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'Great Urgency' to Make Over Singapore's Economy, Says President – BNN

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(Bloomberg) — With the coronavirus pandemic threatening the global openness and integration that have allowed Singapore to prosper, President Halimah Yacob said there’s “great urgency” to transform the city-state’s economy.

“Much of our economy thrives because we have made ourselves a vibrant hub for the region and an attractive place for trade, investments, talent and ideas,” Halimah said Monday, addressing the first session of parliament since July’s general election. “We cannot take our hub status for granted, or assume that its scope and role will remain the same.”

She said the country will resume air travel safely and help its companies develop links to new markets. Meanwhile, efforts to bolster resilience in critical areas such as food, health care and supply chain management can become new sources of growth, while the Southeast Asian nation will also make a major push for sustainable growth including for green financing across the region, she said.

Singapore’s economy entered a technical recession in the second quarter, shrinking a record 42.9% from the previous three months on an annualized basis. Additional support measures of S$8 billion ($5.8 billion) were announced last week to help businesses and workers, adding to some S$93 billion in earlier pledges of government aid for the economy, among the highest levels in the region.

The city-state has more than 56,000 confirmed cases of infection, with over 90% of the total coming from migrant laborers living in tightly-spaced dormitories. Partial lockdown measures imposed in April kept infections at bay among the general public, while Singapore has bolstered its testing and contact-tracing capacity as well as built dedicated community care centers that have helped prevent its health care system from becoming overloaded.

Safety Net

Halimah said the island nation needs to strengthen its social-safety net “to give Singaporeans more assurance coping with life’s uncertainties” and added the government will do “much more” in this term to see its people through the crisis and beyond. Singapore’s jobless rate hit its highest level in the second quarter since the global financial crisis more than a decade ago.

The president also said in her speech that the government will address the sense of competition for jobs from work pass holders, an issue that is “potentially divisive” and has become a major source of anxiety, especially among mid-career Singaporeans. These concerns “not only touch on matters of livelihood, but also on our sense of identity and belonging,” she said.

Halimah said that while the government will work with employers to further bolster workforce capabilities and ensure firms treat Singaporeans fairly when they recruit and retrench workers, the country must also not turn inwards and should continue to welcome those who can contribute to the nation.

The president’s comments follow elections last month where popular support for the ruling People’s Action Party fell to near a record low. With the opposition taking a greater role in parliament, Halimah said that, “besides raising questions and criticisms,” they should now propose policy alternatives to be scrutinized and debated.

“When the situation demands, both the government and opposition should set aside differences and work together to secure the safety and future of our nation,” she said.

©2020 Bloomberg L.P.

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Germany’s pandemic recovery raises age-old questions about European economy – DW (English)

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Germany’s economy was starting to struggle before the pandemic but the country’s response means it is powering ahead of the rest again. This raises questions about a two-speed European economy.

In 1947, two years after the end of World War II, the European economy was in severe trouble. “We are threatened with total economic and financial catastrophe,” said then-French Economy Minister Andre Philip in April that year.

There were many problems but the biggest was Germany. Two years after the Nazis were defeated, Germany’s recovery had in many ways already been remarkable — but economically it remained a basket case and Europe realized it needed its engine back. In part, the Marshall Plan’s purpose was to restore the German economy to the heart of Europe.

By the start of the 1950s, the European economy was in miracle territory but Germany’s miracle burned brightest. The next two decades were among the most prosperous in history.

Here in 2020, the European economy also finds itself at a pivotal and potentially perilous historical moment. The pandemic is ongoing and the economic recovery — if we can even call it that — from the dire lockdown-hit first six months of the year is patchy.

Yet it is already clear that Germany’s economy is faring much better than its closest European equivalents France, Britain, Italy and Spain. Its GDP fall for the lockdown quarters was substantially less than those countries while its recovery for the third quarter of the year is projected to be much better.

Why is Germany’s economy faring better than its European neighbors and will that be a help or a hindrance to the European economy going forward?

No lockdown, Bazooka used instantly

According to Lars Feld, chairman of the German Council of Economic Experts, Germany’s reasonably positive economic situation is driven by the fact that its lockdown was never as strict as elsewhere in Europe.

