A US cargo ship is seen at the Yangshan Deep-Water Port, an automated cargo wharf, in Shanghai on April 9, 2018.
Johannes Eisele | AFP | Getty Images
The International Monetary Fund on Monday released its latest projections for the global economy.
Those forecasts were detailed in an update to the IMF’s World Economic Outlook report, which is widely read by both public and private sectors globally.
Here are five charts that show the fund’s latest assessments of the world economy.
The fund attributed “the lion’s share” of the downward revision to “a more subdued growth forecast” for India.
India’s growth markdown
India, Asia’s third-largest economy, is expected to grow by 5.8% in 2020 — a 1.2 percentage point markdown from the organization’s October forecast.
The IMF said India’s “domestic demand has slowed more sharply than expected” amid stresses in the financial sector and a decline in credit growth.
Still, the 5.8% forecast for this year is an improvement from the estimated 4.8% growth for last year, owing to both monetary and fiscal measures, and subdued oil prices, said the IMF.
China’s growth forecast for 2020 was revised higher by 0.2 percentage points to 6.0%, according to the IMF. That’s partly because the country’s “phase one” trade deal with the U.S. is likely to reduce some risks facing the world’s second-largest economy, the fund said.
“However, unresolved disputes on broader US-China economic relations as well as needed domestic financial regulatory strengthening are expected to continue weighing on activity,” the fund wrote in its report.
US growth moderation
The U.S., the world’s largest economy, is projected to grow by 2.0% this year — a downward revision of 0.1 percentage points compared to the IMF’s October forecast.
Max Lin, a strategist at NatWest Markets, said the downgrade reflects a slowing manufacturing sector in the U.S. and potential risks from the presidential elections later this year.
Euro area pick up
Growth in the euro area for this year was revised down by 0.1 percentage points to 1.3%, according to the IMF.
But that projection reflects a pick up from last year’s 1.2% estimate, which the organization attributed to an expected improvement in external demand.
These are the IMF’s growth forecasts for major European economies this year:
- Germany: 1.1%
- France: 1.3%
- Italy: 0.5%
- Spain: 1.6%
WATCH: How economists make predictions
Trump slams impeachment trial, touts U.S. economy at World Economic Forum – Global News
Trump called a surprise news conference Wednesday to mark a “tremendous two days” at the glitzy summit of world leaders and financiers in Davos, which has served as a respite from the trial underway in Washington.
“It’s such a hoax,” Trump said of the impeachment case against him. “I think it’s so bad for our country.”
Trump gave his legal team high marks after more than 12 hours of arguments on procedural motions Tuesday in which Republicans blocked Democratic efforts to immediately call witnesses and subpoena documents. But Trump said he wanted to see his aides, including former national security adviser John Bolton and acting chief of staff Mick Mulvaney, testify in the Senate.
“Personally, I’d rather go the long route,” he said, referring to calling witnesses in the Senate trial, before suggesting that there were “national security” concerns to allowing their testimony.
A resolution passed early Wednesday by a party line vote allows the Senate to consider calling witnesses only after both sides in the impeachment trial present their cases.
“I thought our team did a very good job,” Trump said, saying he watched some of the proceedings. He praised White House Counsel Pat Cipollone’s ”emotion“ on the Senate floor, adding, ”I was very proud of the job he did.“
Lawmakers argue rules, evidence as Trump impeachment trial begins
Trump repeated his attacks on Democratic House managers serving as prosecutors in the trial, saying that he’d like to “sit right in the front row and stare at their corrupt faces” on the Senate floor during the trial but that his attorneys might have a problem with it.
Democrats say Trump abused his power in his dealings with Ukraine and obstructed Congress in its investigation. Trump denies doing anything wrong.
Trump opened his news conference with triumphant talk on the American economy and said he is pushing for “very dramatic” changes to the World Trade Organization. He called on Roberto Azevedo, the director general of the international organization, who said “has to be updated.”
Azevedo acknowledged that “the system has not been functioning properly in many areas.”
“We are committed to effect those changes, and this is something we are serious about,” he added.
Trump had announced the unexpected availability during a meeting with Iraqi President Barham Salih.
Trump legal counsel says rules for impeachment trial ‘fair way to proceed’
Trump also said the United States is moving to add more countries to its travel ban list, but gave no other details, saying the changes would be announced soon,
The Trump administration is planning to add seven countries — Belarus, Eritrea, Kyrgyzstan, Myanmar, Nigeria, Sudan and Tanzania – to the list, U.S. media reported on Tuesday.
