Connect with us

Economy

How to save the economy – Maclean's

Published

on


Since March, governments have released a blizzard of new programs and policies to stabilize the economy. But what comes next? We asked economists for their big ideas about what Ottawa and the provinces should do now.

Clarity creates confidence

(Colin Rowe Photography)

Pedro Antunes, chief economist,
Conference Board of Canada

While social distancing and the halt to non-essential activity were necessary to halt the spread of COVID-19 and avoid straining our health-care system, they carry a large economic cost. Consumer and business confidence has been shattered and governments have responded with a host of programs to cushion the economic fallout. Unquestionably, these policies and programs were required, but the fact that they have not been applied consistently across the country contributed to an already uncertain operating landscape. Restrictions on activity vary from province to province while the information about support programs put in place by federal, provincial, and municipal governments (even some Crown corporations offered relief) is overwhelming and difficult to navigate.

The key to emerging from this recession will be restoring business and consumer confidence so that, as restrictions are eased, they are ready to hire and spend. Governments can support confidence by being transparent with respect to when and how restrictions will be phased out, what health and security requirements specific businesses will need to adhere to, and what they will do in the event of a resurgence of COVID-19 cases. While companies are used to dealing with our multitude of interprovincial barriers and regulations, alignment between Canada’s federal and provincial leaders on the plan to phase out restrictions would reduce uncertainty at a time when we simply have too much of it.

RELATED: The economy may never return to what it once was

A summer of instant infrastructure

Michael Veall, professor of economics, McMaster University (Georgia Kirkos)

(Photo by Georgia Kirkos)

Michael Veall, professor of economics,
McMaster University

While policy adjustments continue, the main bases appear to have been covered for income support. The focus should shift to safe job creation. Normally I am cautious about boutique programs, but it is not the time to be squeamish.

Dust off that old standby, a temporary home renovation tax credit, but with quick payouts and social distancing provisions. Extend that program to small business. Take a bow for the orphan wells cleanup program and look for other ways to create jobs while solving known problems that will have to be dealt with sooner or later. Make it sooner. Encourage provincial governments to do what they can to re-ignite construction and resource industries. Besides the ongoing push on medical supply manufacture, introduce a sharp and short subsidy of immediate internet and telecommunications investment. Use subsidies to ramp up childcare as soon as operationally safe. Ship money to municipalities for anything shovel-ready, including environmental projects, tree-planting being the cliché.

Make it the summer of instant infrastructure. Avoid delays by letting starting-times depend on local conditions. The unifying principle is rapid employment and output creation. Everything should be a limited-time offer: an incentive for action now, not months from now. Finally, while Canada had a reasonable safety net, it wasn’t designed for this kind of crisis. Plan a new one.

The kids aren’t alright

Tammy Schirle, professor of economics, Wilfrid Laurier University (Tomasz Adamski)

(Photo by Tomasz Adamski)

Tammy Schirle, professor of economics,
Wilfrid Laurier University

What are two things that matter most for landing that first great job after graduation? A graduate’s social networks and the state of the economy will largely define their career trajectory. Moving into the labour market in the middle of this pandemic will be devastating. Studies have shown that entering the workforce during a typical recession is associated with a large loss in earnings for new graduates, compared to their potential, and the negative effect takes up to 10 years to fade. We’re looking at graduates with few options to work in the coming months, and the opportunities for those from less advantaged socioeconomic backgrounds are even worse. We will need support for programs that find innovative ways to bring new entrants into the labour market, perhaps with work-from-home internships, targeting those lacking networks, as well as broader income support for those unable to land that first great job.

EI should be kicked to the CERB

David Macdonald, senior economist, Canadian Centre for Policy Alternatives (Courtesy of David Macdonald)

(Courtesy of David Macdonald)

David Macdonald, senior economist,
Canadian Centre for Policy Alternatives

Let’s formally replace our creaking EI system with a modern equivalent based on the Canada Emergency Response Benefit (CERB). Just like the 1970s computers that run it, EI was built for another era of work with regular hours, a formal workplace and decent pay. This crisis has exposed its flaws: it’s bureaucratic, unresponsive to workers’ needs, incredibly slow, and incredibly complicated. Our dated EI system was built out of the crisis of the Great Depression in 1940, and a modern EI system through CERB is being rebuilt to meet a modern-day crisis. We need a system built for and more adapted to our economy, to our times, to our reality, to our fast-paced lives and smartphones.

