PARIS – The economy of the 19-country eurozone shrank by a devastating 12.1% in the April-June period from the quarter before – the largest drop on record – as coronavirus lockdowns shut businesses and hampered consumer spending.
Economists say the worst of the downturn is past as many restrictions have eased, but that the recovery will be drawn out and vulnerable to renewed virus outbreaks.
Spain, which along with Italy was among the first to get hit hard by the spread of the virus, suffered the region’s heaviest drop at 18.5%. France, Italy and Portugal also endured steep declines, but no country escaped the impact of the pandemic.
For the currency union as a whole it was the biggest decline since the records started in 1995. The broader 27-country European Union, not all of whose members use the euro, saw output sag 11.9%.
The decline in Europe compares with a 9.5% quarter-on-quarter drop in the United States, which unlike Europe has not yet been able to get its contagion numbers firmly down yet and whose economic recovery is in doubt.
European governments are countering the recession with massive stimulus measures. EU leaders have agreed on a 750 billion-euro recovery fund backed by common borrowing to support the economy from 2021. National governments have stepped in with loans to keep businesses afloat and wage support programs that pay workers’ salaries while they are furloughed. The European Central Bank is pumping 1.35 trillion euros in newly printed money into the economy, a step which helps keep borrowing costs low.
Those support measures have helped keep unemployment from spiking. The rate rose to 7.8% in June from 7.7% in May. But many job losses will wind up being permanent despite the stimulus. Major companies such as Lufthansa, Daimler and Airbus have said they will cut thousands of jobs.
Economists say the downturn was concentrated in the months of April and May when lockdowns were most severe. Many restrictive measures have been eased, and business confidence in Germany, the biggest eurozone economy, has ticked up for three straight months.
But the outlook is for a long and uncertain climb back to pre-virus levels that could take until 2022 or longer. Company forecasts for the rest of the year assumed that there is not a renewed outbreak of COVID-19, the illness caused by the coronavirus. Cases have been rising again in several countries as people go on vacations and Britain slapped a 14-day quarantine on travellers returning from Spain.
Rosie Colthorpe, European economist at Oxford Economics, said the current third quarter was likely to see high growth rates, “but not nearly large enough to make up for the damage.”
“Beyond this initial bounce, the recovery is set to be gradual and uneven,” with pre-virus output regained only by mid-2022, she said, adding that “recent flare-ups of the virus in several European countries risk derailing this recovery.”
The Spanish economic drop was by far the sharpest since the country’s national statistics agency began collecting data. Prime Minister Pedro Sanchez was meeting later Friday with the leaders of Spain’s regions to discuss how to rebuild the economy and where to deploy billions of euros in European Union aid for recovery.
Germany, the largest of the countries that use the euro, went through a 10.1% decline, the biggest since records started in 1970.
In France, the startling plunge of 13.8% in April-June was the third consecutive quarter of contraction in France’s worsening recession. The pain has been so damaging to jobs and industries that the government is talking down the possibility of another nationwide lockdown as infections tick upward again. Finance minister Bruno Le Maire called on French people to spend more to help the economy recover.
“All the growth in GDP seen in the 2010-2019 decade has been wiped out in five months,” said Marc Ostwald, chief economist at ADM Investor Services International. In Italy’s case, economists said it wiped out about 30 years of growth.
Barry Hatton in Lisbon, Portugal and Fran D’Emilio in Rome contributed to this report.
Source:- CP24 Toronto’s Breaking News
Province ramping up efforts to restart economy – CHVN Radio
Premier Brian Pallister is sharing ways the province is hoping to grow Manitoba’s economy.
Pallister says there are approximately 40,000 people unemployed who had jobs one year ago.
“If we have a safer society we’re going to have people more confident to go to work, to shop and create more job opportunities.”
He says both public safety and a growing economy are locked in a symbiotic relationship, which is why the province is paying for advertisements, highlighting things they say are important for Manitoba.
The province’s #RestartMB campaign is focusing on both public safety and economic recovery as officials say Manitobans are ready to live with COVID-19 while creating jobs and restarting services.
“Public health and safety is a key driver of recovery, and as we continue to safely restart our economy and reopen our communities, we must learn to live with this virus,” Pallister says. “We are committed to being ready for what lies ahead – ready to live with COVID-19, ready to return to school, ready to restart our services, create jobs and grow our economy.”
He adds the province must continue to act and follow public health advice to keep COVID-19 test positivity cases low.
“The past four months since COVID-19 arrived in Manitoba have been a period of rapid response and adaptation for programs and for public engagement,” Pallister says. “We have done well and accomplished much, adapting as we go and working rapidly to respond.
The campaign hopes to continue to encourage Manitobans to contact the Manitoba Economic Support Centre to access programs and resources. Pallister says the centre has called more than 20,000 businesses to promote programs such as wage subsidies and the Manitoba Gap Protection Program.
The Premier says the centre will promote program priorities in the coming weeks.
