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Hello and welcome to World Business Report from the BBC World Service, I'm Roger hearing and on this edition after the market turmoil of recent weeks.
How the leaders of global financial institutions are joining the chorus of warnings about the consequences of stop -start US tariffs as the price of gold reaches an all -time record amid the economic turmoil.
How do you actually buy the yellow metal. Also we'll hear about efforts to turn Armenia into a regional tech hub and is the person you're interviewing for a job really there?
The rise of deep fake applications.
But first there have been more warnings about the consequences of the on -off tariff policies coming from President Trump after Wednesday's assessment by the federal reserve chair Jerome Powell that U .S. economic growth will be hit and prices will rise for consumers as a result.
The head of the European Central Bank, Christine Lagarde, announced a new cut in interest rates and spoke of market tensions and what she called exceptional uncertainty.
The ECB would take a wait -and -see approach, she said, to whether the planned tariffs would lead to higher inflation in the euro block.
Looking at today, and the tariffs debate that is going on as well as the tariff impact that is actually happening.
We know that it's a negative demand shock, we can anticipate that it will have some impact on growth but the net impact on inflation will only become clearer over the course of time.
That was Christine Lagarde speaking within the last couple of hours, joining me is Emma Wall, head of investments at Hargreaves Landsdown Emma, thanks for being with us here on World Business Report.
Well, there's a number, a number of comments and we'll go through them, but first of all, Christine Lagarde clearly indicating she didn't really even want to say the word tariffs to start with, but just the disruption.
I mean, clearly the EU is having a headache, the ECB particularly.
Yes. And don't forget before these tariffs were announced, the euro area was struggling with growth anyway.
So, this cut from the ECB was very much anticipated.
The market is now suggesting there'll be three more cuts through the course of the year.
But in an area that was already seeing anemic growth and struggling to hit the growth targets, tariffs was really the last thing that they needed.
And the press conference is often where you actually get to glean a bit more about the underlying mechanisms than you do with just the sort of 25 basis Point Cut headline, and she's signaling their pretty cautious approach and that expectation that the euro area will struggle to overcome those tariffs.
Yeah, it's interesting.
And she's joining a chorus, we heard obviously that the head of the Fed had been talking yesterday.
We've now heard from Christine Lagarde, in fact, in the last half hour, we've heard also from the Managing Director of the International Monetary Fund, Kristalina Galguieva.
Now she said, rising trading tensions and sweeping shifts in the global trading system would trigger downward revisions of the IMF's economic forecast?
Interestingly, she said they weren't expecting a global recession.
However, that is interesting, isn't it?
It is. You're right, she says that she thinks, you know, the growth forecast will be cut globally and their inflation expectations have also risen.
She also used a pretty killer punch phrase, which you said off the charts trade uncertainty, which I think almost might even be putting it mildly.
There is so much uncertainty in the markets about economic growth, about inflation and price rise expectation, about really what the fallout from the global, two largest global economies being locked in this trade war and what it will mean for the rest of the world.
I think that quite a few large banks on Wall Street disagree, however, with the forecast that they think that a recession will be avoided, but time will tell.
So it's interesting as you say that there's fear about recession, but she's saying no. As you say, financial institutions may be thinking there might be.
There's also, of course, the whole issue about how China responds to all this we know in a way, because clearly Xi Jinping, the Chinese president's been touring his, I wouldn't say allies, but certainly neighbors in Southeast Asia trying to boost the impact of China as a stable trading partner.
in fact he's just arrived in Cambodia and that's an interesting one because Cambodia has facing one of the highest U .S. tariff rates and this is the last leg of his Southeast Asia tour.
The government in Phnom Penh is thought to be actually seeking more support from Beijing on infrastructure development.
We've actually heard from some Cambodians who are waiting to greet president Xi's cavalcade and they were clear about the benefits of their country's close relationship with China.
China helped build bridges and hospitals and helped poor Cambodians.
They provided money for us to build our country.
I want him to help us more.
The more money he can give us, the better for us.
China helped to build the road named after President Xi And also bridges and other roads.