Trump arrived in Davos on Tuesday. He addressed the forum and over two days has held meetings with leaders from the European Union, Iraq and Pakistan, among others.
The Republican president said in most of his meetings that trade was on the agenda.
-With files from Reuters
© 2020 The Canadian Press
Spooked consumers suggest economic impact of Australia bushfires to grow – National Post
SYDNEY — Australians are beginning to tighten their purse strings because of the country’s deadly bushfires, according to a survey released on Wednesday, a sign that the economic impact of the crisis is likely to deepen.
As authorities warned that a days-long respite from high fire danger was coming to an end, economists said the cost to Australia’s A$1.95 trillion ($1.33 trillion) economy could be as high as A$5 billion ($3.4 billion).
That would shave around 0.25 points off gross domestic product in the December and March quarters, a development that some economists said could prompt the country’s central bank to cut rates as early as February and lower its growth projections.
Consumer sentiment in January was a hefty 6.2% lower than a year earlier, according to the Melbourne Institute and Westpac Bank survey released on Wednesday. Consumer sentiment data is considered a leading indicator, running ahead of actual spending data.
“The risk is that as economic loss from the bushfires materializes, consumers could still become more cautious in February,” said Citi economist Josh Williamson.
The huge bushfires have cut through the country’s east coast during the peak summer months when many businesses usually rake in earnings from both domestic and foreign tourists. Agricultural sectors, particularly the dairy industry, have also been hard hit.
The deepening financial woes intensify pressure on Prime Minister Scott Morrison, who has faced criticism over his handling of the crisis and his conservative government’s stance on climate change.
Australia is one of the world’s largest carbon emitters per capita due to its reliance on coal-fired power plants, and the bushfires have become a global talking point with regard to climate change politics. Morrison has repeatedly rejected calls for Australia to increase its carbon emission reduction targets, insisting such a step would it would do too much damage to the country’s economy.
Late on Tuesday, Morrison reiterated his view that preemptive burning of bushland to remove flammable vegetation was as important as reducing emissions to prevent bushfires, a position that has been rejected by fire services chiefs.
Temperatures in New South Wales and Victoria states began to rise on Wednesday after several days of cool weather, leading authorities to renew “extreme fire danger” warnings in some areas where existing fires could be intensified or new blazes sparked into life.
Here are today’s key events in the bushfire crisis: * The wildfires have killed 29 people, destroyed more than 2,500 homes and razed 11 million hectares (27 million acres) of wilderness – an area one-third the size of Germany – since September.
* Scores of fires were burning in New South Wales and Victoria states on Wednesday. Temperatures in Victoria were expected to top 32 degrees Celsius (89.6 Fahrenheit) on Wednesday, leading officials to declare “extreme fire danger” in some areas. Temperatures in NSW were forecast to hit 40 degrees C (104 F) on Thursday.
* A Reuters analysis shows that Australian animals living in specific habitats, such as mountain lizards, leaf-tailed geckos and pear-shaped frogs, are battling the threat of extinction after fierce bushfires razed large areas of their homes.
* The air in Sydney is expected to again reach hazardous pollution levels on Thursday as smoke drifts over the city, the NSW state government said. Sydney, Melbourne and Canberra have all been periodically blanketed in smoke over the past several weeks, giving all three some of the worst air quality ratings in the world.
* Players at the Australian Open tennis tournament continued to make pledges of financial assistance. Among the latest were the seventh seed, German Alexander Zverev, who said he would donate A$10,000 for each match he wins and pledged his entire prize money of A$4.12 million if he wins the tournament. American John Isner has pledged 25% of all his prize money and A$100 for every ace he serves.
($1 = 1.4620 Australian dollars) (Reporting by Colin Packham and Swati Pandey in Sydney; editing by Jane Wardell)
China virus outbreak may wallop economy, financial markets – CTV News
News that a new virus that has afflicted hundreds of people in central China can spread between humans has rattled financial markets and raised concern it might wallop the economy just as it might be regaining momentum.
Health authorities across Asia have been stepping up surveillance and other precautions to prevent a repeat of the disruptions and deaths during the 2003 SARS crisis, which caused $40 billion-$50 billion in losses from reduced travel and spending.
The first cases of what has been identified as a novel coronavirus were linked to a seafood market in Wuhan, suggesting animal-to-human transmission, but it now is also thought to be spread between people. As of Wednesday, some 440 people were confirmed infected and nine had died from the illness, which can cause pneumonia and other severe respiratory symptoms.
