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How is Delta affecting the economy? The jury is out – CNN

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A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.

London (CNN Business)The Delta variant of Covid-19, which has caused a sharp rise in coronavirus cases in countries around the world, is a major risk to the recovery from the pandemic. And in some places, clear signs of damage are cropping up.

What’s happening: IHS Markit released preliminary readings from its closely-watched surveys of purchasing managers on Monday. The data showed that in many advanced economies, the more contagious Delta strain is having a real impact.
In Australia, business activity in the private sector fell for the second straight month, with the pace of contraction increasing since July.
“Survey respondents signaled that the increase in Covid-19 cases, underpinned by the Delta variant, and the corresponding lockdowns across various Australian states in August continued to dampen demand and output,” IHS Markit said.
Japan is also experiencing worsening business conditions, with companies reporting dwindling optimism following a recent surge in Covid-19 cases.
Ongoing supply chain issues are part of the problem, stoking fears ahead of the important holiday shopping period.
Coronavirus is a factor here, too; the latest obstacle is in China, where a terminal at the Ningbo-Zhoushan Port has been shut since Aug. 11 after a dock worker tested positive for Covid-19. Major international shipping lines have adjusted schedules to avoid the port and are warning customers of delays.
“The pressures on global supply chains have not eased, and we do not expect them to any time soon,” Bob Biesterfeld, CEO of logistics firm C.H. Robinson, told my CNN Business colleague Hanna Ziady.
In the United Kingdom, private sector output is still growing, but the recovery appears to be sharply losing momentum.
“Despite Covid-19 containment measures easing to the lowest since the pandemic began, rising virus case numbers are deterring many forms of spending, notably by consumers,” said Chris Williamson, chief business economist at IHS Markit.
In addition to supply chain concerns, businesses also pointed to staff shortages as a major headwind.
Holding up better: Supply chain woes are also affecting Europe, which logged a slight decline in its Purchasing Managers’ Index.
But business output among the 19 countries that use the euro “continued to grow at one of the strongest rates seen over the past two decades in August,” according to IHS Markit.
“Although the spread of the Delta variant caused widespread problems across the region, curbing demand and causing further supply issues, firms benefited from virus containment measures easing to the lowest since the pandemic began,” Williamson said.
On the radar: Which camp will the United States fall in? We’ll find out when IHS Markit’s data for the country posts later Monday.
The Back-to-Normal Index from CNN Business and Moody’s Analytics indicates that the US economy is operating at 92% of its pre-pandemic level. But expectations for third quarter economic growth are softening thanks to Delta’s effect on spending.

Bitcoin passes $50,000 for the first time since May

Bitcoin has surged above the $50,000 mark as the digital currency continues to climb out of a months-long slump, my CNN Business colleague Diksha Madhok reports.
It’s the first time bitcoin has reached that milestone since May 15. Bitcoin’s peers also advanced. Ethereum was up more than 3%, while dogecoin rose nearly 2%.
Bitcoin had been inching near $50,000 all weekend before finally crossing the threshold Sunday evening, according to data from CoinDesk.
Driving the gains: The cryptocurrency is getting a lift after PayPal announced that it will allow people to buy, hold and sell four types of cryptocurrencies — bitcoin, ethereum, litecoin and bitcoin cash — in the United Kingdom.
This announcement marks the first international expansion of the company’s cryptocurrency offering outside of the United States, where it launched the service in October last year.
Remember: It’s been a turbulent few months for cryptocurrencies. Bitcoin, which hit an all-time high of nearly $65,000 in April, plummeted as low as $28,800 in June after China escalated its crackdown on digital currencies.
Bitcoin, which had been hovering between $30,000 and $40,000 for many weeks, began to break out of its slump earlier this summer. One catalyst has been Amazon, rumored to be considered an entrance into the crypto market after posting a job opening for a digital currency and blockchain product lead.

What forced changes at OnlyFans?

