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Global economy will suffer for 'years to come' says OECD – BBC News

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The world will take years to recover from the coronavirus pandemic, the Organisation for Economic Co-operation and Development has warned.

Angel Gurría, OECD secretary general, said the economic shock was already bigger than the financial crisis.

He told the BBC it was “wishful thinking” to believe that countries would bounce back quickly.

The OECD has called on governments to rip up spending rules to ensure speedy testing and treatment of the virus.

Mr Gurría said a recent warning that a serious outbreak could halve global growth to 1.5% already looked too optimistic.

While the number of job losses and company failures remains uncertain, Mr Gurría said countries would be dealing with the economic fallout “for years to come”.

He said many of the world’s biggest economies would fall into recession in the coming months – defined as two consecutive quarters of economic decline.

“Even if you don’t get a worldwide recession, you’re going to get either no growth or negative growth in many of the economies of the world, including some of the larger ones, and therefore you’re going to get not only low growth this year, but also it’s going to take longer to pick up in the in the future,” he added.

Big shock

Mr Gurría said the economic uncertainty created by the virus outbreak meant economies were already suffering a bigger shock than during the September 11 terror attacks or the 2008 financial crisis.

He said: “And the reason is that we don’t know how much it’s going to take to fix the unemployment because we don’t know how many people are going to end up unemployed. We also don’t know how much it’s going to take to fix the hundreds of thousands of small and medium enterprises who are already suffering.”

Governments around the world have taken unprecedented steps to support workers and businesses during the outbreak.

Policymakers in the UK have pledged to pay the wages of employees unable to work due to the coronavirus pandemic.

Mr Gurría called on governments to rip up borrowing rules and “throw everything we got at it” to deal with the crisis.

However, he warned that bigger deficits and larger debt piles would also weigh on heavily indebted countries for years to come.

No quick recovery

Mr Gurría said that just weeks ago, policymakers from the G20 club of rich nations believed the recovery would take a ‘V’ shape – with a short, sharp drop in economic activity followed swiftly by a rebound in growth.

“It was already then mostly wishful thinking,” he said.

“I do not agree with the idea of a ‘V’ shaped phenomenon … Right now we know it’s not going to be a ‘V’. It’s going to be more in the best of cases like a ‘U’ with a long trench in the bottom before it gets to the recovery period. We can avoid it looking like an ‘L’, if we take the right decisions today.”

The OECD is calling for a four-pronged plan to deal with the outbreak, including free virus testing, better equipment for doctors and nurses, cash transfers to workers including the self-employed and tax payment holidays for businesses.

Mr Gurría compared the level of ambition to the Marshall Plan – which helped to pay for the reconstruction of Europe after the Second World War.

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Economy

Trump is prioritising the economy over the vulnerable – Al Jazeera English

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It is one thing to provide hope during a crisis – it is quite another to address people’s fears with empty promises. Unfortunately, US President Trump is engaging too much in the latter and not enough in the former as the coronavirus threatens to upend the United States healthcare system.

The latest development in the president’s critically flawed response to the pandemic is the false optimism that he has created by stating that the country “could open for business” by Easter.

What the US needs, right now, is leadership. Politicians who are true leaders in times of crisis provide well-conceived plans that prioritise the most vulnerable, while also issuing clear and calming statements when discussing matters with the public.

Is this what we receive from the White House? No, far from it – when we need clarity, we get confusion, and where facts and research should provide guidance, we are told that the economy takes precedence over everything else, people included.

So, what exactly are the facts?

On this front, many of us are in the dark. To know the actual extent of the coronavirus pandemic requires testing folks who may have it. That way, we would know who is sick and where they are.

Yet, the US lags significantly behind most other countries that have been administering tests, such as South Korea.

It is unclear what the administration’s efforts have been in this regard, for instance, whether the government turned down kits from the World Health Organization (WHO), or simply was slow to get the FDA to approve an alternative.

The result, however, is that the reported number of coronavirus cases is most likely an underestimate.

Yes, we can point fingers all we want, but we cannot change the past. We can plan with whatever information we do have.

