The coronavirus will lead the world economy into its first contraction in a decade, some economists are warning.
Evidence in mounting that the virus is having a large impact on global growth, says Oxford Economics. ‘What began as a supply shock in China has morphed into something much more serious,” said Oxford economist Ben May. “The effects of financial market weakness and the disruption to daily life around the world will trigger lower consumer spending and investment on top of the disruptions to the global supply chain.”
Oxford, along with a growing number of other economists and market watchers, believe this will lead in the first quarter of 2020 to the global economy’s first contraction since Q1 2009. Oxford predicts a rapid rebound from Q2 on, but the “short, sharp shock” will cut growth for the year to 2%, “easily the slowest pace in the last decade.”
Already there are signs of a sharp decline in world trade, which Oxford expects to shrink by as much as 7% in late Q1, early Q2 from the year before. It estimates China imports alone will be down about 12% in the first quarter, from the quarter before.
Demand for commodities is also declining, leading to a 25% drop in Brent oil prices from their peaks and 10% drop in industrial metals.
And there are more risks, as the “shock” exacerbates vulnerabilities that have been building up since the financial crisis, such as corporate debt. Falling stock prices, weaker corporate profits and more bad debts could lead banks to tighten lending, amplifying the downturn, says Oxford. “Historically, the double-digit slump in stocks since mid-February is consistent with U.S. corporate credit standards tightening at a pace only seen during recessions,” said Oxford economist Adam Slater.
Oxford has slashed its global 2020 GDP growth forecast by 0.5pp since the beginning of the year, but warns that more cuts may be necessary if the disruptions of the virus continue for longer than expected or if “draconian actions” are needed in the event of a global pandemic.
“Our scenarios suggest that the latter could push the global economy into a deep recession,” said May.
Here’s what you need to know this morning:
Finance Minister Bill Morneau delivers a speech on the state of the Canadian economy in Toronto
OPEC+ meeting in Vienna
Alberta Premier Jason Kenney and Infrastructure Minister Prasad Panda to discuss government’s 2020 capital plan in Morinville, Alberta
Vic Fedeli, Ontario Minister of Economic Development, Job Creation and Trade, will hold a media availability at Queen’s Park to discuss the latest release of Statistics Canada jobs numbers
Gender Equality Minister Maryam Monsef, Public Services Minister Anita Anand, and Middle Class Prosperity Minister Mona Fortier speak on a panel at the Economic Club of Canada in Toronto on growing an economy that works for everyone
Today’s Data: Canadian labour force survey, U.S. non-farm payrolls, wholesale trade, consumer credit
Canada doesn’t stack up well on the global stage when it comes to pay equity, as this OECD chart below shows. A new study reveals that Canadian working women earn almost a quarter less than their male counterparts. Men also received more than twice the bonuses or profit sharing than women, the ADP LLC poll done by Leger Research says. ADP’s research also found that traditional job identities persist with women outnumbering men about fourfold in health care, while men are three times more prevalent in technology/IT and manufacturing. Happy International Women’s Day Sunday
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
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.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