“Despite lockdown measures, an interruption of value chains or lower private consumption due to considerable uncertainty, the German economy continued a considerable part of its activity. For example, the construction industry had very low restrictions,” he told DW.

Another major help is the massive financial support the German government has provided to businesses and citizens, something it was able to do after years of frugality in terms of its budget.

The “bazooka,” as German Finance Minister Olaf Scholz called it back in March, amounted to close to €1 trillion ($1.16 trillion) in aid when everything from state-backed loans to the country’s much-admired Kurzarbeit scheme is included.

“The German economy has had more reserves than other European economies, be it with respect to fiscal space due to successful consolidation of public finances in the past or with respect to private firms which have a sound equity base in general,” says Feld.

German Economy Minister Peter Altmaier wearing a face mask presents the government’s updated 2020 economic outlook

V for Victory

That helps explain why the German Economy Minister Peter Altmaier was so bullish back on September 1 when, wielding graphs showing Germany’s “v-shaped recovery” (a sharp drop followed by an equally sharp rise), he said: “The recession in the first half of the year was not as bad as we feared, and the recovery since the high point of the shutdown is happening faster and more dynamically than we had dared hope.”

But it’s not all plain sailing. Before the pandemic hit, Germany’s economy was slowing down anyway. Longstanding vulnerabilities in terms of exports and the car sector were being exposed by a slowdown in global trade and by the technological changes sweeping the auto industry.

One key sector which feels such headwinds keenly is that of the country’s machine builders, a vital cog in Germany’s export machine. For them, the pandemic has had a severe impact. Even though factories weren’t really forced to close in March and April, without foreign demand, orders fall.

That’s why Germany’s Mechanical Engineering Industry Association (VDMA) forecasts a drop in production of 17% for its thousands of members in 2020, with a tiny rise of 2% foreseen for next year.

“There are not so many orders in the books now,” the VDMA’s director of foreign trade Ulrich Ackermann, told DW.

A close-up picture showing Ulrich Ackermann

Ulrich Ackermann from the German Mechanical Engineering Association

Yet the factors mentioned earlier, namely the fact that production was never shut down and that workers have been retained through government intervention, means that Germany’s machine builders are in a stronger position than those in other countries.

“In general we are maybe in better shape than other countries, they had real lockdowns and that meant they could not produce any longer,” says Ackermann. “Our companies could always produce when they wanted.”

Healthy man of Europe

If and when demand picks up in Germany’s overseas markets, it appears likely that German companies will be readier than most to step in and meet that demand.

That brings us back to the central question of Europe’s two-speed economic recovery. If the forecasts bear out and Germany’s economic contraction this year is less than its French and southern counterparts, what will that mean?

Arguments between German and southern interests have dominated EU discussions on fiscal policy for the last decade. The recently agreed €750 billion Post Pandemic Recovery Fund was historic in that Germany agreed, for the first time, for a form of shared European debt.

A picture of German Chancellor Angela Merkel and the head of the European Commission, Ursula von der Leyen, during a joint news conference via video conference to mark Germany's taking over the EU's rotating presidency from July 1.

The EU’s pandemic recovery fund saw Germany agree to a historic policy shift in terms of European debt

With its economy growing faster than Spain and Italy’s, there remains the possibility that tensions over funding and reforms associated with struggling countries receiving such funding, could bring familiar debates about debt and austerity back to Brussels again.

But there is another, equally familiar view about the benefits of Germany’s engine purring a little better than the rest.

“A strong German economy could serve as an economic engine for other EU member countries, in particular regarding the strongly developed value chains in Europe,” says Feld.

“The quick takeoff of the German economy triggers demand in other EU countries. It should also be kept in mind, that the high credit-worthiness of Germany is a strong backup for the EU budget and the ECB balance sheet, both allowing other countries in Europe to restart their economies without further turbulences, e.g., on financial markets.”

Much like it was after World War II, it appears that it is much better for Europe to have a German economy that is too strong, than one that is too weak.

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Trump's boasts about pre-coronavirus economy aren't relevant, economists say – NBC News

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As President Donald Trump and Democratic presidential nominee Joe Biden trade boasts and barbs over the former and current state of the economy, analysts have zeroed in on Trump’s claims of record-high job creation — which comes saddled with significant caveats.

“The job market is still a shadow of what it was prior to the pandemic,” said Mark Zandi, chief economist at Moody’s Analytics.