We know from existing research that approximately 15 percent of the people who are infected will require hospitalisation. For every 1,000 people who have the virus, this means that about 150 people will need to be admitted to hospital.

We also know that people above the age of 65, individuals with underlying health conditions, such as heart disease or respiratory illnesses, as well as folks with weakened immune systems, are likely to fall seriously ill if they contract coronavirus.

It is also clear that the vast majority of those who catch the virus survive – studies place the death rate at 2 percent, perhaps even lower.

Research also shows that quarantine works. That much, at least according to the United Nations, has been made clear by analysing how China has successfully brought the spread of the virus under control.

Two clear action plans result from this information – first, the government needs to act swiftly and dedicate emergency resources for healthcare. Second, politicians should clearly tell people to stay at home.

Yet, where such steps need to be taken, Trump either drags his feet or misleads.

Consider the government’s slow action with respect to the Defense Production Act of 1950 which gives the president powers to compel businesses to follow orders deemed necessary for national defence. The president signed two decrees authorising the use of this Act which would make private companies prioritise carrying out government orders. However, he took days to issue any specific orders under the Act – only doing so on Friday to compel General Motors to produce ventilators. 

And why did it take so long? According to some reporting, Trump was worried about complaints from big business on how using the act would interfere with the market and private property.

There are others who would also prioritise the economy over everything else – the Lieutenant Governor of Texas, Daniel Patrick. In expressing fear over “economic collapse” and that we are “losing the whole country”, this week, he followed Trump in stating that perhaps in a few weeks people should get back to work.

Yet, it seems that the Lieutenant Governor may not be the best person to consult at times like these. He is a small businessperson – not a doctor or healthcare professional – so let’s listen to them before we open businesses and go back to living as usual.

More importantly, we are receiving mixed messages from across the country as a whole. Individual states, such as California, New York and, more recently, Minnesota, have ordered non-essential workers to stay at home. There is no expiry date set with these orders.

It seems that Trump and Patrick think that they should expire at a certain time, while state governments have a different opinion.

More importantly, what will people do? If the president and some of his supporters think it is ok to resume our typical daily routines in three weeks’ time, why not make it two? Hell, why stay home at all?

With cases rising by the thousands daily across the country, and as something like 30 percent of infected people show no symptoms according to the research, then this seed of doubt concerning the need to stay home could grow into a monster.

In effect, it could render null all attempts to contain the virus, granting the contagion fertile ground to continue to spread globally.

So, will the US be “open for business” by Easter? Is this possible? I cannot say one way or another. But really, opening or closing the US is not the issue. What is necessary is for our leaders to act cautiously, with the information that is available, to create well-thought-out plans that keep the most vulnerable among us safe.

For the sake our friends, families and also for all the other people we do not know who have heart disease, AIDS, cancer or who are our elders, the president needs to act as if their safety is the reason for his actions.

This is what a leader would do – the question is, will Trump?

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.

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Global economy has entered a recession amid coronavirus pandemic, says IMF head – Global News

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The head of the International Monetary Fund said Friday it is clear that the global economy has now entered a recession that could be as bad or worse than the 2009 downturn.

IMF Managing Director Kristalina Georgieva said the 189-nation lending agency was forecasting a recovery in 2021, saying it could be a “sizable rebound.” But she said this would only occur if nations succeed in containing the coronavirus and limiting the economic damage.

“A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but erode the fabric of our societies,” she told reporters at a news conference following a telephone conference with finance officials from the 24 nations that make up the IMF’s policy-setting panel.


READ MORE:
North American stocks tank after 3-day rebound as coronavirus fears grow

She said the IMF was updating its economic outlook now and it would be released in a few weeks, allowing the agency more time to assess the economic impacts of the virus.

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Asked if the United States was now in recession, she noted that Federal Reserve Chairman Jerome Powell had said Thursday that America “ may well be in a recession.” She said she believed not only the United States but many other advanced economies and a number of developing countries had already entered downturns.






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Georgieva said lower income countries were being hit hard by the spreading coronavirus, with 81 nations now seeking support from an IMF emergency financing program being used to provide aid.

