EU Predicts Big Economic Turnaround As Vaccinations Ramp Up

A logo for the European Union

 

The EU on Wednesday sharply revised its growth forecasts for this year and next, saying an accelerated vaccination drive and the bloc’s landmark recovery plan would lift Europe out of recession.

“Recovery is no longer a mirage. It is under way,” EU economic affairs commissioner Paolo Gentiloni told a media conference.

The pickup in growth confirms forecasts by the IMF and other data that showed an increase in manufacturing and greatly improved confidence by consumers who see a happy end to the long winter of Covid-related restrictions.

Europe also hopes to quiet criticism that it has fallen short in jumpstarting its economy compared to the US where the economic activity has already roared ahead on the back of major stimulus plans.

According to the European Commission, growth in the 19 countries that use the euro currency will hit 4.3 percent in 2021 and 4.4 percent in 2022, compared with 3.8 percent for these years in its previous estimate given in February.

For the full 27 members of the EU, the commission said the economy will expand by 4.2 percent in 2021 and by 4.4 percent in 2022.

“The shadow of Covid-19 is beginning to lift from Europe’s economy,” Gentiloni said, though he cautioned that “the risks of a scarring effect remains real”.

If the growth is confirmed, the European economy will have sped out of a second recession in less than year, after a slow rollout of Covid vaccines stymied a first economic recovery in the winter of 2020-21.

It would still be trailing the other two biggest economies in the world, however. The United States is forecast to reach growth of seven percent this year — its fastest pace since the 1980s — and China is looking similarly buoyant.

– Public debt –

The EU said public debt in the eurozone will be at historic levels, with a debt pile stuck at above 100 percent of annual GDP over the next two years.

This public debt is particularly high in Greece, at 208.8 percent in 2021, and Italy at 159.8 percent of GDP.

But despite the historic budget-busting, Gentiloni insisted that major public spending “has been –- and remains -– essential in helping Europe’s workers and companies to weather the storm”.

That includes the EU’s landmark 750-billion-euro ($910-billion) recovery plan, which was decided almost a year ago but is expected to only start paying out later this summer.

Gentiloni said that, largely thanks to that recovery package, “the EU is now projected to recover to its pre-crisis level in the fourth quarter of ’21” and the eurozone would reach that point in the first quarter of 2022.

Out of the major eurozone economies, Spain and France, which were particularly hard hit in 2020, will have the highest growth rates in 2021, both nearing six percent, according to the Commission’s estimates.

Growth will be more moderate in Germany, at 3.4 percent, and the Netherlands, at 2.3 percent, as they were slightly less affected last year.

AFP

Why Merit Is Crucial To Economic Growth –  Osinbajo

File Photo: Vice President Yemi Osinbajo

 

Vice President Yemi Osinbajo says Nigeria’s desire and pursuit of economic growth and sustainable development is best achieved through the adoption of merit as a national value.

He made the remarks in a keynote address delivered at the Nigeria Leadership Initiative (NLI) webinar series with the title, “A National Conversation on Rebuilding our National Values System.”

“Meritocracy is crucial in an economically viable value system because it rewards talent and enterprise. And it is talent and enterprise that would drive sustainable growth,” Osinbajo was quoted as saying in a statement issued by his spokesman, Laolu Akande.

Osinbajo emphasised on the importance of merit to sustainable growth, adding that the system should be built on trust.

According to the Vice President, economic growth rests upon the substructure of values.

SEE FULL STATEMENT HERE:

STATE HOUSE PRESS RELEASE

OFFICE OF THE VICE PRESIDENT

WHY MERIT IS CRUCIAL TO ECONOMIC GROWTH, BY VP OSINBAJO

*Our value system must conduce to the development

Nigeria’s desire and pursuit of economic growth and sustainable development is best achieved through the adoption of merit as a national value, according to Vice President Yemi Osinbajo, SAN.

The Vice President made the remarks in a keynote address delivered at the Nigeria Leadership Initiative (NLI) webinar series themed: “A National Conversation on Rebuilding our National Values System”.

“Meritocracy is crucial in an economically viable value system because it rewards talent and enterprise. And it is talent and enterprise that would drive sustainable growth”, Prof. Osinbajo affirmed.

Stressing the point about the importance of merit to sustainable growth, the Vice President said, “Economic growth rests upon the substructure of values. The basis of the entire credit system as we know it, is trust. Indeed, the word credit is derived from the Latin word “credere” —to believe or to trust. For a credit facility to be extended to a person, trust is placed in the borrower and his or her willingness and ability to repay.

“When we say that there is a credit crunch, we are referring to a lack of trust. This has significant implications for the economy.  Banks cannot lend to people when fraud is widespread, and enterprise and industry cannot flourish without credit.”

