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COMMENTARY: Four possible steps to restarting a coronavirus-plagued economy – Global News

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What does a post-pandemic economy look like? Health researchers are indicating that managing this virus will be a long-term game. That means COVID-19 will impact the economy for months, maybe years, but reopening businesses cannot wait until the virus is completely eradicated.

Estimated lost wages from the locked-down Canadian economy range between $3 billion to $6 billion per month. Many Canadians are worrying about more than infection; concerns about affording rent and everyday necessities are pervasive. Restarting businesses is not only important for the social well-being of Canadians but also for restoring investor confidence in the market and generating much-needed tax revenue.

Germany has just started to make small steps by reopening small shops. Understanding when and how to reopen businesses may be the most challenging task of this pandemic. Reopening too soon risks a second wave of infections and a far greater negative economic impact.

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However, not allowing companies to promptly reopen will lead to a deep recession and is already fuelling societal unrest. Successfully re-establishing businesses in a COVID-19 economy requires government, health-care and business leaders working together to implement a phased return to employment.

READ MORE: Canada’s GDP shrank by 9% in March amid COVID-19

Phase 1: Our current situation — working from home or remaining unemployed

The first phase is the one in which we now find ourselves: working from home or unemployed. Many professional and business-to-business companies have learned to facilitate working from home using web-based technology over the past few weeks.

This has been critical in reducing COVID-19 transmission, but it’s not sustainable in the long term. So what’s next?

Phase 2: Resuming small-scale operations

The next phase is a suppression approach involving reopening and supporting businesses where virus transmission can be easily controlled.

Workplaces that have adequate space for physical distancing, easy access to soap and water and the ability for continuous cleaning of all public areas should be encouraged to reopen. These businesses can learn from those that remained open during the lockdown.

People leave a grocery store in Ottawa where carts and signs have been placed to facilitate physical distancing in response to the COVID-19 pandemic on April 4, 2020. THE CANADIAN PRESS/Justin Tang

This might require that businesses operate with reduced hours until they can assure regular and thorough cleaning of their workplaces.

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In a pandemic, short-term age discrimination may also be justified. Employers should be encouraged to rehire younger people after they’ve been tested, while governments continue to provide financial support to older workers and those with chronic health conditions, since younger people are less likely to be hospitalized due to COVID-19 infection.

Success in this early phase is dependent on rapid testing of employees displaying symptoms, including a potential self-testing kit and the quick return of results. Employers must keep reminding employees to stay home if they are not feeling well, while governments must continue to provide easy and quick access to insurance for lost wages.

[ Sign up for our Health IQ newsletter for the latest coronavirus updates ]

In the meantime, employees have a responsibility to limit their social exposure when they’re not at work. The goal must be to keep the transmission rate a low as possible.






1:35
Premier Scott Moe on the need to re-open Saskatchewan’s economy


Premier Scott Moe on the need to re-open Saskatchewan’s economy

Phase 3: Expanding to social events

The next phase should begin within a month of lowering the infection rate to acceptable levels, a number that still hasn’t been established. There is ongoing development of models of transmission in different-sized and types of groups, and as more is learned on how to ensure low infection rates, businesses and organizations can expand operations carefully.

This could mean allowing more customers into stores and restaurants at one time, allowing small social gatherings and reopening some education and recreation facilities. Professional sports leagues could resume, either with relatively few or no spectators. Whatever the expansion looks like, maintenance of new cleaning and social and physical distancing practices needs to be ensured.

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Coronavirus outbreak: Doug Ford says Ontario economy to reopen ‘with a trickle’


Coronavirus outbreak: Doug Ford says Ontario economy to reopen ‘with a trickle’

Phase 4: Domestic tourism

The final phase should focus on rebuilding domestic tourism and Canada’s reputation as a safe country for its citizens to explore.

Airlines and hotels should have appropriate cleaning and hygiene practices ready to go. Reopening the border could be considered for those countries that have also controlled transmission of the virus.

A tourist looks out over Stuckless Pond in Gros Morne National Park, Newfoundland and Labrador, in August 2016. THE CANADIAN PRESS/Darren Calabrese

During this phased-in approach, governments need to go beyond providing financial stimulus packages. Businesses also need to be supported in training workers on safety and sanitation precautions, and must facilitate the development of technologies that monitor workplace social distancing and tracking of interactions that could lead to virus transmission.