The COVID-19 crisis finally forced us to throw the antiquated EI system into the trash and build a new one on the spot. Despite being done quickly, the design benefits of the CERB are substantial: it’s built for speed, it covers gig workers, it provides a floor on benefits for low-wage workers, it’s dramatically simpler to administer, and it’s easy to understand what you’ll get. Hopefully these features will be the foundation for a new modern EI system following this crisis, and we can leave our post-war EI system where it belongs: in the bin.

Good government needs fair tax systems

Frances Woolley, professor of economics, Carleton University (Courtesy of Frances Woolley)

(Courtesy of Frances Woolley)

Frances Woolley, professor of economics, Carleton University

A government is, in essence, an insurance company with an army. It can insure against the kinds of risks that private insurance companies cannot, or will not, take on. In Canada, Employment Insurance, the Canada Emergency Response Benefit, and other programs are insuring workers against income and job losses caused by this coronavirus. Canadian firms and investors are being insured through wage subsidies, loans and the Bank of Canada’s actions to provide stability in financial markets. Provincial health insurance systems provide every Canadian with health-care coverage.

Yet for government insurance to be effective in protecting both the economy and the people and businesses who make up the economy, everyone has to opt in and pay insurance premiums. In recent decades, however, many have tried to opt out. For example, firms avoid paying Employment Insurance premiums and other payroll taxes by reclassifying employees as self-employed, independent contractors. There is widespread lobbying for lower tax rates or special tax breaks.

The COVID-19 pandemic is reminding Canadians that governments play a vital role in ensuring economic stability and prosperity. They can play that role most effectively when they are supported by a strong, fair, and efficient tax system. What I hope to see coming out of this crisis is a serious effort to strengthen the revenue foundations of good government. This means regularizing gig economy work, levelling the tax playing field between digital and bricks-and-mortar firms, preventing the tax base erosion, and reducing tax avoidance.

A sales tax holiday for consumers

(Courtesy of CFIB)

Ted Mallett, chief economist, Canadian Federation of Independent Business

The unknowns about COVID-19 with respect to public health are complicating Canada’s efforts to manage the economic policy aspect of the crisis. Short-term measures on incomes, payrolls, credit and rent in a shutdown environment are eventually going to have to transition to support for restart and recovery. For small businesses, that path will be uneven and bumpy. Even if permitted to reopen, businesses will be faced with higher operating expenses before any meaningful revenues return. Credit and wage subsidy measures, therefore, will have to stay in place as that process begins. Consumers too will be shy to reestablish old habits, so they may need nudges from demand-inducing measures like sales tax holidays to help get money circulating again. Boosted infrastructure spending may help a little, but past experience shows its value doesn’t always measure up to its costs.

Longer term, Ottawa and the provinces will need to focus on the fiscal hangover. Attention should be on incentivizing participation in the work force—because we need to earn our way out of this. Education, immigration, childcare and mobility-directed measures to bring in and to keep people working are widely supported by the general public, as are removing barriers to business creation. For other necessary measures, like delaying retirements, some may need more persuasion. There will be difficult choices ahead and limited funds, so we can look forward to a completely new policy-making environment.


This article appears in print in the June 2020 issue of Maclean’s magazine with the headline, “How to save the economy.” Subscribe to the monthly print magazine here.

MORE ABOUT ECONOMY:

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Why the stock market is outperforming the economy: Morning Brief – Yahoo Canada Finance

Published

on



<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Tuesday, May 26, 2020” data-reactid=”16″>Tuesday, May 26, 2020

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET.&nbsp;” data-reactid=”17″>Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. 

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Subscribe” data-reactid=”18″>Subscribe

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Corporate profits look better than expected, the economy looks worse than expected” data-reactid=”19″>Corporate profits look better than expected, the economy looks worse than expected

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="During the early days of the coronavirus pandemic, economic and market forecasters were flying blind.” data-reactid=”20″>During the early days of the coronavirus pandemic, economic and market forecasters were flying blind.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Accelerating numbers of confirmed COVID-19 cases along with sudden lockdowns around the globe made it impossible to estimate with any accuracy the kind of impact economies and businesses would see.” data-reactid=”21″>Accelerating numbers of confirmed COVID-19 cases along with sudden lockdowns around the globe made it impossible to estimate with any accuracy the kind of impact economies and businesses would see.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As preliminary March data — which captured the earliest impacts of these lockdowns — started to trickle in, forecasters were quick to slash their expectations. Economists predicted depression-like numbers and the financial market pros predicted earnings would crash.” data-reactid=”22″>As preliminary March data — which captured the earliest impacts of these lockdowns — started to trickle in, forecasters were quick to slash their expectations. Economists predicted depression-like numbers and the financial market pros predicted earnings would crash.