Explaining further, Prof. Osinbajo said “financial institutions may also be reluctant to lend because they cannot trust that the government will remain consistent with regulatory policies. For the same reason, investors may be discouraged from investing. When we speak of investor confidence, we are merely describing the level of trust investors are willing to place in an environment.

“Citizens who do not trust that their taxes will be embezzled due to official corruption are unlikely to see any value in paying their taxes. If people stop trusting the media, they are more likely to fall prey to merchants of fake news which can have a destabilizing effect on a nation. Where everyone is self-seeking there can be no trust and without trust, it is impossible to sustain an open society. The significance of trust for the workings of the economy and society are far-reaching.”

In a speech that clearly proposes that merit can also be worked into the implementation of the Federal Character Principles, the Vice President submitted that stakeholders must focus their attention on merit as a crucial factor for society’s economic survival, social justice and in having an economically viable value system.

According to him, “Meritocracy is crucial as a value in and of itself. The moment that we depart from meritocracy, we cannot tie our value system to develop in any meaningful way. Our public institutions must be equipped to provide opportunities, regardless of tribe, religion or gender, but the primary criterion must be merit.”

The Vice President noted that the nation’s value system must provide “a causal connection with our economic development. In other words, we must be able to say that these sets of values conduce to economic development in a particular way. And it must also be one that is capable of showing us or the individual, that happy society, a community of people that are prepared to live and work together, is possible on account of this value system.”

“While inequalities may be addressed by affirmative provisions such as Federal Character, the primary consideration should be merit,” Prof. Osinbajo noted.

Providing more insights, he said “time and time again, we get arguments around the question as to whether the dominant principle in appointments to public institutions should be Federal Character. The dominant principle should be merit, Federal Character is essentially affirmative. What it seeks to do is to create a balance. But even if we are to create that balance, it should still be based on merit.

“For example, if we say that a particular zone should produce a particular candidate for whatever position, that zone should be able to produce the best.  What you find, repeatedly, is the situation where the choices are not based on merit, and everything goes around the question of trying to create a balance.”

Situating the values system in the context of society’s development aspirations, the Vice President said: “shaping our discussion on values as a fundament of development is also important because it helps to focus the individual and communal mind on survival especially economic survival which is dear to the heart of all.”

He said “the value system that we need is one that promotes national development, especially economic development and especially socio-economic development. And it must be capable of engendering unity and a shared vision. It must provide a causal connection with economic development. The end result is the creation of a happy society.”

Continuing, he maintained that “for purposes of national unity, for example, we must accept that unity and peace are important outcomes, but the condition predicate for both unity and peace is justice (both legal and social justice). So, in our context, justice includes the notions of fairness, equity, and equality.

Citing relevant portions of the Nigerian Constitution to explain the relevance of merit in a viable value system, the Vice President said: “in our context, justice includes the notions of fairness, equity, equality and it is significant that our Constitution is actually replete with references to these themes”.

“Our Constitution affirms that “the Federal Republic of Nigeria shall be a state based on the principles of democracy and social justice”, and it also asserts that “the State social order is founded on ideals of Freedom, Equality and Justice.” So, it is obvious that the mandates of our public institutions must be to transparently ensure that there is fairness in the availability of opportunity to all regardless of tribe, religion or gender, or any other considerations.”

Underscoring the importance of the rule of law to the subject matter, the Vice President said “the administration of justice, is at the heart of the beneficial value system. The uncompromising prosecution of criminal activity, the fair and just adjudication of civil disputes, are fundamental to any notion of a strong value system.”

He noted that “institutions that must deliver these values, must themselves be deliberately invested in, both in terms of material infrastructure and the quality of personnel. Where the institutions for the resolution of conflicts and disputes are trusted and judicial outcomes are preponderantly fair and predictable, unity and stability are more likely. And this is very important especially with respect to judicial institutions.”

On his part, former Head of State, Yakubu Gowon (Rtd) emphasized the need to re-engineer the National Youth Service Corps scheme and reinvigorate the studies of History in schools, to reclaim lost values in the society.

He said the nation’s reward system should be linked to a renewed national value system, noting that Nigerians should be defined by established core values.

In the same vein, the President of the Senate, Sen. Ahmed Lawan, pledged the support of the National Assembly in ensuring curriculum alignment to the value rebuilding processes and called for a re-engineering of family ethics to support the entire reconstruction process.

Other speakers at the event include former Nigeria High Commissioner to the United Kingdom, Dr Christopher Kolade; Chairman of First Bank, Nigeria, Mrs Ibukun Awosika, among other notable Nigerians.

Laolu Akande

Senior Special Assistant to the President on Media & Publicity

Office of the Vice President

4th October 2020

Global Recession Not As Deep As Expected – OECD

 

The global recession this year will not be as deep as expected as a result of countries’ efforts to counter the economic fallout from the coronavirus pandemic, the OECD said on Wednesday.