Governments and health-care experts must also continually monitor and provide updates on transmission rates. Success is dependent on everyone being informed.

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READ MORE: Recession or depression? Length of global economic standstill likely to decide

Public trust in business is critical. Canadians have effectively responded to this pandemic. To ensure ongoing co-operation, they need to know there’s plan for getting people back to work.

COVID-19 will not be the last health threat to the Canadian economy. Our focus needs to shift from controlling risks through economic shutdowns to managing health-related threats in the workplace. Otherwise disastrous economic downturns will continue.

The response to COVID-19, in fact, should become a learning opportunity on how to develop more illness-proof economies.The Conversation

Loren Falkenberg, Senior Associate Dean, Business, University of Calgary and Jillian Walsh, Graduate Student, Health Economics, University of York

This article is republished from The Conversation under a Creative Commons licence. Read the original article.

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Coronavirus 'a devastating blow for world economy' – BBC News

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The coronavirus pandemic is a “devastating blow” for the world economy, according to World Bank President David Malpass.

Mr Malpass warned that billions of people would have their livelihoods affected by the pandemic.

He said that the economic fallout could last for a decade.

In May, Mr Malpass warned that 60 million people could be pushed into “extreme poverty” by the effects of coronavirus.

The World Bank defines “extreme poverty” as living on less than $1.90 (£1.55) per person per day.

However, in an interview on Friday Mr Malpass said that more than 60 million people could find themselves with less than £1 per day to live on.

Mr Malpass told BBC Radio 4’s The World This Weekend: “It [coronavirus] has been a devastating blow for the economy.

“The combination of the pandemic itself, and the shutdowns, has meant billions of people whose livelihoods have been disrupted. That’s concerning.

“Both the direct consequences, meaning lost income, but also then the health consequences, the social consequences, are really harsh.”

Mr Malpass warned it’s been those who can least afford it who’ve suffered the most.

“We can see that with the stock market in the US being relatively high, and yet people in the poor countries being not only unemployed, but unable to get any work even in the informal sector. And that’s going to have consequences for a decade.”

The World Bank, along with its counterparts, has been providing support to the worst affected countries, but says much more is needed.

It is calling on commercial lenders such as banks and pension funds to offer debt relief to poor countries.

He would also like them to make the terms of their loans clearer, so other investors are more confident about putting money into those economies.

Targeted government support and measures to shore up the private sector are also vital to rebuild economies, the World Bank argues.

Investment and support would create jobs in areas like manufacturing, to replace those in the worst affected sectors, such as tourism, which may have been permanently lost.

‘Tensions and inequality’

Mr Malpass admits the damage to global trade, and inclinations to bring supply chains closer to home or erect trade barriers, are a challenge.

“When trade is reduced, that creates its own set of tensions and inequality… I’m sure [the global economy] will be interconnected in the future, maybe less than it was pre-COVID.”

But ultimately, Mr Malpass said the “catastrophe” could be overcome, and that people were “flexible, they’re resilient” .

“I think it’s possible to find paths, it’s hard work for countries and governments to do that.

“But we can encourage that effort… I’m an optimist, over the long run, that human nature is strong, and innovation is real. The world is moving fast and connectivity… has never been higher. And so that gives hope for the future.”

However, he admits the challenge is getting the right plans in place at the right time – and in the meantime, the pain could be considerable.

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Guardians of the World Economy Stagger From Rescue to Recovery – Yahoo Canada Finance

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Guardians of the World Economy Stagger From Rescue to Recovery

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(Bloomberg) — The world’s governments and central banks are shifting from rescue to recovery mode as the deepest slump since the Great Depression shows signs of bottoming out.

After rolling out trillions of dollars worth of measures to prevent their economies and markets from collapsing, they are now doubling down with even more spending to backstop a recovery as coronavirus lockdowns ease. In what counts for good news these days, Bloomberg Economics’ global GDP growth tracker showed economies contracted at an annualized rate of 2.3% in May, less than the 4.8% slump in April.

“Policy makers are moving from triage to recovery,” said Deutsche Bank Securities Chief Economist Torsten Slok. “They are realizing that more fiscal support will be needed to households and small businesses to prevent this liquidity crisis from turning into a solvency crisis.”