Now, after two months and many economic and earnings reports later, two narratives have emerged: the U.S. economy as a whole is in worse shape than expected, and the profits of America’s biggest corporations are doing better than expected.

<h3 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The economy looks worse” data-reactid=”24″>The economy looks worse

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Following the releases of April economic numbers, including dismal jobs numbers and disastrous retail numbers, economists revised their forecasts even lower.” data-reactid=”25″>Following the releases of April economic numbers, including dismal jobs numbers and disastrous retail numbers, economists revised their forecasts even lower.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="On May 12, Goldman Sachs cut its GDP forecasts and while warning the unemployment rate would spike to 25%. The same day Goldman cut its forecasts, Credit Suisse economists made similar cuts while warning “a longer growth slump will outlast fiscal relief.”” data-reactid=”26″>On May 12, Goldman Sachs cut its GDP forecasts and while warning the unemployment rate would spike to 25%. The same day Goldman cut its forecasts, Credit Suisse economists made similar cuts while warning “a longer growth slump will outlast fiscal relief.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="BofA economists lowered their GDP estimates last Wednesday, warning that GDP in Q2 would fall at a 40% rate while saying the recession will be “unlike anything we have seen in modern history.”” data-reactid=”27″>BofA economists lowered their GDP estimates last Wednesday, warning that GDP in Q2 would fall at a 40% rate while saying the recession will be “unlike anything we have seen in modern history.”

And just on Friday, JPMorgan economists cut their 2021 GDP forecasts while warning the unemployment rate would stay above 10% through at least the end of the year.

<h3 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Big companies are doing better” data-reactid=”29″>Big companies are doing better

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Through Friday, 97% of S&amp;P 500 (^GSPC) companies had announced their Q1 financial results, including many retailers whose quarters went through April.” data-reactid=”30″>Through Friday, 97% of S&P 500 (^GSPC) companies had announced their Q1 financial results, including many retailers whose quarters went through April.

And these numbers have mostly been better than expected.

“Although aggregate earnings are beating estimates by +2.6%, ex-Financials, earnings are surpassing expectations by +7.1%, with 65% of companies exceeding their lowered projections,” Credit Suisse’s Jonathan Golub wrote on Friday.

To be clear, it looks like earnings per share will have been down by around 14% in Q1. But the takeaway is that analysts were expecting worse.

“Expectations were -10.5% at the end of March, and -25.3% when 1Q reporting season began,” Golub added.

These better-than-expected earnings results help, in part, explain the rebound in the stock market.

The U.S. economy appears to be in worse shape than expected. (AP)
The U.S. economy appears to be in worse shape than expected. (AP)

<h3 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Bigger companies cash in as their smaller competitors struggle” data-reactid=”47″>Bigger companies cash in as their smaller competitors struggle

We’re aware that Corporate America is a part of the U.S. economy, and so these stories aren’t mutually exclusive. Still, these diverging narratives call attention to the fact that big companies have massive advantages in the current environment as everyone else struggles to keep up.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="With many small businesses shuttered and tens of millions of Americans workers headed to the unemployment office, government stimulus checks have made their way to big retailers like Amazon and Walmart, which both reported blowout quarterly numbers.” data-reactid=”49″>With many small businesses shuttered and tens of millions of Americans workers headed to the unemployment office, government stimulus checks have made their way to big retailers like Amazon and Walmart, which both reported blowout quarterly numbers.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“The stimulus might as well be called the Amazon and Walmart shareholder act,” NYU professor Scott Galloway said to Yahoo Finance. “There are some unintended consequences here. The strong are getting stronger.”” data-reactid=”50″>“The stimulus might as well be called the Amazon and Walmart shareholder act,” NYU professor Scott Galloway said to Yahoo Finance. “There are some unintended consequences here. The strong are getting stronger.”

For Galloway, what’s happening in business now was inevitable. “The future doesn’t look any different. It’s just being accelerated faster… After 11 years of a bull economy, a lot of these small businesses quite frankly just shouldn’t be around. And they have to adapt and reshape.”