But the recovery next year will also be more modest than anticipated, the Organisation for Economic Co-operation and Development said, projecting a contraction of 4.5 percent in global economic output this year and a return to growth of roughly 5.0 percent in 2021.

In its previous set of forecasts in June, the Paris-based OECD had been expecting the global economy to shrink by 6.0 percent in 2020 and return to growth of 5.2 percent next year.

“After the initial bounce-back in many activities following the easing of confinement measures, there are some signs from high-frequency indicators and business surveys that the pace of the global recovery has lost momentum since June, particularly in many advanced economies,” the OECD said.

It pointed out, however, that “the economic outlook remains exceptionally uncertain, with the Covid-19 pandemic continuing to exert a substantial toll on economies and societies”.

In the second quarter of 2020, global output more than 10 percent lower than at the end of 2019, “an unprecedented sudden shock in modern times”, the OECD said.

The extent and timing of the pandemic shock differed across the major economies, but all experienced a sharp contraction in activity as necessary containment measures were implemented.

– Prompt and effective action –

Global trade collapsed, declining by over 15 percent in the first half of 2020, and labour markets were severely disrupted by reductions in working hours, job losses and the enforced shutdown of businesses.

“Without the prompt and effective policy support introduced in all economies to cushion the impact of the shock on household incomes and companies, the contraction in output and employment would have been substantially larger,” it said.

Looking at individual economies, China was expected to be the only one to expand in 2020, with projected growth of 1.8 percent.

India, on the other hand, would see its economy shrink by 10.2 percent.

The United States, the world’s biggest economy, would fare better than the global average, with a projected contraction of 3.8 percent this year.

Germany would perform better than the eurozone as a whole, with its economy set to shrink by 5.4 percent, compared with a contraction of 7.9 percent for the single currency area.

The French economy was set to shrink by 9.5 percent, Italy’s by 10.5 percent and Britain’s by 10.1 percent, the OECD predicted.

Future growth prospects would depend on factors including the severity of new virus outbreaks, the type of restrictions imposed, vaccine deployment and the effects of fiscal and monetary policy actions on demand, the OECD said.

AFP

Guinea, Togo Extend COVID-19 Restrictions

 

The West African states of Guinea and Togo announced late Tuesday that they were extending exceptional measures to curb the spread of coronavirus.

Guinean President Alpha Conde, in a decree read on national television, said restrictions would be extended by another month from Thursday, while in Togo, Prime Minister Selom Komi Klassou said a “health state of emergency” would be carried forward for another six months.

Guinea imposed nationwide measures on March 26 that have been repeatedly rolled over since then.

Some measures, such as closures of schools and borders, have been eased but others, including restrictions on public gatherings, remain in place.

Critics accuse the authorities of using anti-coronavirus laws to gag protests and political rallies in the runup to tense presidential elections on October 18.

One of the world’s poorest states, Guinea has recorded 10,111 cases of coronavirus, 63 of them fatal.

Togo’s parliament gave the government a six-month approval for anti-coronavirus measures on March 30, and the latest extension was approved unanimously, Klassou said.

The country has registered 1,595 coronavirus infections, 40 of them fatal, but the tally rose after the country reopened its airports on August 1.

“With this extension, we have 180 days to provide further protection for our fellow citizens, their work (and) purchasing power, to preserve our children’s school careers and remake our lifestyle while pursuing economic and social development,” he said.

AFP

Australia Recession Adds To Global Economic COVID-19 Woes

An ambulance is seen outside one of nine public housing estates locked down due to a spike in COVID-19 coronavirus numbers in Melbourne on July 6, 2020. – Australia will effectively seal off the state of Victoria from the rest of the country, authorities said on July 6, announcing unprecedented measures to tackle a worrying surge in coronavirus cases. (Photo by William WEST / AFP)

 

Australia has fallen into recession for the first time in three decades and Brazil’s economy shrank by almost 10 percent because of the coronavirus, leaving China as the only major nation still recording economic growth during the pandemic.

A raft of bleak data from India to Europe in recent days has laid bare the toll from lockdowns as nations try to keep a lid on an illness that has killed more than 850,000 people and infected over 25 million.

The challenges were further highlighted Wednesday when Australia announced a record contraction of seven percent despite authorities providing billions of dollars in support to struggling firms.

“Today’s national accounts confirm the devastating impact on the Australian economy from Covid-19,” said Treasurer Josh Frydenberg.

“Our record run of 28 consecutive years of economic growth has now officially come to an end. The cause: a once-in-a-century pandemic.”

Australia has confirmed almost 26,000 cases of coronavirus and 663 deaths, but had successfully contained the illness in most of the country by July.

