Economy
China's central bank says coronavirus outbreak could disrupt economy in first-quarter, has many policy tools – TheChronicleHerald.ca
BEIJING (Reuters) – China’s economy could be disrupted in the first quarter due to the coronavirus outbreak, but it is expected to recover once the virus is brought under control, a vice governor of the central bank said on Friday.
The People’s Bank of China is closely watching the impact of the outbreak on the economy, and is preparing policy reserves to offset the pressure, Vice Governor Pan Gongsheng told a news briefing on Friday.
Analysts believe China’s first-quarter economic growth could slow sharply by 2 percentage points or more from 6% in the last quarter, but could rebound sharply if the outbreak peaks soon, much like the pattern during the SARS epidemic in 2003.
Widespread travel and public health restrictions are taking a increasing toll on tourism, restaurants and other parts of the services sector, while many factories have suspended operations until next week or longer.
The PBOC will maintain ample liquidity and deepen interest rate reforms, Pan said. It pumped large amounts of cash into the financial system on Monday to shore up confidence and cut some key money market interest rates.
The death toll from the epidemic in mainland China reached 636 as of the end of Thursday, up by 73 from the previous day. There were 3,143 new confirmed infections, bringing the total so far to 31,161.
China will also implement cuts in taxes and fees, Vice Finance Ministry Weiping said at the briefing.
China Banking and Insurance Regulatory Commission Vice Chairman Zhou Liang said he expects banks’ non-performing loan ratios to rise somewhat amid the outbreak but said China has ample resources to deal with any rise in bad loans.
(Reporting by Kevin Yao; Writing by Se Young Lee and Ryan Woo; Editing by Tom Hogue and Kim Coghill)
Economy
China Wants Everyone to Trade In Their Old Cars, Fridges to Help Save Its Economy
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China’s world-beating electric vehicle industry, at the heart of growing trade tensions with the US and Europe, is set to receive a big boost from the government’s latest effort to accelerate growth.
That’s one takeaway from what Beijing has revealed about its plan for incentives that will encourage Chinese businesses and households to adopt cleaner technologies. It’s widely expected to be one of this year’s main stimulus programs, though question-marks remain — including how much the government will spend.
Economy
German Business Outlook Hits One-Year High as Economy Heals
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German business sentiment improved to its highest level in a year — reinforcing recent signs that Europe’s largest economy is exiting two years of struggles.
An expectations gauge by the Ifo institute rose to 89.9. in April from a revised 87.7 the previous month. That exceeds the 88.9 median forecast in a Bloomberg survey. A measure of current conditions also advanced.
“Sentiment has improved at companies in Germany,” Ifo President Clemens Fuest said. “Companies were more satisfied with their current business. Their expectations also brightened. The economy is stabilizing, especially thanks to service providers.”
A stronger global economy and the prospect of looser monetary policy in the euro zone are helping drag Germany out of the malaise that set in following Russia’s attack on Ukraine. European Central Bank President Christine Lagarde said last week that the country may have “turned the corner,” while Chancellor Olaf Scholz has also expressed optimism, citing record employment and retreating inflation.
There’s been a particular shift in the data in recent weeks, with the Bundesbank now estimating that output rose in the first quarter, having only a month ago foreseen a contraction that would have ushered in a first recession since the pandemic.
Even so, the start of the year “didn’t go great,” according to Fuest.
“What we’re seeing at the moment confirms the forecasts, which are saying that growth will be weak in Germany, but at least it won’t be negative,” he told Bloomberg Television. “So this is the stabilization we expected. It’s not a complete recovery. But at least it’s a start.”
Monthly purchasing managers’ surveys for April brought more cheer this week as Germany returned to expansion for the first time since June 2023. Weak spots remain, however — notably in industry, which is still mired in a slump that’s being offset by a surge in services activity.
“We see an improving worldwide economy,” Fuest said. “But this doesn’t seem to reach German manufacturing, which is puzzling in a way.”
Germany, which was the only Group of Seven economy to shrink last year and has been weighing on the wider region, helped private-sector output in the 20-nation euro area strengthen this month, S&P Global said.
–With assistance from Joel Rinneby, Kristian Siedenburg and Francine Lacqua.
(Updates with more comments from Fuest starting in sixth paragraph.)
Economy
Parallel economy: How Russia is defying the West’s boycott
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When Moscow resident Zoya, 62, was planning a trip to Italy to visit her daughter last August, she saw the perfect opportunity to buy the Apple Watch she had long dreamed of owning.
Officially, Apple does not sell its products in Russia.
The California-based tech giant was one of the first companies to announce it would exit the country in response to Russian President Vladimir Putin’s full-scale invasion of Ukraine on February 24, 2022.
But the week before her trip, Zoya made a surprise discovery while browsing Yandex.Market, one of several Russian answers to Amazon, where she regularly shops.
Not only was the Apple Watch available for sale on the website, it was cheaper than in Italy.
Zoya bought the watch without a moment’s delay.
The serial code on the watch that was delivered to her home confirmed that it was manufactured by Apple in 2022 and intended for sale in the United States.
“In the store, they explained to me that these are genuine Apple products entering Russia through parallel imports,” Zoya, who asked to be only referred to by her first name, told Al Jazeera.
“I thought it was much easier to buy online than searching for a store in an unfamiliar country.”
Nearly 1,400 companies, including many of the most internationally recognisable brands, have since February 2022 announced that they would cease or dial back their operations in Russia in protest of Moscow’s military aggression against Ukraine.
But two years after the invasion, many of these companies’ products are still widely sold in Russia, in many cases in violation of Western-led sanctions, a months-long investigation by Al Jazeera has found.
Aided by the Russian government’s legalisation of parallel imports, Russian businesses have established a network of alternative supply chains to import restricted goods through third countries.
The companies that make the products have been either unwilling or unable to clamp down on these unofficial distribution networks.
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