Last week’s decision by the creator platform OnlyFans to soon stop hosting a wide swath of sexually explicit content has sent shockwaves through the internet.
OnlyFans, a website with 130 million users and more than 2 million content creators, has become synonymous with pornography. For many, performing on the app is a lifeline: Some who lost their jobs during the pandemic turned to sharing explicit videos of themselves on OnlyFans to help pay the bills. Many of these sex workers are now expressing outrage at what they view as OnlyFans’ betrayal of a community that enabled the platform’s massive success.
One explanation: Venture capital firms are often wary of investing in platforms that host adult content. According to internal documents obtained by Axios, OnlyFans’ popularity and revenue both exploded during the pandemic, yet it has struggled to secure outside investment.
The pivot at OnlyFans is also tied to a much wider crackdown by payment processors who handle credit card swipes behind the scenes, my CNN Business colleague Brian Fung reports.
OnlyFans said its decision was driven with a view toward building a sustainable platform for the long term. “These changes are to comply with the requests of our banking partners and payout providers,” the company said.
Seth Eisen, a spokesman for Mastercard (MA), told CNN Business it was not involved in OnlyFans’ decision to restrict the content it would allow on the platform. “It’s a decision they came to themselves,” Eisen said.

Up next

JD.com (JD) and MSG Entertainment (MSG) report earnings before US markets open.
Also today →
  • The IHS Markit Purchasing Managers’ Index for the United States posts at 9:45 a.m. ET.
  • Existing US home sales for July arrive at 10 a.m. ET.
Coming tomorrow: Best Buy (BBY), Nordstrom (JWN) and Urban Outfitters (URBN) earnings.

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Canadian dollar falls as Canadian data shows economic momentum easing

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Canadian dollar

The Canadian dollar weakened against its U.S. counterpart on Thursday as the greenback notched broad-based gains and investors weighed domestic data showing some weakening in activity.

The loonie was trading 0.3% lower at 1.2675 to the greenback, or 78.90 U.S. cents, after moving in a range of 1.2616 to 1.2698.

Canadian wholesale trade fell by 2.1% in July from June, the biggest decline since April last year, and housing starts were down 3.9% in August compared with the previous month.

“Momentum (in housing starts) has been moderating after unprecedented strength earlier in the year,” Shelly Kaushik, an economist at BMO Capital Markets, said in a note.

Foreign investors are growing more worried that Canada‘s federal election on Monday could result in a deadlock that hampers Ottawa’s response to the COVID-19 pandemic and further slows the economic recovery from the crisis.

The U.S. dollar climbed to a near 3-week high against a basket of currencies after data showing U.S. retail sales unexpectedly increased in August.

The data could ease some concerns about a sharp slowdown in the U.S. economy, ahead of a Federal Reserve policy meeting next week.

U.S. crude prices were unchanged at $72.61 a barrel as the threat to U.S. Gulf production from Hurricane Nicholas receded. Oil is one of Canada‘s major exports.

Canadian government bond yields were higher across the curve. The 10-year touched its highest since Aug. 12 at 1.272% before pulling back to 1.231%, up 1.2 basis points on the day.

 

(Reporting by Fergal Smith; Editing by Bernadette Baum)

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New Zealand's Economy Was Humming Prior to Delta Lockdown – BNN

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(Bloomberg) — New Zealand’s economy was expanding at a rapid pace before a nationwide lockdown interrupted its momentum, latest data show. 

Gross domestic product climbed 2.8% in the second quarter after jumping 1.4% in the first, Statistics New Zealand said Thursday in Wellington. Economists forecast a 1.1% gain. From a year earlier, when the country was in its initial pandemic lockdown, the economy expanded 17.4% against expectations of 16.1% growth.

Today’s report will do nothing to dissuade the central bank from raising interest rates at its next meeting on Oct. 6 as it frets about mounting inflation pressures. While a contraction is expected in the current quarter after an outbreak of the delta strain of coronavirus prompted a three-week national lockdown, last year’s experience shows that demand quickly bounces back when restrictions are lifted. 

The New Zealand dollar rose on the data. It bought 71.29 U.S. cents at 10:47 a.m. in Wellington, up from 71.2 cents beforehand.

©2021 Bloomberg L.P.

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Global economy projected to show fastest growth in 50 years – UN News

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In its new report released on Wednesday, the agency said that the rebound was highly uneven along regional, sectoral and income lines, however.  

During 2022, UNCTAD expects global growth to slow to 3.6 per cent, leaving world income levels trailing some 3.7 per cent below the pre-pandemic trend line. 