A recent outbreak in Melbourne, however, forced a new lockdown covering five million people that has dragged on any economic recovery.

– ‘Depressing feeling’ –

Shutdowns have taken a toll on livelihoods across the globe as business revenues plunge and millions are forced out of work.

New Delhi reported Monday that growth in Asia’s third-largest economy suffered a historic 23.9 percent decline between April and June as the manufacturing sector was battered by restrictions on businesses.

In the Philippines, meanwhile, there has been a resurgence of barter trade as cash incomes dry up, with people flocking to Facebook groups to exchange everyday possessions for food.

“People are realising that while they have no money, they have accumulated a lot of material things,” said Charles Ramirez, who runs a 14,000-member bartering website in the capital Manila.

“It’s a depressing feeling, of course, having to let go of things you have accumulated just to be able to survive.”

The site is one of dozens that have sprouted up to provide a lifeline to Filipinos hit hard by the country’s recession.

– ‘Changed everything’ –

Brazil’s economy, the biggest in Latin America, contracted by a record 9.7 percent in the second quarter of the year, plunging the nation into a virus-induced recession.

“GDP is now at the same level as in late 2009, at the height of the global financial crisis,” the Brazilian Institute of Geography and Statistics said.

The drop in the April-June period was the biggest for any quarter since the current system of records began in 1996, it added.

The only major economy to have avoided a recession is China — where the coronavirus first emerged last year — thanks to strict lockdowns that have seen Covid-19 all but disappear in the country.

In the second quarter the Chinese economy rebounded by 11.5 percent, having fallen by 10 percent in the first quarter.

The Chinese city at the centre of the initial outbreak, Wuhan, took another step back to normality on Tuesday when almost 1.4 million children returned to schools and kindergartens.

In Europe, where GDP plunged 12.1 percent in the three months to June, fears are growing of more lockdowns and disruption this autumn and winter as the virus refuses to die.

“The pandemic has changed everything,” said Gema Perez Barea, who runs a firm offering tours of wineries in southern Spain that are highly dependent on tourists.

She said there were “far fewer visitors” than before the pandemic and “now all the tourists we have are from Spain”.

The country is the world’s third-largest wine producer by value after France and Italy, but sales have been battered by the virus crisis.

The virus has failed to put the brakes on the Venice film festival in Italy, however, which on Wednesday was gearing up for the movie industry’s first post-Covid-19 international competition.

Still, only about half the usual number of visitors are expected to attend.

“It’s a festival without stars because Hollywood is still in lockdown,” festival director Alberto Barbera told AFP.

“Will there be less glamour? Yes.”

AFP

Germany Sees Strong Economic Rebound, No Second COVID-19 Lockdown

Coaches drive towards Berlin's landmark the Victory Column as travel agency workers demonstrate on May 13, 2020. Odd ANDERSEN /AFP
Coaches drive towards Berlin’s landmark the Victory Column as travel agency workers demonstrate on May 13, 2020. Odd ANDERSEN /AFP

 

Germany is in a V-shaped economic recovery and should avoid a new phase of lockdowns, the economy minister said Tuesday, despite a resurgence of coronavirus cases.

German GDP is expected to fall 5.8 percent in 2020, a narrower recession than the 6.3 percent drop projected earlier, Peter Altmaier said, signalling that the country is emerging from the worst of the crisis.

Altmaier said Germany “can and will” avoid lockdowns like Germans lived through in March and April.

“Rising infection rates will be countered by targeted and regionally limited measures, so that the economic recovery can continue to develop gradually in the coming months,” he said.

The country, which has been more resistent to the pandemic than many of its neighbours, reported nearly 1,250 new cases of COVID-19 per day on average over the last week, compared with an average of less than 500 in July and August, and is starting to tighten restrictions again.

Last week, the government announced a minimum fine of 50 euros ($59) for anyone caught without a face mask in places where wearing one is compulsory, a ban on large events until the end of the year and new quarantine rules for travellers returning from regions with high case rates.

Chancellor Angela Merkel, a former scientist, has won plaudits and seen her approval ratings soar for her handling of the virus, but last week said coping with the outbreak will become more challenging in the coming months.

More than 9,000 people have died with COVID-19 in Germany since the first detected case in January, a lower rate than other major countries in Europe that lived through tougher lockdowns.

It tallies with Germany’s considerably better economic outlook.

France, for example, is expected to see its economy shrink 10.6 percent by the end of 2020, Spain 10.9 percent and Italy 11.2 percent, according to EU statistics.

– ‘Road to recovery’ –

Altmaier said Europe’s largest economy was experiencing “an unfortunately strong slump but then an unexpectedly fast recovery”.

Before a press conference, the minister even showed off a printed V-shaped chart for assembled photographers to highlight the bounce back.