A retreat in financial markets on Tuesday was followed by a rebound on Wednesday, as investors snapped up bargains. Share benchmarks were mostly higher, with Hong Kong’s Hang Seng gaining 1.1% and the Shanghai Composite index advancing 0.4%. Japan’s Nikkei 225 jumped 0.7%.
While the new virus appears much less dangerous than SARS, “the most significant Asia risk could lie ahead as the regional peak travel season takes hold, which could multiply the disease diffusion,” said Stephen Innes, chief Asian strategist for AxiCorp. “So, while the risk is returning to the market, the lights might not turn green until we move through the Lunar New Year travel season to better gauge the coronavirus dispersion.”
The 2003 outbreak of Severe Acute Respiratory Syndrome in China, along with cases of a deadly form of bird flu, resulted in widespread quarantine measures in many Chinese cities and in Hong Kong. More than 8,000 people fell sick and just under 800 people died, a mortality rate of under 10%.
While the ordinary flu kills hundreds of thousands of people each year, such new diseases raise alarm due to the uncertainties over how deadly they might be and how they might spread. That’s especially true during the annual mass travel of the Lunar New Year festival, which begins this week.
“The cost to the global economy can be quite staggering in negative GDP terms if this outbreak reaches epidemic proportions as until this week, the market was underestimating the potential of the flu spreading,” Innes said in a report.
In China, health officials stepped up screening for fevers. “We ask the public to avoid crowds and minimize the public gatherings to reduce the possibility of cross infection,” Li Bin, deputy director of the National Health Commission, said Wednesday.
Just as with SARS, though, the impact of the disease is likely to fall heaviest on specific industries, such as hotels and airlines, railways, casinos and other leisure businesses and retailers, analysts said. Most declined Tuesday but rebounded on Wednesday as investors locked in profits ahead of the Lunar New Year holiday. The outbreak is a boon, meanwhile, for pharmaceutical companies and makers of protective masks and other medical gear.
“If the pneumonia couldn’t be contained in the short term, we expect China’s retail sales, tourism, hotel & catering, travel activities likely to be hit, especially in the first and second quarters,” said Ning Zhang of UBS. Government efforts to offset the shock would help, but growth will likely rebound less than earlier forecast, Zhang said.
As of Jan. 17, the World Health Organization had not recommended any international restrictions on travel but urged local authorities to work with the travel industry to help prevent the disease from spreading while warning travellers who fall ill to seek medical attention.
The illness is yet another blow for Hong Kong, whose economy is reeling from months of often violent anti-government protests. The wider concern is China, where the economy grew at a 30-year low 6.1% annual pace in 2019. An interim trade pact between Beijing and Washington had raised hopes that some pressure from tensions between the two biggest economies might ease, and the latest data have showed signs of improved demand for exports.
The virus outbreak raises the risk such optimism might be premature.
“According to our analysis of the spread of the SARS virus, which so far appears very similar to 2019-nCoV (the new virus), we expect increased downward pressure on China’s growth, particularly in the services sector,” Ting Lu and other analysts at Nomura in Hong Kong said in a commentary.
The growing number of global travellers has contributed to the spread of various diseases in recent years, including Middle East respiratory syndrome, the Ebola and Zika viruses, the plague, measles and other highly contagious illnesses.
The World Economic Forum estimates that pandemics — cross-border outbreaks like the flu that killed 50 million people a century ago — have the potential to cause an $570 billion in annual economic losses.
The 2014-16 Ebola virus epidemic caused losses amounting to over $2.2 billion, according to the World Bank. That includes a 40% decrease in the number of working Liberians at the height of the crisis, lower exports and harvests, and costs for combating the disease.
Apart from the human tragedy, such crises gobble up resources needed for other government spending, exacting a harsh toll on the poorest economies. In Africa, the loss of health care workers to Ebola resulted in thousands more deaths of mothers and babies, hindered work on other diseases such as preventing and treating malaria, HIV/AIDS and tuberculosis, reduced vaccination rates and fewer surgeries, the World Bank said in a report.
Many survivors, meanwhile, suffer from lingering effects of the illnesses and the powerful drugs used to save their lives, becoming more vulnerable to hunger and other risks.
At the same time, increasingly sophisticated tools for collecting data and analyzing are aiding efforts to prepare for and cope with severe disease outbreaks.
In 2016, the World Bank set up a $500 million rapid response insurance fund, working with the WHO and insurance companies, to combat pandemics in developing countries. The fund uses “cat bonds,” or catastrophe bonds, whose principal will be lost if the funds are needed to help deal with an outbreak. Private insurers have followed with products of their own meant to hedge against risks from such disasters.
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