of fun as we go about doing it all. Because that's QUEST MEANS BUSINESS for tonight. I'm
Richard Quest in New York. Whatever together are up to in the year ahead, I do hope it's profitable.