The German economy slumped 9.7 percent in the second quarter of 2020, the “sharpest decline since quarterly GDP calculations for Germany began in 1970,” the federal statistics agency Destatis said previously.

However, the “low point of the recession” passed in May, according to the economy ministry.

Recent surveys have already shown an improvement in business sentiment in the country.

Meanwhile enemployment was stable for the third-straight month, at 6.4 percent in July, the German labour agency said in statistics published Tuesday.

Last week, the Ifo Institute said its monthly barometer of business confidence showed that companies were growing more and more positive about the economic situation, after the index plummeted to record lows in April.

“The German economy is on the road to recovery,” Ifo President Clemens Fuest said of the data.

German Purchasing Managers’ indices, another measure, have also shown expansionary trends since July.

The German economy is expected to grow 4.4 percent in 2021, although pre-crisis GDP levels will not be seen again until 2022, the economy ministry said.

AFP

India Economic Growth Hit By Record Slump After COVID-19 Lockdown

People walk at the sea front after the government eased a lockdown imposed as a preventive measure against the COVID-19 coronavirus, in Mumbai on June 8, 2020. – Malls and temples re-opened in several cities across India on June 8 despite the country recording a record daily number of new coronavirus infections, with the pandemic expected to ravage the country for weeks to come. (Photo by Punit PARANJPE / AFP)

 

India’s economic growth suffered a historic 23.9 percent decline between April and June, official figures showed Monday, as manufacturing and productivity were battered by a strict coronavirus lockdown.

The contraction was the biggest since New Delhi started publishing quarterly statistics in 1996, and the latest figures came as the country’s coronavirus cases surged past the 3.6 million mark.

The steep dip in Asia’s third-largest economy reflected the impact of a months-long nationwide shutdown that saw most industrial and manufacturing activity grind to a halt.

The virus restrictions dealt a severe blow to an economy that was already struggling with a protracted slowdown through 2019, hit by the twin shocks of shrinking consumer demand and rising unemployment levels.

The decline was worse than expected, with a survey of economists by Bloomberg earlier predicting a contraction of 18 percent.

On Monday the government warned that the figures could be revised further since the pandemic had also affected the ability to collect accurate data on economic activity.

“The entire quarter was spent in lockdown and it was a complete washout for the Indian economy,” Mumbai-based economist Ashutosh Datar told AFP.

He added that the clouds of gloom were unlikely to lift “for the next few quarters”.

“We started publishing quarterly growth figures only from 1996 and this is the worst quarterly performance on record ever since,” he said.

The sudden shutdown from late March prompted a huge exodus by millions of migrant workers who fled cities for their villages due to a lack of food and money.

Many have yet to return even as restrictions have eased, leaving factories struggling with labour shortages.
– Bleak outlook –

“This is a health crisis that has metamorphosed into an economic crisis,” State Bank of Baroda chief economist Sameer Narang told AFP.

“Manufacturing, trade, construction, transport and communication have all suffered.”

Prime Minister Narendra Modi had announced a $266 billion package — 10 percent of the country’s GDP — to revive the battered economy, while India’s central bank has slashed interest rates and transferred billions of rupees in annual dividends to the government.

But the measures have yet to yield any positive economic impact or spur a pick-up in demand, while inflation has jumped to over six percent — far above the bank’s target range of four percent.

Rising inflation and unemployment have sharply hit demand, analysts said, underlining the need for the government to act quickly to jumpstart the economy.

“We have ample reasons to be pessimistic about demand as there is a huge… job and income loss so demand will not (return) rapidly,” said Sujan Hajra, a Mumbai-based economist with Anand Rathi securities.

“The Modi government has to come forward with some form of fiscal stimulus urgently to help economic recovery.”

Meanwhile, coronavirus infections have hit new records across the country. India on Monday reached almost 65,000 virus deaths, overtaking Mexico as the world’s third-highest fatality toll behind the United States and Brazil.

The nation of 1.3 billion also has the third-highest number of infections worldwide.

The lockdown has failed to contain the spread of the disease which has travelled from crowded cities to remote villages where access to healthcare remains a huge issue.

AFP

Italy Plunges Into Recession As COVID-19 Bites

People shop at the outdoor market and walk about in central Rome on May 9, 2020, during the country’s partial lockdown aimed at curbing the spread of the COVID-19 infection, caused by the novel coronavirus. Tiziana FABI / AFP.

 

Italy posted a record economic contraction Monday as household spending and investment crashed during the country’s coronavirus lockdown, driving the eurozone’s third-largest economy deep into recession.

The country’s gross domestic product fell by 12.8 percent in the second quarter compared to the previous quarter and by 17.7 percent versus the same period last year, national statistics agency Istat said.

“The full estimate of the quarterly economic figures confirm the exceptional extent of the drop in GDP in the second quarter, due to the economic effects of the health emergency and the containment measures adopted,” Istat said.

