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Fiscal ‘snapshot’ to reveal economic impact of COVID-19 on Canadian economy

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OTTAWA —
Canadians will get a clearer picture of the current state of the economy and national deficit when Finance Minister Bill Morneau unveils what’s been billed as an economic and fiscal “snapshot” on Wednesday afternoon. Morneau will present the snapshot inside the House of Commons—which is gathered for a special committee of the whole session— at around 1:40 p.m. ET.

Speaking to reporters in advance of the snapshot being made public, Prime Minister Justin Trudeau said it’s clear that certain sectors will bounce back and some people will be able to find work, but others won’t, and so ongoing government support will be necessary through the economic rebound phase.

“When the pandemic first hit, a lot of people lost their jobs overnight. They didn’t know how they were going to feed their families, or pay their bills. Faced with this unprecedented challenge our government had two options: We could sit back and let Canadians fend for themselves… or we could swiftly and substantially choose to support Canadians. We chose to support Canadians,” Trudeau said.

The report—which is not a federal budget or a fiscal update—is set to show the current state of the federal deficit and the impact of the nearly more than $193 billion in spending on direct COVID-19 aid to Canadians as well as health and safety measures. Among the biggest ticket items to date: the $2,000 a month Canada Emergency Response Benefit; the 75 per cent wage subsidy; and the Canada Emergency Business Account, which offers businesses loans of up to $40,000.

The snapshot is also going to look at how Canada’s economic response compares to that of other countries and forecast what can be expected economically in the months ahead.

The overall economic numbers will be the first offered by the federal government since a December 2019 update—the only of the Liberal minority since the last election—which projected the deficit would rise to $28.1 billion in 2020-21.

The 2020 federal budget date was scheduled to be March 30 but that was cancelled due to the surging COVID-19 pandemic at the time.

In the December update, Canada’s debt-to-GDP ratio was at 30.9 per cent and projected to remain on track to reduce incrementally over the next few years.

Over the last few months federal job numbers have already showed millions are out of work, and a growing list of businesses are set to shutter their doors permanently.

In an effort to buoy businesses big and small, in addition to the direct spending offered, the federal government has offered billions in liquidity and government-guaranteed loans which Morneau has said he hopes will bridge key job creators in this country to better times.

Today’s snapshot comes after opposition parties and economists called for a more robust fiscal update. Already the Conservatives and New Democrats have spelled out what they expect to see from the economic report card. While the Conservatives are calling for a clear path out of the red—which is now likely to be a years-long endeavour—the NDP want to see a plan for continuing to support those disproportionately impacted by the economic downturn.

Source:- CTV News

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Virus Hit to Sweden's Economy Seen Among Least Bad in Europe – BNN

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(Bloomberg) —

Data this week could confirm how Sweden’s contentious decision to avoid a full lockdown at the start of the coronavirus pandemic has spared its economy from the worst of the fallout.

On Wednesday, Sweden will publish a keenly anticipated flash indicator for second-quarter GDP, and economists surveyed by Bloomberg are expecting a 7% contraction, according to median estimates.

While that would mark an unprecedented drop for the Nordic region’s biggest economy, it’s considerably less than the recent hits suffered in the U.S. and the 19-member euro area.

“The Swedish economy has not been unscathed, despite its light-touch lockdown, but we think that the quarterly drop in GDP in the second quarter is likely to have been about one-third of that seen in the euro-zone,“ said David Oxley, an economist at Capital Economics, in a note to clients.

But the strategy has also resulted in Sweden having one of the highest death rates in the world, at 56.4 per 100,000, and it’s unclear whether the economy will fare much better than in neighboring Denmark and Norway, which initially imposed strict lockdowns and have seen substantially lower fatalities.

“We do not know how the virus strategy will affect the economies in the long run,” said Nordea economist Torbjorn Isaksson in emailed comments. “Our Nordic neighbors locked down but may be able to open up and normalize faster.”

What economists are saying…

  • Nordea expects a “painful” drop in GDP by 8.5% q/q and 8% y/y in 2Q, in line with the Riksbank’s view
  • Swedbank foresees a 2Q GDP contraction of 7.5% q/q and 7.0% y/y, making it “the biggest GDP drop in memory”
  • SEB expects a GDP drop of 8.0% q/q and 7.7% y/y, saying that “GDP is most likely start to recover in 3Q, though strength of the upturn remains uncertain.”
  • Danske Bank economists see Swedish GDP falling 7.1% y/y and -6.3% q/q
  • Capital Economics expects GDP to drop 4% q/q and 3.7 y/y, which would be “about half as big as that of the Riksbank and other forecasters.” They also add that the economy has “still faced a deep crunch by normal standards.”