I think a strong relationship with China will potentially help our economy develop even more China helped to build bridges schools So voices that from Cambodia reflecting attitude say Emma stay with us We're going to talk about how all the calls to this is impacting the share market and various financial institutions a little bit later in the programme, so stay with us.
But let's turn our thoughts to one effort to try and deal with this in a way, or certainly deal with the European aspect of it.
Because one question that's taxing many governments around the world is how best to get on the right side of the world's most powerful leader.
Could Italy's prime minister, who some call the Trump whisperer, charm the American president when they meet in the White House?
in a few hours time Georgia Maloney is the first European leader to visit the US since President Trump announced the tariffs it's thought that her chemistry of President Trump could help lower the temperature of the trade war with the EU.
I've been speaking about all this to Nathalie Tarchi director of the Rome based Institute of International Affairs think -tank.
She can in the sense that obviously there is a personal relationship there you know he seems to like her.
And so, if he is to listen to any European leader with some degree of, in a sense, favor, that's probably her.
Now, having said that, I think there are big limitations to how much she can actually achieve.
I mean, firstly, as we've seen with other leaders that Trump has a good relationship with, doesn't necessarily mean that he, therefore, particularly on things like trade, actually steps back, right.
I mean, he didn't in the case of Israel.
So, there's little that makes us think that he would actually want to reward Miloni by, you know, granting something to the EU, which, you know, in his own words, has been invented to screw America.
So, I think there's a limit to how much, in a sense, personal sympathy can go.
And having said that, I think there's also a potential threat, because what Trump might try to do is to in a sense divide and rule Europe by peeling Italy off from the European consensus.
Now, I think that other European leaders and I think that, to be honest, Georgia Maloney herself is aware of this possibility, and I think that there are those within her government, for example, like Mateo Salvini, that have been trying to push her to go down that bilateral route.
However, the sort of snag there is that trade policy is an exclusive EU competence.
And so if Italy were to in a sense take a bilateral deal, essentially it would be acting illegally.
But Natalie, part of the logic behind saying that she has a special relationship with Donald Trump, is that they share a certain amount of the political outlook.
And is it also true on the economic sphere?
Well, yes, but this is really the thing about nationalists, right?
That they may, broadly speaking, share a similar world view, but precisely because they're nationalists as, you know, the bigger nationalists acts and does so against the interests of the smaller nationalists, the smaller nationalist is going to have you know, is going to basically end up with a short straw.
And so, in a sense, that ideological convergence between them doesn't really detract from the fact that, you know, if Trump pursues a protectionist policy, and if Italy is essentially the third EU member state with the largest surplus vis -a -vis the United States, it is very clear that Italy is going to be badly hurt.
And this is why I'm saying that there is a threat that is, you know, that exists insofar far as Trump may basically say to Milani, well hey, you know, how about giving your parmesan a bit of an exemption here, and Milani the nationalist that might be tempted to take it precisely because she's a nationalist. But the point is that she can't because, as I said, within the EU it's a trade.
You know, trade is the Brussels competence.
And at the end of the day, I think even someone like Milani understands that it's only by negotiating through the weight of the European Union that your own country can actually get a better deal.
Natalie touchy there.
Well, one sign of how worried investors are by the current chaos and world markets is the price of the ultimate haven asset gold.
It's what tradition is brought by those who want something solid and safe in a time of crisis.
And this week, the price gold reached a new all -time high of three thousand three hundred and fifty seven point four dollars an ounce although it has dropped back a little since but how exactly do you buy gold is it jewellery ingots bars where is it kept why does a lump of inner metal count as an asset at all well joining me now is joe cavatone senior market strategist at the world gold council joe thanks for being with us um i mean pretty basic question right at the beginning if i want to buy some gold And how do I do it?
Well, it's a very good question.
And it's actually a very simple exercise.
You need to make a decision over whether you want to own your gold in physical form or you're comfortable buying it in a trusted regulated financial product.
So you can buy bars like you've mentioned, or coins, or you can buy an exchange traded product, which are readily available for most investors, provided they have access to a securities account.