The contraction was even worse than predicted in July, when Istat estimated a second-quarter drop of 12.4 percent.

A recession is commonly defined as two consecutive periods of a quarter-on-quarter drop in GDP.

Italy’s economy shrunk 5.4 percent in the first quarter.

In the second quarter, household spending fell by 11.3 percent compared to the first quarter, while exports plummeted 26.4 percent, the agency said.

Italy, the first European country to be hit full force by the coronavirus outbreak, went into total lockdown in early March as Covid-19 tightened its grip on the country.

The peninsula is set to suffer its worst recession since World War II this year, with experts estimating GDP to plummet between 8.0 to 14 percent.

The eurozone economy is predicted to contract by a record 8.7 percent this year, with mass unemployment and other dire consequences still very much a possibility.

AFP

Most Asian Markets Up On Economy Hopes Despite COVID-19 Spike

A passenger wearing a facemask (R) uses her phone as she stands near a luggage at Tianhe Airport in Wuhan, in China’s central Hubei province on May 29, 2020. Hector RETAMAL / AFP

 

Markets mostly rose in Asia on Wednesday as investors looked past spiking coronavirus infections and warnings of a US surge in the disease, with eyes on the economic recovery as countries press ahead with the easing of lockdowns.

Traders took their lead from another rally on Wall Street, which was lifted by a forecast-beating jump in US consumer confidence, while eyes were also on the release later this week of key jobs data out of Washington.

And while equities are considered unlikely to kick on unless there is a major vaccine breakthrough, analysts said the trillions of dollars in government and central bank support continues to provide a boost.

In the United States, Donald Trump’s top virus expert warned Congress that new daily cases could more than double unless officials step up efforts to control the pandemic.

“Clearly, we are not in total control right now,” Anthony Fauci said. “I would not be surprised if it goes up to 100,000 a day if this does not turn around.”

He warned that a jump in infections in Texas and Florida was driving the daily national total to more than 40,000, and they need to be tamped down quickly to avoid dangerous surges elsewhere in the country, adding that the final death toll could be “very disturbing”.

His comments came as some states reimposed measures only recently lifted, while reports of new clusters in several countries including Australia, Germany and Japan fuelled worries of a second wave.

Still, there was a feeling that a return to widespread lockdowns seen earlier in the year was unlikely.

“The next couple of weeks may tell us much about how the rest of the pandemic develops as the renewed wave of the virus in some US states is starting to weigh on economic activity,” said AxiCorp’s Stephen Innes.

“But the restoring lockdowns so far are mostly concentrated on the service sector of the southern and western states. It certainty prolongs the rebound of the service sector, but the impact is much less than the first lockdown in March.”

– ‘Fear of missing out’ –

Innes added that some metrics indicated the death rate was much lower in the US.

“The optimist in me looks for potential drivers, including better medical treatment, healthcare systems that are no longer overwhelmed, younger patients, and mutation of the virus,” he said.

Shanghai gained 1.4 percent with investors taking heart from the easing of some recently reimposed lockdowns as hopes grew that a recent outbreak in Beijing had been brought under control.

Mumbai also rose more than one percent, while Sydney and Singapore both put on 0.6 percent. Taipei and Manila were also higher.

Tokyo shed 0.8 percent after a closely watched Bank of Japan survey showed that confidence among the country’s biggest manufacturers had hit its lowest level since 2009 during the global financial crisis.

There were also losses in Seoul, Jakarta, Bangkok and Wellington.

In early trade, London, Paris and Frankfurt edged up slightly.

Hong Kong was closed for a holiday, though investors were keeping tabs on the city on the anniversary of the handover to China and after Beijing imposed a sweeping security law to prevent further unrest in the financial hub.

Markets have surged about a fifth from their March lows, thanks to the easing of lockdowns, improving economic data and the huge financial support.

Rodrigo Catril, of National Australia Bank, said that the worry of missing out on further gains is playing a role in continued support for prices.

“The fear of missing out, along with the need to put cash to work against a stimulus deluge backdrop, continues to be the overwhelming force, notwithstanding worrying virus infection rates and warnings from experts,” he said in a note.

Oil prices jumped more than one percent as investors cheered news that Saudi exports had tumbled in June, indicating it was sticking to a massive output agreement with other major producers including Russia.

It shipped 5.7 million barrels a day last month, compared with 6.2 million in May, a drop equivalent to seven full supertankers over the month.