The report also warns that growth deceleration could be bigger than expected, if policymakers lose their nerve or answer what it regards as misguided calls for a return to deregulation and austerity. 


Two women check industrial looms in a rug factory in Mongolia. International rules and practices have locked developing countries into pre-pandemic responses

Differences in growth 

The report says that, while the response saw an end to public spending constraints in many developed countries, international rules and practices have locked developing countries into pre-pandemic responses, and a semi-permanent state of economic stress. 

Many countries in the South have been hit much harder than during the global financial crisis. With a heavy debt burden, they also have less room for maneuvering their way out through public spending. 

Lack of monetary autonomy and access to vaccines are also holding many developing economies back, widening the gulf with advanced economies and threatening to usher in another “lost decade”. 

“These widening gaps, both domestic and international, are a reminder that underlying conditions, if left in place, will make resilience and growth luxuries enjoyed by fewer and fewer privileged people,” said Rebeca Grynspan, the secretary-general of UNCTAD. 

“Without bolder policies that reflect reinvigorated multilateralism, the post-pandemic recovery will lack equity, and fail to meet the challenges of our time.” 

Lessons of the pandemic 

UNCTAD includes several proposals in the report that are drawn from the lessons of the pandemic. 

They include concerted debt relief and even cancellation in some cases, a reassessment of fiscal policy, greater policy coordination and strong support for developing countries in vaccine deployment. 


Women sell fruit and vegetables on a sidewalk in the Philippines, where workers in the informal economy are in danger of having their livelihoods destroyed by the impacts of COVID-19.

ILO/Minette Rimando.

Women sell fruit and vegetables on a sidewalk in the Philippines, where workers in the informal economy are in danger of having their livelihoods destroyed by the impacts of COVID-19.

Even without significant setbacks, global output will only resume its 2016-19 trend by 2030. But even before COVID-19, the income growth trend was unsatisfactory, says UNCTAD. Average annual global growth in the decade after the global financial crisis was the slowest since 1945. 

Despite a decade of massive monetary injections from leading central banks, since the 2008-9 crash, inflation targets have been missed. Even with the current strong recovery in advanced economies, there is no sign of a sustained rise in prices. 

After decades of a declining wage share, real wages in advanced countries need to rise well above productivity for a long time before a better balance between wages and profits is achieved again, according to the trade and development body’s analysis. 

Food prices and global trade 

Despite current trends on inflation, UNCTAD believes the rise in food prices could pose a serious threat to vulnerable populations in the South, already financially weakened by the health crisis. 

Globally, international trade in goods and services has recovered, after a drop of 5.6 per cent in 2020. The downturn proved less severe than had been anticipated, as trade flows in the latter part of 2020 rebounded almost as strongly as they had fallen earlier. 


Lack of monetary autonomy and access to vaccines are also holding many developing economies back

Lack of monetary autonomy and access to vaccines are also holding many developing economies back, by ILO/K.B. Mpofu

The report’s modelling projections point to real growth of global trade in goods and services of 9.5 per cent in 2021. Still, the consequences of the crisis will continue to weigh on the trade performance in the years ahead. 

For director of UNCTAD’s globalization and development strategies division, Richard Kozul-Wright, “the pandemic has created an opportunity to rethink the core principles of international economic governance, a chance that was missed after the global financial crisis.” 

“In less than a year, wide-ranging US policy initiatives in the United States have begun to effect concrete change in the case of infrastructure spending and expanded social protection, financed through more progressive taxation. The next logical step is to take this approach to the multilateral level.” 

The report highlights a “possibility of a renewal of multilateralism”, pointing to the United States support of a new special drawing rights (SDR) allocation, global minimum corporate taxation, and a waiver of vaccine-related intellectual property rights.  

UNCTAD warns, though, that these proposals “will need much stronger backing from other advanced economies and the inclusion of developing country voices if the world is to tackle the excesses of hyperglobalization and the deepening environmental crisis in a timely manner.” 

For the UN agency, the biggest risk for the global economy is that “a rebound in the North will divert attention from long-needed reforms without which developing countries will remain in a weak and vulnerable position.”

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