TOKYO/RIYADH (Reuters) – Bank of Japan Governor Haruhiko Kuroda said he was watching the coronavirus impact on the economy with “grave concern,” in a nod to the growing toll the epidemic is taking on manufacturing activity and exports across Asia.
The fallout from the health crisis will be a main topic of debate at a Group of 20 finance leaders’ meeting in Riyadh, Kuroda said on Friday, in a sign it could overshadow the weekend meeting of the world’s top economies.
Massive business disruptions in China are starting to spillover into the global economy, with parts shortages rippling through supply chains as far away as the United States. Asian economies that are heavily reliant on exports to China and Chinese tourists are being hit hard on both fronts.
“Huge uncertainty remains on how the spread of the new virus may affect the Japanese economy,” Kuroda told parliament.
“We’re watching the impact with grave concern and keeping a close eye on downside risks,” he added.
The epidemic has already extracted a heavy human and economic toll in China, with over 2,200 deaths, prompting authorities to take strict containment measures.
Retail sales of passenger cars in China plunged 92% on an annual basis in the first 16 days of February, according to China Passenger Car Association (CPCA).
Japan’s factory activity contracted at the sharpest pace in seven years in February, a private industry survey showed on Friday, adding to growing signs the world’s third-largest economy is on the brink of recession.
South Korea’s exports to China slumped in the first 20 days of February, indicating a grim outlook for Asia’s fourth-largest economy.
Kuroda reiterated the BOJ’s readiness to ease monetary policy further as needed. But he said it’s “not time yet” to discuss specific monetary policy steps, suggesting the BOJ won’t deploy its dwindling ammunition easily.
Japanese Finance Minister Taro Aso told reporters on Friday he will explain to his G20 counterparts that Tokyo is taking necessary steps to contain the spread of the epidemic, which has become “among risks to the global economy.”
The weak yen, however, may offer Japanese policymakers some relief by boosting the value of profits Japanese manufacturers earn overseas, some analysts said.
GLOBAL IMPACT
Japan’s economy shrank at its fastest pace in nearly six years in the December quarter, as soft global demand and last year’s sales tax hike hurt consumption and business spending.
Some analysts expect the economy to contract again in the current quarter, dashing the BOJ’s hope an expected rebound in global growth mid-year will underpin Japan’s fragile recovery.
The damage from the outbreak is spreading across Asia with organizers cancelling events, flight cancellations hurting tourism and fears of the virus keeping shoppers home.
Analysts are divided on how much the epidemic could hurt the global economy. Oxford Economics say its baseline scenario is for the outbreak to have a large but short lasting impact centered on China and the rest of Asia.
“We assume the economic effects are concentrated in the first half of 2020 and that the outbreak then starts to come under control,” Oxford economists said in a research note.
Even so, the outbreak will cut global economic growth to just 2.3% in 2020, its weakest since 2009, they said.
In a note for the G20 finance leaders, the International Monetary Fund said a further spread of the epidemic could derail a “highly fragile” projected recovery in the global economy in 2020.
Highlighting increased global interdependencies, Amazon sent an urgent email to suppliers this week about its midsummer mega sale Prime Day indicating it has begun worrying about inventory, the New York Times reported on Thursday.
(Reporting by Tetsushi Kajimoto in Tokyo and Leika Kihara in Riyadh; additional reporting by Daniel Leussink and Takaya Yamaguchi in Tokyo, Cynthia Kim and Joori Roh in Seoul, editing by Chang-Ran Kim, Richard Pullin and Kim Coghill)
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