However, many would contend that it’s unreasonable for all businesses to have prepared a financial buffer for a pandemic that led to an unexpected, fragmented, government-mandated, months-long economic shutdown.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“We let big box retailers stay open because they sell essential goods, but they also sell the same nonessential goods that small stores — who were forced to close — normally do,” Gary Cohn, former director of the National Economic Council recently tweeted. “We can’t let this run small stores out of business and need to make sure we level the playing field.“” data-reactid=”57″>“We let big box retailers stay open because they sell essential goods, but they also sell the same nonessential goods that small stores — who were forced to close — normally do,” Gary Cohn, former director of the National Economic Council recently tweeted. “We can’t let this run small stores out of business and need to make sure we level the playing field.“

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="By Sam Ro, managing editor. Follow him at @SamRo” data-reactid=”58″>By Sam Ro, managing editor. Follow him at @SamRo

What to watch today

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Economy” data-reactid=”60″>Economy

  • 8:30 a.m. ET: Chicago Fed National Activity Index, April (-4.19 in March)

  • 9 a.m. ET: FHFA House Price Index month-on-month, March (+0.6% expected, +0.7% in February)

  • 9 a.m. ET: S&P CoreLogic CS 20-City home price index MoM SA, March (0.3% estimated, 0.45% in February); S&P CoreLogic CS 20-City YoY NSA, March (3.4% estimated, 3.47% in February)

  • 10 a.m. Conference Board Consumer Confidence, May (87.5 expected, 86.9 in April)

  • 10 a.m. ET: New Home Sales, April (500,000 expected, 627,000 in March); New Home Sales month-on-month, April (-20.3% expected, -15.4% in March)

  • 10:30 a.m. ET: Dallas Fed Manufacturing Index, May (-73.7 in April)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Earnings” data-reactid=”68″>Earnings

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Pre-market” data-reactid=”69″>Pre-market

  • 6:55 a.m. ET: AutoZone (AZO) before market open

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="READ MORE” data-reactid=”72″>READ MORE

Top News

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="European stocks rise as all UK shops allowed to reopen next month [Yahoo Finance UK]” data-reactid=”74″>European stocks rise as all UK shops allowed to reopen next month [Yahoo Finance UK]

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Latin America’s largest airline LATAM files for U.S. bankruptcy protection [Reuters]” data-reactid=”75″>Latin America’s largest airline LATAM files for U.S. bankruptcy protection [Reuters]

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Uber-rival Bolt raises $109 million [Reuters]” data-reactid=”76″>Uber-rival Bolt raises $109 million [Reuters]

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Stanley Ho, who built Macao’s gambling industry, dies at 98 [AP]” data-reactid=”77″>Stanley Ho, who built Macao’s gambling industry, dies at 98 [AP]

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="YAHOO FINANCE HIGHLIGHTS” data-reactid=”78″>YAHOO FINANCE HIGHLIGHTS

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Spotify, Amazon, Apple, and Barstool Sports are all betting big on podcasts” data-reactid=”79″>Spotify, Amazon, Apple, and Barstool Sports are all betting big on podcasts

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Joy, confusion over money allocated for niche U.S. schools amid coronavirus” data-reactid=”80″>Joy, confusion over money allocated for niche U.S. schools amid coronavirus

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Student housing amid coronavirus: ‘Count on getting heads in beds’” data-reactid=”81″>Student housing amid coronavirus: ‘Count on getting heads in beds’

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Editor’s note: Morning Brief will be observing Memorial Day. We will return Tuesday, May 26.” data-reactid=”83″>Editor’s note: Morning Brief will be observing Memorial Day. We will return Tuesday, May 26.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.” data-reactid=”85″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Find live stock market quotes and the latest business and finance news” data-reactid=”86″>Find live stock market quotes and the latest business and finance news

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For tutorials and information on investing and trading stocks, check out&nbsp;Cashay” data-reactid=”87″>For tutorials and information on investing and trading stocks, check out Cashay

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Include question period in Phase 2 of Manitoba's economy restart, NDP says – CBC.ca

Published

on


If restaurants, pools and gyms can reopen in the next sweeping phase of Manitoba’s reopening plan, so should a democratic institution holding the government to account, the Official Opposition says.

NDP Leader Wab Kinew wrote to Dr. Brent Roussin and the premier on Monday, arguing the restoration of regular sitting days of question period should be included in Phase 2 of the economy restart, like the many eateries and recreation centres that can soon open their doors.

No date is attached to the second phase yet. 

“The democratic functions of the Legislative Assembly are an essential part of our province,” the letter reads.