©2020 Bloomberg L.P.

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Philippine economy fears as coronavirus curbs reintroduced – The Journal Pioneer

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By Neil Jerome Morales and Karen Lema

MANILA (Reuters) – The Philippines stock market tumbled on Monday after the government reimposed coronavirus lockdown measures in and around Manila in response to fresh outbreaks, dashing hopes of a swifter economic recovery.

The restrictions, due to take effect from Tuesday, are being reinstated after a group of doctors and nurses warned that the healthcare system could collapse as a result of surging COVID-19 cases.

“It’s a bitter but necessary pill given the plight of our medical frontliners,” said Francis Lim, president of the Management Association of the Philippines. “We hope the government will deep dive into our COVID-19 strategy and find more effective ways to execute it.”

The Philippine economy had been one of Asia’s fastest growing before the pandemic but is now on the brink of recession. The main stock index .PSI> fell as much as 3.9% on Monday, its lowest in more than two months.

Quarterly growth data is due on Thursday and economists expect a deeper contraction compared with the 0.2% contraction decline in the first quarter as the pandemic-induced lockdown shuttered businesses and sapped domestic consumption, a main driver of growth.

“We reiterate that the Philippines is indeed headed into a severe crash landing with the probability of the economy returning to its former glory any time soon now declining by the day,” said Nicholas Mapa, economist at ING bank.

The country recorded a single-day record of 5,032 new infections on Sunday, taking total confirmed cases of COVID-19 to around 103,000.

Case numbers have grown exponentially since authorities relaxed a previous lockdown in June and the Philippines is now close to overtaking Indonesia as the country with the highest number of infections in Southeast Asia.

The government announced late on Sunday it was placing metro Manila and nearby provinces such as Laguna, Cavite, Rizal and Bulacan under so-called “Modified Enhanced Community Quarantine” for two weeks from Tuesday.

Public transport will be barred, working from home will be instituted where possible, and only one person per household allowed out for essential goods.

(Reporting by Neil Jerome Morales and Karen Lema; editing by Jane Wardell)

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Philippine economy fears as coronavirus curbs reintroduced – TheChronicleHerald.ca

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By Neil Jerome Morales and Karen Lema

MANILA (Reuters) – The Philippines stock market tumbled on Monday after the government reimposed coronavirus lockdown measures in and around Manila in response to fresh outbreaks, dashing hopes of a swifter economic recovery.

The restrictions, due to take effect from Tuesday, are being reinstated after a group of doctors and nurses warned that the healthcare system could collapse as a result of surging COVID-19 cases.

“It’s a bitter but necessary pill given the plight of our medical frontliners,” said Francis Lim, president of the Management Association of the Philippines. “We hope the government will deep dive into our COVID-19 strategy and find more effective ways to execute it.”

The Philippine economy had been one of Asia’s fastest growing before the pandemic but is now on the brink of recession. The main stock index .PSI> fell as much as 3.9% on Monday, its lowest in more than two months.

Quarterly growth data is due on Thursday and economists expect a deeper contraction compared with the 0.2% contraction decline in the first quarter as the pandemic-induced lockdown shuttered businesses and sapped domestic consumption, a main driver of growth.

“We reiterate that the Philippines is indeed headed into a severe crash landing with the probability of the economy returning to its former glory any time soon now declining by the day,” said Nicholas Mapa, economist at ING bank.

The country recorded a single-day record of 5,032 new infections on Sunday, taking total confirmed cases of COVID-19 to around 103,000.

Case numbers have grown exponentially since authorities relaxed a previous lockdown in June and the Philippines is now close to overtaking Indonesia as the country with the highest number of infections in Southeast Asia.

The government announced late on Sunday it was placing metro Manila and nearby provinces such as Laguna, Cavite, Rizal and Bulacan under so-called “Modified Enhanced Community Quarantine” for two weeks from Tuesday.

Public transport will be barred, working from home will be instituted where possible, and only one person per household allowed out for essential goods.

(Reporting by Neil Jerome Morales and Karen Lema; editing by Jane Wardell)

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