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

She announced that Kyrgyzstan would receive the first IMF support package of $120.9 million to deal with adverse effects of the virus.

She repeated a pledge that the IMF stood ready to make all $1 trillion of its lending resources available to countries being hit by the virus.


READ MORE:
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“We have seen an extraordinary spike in requests for IMF emergency financing,” Georgieva said. “We are being asked by our members to do more, do it better and do it faster than ever before.”

She said to meet the increased demand she would seek to double the emergency financing program and simplify the procedures countries will have to go through to obtain IMF support. She said the IMF was also looking for ways to expand its current lending facilities to provide more help to countries.

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Georgieva said the IMF also wanted to find ways to provide more debt relief to the poorest countries.






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Coronavirus outbreak: Morneau outlines measures feds taking to mitigate economic impact of COVID-19

She said she planned to discuss these issues with the IMF’s executive board with the goal of putting together a package of reforms that could be presented at the IMF’s spring meetings in mid-April. Because of the virus, the spring meetings of both the IMF and its sister lending organization, the World Bank, will be virtual this year instead of meetings in Washington.

“IMF efforts that start to offer debt relief to the poorest countries and that increase financing to help prevent a global financial crisis are really positive and needed steps,” said Eric LeCompte, the executive director Jubilee USA, a group that campaigns for increased assistance for low income countries.

© 2020 The Canadian Press

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IMF says global economy already in recession – The Globe and Mail

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IMF chief Kristalina Georgieva said emerging market countries need at least $2.5 trillion in financial aid.

BRENDAN SMIALOWSKI/AFP/Getty Images

The head of the International Monetary Fund said Friday it is clear that the global economy has now entered a recession that could be as bad or worse than the 2009 downturn.

IMF Managing Director Kristalina Georgieva said the 189-nation lending agency was forecasting a recovery in 2021, saying it could be a “sizable rebound.” But she said this would only occur if nations succeed in containing the coronavirus and limiting the economic damage.

“A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but erode the fabric of our societies,” she told reporters at a news conference following a telephone conference with finance officials from the 24 nations that make up the IMF’s policy-setting panel.

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International Monetary Fund Managing Director Kristalina Georgieva said ‘it is clear’ that world has ‘entered a recession as bad or worse’ than the global financial crisis in 2009. Reuters

She said the IMF was updating its economic outlook now and it would be released in a few weeks, allowing the agency more time to assess the economic impacts of the virus.

Asked if the United States was now in recession, she noted that Federal Reserve Chairman Jerome Powell had said Thursday that America “ may well be in a recession.” She said she believed not only the United States but many other advanced economies and a number of developing countries had already entered downturns.

Georgieva said lower income countries were being hit hard by the spreading coronavirus, with 81 nations now seeking support from an IMF emergency financing program being used to provide aid.

She announced that Kyrgyzstan would receive the first IMF support package of $120.9 million to deal with adverse effects of the virus.

She repeated a pledge that the IMF stood ready to make all $1 trillion of its lending resources available to countries being hit by the virus.

“We have seen an extraordinary spike in requests for IMF emergency financing,” Georgieva said. “We are being asked by our members to do more, do it better and do it faster than ever before.”

She said to meet the increased demand she would seek to double the emergency financing program and simplify the procedures countries will have to go through to obtain IMF support. She said the IMF was also looking for ways to expand its current lending facilities to provide more help to countries.

Story continues below advertisement

Georgieva said the IMF also wanted to find ways to provide more debt relief to the poorest countries.

She said she planned to discuss these issues with the IMF’s executive board with the goal of putting together a package of reforms that could be presented at the IMF’s spring meetings in mid-April. Because of the virus, the spring meetings of both the IMF and its sister lending organization, the World Bank, will be virtual this year instead of meetings in Washington.

“IMF efforts that start to offer debt relief to the poorest countries and that increase financing to help prevent a global financial crisis are really positive and needed steps,” said Eric LeCompte, the executive director Jubilee USA, a group that campaigns for increased assistance for low income countries.

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