Okay, Joe. So you talked about ways in which you could do one of the mentioned bars of gold, or ingots, or whatever it is, or indeed gold rings, I suppose.
But when you're buying the gold in form, I suppose if it's jewellery you have it, you keep it, but if I'm buying some bars of gold, I presume you don't keep them at home.
I mean, presumably they sit somewhere, don't they?
Well, you can keep them at home, but there are a lot of different choices.
I think once you've decided what product you're looking for, and you've verified the product, and you have evaluated the cost to get access to it, and part of that decision is deciding where you want to Many organizations will store it for you.
They'll keep it with them at a vault, or you can actually have it delivered to your home and you can keep it in your own position, or you can put it in a bank with the safe deposit box or their vaulting services.
So there are a number of choices.
They have cost implications, possible insurance implications, but it's very simple to figure out provided you take the time to ask the right questions and actually get the right answers.
And if possession's critical, you can keep it at home.
Just make sure that you understand what the risks are that come with that.
It makes insurance...
insurance security how you can imagine, I suppose.
Particularly as the price goes up.
And that's what I wanted to ask you.
I mean, the price has gone through the roof.
Is it something that you expected?
Well, we've been talking about the fact that risk assets have been inflated for a while and they correlate more than they've ever done in the past. Bonds and equities act like each other a lot more than they have in the past. And we've been messaging the people that they need to understand having gold in a portfolio will help you when this bubble pops.
These circumstances we're now dealing with have really just brought it all to light.
And actually, we were expecting good performance from gold.
It's been stronger than we thought, and we actually see a lot of reasons for why it continues to stay strong.
Real risk at the sovereign level, weakness around currencies on a global level, the conversations you've just been having with the previous guests around whether or not inflation is going to be higher, stickier, here for longer.
Basically economic uncertainty and risk and uncertainty around risk assets.
But the odd thing, Joe, is it's a dead asset in a way.
It's a lump of metal at the end of the day.
It's not an investment in a company to make that company bigger or earn more.
It's a funny kind of investment, isn't it?
Well I don't know if I would agree with you completely on that.
What I would say is because Because of its scarcity and because of its unique characteristics in terms of how it's consumed both for wealth creation, wealth savings, but also in an industrial sense.
It has a unique profile that gives you upside return during good markets, and definitely like we're seeing, downside protection and upside performance during risky markets.
It's unique, and actually it has returns that have a characteristic that give you on average historically, 8 % return, which is in line with equities.
And that scarcity keeps it growing at a rate of 2 % but less so than the demand profile.
So yes, it doesn't have a coupon, but it does give you returns.
All right, Joe, thanks for explaining all that to us.
Joe Cavatone there of the World Gold.
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Counsel. You're with World Business Report from the BBC World Service.
Let's go back to Emma Wall now to mop up a few of the other things that are happening and then they're all related I suppose what we were talking about at the beginning.
Emma, I mean, Wall Street opening just a couple of hours ago, after all the ups and downs, and we're now getting into a holiday period, I suppose.
What's the what's the feeling?
I mean, there was a little bit of climb, I think in the last hour or so.
Yeah, there was but it's given most of it back.
So it opened and it did rise.
But actually, in the last sort of half hour, it has come back down again.
And, you know, I'm sure that mood music put out from the IMF on Yes, that will be good news that they've avoided recession.
but the news that global growth will have a more negative forecast than they had previously thought and that inflation will continue to be sticky and indeed rise because the results of the tariffs will definitely be weighing on the market.
I actually also think some of the news coming out of Asia, some of the grand tour that President Xi is going on, the consequences of the tariffs, the irony that President Trump has actually set out to weaken China on the global stage, actually could have the opposite effect.
If Asia joins as one sort of, you know, regional superpower, so all of this would be just adjusted by market, which is why I've seen, you know, actually a pretty muted response from from the S &P 500 this morning.
Yeah, and one interesting, we look at a lot of sectors in all this to see how they're playing.
And one I hadn't really thought of, I suppose, the spirit sector Pernod earnings, really disappointing.
I mean, we talked about luxury yesterday.