The new wave of stimulus has both governments and central banks moving in sync to continue flooding lenders, markets and companies with cheap credit at an unprecedented pace.

The European Central Bank last week expanded its asset purchases by 600 billion euros ($677 billion) to 1.35 trillion euros, and extended them until at least the end of June 2021. And Germany’s government agreed another 130 billion-euro fiscal stimulus push and said it will back a proposed new 750 billion-euro European Union recovery fund.

“Action had to be taken,” ECB President Christine Lagarde said in a press conference.

It’s a similar story in Asia.

Japan is planning another $1.1 trillion worth of spending in its biggest splurge yet and the central bank in May called an emergency meeting to roll out 30 trillion yen ($274 billion) of loan support for small businesses.

China last week unveiled another 3.6 trillion yuan ($508 billion) in spending and South Korea’s 76 trillion won ($63 billion) ‘New Deal’ fiscal package is its largest to date.

In the U.S., lawmakers continue to debate extra fiscal stimulus and the Federal Reserve, which meets on June 10, has just launched a new Main Street Lending Program, the latest in trillions of support it has already poured into the economy and markets.

While the Fed is unlikely to signal any moves when its officials gather this week, many economists expect it to harden its commitment to easy monetary policy later in the year and perhaps even start pursing a Japan-style campaign to control long-term borrowing rates.

The latest U.S. jobs numbers give some hope that the stimulus unleashed so far is beginning to kick in. A record 2.5 million workers were added by employers during May while unemployment declined to 13.3%, wrong footing economists who had forecast widespread job losses.

Read more: Economists Have Biggest Miss Ever in U.S. Jobs-Report Shocker

To be sure, there’s far from consensus that the latest wave of support will be enough to get growth back to where it was at the start of the year. Some of the steps being taken are merely to replace existing policies as they start to expire.

“It seems clear already approved packages are perceived to be not enough,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA.

There are other concerns that monetary policy can only do so much to revive growth before it loses its potency.

“How does the Fed actually get money to millions and millions of households and small businesses, that is difficult to do operationally,” former New York Federal Reserve Bank President William Dudley told Bloomberg Television.

“It’s much easier to intervene in the capital markets where the Fed can rely on counterparties, primary dealers and others,” Dudley said. “It is much more difficult to lend one by one to millions of different entities.”

Another risk is a return to austerity, even if it seems unlikely now. JPMorgan recently predicted a fiscal thrust of 3.3% of GDP this year and 1.5% drag next year.

U.S. senators have put the brakes on a $3 trillion fiscal package that was approved by lower house lawmakers. China’s government has ruled out a return to the kind of large scale stimulus it rolled out after the global financial crisis, preferring to keep a lid on rising debt.

Still, because the crisis meant economies were forced into shutdown, much of the emergency response so far has been less about driving growth and more about avoiding total collapse. It’s that dynamic which is leaving governments with little option but to borrow harder.

“We shouldn’t look at the positive immediate growth impact of the opening up process as being the rate of growth that may last,” said David Mann, chief economist for Standard Chartered Plc.

Creating jobs will be mission critical to cementing any upswing. That will need support for firms to retrain employees, incentives to hire older workers and for governments to continue with wage subsidies. More than one in six people have stopped working since the onset of the crisis, according to the International Labour Organization, which in April estimated more than 1 billion workers were at high risk of a pay cut or losing their job.

“A faster job market recovery will speed up the economic healing and reduce the risk from widening income inequality and social stress,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte.

Ultimately, the rescue of economies will go well beyond quantitative solutions and into the realm of story telling too, as policy makers will need to inject confidence back into wary consumers and executives, said Stephen Jen, who runs hedge fund and advisory firm Eurizon SLJ Capital in London.

“Human psychology is the same and is now as important as the mechanics of delivering the fiscal stimuli themselves,” he said.

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Guardians of the world economy stagger from rescue to recovery – BNNBloomberg.ca

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The world’s governments and central banks are shifting from rescue to recovery mode as the deepest slump since the Great Depression shows signs of bottoming out.