– Key figures around 0720 GMT –

Tokyo – Nikkei 225: DOWN 0.8 percent at 22,121.73 (close)

Shanghai – Composite: UP 1.4 percent at 3,025.98 (close)

Hong Kong – Hang Seng: Closed for a holiday

London – FTSE 100: UP 0.1 percent at 6,175.65

West Texas Intermediate: UP 1.4 percent at $39.81 per barrel

Brent North Sea crude: UP 1.3 percent at $41.79 per barrel

Euro/dollar: DOWN at $1.1227 from $1.1234 at 2100 GMT

Dollar/yen: DOWN at 107.64 yen from 107.97 yen

Pound/dollar: DOWN at $1.2388 from $1.2391

Euro/pound: UP at 90.62 pence from 90.65 yen

New York – Dow: UP 0.9 percent at 25,812.88 (close)

— Bloomberg News contributed to this story —

AFP

EU Hopes US Pullout Of Digital Tax Talks Not ‘Definitive’

European Union, Ogbonnaya Onu, Science and technology

 

EU commissioner for economic affairs Paolo Gentiloni on Thursday said that he hoped Washington’s decision to stop international negotiations on the taxation of tech giants would not be permanent.

“I very much regret the US move to put the brakes on international talks on taxation of the digital economy. I hope that this will be a temporary setback rather than a definitive stop,” he said in a statement.

Washington on Thursday angered its OECD partners by announcing it was pulling out the talks that are intended to make tech giants such as Google or Facebook pay more tax.

In the OECD talks, 137 countries agreed in January to reach a deal on the taxation of multinationals by the end of 2020.

The EU had attempted its own European version of the digital tax, but struck by internal divisions on the issue, put those plans aside in order to pursue the international solution.

“The European Commission wants a global solution to bring corporate taxation into the 21st century -– and we believe the OECD’s two-pillar approach is the right one,” Gentiloni said.

“But if that proves impossible this year, we have been clear that we will come forward with a new proposal at EU level,” he said.

An EU-wide tax is however no sure thing, however, given the bitter opposition of Ireland, which is the EU headquarters for several US tech giants, including Facebook and Apple.

Tax affairs require unanimity among the EU’s 27 member states.

Given the difficulty, several European countries — including Austria, Spain, Hungary and Italy — have launched their own plans for a digital services tax.

Gentiloni said Brussels would stand behind any of its member states that would receive trade sanctions by the US over the digital tax issue.

France imposed a tax on large digital companies in 2019, but in retaliation, Washington threatened to impose tariffs on the equivalent of $2.4 billion of French goods.

A truce was worked out pending the outcome of the OECD deal.

But earlier this month, the US announced investigations into Austria, the Czech Republic, Italy, Spain and non-EU Britain that could also lead to more tariffs.

AFP

Poverty, Anger Swell In North Lebanon As Crisis Deepens

lebanon-protest
Youths smash the facade of a shop during a demonstration against dire economic conditions in the downtown district of the Lebanese capital Beirut, late on June 11, 2020. The Lebanese pound sank to a record low on the black market on June 11 despite the authorities’ attempts to halt the plunge of the crisis-hit country’s currency, money changers said. Lebanon is in the grips of its worst economic turmoil in decades, and holding talks with the International Monetary Fund towards securing billions in aid to help overcome it. ANWAR AMRO / AFP

 

Years ago Ahlam had escaped poverty in Lebanon for a better life in Europe, but then a family tragedy forced her back home to a country now in the throes of a raging economic crisis.

In the northern port city of Tripoli, a web of electric wires hangs low over a narrow street as men sit around a table drinking coffee in the Bab al-Tabbaneh neighbourhood.

Inside her small flat in a dilapidated building there, 54-year-old Ahlam leans over the kitchen sink and rinses dishes, her hair and slim body draped in black.

“I escaped the poverty and deprivation we lived under in Bab al-Tebbaneh, only to return back to extreme poverty,” she told AFP, fatigue visible on her emaciated face.

Ahlam is one of thousands in Tripoli now struggling to put food on the table, as Lebanon’s worst economic crisis since the end of the 1975-1990 civil war has rapidly deepened in recent weeks.

The downturn has sparked unprecedented protests nationwide against a ruling elite widely deemed incompetent and corrupt, which includes wealthy politicians from Tripoli.

Ahlam and her husband, seeking better chances abroad, had in 2015 sold all their furniture to join the migrant route to Europe.

They paid a trafficker to take them by sea to Europe, her husband leaving first before Ahlam followed two weeks later on a boat packed with migrants from Syria, Sudan and Afghanistan.

She eventually made it to Germany where she reunited in the Cologne area with one of her sons and they lived a “dignified life” for around two years.

But the death of her other son forced the couple to return to Tripoli to help take care of his wife and two children, so three years ago Ahlam arrived back to build up her life again from scratch.

– ‘Borrow to buy bread’ –

Ahlam found work in the villa of a well-off Tripoli family, earning a monthly wage of 500,000 Lebanese pounds.

That would once have been equivalent to around $330 before the start of the downturn late last year, but it would now fetch barely $100 on the black market.