Pernod, I guess, probably falls into that role.
Not for everybody. But it's How that sector is suffering?
Yes, already. So analysts have predicted a sort of two percent decline in sales, but actually it came in even under that.
So it came three percent under, which is disappointing.
And they and they actually their reasons are saying it's tariffs already.
You know, there is a huge amount of trade that goes into China and into the U .S. from these kind of luxury, high end drinks manufacturers.
And so the tariff war is really affecting that industry.
And one other thing I suppose is peripherally related, at least to what the policy of the Trump administration, what happened at the BP AGM today, the massive oil giant, of course, a real vote of no confidence.
Well, not no confidence, but very little confidence in the chair, partly because of people's hostility to the ways in which they're pushing back against the green agenda that they've had before.
Yeah, so this is the first general meeting that they've had since they had that sort of climate strategy U -turn.
You remember that they actually previously had vowed to invest quite heavily in renewables and then they went back on that prioritising fossil fuel investment and actually suggesting that they were going to put new investment into into new endeavours.
And actually, so this is the first vote that they've had and a quarter of shareholders voted against the chair.
And they also actually had a bit of civil unrest. So five protesters turned up at the AGM and had to be forcibly removed.
So this is a real signal, actually, to the Corporation that this news dance is not well received by everybody.
Interesting, interesting times on that front.
Thanks so much, Emma Wall there, giving us a sense of what's been going on on the markets today.
Now, Armenia. It's a small landlocked nation of 2 .7 million people in the South Caucasus, but it's quietly transforming itself into a regional tech hub, from coding laboratories in schools to venture capital firms connecting start -ups with Silicon Valley.
The country is using its Soviet science legacy and global diaspora to build a tech -powered future.
Rehan Demitry went to Yerevan to explore Armenia's tech revolution and sent this report.
In schools across Armenia, afternoons are filled with the sounds of young minds discovering technology.
In one such classroom in the capital, Yerevan, 16 -year -old Milena shows her latest creation, a smart parking app called AutoHive.
With this app you can see how many free places there are in a parking lot and you can reserve your space from home from anywhere you want, anytime.
The variety of projects the children are presenting is remarkable from smart phone controlled robotic arms to memory games.
This is one of Armaf engineering laboratories where children age 10 to 18 learn coding, robotics and 3D modeling in public schools.
For many kids, the lessons help shape their ambitions.
I want to become a programmer.
These are my own products, and then we want to create our own company with my friends and make products.
Something like operating systems, software, antiviruses, everything, with IT technologies, yeah.
Sargis Khareputian leads the Union of Advanced Technology Enterprises, which spearheads this initiative.
And the goal is to have 5 ,000 most talented kids decide to become an engineer every year.
The Armat is the most successful public private partnership.
So we raised the capex from the private, we go to the school, we give the equipment to the school.
Raspberry Pi's computers, 3D printer, lasers in the sea, the robotic kit and so on.
And the school covers the costs for utilities and the government, the education ministry, gives us a budget of $2 million annually approximately, to pay the salaries of the coach. Armenia's focus on tech education is no accident.
It has a long history of being one of the leading centers for computer science in Soviet times.
The USSR's first semiconductor computer, And here, Razdan 2 was designed and built here.
But today, Armenia's bid for tech development relies on its diaspora.
There are around 10 million Armenians, but only like 25 percent, around 25 percent, lives in Armenia.
One of the biggest powers and tools we have, it's the diaspora.
In the United States, Armenians who are actually very advanced in tech. So if you go...
Smartgate VC is a venture capital firm which helps startups that begin in Armenia to expand their operations to the United States via a special program.
Samvel Khachikyan is the head of operations.
Idea of the program is to take a batch of founders, cohort of founders from Armenia and go to Silicon Valley.
We are organizing visits to top companies, top venture capital firms. We are doing introductions, they are getting connected to people.
For startups in a small country like Armenia, thinking about bigger markets from day one is essential.
Irina Hasarian, an architect by training founded Doctor Yan, an app which connects patients with doctors.
So we started the Doctor Yan I think three years ago so, we barely survived the first year and then things started going much better.