After rolling out trillions of dollars worth of measures to prevent their economies and markets from collapsing, they are now doubling down with even more spending to backstop a recovery as coronavirus lockdowns ease. In what counts for good news these days, Bloomberg Economics’ global GDP growth tracker showed economies contracted at an annualized rate of 2.3 per cent in May, less than the 4.8-per-cent slump in April.

“Policy-makers are moving from triage to recovery,” said Deutsche Bank Securities Chief Economist Torsten Slok. “They are realizing that more fiscal support will be needed to households and small businesses to prevent this liquidity crisis from turning into a solvency crisis.”

The new wave of stimulus has both governments and central banks moving in sync to continue flooding lenders, markets and companies with cheap credit at an unprecedented pace.

The European Central Bank last week expanded its asset purchases by 600 billion euros (US$677 billion) to 1.35 trillion euros, and extended them until at least the end of June 2021. And Germany’s government agreed another 130 billion-euro fiscal stimulus push and said it will back a proposed new 750 billion-euro European Union recovery fund.

“Action had to be taken,” ECB President Christine Lagarde said in a press conference.

It’s a similar story in Asia.

Japan is planning another US$1.1 trillion worth of spending in its biggest splurge yet and the central bank in May called an emergency meeting to roll out 30 trillion yen (US$274 billion) of loan support for small businesses.

China last week unveiled another 3.6 trillion yuan (US$508 billion) in spending and South Korea’s 76 trillion won (US$63 billion) ‘New Deal’ fiscal package is its largest to date.

In the U.S., lawmakers continue to debate extra fiscal stimulus and the Federal Reserve, which meets on June 10, has just launched a new Main Street Lending Program, the latest in trillions of support it has already poured into the economy and markets.

While the Fed is unlikely to signal any moves when its officials gather this week, many economists expect it to harden its commitment to easy monetary policy later in the year and perhaps even start pursing a Japan-style campaign to control long-term borrowing rates.

The latest U.S. jobs numbers give some hope that the stimulus unleashed so far is beginning to kick in. A record 2.5 million workers were added by employers during May while unemployment declined to 13.3 per cent, wrong footing economists who had forecast widespread job losses.

To be sure, there’s far from consensus that the latest wave of support will be enough to get growth back to where it was at the start of the year. Some of the steps being taken are merely to replace existing policies as they start to expire.

“It seems clear already approved packages are perceived to be not enough,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA.

There are other concerns that monetary policy can only do so much to revive growth before it loses its potency.

“How does the Fed actually get money to millions and millions of households and small businesses, that is difficult to do operationally,” former New York Federal Reserve Bank President William Dudley told Bloomberg Television.

“It’s much easier to intervene in the capital markets where the Fed can rely on counterparties, primary dealers and others,” Dudley said. “It is much more difficult to lend one by one to millions of different entities.”

Another risk is a return to austerity, even if it seems unlikely now. JPMorgan recently predicted a fiscal thrust of 3.3 per cent of GDP this year and 1.5 per cent drag next year.

U.S. senators have put the brakes on a US$3-trillion fiscal package that was approved by lower house lawmakers. China’s government has ruled out a return to the kind of large scale stimulus it rolled out after the global financial crisis, preferring to keep a lid on rising debt.

Still, because the crisis meant economies were forced into shutdown, much of the emergency response so far has been less about driving growth and more about avoiding total collapse. It’s that dynamic which is leaving governments with little option but to borrow harder.

“We shouldn’t look at the positive immediate growth impact of the opening up process as being the rate of growth that may last,” said David Mann, chief economist for Standard Chartered Plc.

Creating jobs will be mission critical to cementing any upswing. That will need support for firms to retrain employees, incentives to hire older workers and for governments to continue with wage subsidies. More than one in six people have stopped working since the onset of the crisis, according to the International Labour Organization, which in April estimated more than 1 billion workers were at high risk of a pay cut or losing their job.

“A faster job market recovery will speed up the economic healing and reduce the risk from widening income inequality and social stress,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte.

Ultimately, the rescue of economies will go well beyond quantitative solutions and into the realm of story telling too, as policy makers will need to inject confidence back into wary consumers and executives, said Stephen Jen, who runs hedge fund and advisory firm Eurizon SLJ Capital in London.

“Human psychology is the same and is now as important as the mechanics of delivering the fiscal stimuli themselves,” he said.

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