Japan's wholesale price fall eases further as economy emerges from coronavirus jolt – TheChronicleHerald.ca
By Leika Kihara
TOKYO (Reuters) – Japan’s wholesale prices fell at a smaller annual pace in July than in the previous month as global and domestic demand rebounded, a sign the economy was gradually emerging from the damage wrought by the coronavirus pandemic.
But analysts expect any pick-up in prices to remain shallow as fears of a huge second wave of infections weigh on business and consumer sentiment.
The corporate goods price index (CGPI), which measures the price companies charge each other for their goods, fell 0.9% in July from a year earlier, Bank of Japan data showed on Thursday, less than a median market forecast for a 1.1% drop.
The decline was less steeper than a 1.6% fall in June and the smallest downturn since March, when it was off 0.5%.
Declines in gasoline, chemical and nonferrous metal prices eased in July, reflecting a pick-up in demand as China and many advanced economies lifted lockdowns, the data showed.
Agricultural goods prices also fell at a much slower pace than in June, as demand for beef and other food products recovered after Japan ended lockdown measures in late May.
“As economies re-open, downward pressure on prices from the pandemic appears to be easing,” Ichiro Muto, head of the BOJ’s price statistics division, told reporters.
“But there’s no change to the broader picture, in which the pandemic is weighing heavily on wholesale prices,” he said.
Japan’s economy slipped into recession and is expected to have suffered an annualised contraction of 27.2% in April-June, as the coronavirus crisis crushed business and consumer spending.
While economic activity has re-opened, a recent surge in infection numbers is clouding the outlook for the recovery.
(Reporting by Leika Kihara; Editing by Shri Navaratnam)
U.K. economy plunges 20% as nation enters deepest recession on record – CBC.ca
The United Kingdom’s economy shrank by a record 20.4 per cent in the second quarter when the coronavirus lockdown was tightest, the most severe contraction reported by any major economy so far, with a wave of job losses set to hit later in 2020.
The scale of the economic hit may also revive questions about U.K. Prime Minister Boris Johnson’s handling of the pandemic, with England suffering the highest death toll in Europe. More than 50,000 U.K. deaths have been linked to the disease.
“Today’s figures confirm that hard times are here,” finance minister Rishi Sunak said. “Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.”
The data confirmed that the world’s sixth-biggest economy had entered a recession, with the low point coming in April when output was more than 25 per cent below its pre-pandemic level.
Growth restarted in May and quickened in June, when the economy expanded by a monthly 8.7 per cent — a record single-month increase and slightly stronger than forecasts by economists in a Reuters poll.
However, some analysts said the bounce-back was unlikely to be sustained.
Last week, the Bank of England forecast it would take until the final quarter of 2021 for the economy to regain its previous size and warned unemployment was likely to rise sharply.
Any decision to pump more stimulus into the economy by the Bank of England and finance minister Sunak will hinge on the pace of growth in the coming months and whether the worst-hit sectors such as face-to-face retail and business travel ever fully recover.
The second-quarter GDP slump exceeded the 12.1 per cent drop in the eurozone and the 9.5 per cent fall in the United States.
Some economists said the sharper decline partly reflected the timing of U.K.’s lockdown — which fell more in the second quarter — and its dependence on domestic consumer spending.
Suren Thiru, an economist with the British Chambers of Commerce, said the recent pick-up probably only reflected the release of pent-up demand rather than a sustained revival.
“The prospect of a swift ‘V-shaped’ recovery remains remote,” he said.
The nation’s unemployment rate is expected to jump when the government ends its huge job subsidy program in October.
Sunak — who told the BBC he saw some “promising signs” in GDP data for the month of June — reiterated his opposition to extending the program.
In July, he cut sales tax for the hospitality sector and in August is subsidizing restaurants to draw in diners.
Hotels and restaurants did just one fifth of their normal business in June, when the lockdown was still largely in force.
U.K. GDP shrank by 2.2 per cent in the first quarter of the year, reflecting the lockdown that started on March 24.
It closed restaurants, shops and other public spaces after many other European countries, meaning more of the hit was felt in the second quarter.
However, the Office for National Statistics said that over the first six months of 2020, GDP fell by 22.1 per cent, slightly less than Spain’s 22.7 per cent but more than double the 10.6 per cent fall in U.S.
“The larger contraction of the U.K. economy primarily reflects how lockdown measures have been in place for a larger part of this period in the U.K.,” it said.
Non-essential shops in England did not reopen until June 15, and pubs and restaurants were shut until July 4.
Sunak, as well as some economists, said the U.K.’s greater reliance on consumer-facing services businesses — many of which were completely shut in the lockdown — also explained why the economy suffered more than its peers.
In both the U.K. and Spain, spending on hotels, restaurants, recreation and culture make up around 13 per cent of the economy, compared with around 10 per cent or less elsewhere in Europe and the United States.
Although some sectors appear to have made a rapid recovery, businesses are wary about the outlook, especially as a second wave of COVID infections could lead to the reimpositions of lockdowns.
Employers have already shed more than 700,000 jobs since March, according to tax data.
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