The White House bragged about the jobless rate falling from a peak of 14.7 percent in April to 8.4 percent in August, but that decrease obscures the sobering deficit that still remains of more than 11 million jobs, compared to the pre-pandemic labor market.

The picture is even grimmer for some worker subgroups: By February, Black unemployment had already begun to creep up from the 5.5 percent low it hit in the fall of 2019. Black unemployment skyrocketed to 16.7 percent in April and then rose again in May, a month in which overall unemployment dropped. Black unemployment was 13 percent in August and Hispanic unemployment was 10.5 percent.

The reality when it comes to the recovery in economic activity also falls short of White House claims. Third quarter GDP is scheduled to be released Wednesday, and the Atlanta Fed’s GDPNow tracking tool indicates an unprecedented jump of 32 percent.

Bragging about the pre-coronavirus economy does little to reassure a worried electorate, said Mark Hamrick, senior economic analyst at Bankrate.com. “The administration will tout the strength of the recovery in recent months, but that’s also within the context of steep declines in March and April, and the same is true of the annualized contraction in GDP. When people talk about the fact that there’s likely a record rebound, the two cannot be viewed in the absence of the other,” he said.

“What’s most important is where the economy stands and where it’s headed… GDP will likely be contracting for the full year,” Hamrick said.

“The real risk, and the real issue, is Q4,” Zandi said. “Given the lack of momentum… you can cherry-pick numbers, but the reality is even after that strong Q3 number, we’re only going to get about half the GDP back.”

Biden has said the middle class got a raw deal even before the pandemic, noting Trump’s policies exacerbated economic inequality. The Federal Reserve found that, in 2018, nearly four in 10 Americans would be unable to shoulder a $400 emergency expense without having to borrow money, an increase of a mere two percentage points from 2017, the first year of Trump’s presidency and the year the Tax Cuts and Jobs Act was implemented.

Likewise, the stock market increases the president touts have not been shared equally: According to the Pew Research Center, nearly half of Americans have no exposure to the stock market at all, and a mere 14 percent of households have any direct investments in individual stocks.

“We know there were disproportionate gains in income among the wealthiest Americans. That was because of the strength of the stock market and the way the tax cut was designed,” Hamrick said. “Those are inconvenient facts for the president.”

For a president elected on a platform of economic populism, the vast majority of Americans have gained remarkably little. In the first quarter of 2020, just before Covid-19 struck, the richest 10 percent of households held roughly 69 percent of the nation’s collective wealth, with just over 31 percent held by the richest 1 percent, while the poorest half held a mere 1.4 percent — figures nearly unchanged from the first quarter of Trump’s presidency.

Zandi said the tax cuts introduced in 2017 were a boon to rich Americans and corporations, and pointed out that financing those tax cuts also left the nation on shakier economic footing for the long term. The Urban-Brookings Tax Policy Center said the tax cuts could add from $1 trillion to $2 trillion to the federal debt — and most American households will have little to show for it, Zandi said.

“The prime beneficiaries were high-income, high-net worth households. They were the winners,” he said.

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Hiring marginalized workers could jumpstart economy, boost incomes by $5K: Deloitte – Assiniboia Times

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TORONTO — A new report by Deloitte Canada says that Canada’s economy was headed for slowing growth in the next decade, even if COVID-19 had never hit.

The consulting and audit firm says that boosting the number of hours worked in the economy would reverse Canada’s economic slowdown and lift the pace of yearly economic growth by 50 per cent, adding $4,900 to Canadians’ average annual income by 2030 without raising tax rates.

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To do that, Deloitte says Canada needs to be more inclusive of groups that are underemployed in the economy, otherwise the number of workers will shrink over the next decade.

The report, which looks at more than 1,000 variables, says Canada has a low fertility rate, and the share of Canadians over age 65 is expected to nearly double.

That means retirees must be replaced in the workforce by underrepresented groups such as women, immigrants, people with disabilities and Indigenous Canadians.

Deloitte suggests that for the economy to grow faster, companies need better disability accommodations, workplace inclusion policies, and childcare benefit packages — while regulators need to expand apprenticeship options and degree equivalencies for immigrants.

This report by The Canadian Press was first published Sept. 29, 2020.

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