“My income can only buy me vegetables,” Ahlam said. “I sometimes have to borrow money to buy oil and bread.

“Many days, we just eat leftovers,” she said.

Food prices have risen by more than 70 percent since the autumn, according to the non-governmental Consumer Protection Association.

The inflation has been a blow in a country where more than 45 percent of the population now lives below the poverty line and about one third of the workforce is unemployed.

But Lebanese in Tripoli, long a poorer city with a history of sectarian violence, are among the hardest hit.

According to a 2015 study by the United Nations, 57 percent of the city’s population already lived at or below the poverty line and 26 percent suffered extreme poverty.

Ahlam said she would return to Germany in a heartbeat if she could.

“I no longer feel like I’m part of this country… I’d be ready to try again, just to flee this bankrupt country where we live humiliated.”

– ‘State abandoned us’ –

Tripoli emerged as a vibrant protest hub in the nationwide demonstrations from October last year, earning the city the title the “bride of the revolution”.

After the Lebanese currency plunged to record lows last week, angry protests erupted again, with standoffs between security forces and demonstrators leaving dozens wounded in Tripoli.

In recent months, scores of protesters have rallied outside the homes of politicians in Tripoli against what they describe as the government’s neglect of the port city and its residents.

“All officials in Lebanon are thieves… We should be angry,” said Fayad Darwish, a 55-year-old father of seven whose income has evaporated because of the de-facto devaluation.

Tripoli’s economic struggles were long compounded by sectarian violence.

From 2007 to 2014, the city was the scene of frequent clashes between Sunni residents of the Bab al-Tebbaneh district, and Alawite residents of neighbouring Jabal Mohsen.

With a high number of school dropouts or unemployed among the young men of Bab al-Tebbaneh, many were paid to take up arms while others joined jihadist groups in Syria or resorted to taking and dealing drugs.

“This area has paid heavily in blood for battles that have nothing to do with us,” said Abu Mohammad, a 70-year-old resident.

“We are worried about our youth and the possibility they may slide back into violence and take up weapons again because of growing poverty.”

In a former frontline street near Bab al-Tebbaneh, a group of young men passed around a joint.

Taking a drag, one of men, aged in his twenties, said: “We have nothing else to do.”

“We are all unemployed here,” his friend chimed in. “The state has abandoned us.”

AFP

Pandemic Drives Broadest Economic Collapse In 150 Years – World Bank

 

The coronavirus pandemic inflicted a “swift and massive shock” that has caused the broadest collapse of the global economy since 1870 despite unprecedented government support, the World Bank said Monday.

The world economy is expected to contract by 5.2 percent this year — the worst recession in 80 years — but the sheer number of countries suffering economic losses means the scale of the downturn is worse than any recession in 150 years, the World Bank said in its latest Global Economic Prospects report.

“This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions Ceyla Pazarbasioglu.

The depth of the crisis will drive 70 to 100 people into extreme poverty — worse than the prior estimate of 60 million, she told reporters.

And while the Washington-based development lender projects a rebound for 2021, there is a risk a second wave of outbreaks could undermine the recovery and turn the economic crisis into a financial one that will see a “wave of defaults.”

Economists have been struggling to measure the impact of the crisis they have likened to a global natural disaster, but the sheer size of the impact across so many sectors and countries has made it hard to calculate, and made predictions about any recovery highly uncertain.

READ ALSO: Lockdowns Averted Three Million Deaths In 11 European Nations – Study

Under the worst-case scenario, the global recession could mean a contraction of eight percent, according to the report.

But Pazarbasioglu cautioned that, “Given this uncertainty, further downgrades to the outlook are very likely.”

– China still growing, barely –

Although China is nearly alone in seeing modest growth this year, the depth of the slowdown in the world’s second-largest economy will hinder recovery prospects in developing nations, especially commodity exporters, the World Bank warned.

While China will see GDP rise just one percent, the World Bank said, the rest of the forecasts are grim: US -6.1 percent, eurozone -9.1 percent, Japan -6.1 percent, Brazil -8 percent, Mexico -7.5 percent and India -3.2 percent.

And things could get worse, meaning the forecasts will be revised even lower, the bank warned.

There remain some “exceptionally high” risks to the outlook, particularly if the current outbreaks linger or rebound, causing authorities to reimpose restrictions that could make the downturn as bad as eight percent.

“Disruptions to activity would weaken businesses’ ability to remain in operation and service their debt,” the report cautioned.

That, in turn, could raise interest rates for higher-risk borrowers and, “With debt levels already at historic highs, this could lead to cascading defaults and financial crises across many economies.”

But even if the 4.2 percent global recovery projected for 2021 materializes, “In many countries, deep recessions triggered by COVID-19 will likely weigh on potential output for years to come.”

AFP