“Other provincial legislatures and Parliament are ensuring that regular sittings of their Houses will take
place in June and during the summer.”

Another edition of question period will occur on Wednesday, but no additional dates have been set. The legislature normally goes on summer recess in early June.

Sittings limited during pandemic

The legislature usually meets four days a week throughout much of spring, but sittings were indefinitely suspended by the COVID-19 pandemic in mid-March. 

There has since been one emergency meeting to pass COVID-19 legislation and three question periods in May. 

While negotiations between party house leaders for extra sitting dates have happened, no plan has been ironed out.

“It seems odd to me that when we look at Phase 2, I might be able to get a tattoo on my way to the gym after which I visited a patio, but I wouldn’t be able to hear the Premier answer accountability questions in Question Period,” Kinew said.

On Monday, the Liberals called for sittings every Monday to Thursday in June.   

House Leader Jon Gerrard says the existing sittings, conducted with a reduced number of MLAs, demonstrate the legislature can function under physical distancing and sanitation requirements.

“We have seven weeks of work to make up, and unless we go back with more sitting days, it is not going to get done,” Gerrard said in a news release.

“We should be sitting in June and September to make sure that the PCs have to justify and defend their agenda in public.” 

A number of Progressive Conservative MLAs are seen in the legislature in March 2020. (Gary Solilak/CBC )

Premier Brian Pallister was non-committal last week when asked about more question periods.

“I understand the job of opposition parties is to do what the opposition is trying to do here now,” he said in a media briefing.

“That being said, we’re focused in the middle of a pandemic on the recovery of our province and we’re also focused on being available in an appropriate manner, in a safe manner, here in the legislature and always to answer questions that the opposition and you in the media may have.”

The government said Monday that the health department is comfortable with the physical distancing measures in place for question period. Any additional sitting dates must be negotiated between the parties. 

During the pandemic, Manitoba legislators are meeting more frequently than their counterparts in other provinces. 

The Saskatchewan and Nova Scotia legislatures haven’t been recalled since mid-March. New Brunswick has only met once to consider COVID-19 legislation and Prince Edward Island will resume sitting tomorrow. 

The Manitoba NDP, however, says the provinces representing the vast majority of the population — including Ontario, Quebec, Alberta and British Columbia — have sitting dates in June. 

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Singapore cuts 2020 GDP outlook again as virus batters economy – TheChronicleHerald.ca

Published

on


By Aradhana Aravindan and John Geddie

SINGAPORE (Reuters) – Singapore downgraded its 2020 gross domestic product forecast for the third time on Tuesday, the trade ministry said, as the bellwether economy braces for its deepest ever recession.

The city-state lowered its GDP forecast to a contraction range of -7% to -4% from the prior range of -1% to -4%.

Singapore’s economy shrank 0.7% year-on-year in the first quarter and 4.7% on a quarter-on-quarter, a less severe decline than advance estimates, although officials and analysts warned of more pain ahead.

“There continues to be a significant degree of uncertainty over the length and severity of the COVID-19 outbreak, as well as the trajectory of the economic recovery,” said Gabriel Lim, permanent secretary at the ministry of trade and industry.

Following the news, the central bank chief economist Ed Robinson said monetary policy remains unchanged and will next be reviewed in October, as planned.

Singapore also downgraded its 2020 forecast for non-oil domestic exports to -4.0% to -1.0%, from -0.5% to 1.5% previously.

Exports have been a rare bright spot for the economy in recent months mainly due to a surge in demand for pharmaceuticals.

Analysts expect the trade-reliant economy to see a deeper contraction in the second quarter due to a two-month lockdown, dubbed a “circuit breaker” by authorities, in which most workplaces closed to curb the spread of the novel coronavirus.

The city-state has among the highest number of infections in Asia and has said that easing of the lockdown from next month will only be done gradually.

“The downward revision…implies a significant deterioration in the second-quarter momentum due to the circuit breaker period as well as a weak recovery trajectory,” said Selena Ling, OCBC Bank’s head of treasury research and strategy.

The government first flagged the possibility of recession in February when it cut its 2020 GDP forecast to -0.5% to 1.5%, from 0.5% to 2.5% previously.

Singapore’s finance minister is set to deliver the latest in a string of multi-billion-dollar economic packages to offset the hit to businesses and households from the pandemic later on Tuesday.

(Reporting by John Geddie, Aradhana Aravindan and Fathin Ungku; Editing by Sam Holmes)

Let’s block ads! (Why?)



Source link

Continue Reading

Trending