Economy
Coronavirus recession: B.C. economy could shrink 7-12%, analyst warns – Global News
British Columbia is headed into a potentially nasty recession, according to the latest analysis from the Business Council of B.C.
The organization’s latest 2020 forecast amid the novel coronavirus pandemic suggests the province’s economy could shrink between seven and 12 per cent.
READ MORE: ‘We’re devastated’: COVID-19 dries up tourism industry, thousands laid off in mountain towns
“Both those numbers would be unprecedented, even the lower one, in terms of a decline in economic activity,” council president Jock Finlayson told CKNW Radio, Tuesday.
“So we’re really in uncharted waters here, there’s no doubt about that.”
Finlayson said even the seven-per-cent figure would be the same as about three times the impact of the Great Recession in 2009.
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Fewer than three weeks ago, the council was still predicting modest growth for 2020 of about 1.5 per cent.
Finlayson said it was difficult to calculate the magnitude of the effect of completely shutting down entire sectors.
He said if the crisis goes on for more than three or four months, it it would amount to a “complete sort of meltdown.”
The Canadian Federation of Independent Businesses warned Tuesday that a third of all small businesses in the country could go under within the month without additional aid.
The federal government is offering businesses a 10-per-cent wage subsidy to keep employees on the payroll, deferring income tax payment deadlines until September, and boosting tax credits to small and medium-sized businesses.
The B.C. government is deferring payment of a slew of provincial taxes, including PST and the Employer Health Tax until the end of September, and cutting the school tax for certain property classes.
Finlayson called those good first steps, but urged more action than “temporary tax relief.”
“Given the numbers … around the decline in economic activity that were anticipating, I think it’s pretty clear governments, both federally and provincially, will have to do more, as will the Bank of Canada.”
B.C. and Ottawa need to study what countries in Europe are doing, he added, and be prepared to borrow the best ideas that will work in Canada.
He pointed to Denmark, which is guaranteeing wages up to 75 per cent, and Germany, which is spending “enormous sums” to support companies of national importance.
Finlayson said the European Central Bank is expanding its quantitative easing program and directly buying debt issued by corporations to try to stabilize credit markets and waves of bankruptcy.
Quantitative easing is an unconventional monetary policy that sees central banks buy government securities or other securities in an effort to increase the supply of money and stimulate the economy.
“My own personal view — and we’re (the Business Council of B.C.) not ready to recommend this — but my own view is we’re going to have to look at options like that in Canada, if this crisis persists over the next few months.”
© 2020 Global News, a division of Corus Entertainment Inc.
(Bloomberg) — Nigeria’s economy, which ranked as Africa’s largest in 2022, is set to slip to fourth place this year and Egypt, which held the top position in 2023, is projected to fall to second behind South Africa after a series of currency devaluations, International Monetary Fund forecasts show.
The IMF’s World Economic Outlook estimates Nigeria’s gross domestic product at $253 billion based on current prices this year, lagging energy-rich Algeria at $267 billion, Egypt at $348 billion and South Africa at $373 billion.
Africa’s most industrialized nation will remain the continent’s largest economy until Egypt reclaims the mantle in 2027, while Nigeria is expected to remain in fourth place for years to come, the data released this week shows.
Nigeria and Egypt’s fortunes have dimmed as they deal with high inflation and a plunge in their currencies.
Bola Tinubu has announced significant policy reforms since he became Nigeria’s president at the end of May 2023, including allowing the currency to float more freely, scrapping costly energy and gasoline subsidies and taking steps to address dollar shortages. Despite a recent rebound, the naira is still 50% weaker against the greenback than what it was prior to him taking office after two currency devaluations.
Read More: Why Nigeria’s Currency Rebounded and What It Means: QuickTake
Egypt, one of the emerging world’s most-indebted countries and the IMF’s second-biggest borrower after Argentina, has also allowed its currency to float, triggering an almost 40% plunge in the pound’s value against the dollar last month to attract investment.
The IMF had been calling for a flexible currency regime for many months and the multilateral lender rewarded Egypt’s government by almost tripling the size of a loan program first approved in 2022 to $8 billion. This was a catalyst for a further influx of around $14 billion in financial support from the European Union and the World Bank.
Read More: Egypt Avoided an Economic Meltdown. What Next?: QuickTake
Unlike Nigeria’s naira and Egypt’s pound, the value of South Africa’s rand has long been set in the financial markets and it has lost about 4% of its value against the dollar this year. Its economy is expected to benefit from improvements to its energy supply and plans to tackle logistic bottlenecks.
Algeria, an OPEC+ member has been benefiting from high oil and gas prices caused first by Russia’s invasion of Ukraine and now tensions in the Middle East. It stepped in to ease some of Europe’s gas woes after Russia curtailed supplies amid its war in Ukraine.
©2024 Bloomberg L.P.
Climate inaction will depress the world’s economy more than previously estimated, according to a new study that takes into account the impacts of weather extremes and variability such as temperature spikes and intense rainfall.
A scenario in which global temperatures rise 3C on average will reduce the world’s gross domestic product by about 10%, doctoral researcher Paul Waidelich of ETH Zurich and colleagues write, with less developed countries paying the worst toll. By comparison, limiting global warming by 2050 to 1.5C — as sought by the Paris Agreement — will reduce that impact by about two-thirds.
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