Yeah, now we're growing at least 25 % revenue month by month and that actually gives us the strength to start expanding into other markets.
We are already starting building some relationships in Uzbekistan.
It's a huge market, almost 40 million population, like 300 million doctor visits annually.
It's somewhere around 100 times more than in Armenia, yes.
Armenia's tech ecosystem received an unexpected boost in 2022 following Russia's invasion of Ukraine...
...when thousands of Russian IT specialists left the country.
Up to 8 ,000 moved to Armenia.
Vasily is an IT consultant based in Yerevan.
In Armenia, traditionally, there were lots of specialists related to the development of processors, machine vision...
But there was a rather large deficit of specialists in data processing, cyber security or financial technologies.
Many such specialists came from Russia.
But Vasily says there should be more incentives, such as better infrastructure, preferential tax system to keep the IT talent in the country.
In a country which continues to face geopolitical challenges with its neighbors, developing its tech ecosystem isn't just about economic opportunity, it's about re -imagining their nation's future.
Reihan Demitry reporting there from Armenia.
Now when you interview someone for a job these days you often do it remotely speaking to the candidate via zoom or teams or FaceTime, if indeed it really is the candidate, because there's growing evidence that where the job and interview are both remote, you never actually meet the candidate, they might not really exist at all.
The tech advisory firm Gartner says by 2028, around 25 % of candidates are likely to be fake.
It's already happening.
David Moccillo was holding a job interview over zoom when he noticed something looking a bit suspicious and he shared the interaction on LinkedIn.
But he muted the candidate's voice for privacy reasons.
Take a Your avatard is like kinda weird, like, are you using something to like change your camera view?
Can you take your hand and put it like in front of your face?
To like cover it partially?
No, no, it's not a joke because I can see that you're using some kind of software.
If you don't do it will end the conversation right now.
Okay, thank you. Bye bye.
David Mozilo there well the risk isn't confined to tech firms, more than 300 American firms inadvertently hired impostors with ties to North Korea for IT work including a television network, a defense manufacturer and a car manufacturer.
The US Justice Department claimed all that last year.
Well Estelle McCartney here runs candidate assessment company Arctic Shores and she joins me now.
Estelle thanks for being with me, have you heard of this happening?
Is it more and more employers who are getting to sort of final interview stage only to discover a big mismatch between the person they saw maybe in a video interview earlier up the process and the person who's in front of them in the final interview or in the assessment centre.
And I guess given how quickly candidates and indeed all of us are adopting AI and how easy these tools are to use, you know, it might be shocking but it's not really that surprising.
And why are people doing?
Is it because they actually don't exist at all?
It's just a way of getting money out of the company, or is it a way of improving your chances somehow in the interview?
Yeah, well, I think it's important to recognise that not all deepfakes are created equally.
At one end of the spectrum, you've got those cases where AI might be getting used more for sort of criminal activity to think data theft or fraud.
That's obviously high risk, high impact, you know, sort of the next evolution of phishing tactics that we've all kind of seen in emails and texts, but at the other end of the spectrum, it's really candidates that are using AI tools to support, for example, their performance in a video interview.
It's less malicious, but it's still a real challenge for companies.
And how then do you deal with that?
I mean, briefly, how on earth do you make sure you're talking to a real person?
Well, I think when we think about the impact of generative AI in the recruitment processes and what we can do to ensure that the right people get the right job, there's two big things that need to happen.
I think, first of all, companies really need to kind of redesign the hiring process.
A lot of the traditional tools that have been relied upon, whether those are CVs or cover letters or question -based psychrometric tests, can now be gamed by AI.
So what we're seeing now is a shift towards more sort of interactive task -based type assessments.
They're much harder for AI to game.
That's the way to get around it.
Estella, we're gonna have to leave it there, I'm afraid.
So thank you so much for being with me genuinely, Estelle McCarthy.
They're talking about deep fake interview technique.
That's World Business Report.
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Discover key themes, including how to meet the continent's structural needs while driving sustainable growth at standardbank .co .za forward slash c -i -b.
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