WASHINGTON — The global economy’s recovery from the pandemic recession is tentative and uneven and “marked by significant uncertainty” as confirmed coronavirus cases spread in many countries, international finance ministers warned Thursday.
The policy-setting panel of the 189-nation International Monetary Fund concluded a virtual meeting Thursday with a joint statement that warned of permanent damage from the worst global downturn since the Great Depression of the 1930s unless countries are given further economic support.
“The crisis threatens to leave long-lasting scars on the global economy, such as weaker productivity growth, heavier debt burdens, heightened financial vulnerabilities and higher poverty and inequality,” the IMF panel said.
“This is a crisis like no other,” Kristalina Georgieva, the IMF’s managing director, said at a closing news conference. “It calls for steps to enable a recovery like no other.”
The IMF’s communique said it was committed to supporting “the most vulnerable countries and people.” It endorsed a six-month extension of a suspension on debt payments that was approved Wednesday by the Group of 20 major industrial countries.
The IMF panel urged the G-20 to go further and adopt at a meeting next month a framework for managing the crushing debt burdens of many low-income countries. International aid groups say rich nations should not merely suspend debt payments but forgive large chunks of debt that are leaving poor countries unable to devote their limited resources to health care and other urgent needs during the pandemic.
The fall meetings of the IMF and its sister lending organization, the World Bank, were held virtually against a grim backdrop of the damage the pandemic has inflicted on the world. In its economic outlook, the IMF forecast that global growth would shrink 4.4 per cent this year, which would mark the worst downturn since the Great Depression. And the World Bank forecast that the pandemic could send an additional 114 million people into extreme poverty, defined as living on less than US$1.90 a day.
Eric LeCompte, executive director of the international aid group Jubilee USA Network, said more debt relief and and other steps must be taken.
“Wealthy countries, who are making decisions for the entire world about the crisis, are more insulated from the extreme shocks,” LeCompte said. “Nearly 90 per cent of all global stimulus was spent in wealthy countries and less than three per cent in developing countries.”
The IMF communique said more involvement by the private sector in granting debt relief is needed, as well as more widespread support by governments.
China, a major creditor country, has been criticized by international aid groups for not doing enough to grant debt relief to low-income countries. While not singling out China by name, the IMF communique said that debt relief efforts need the “full support” of all countries as well as greater transparency.
The United States was represented at the finance meetings by Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell.
In his speech to the IMF panel, Mnuchin said the United States, the world’s largest economy, was doing its part to support the recovery by “deploying the largest economic relief package in American history” with Congress’ passage last spring of US$3 trillion in support for workers and businesses.
The Trump administration and Congress have failed to reach agreement on further aid after the expiration of a US$600-a-week benefit for the unemployed, US$500 billion in forgivable short-term loans to small businesses and other financial assistance.
Asked how the failure of U.S. officials to approve more support could affect the global economy, Georgieva told reporters that the decisive action taken in the spring had offered critically needed aid that had spillover effects for the global economy.
“Don’t cut the lifelines,” she said.
Result of 2020 U.S. election has implications for Canadian economy – insauga.com
Coverage of the U.S. election has split Canadians into three main camps: those who are relieved they live north of the border, those who don’t care, and those who are nervous either outcome with have consequences for us, the neighbour to the north.
A recent report from RSM Canada indicates the election outcome, combined with Canada’s reliance on the U.S. economy, might alter Canada’s recovery and longer-term outlook.
Based on the findings, Canada-China trade has been trending down since the beginning of the U.S.-China Trade War in 2018, while total trade between Canada and the United States increased during this period.
This indicates, based on the current administration’s inability to cap the domestic spread of the virus, a Donald Trump re-election could present economic risks to Canada, due to our dependence on them.
However, Trump’s protectionist tendencies suggest Canada may see further headwinds with its largest trading partner, should he be re-elected.
Additionally, Joe Biden’s proposed ‘Made in America’ tax incentive, which offers tax credits for companies in the U.S. that expand employment and salaries domestically, could potentially discourage future Canadian market expansion.
Further, Biden’s willingness to adopt Trump’s tough stance on China if elected suggests Canada will likely continue to be negatively affected by U.S.-China trade relations.
Moreover, Canadian oil pricing will be hit hard if Biden follows through on his campaign promise to cancel the Keystone XL pipeline–a critical venture for Western Canada oil producers that would provide direct access to the Gulf Coast refineries and world markets.
“Despite a rocky relationship between Canada and the current U.S. administration in recent years, it’s clear that a victory for either Trump or Biden would pose risks to Canada’s economy,” Alex Kotsopoulos, vice president of projects and economics with RSM Canada, said in a news release.
“The issue is that Canada has become increasingly dependent on its neighbour south of the border, and when you combine this with the strong ‘America First’ policies of both presidential candidates, Canada will feel the brunt of those decisions. Therefore, it’ll be important for the Canadian government to proactively engage with the new administration to shore up trade and supply chains, which will be vital in Canada’s own recovery,” he continued.
Ottawa's economy to shrink 5.7% in 2020 before rebounding next year: Conference Board – Ottawa Business Journal
Even the insulating effect of the federal government won’t be enough to prevent Ottawa-Gatineau’s economic output from contracting for the first time in nearly a quarter-century in 2020 as COVID-19 continues to wreak havoc with key sectors, a leading think-tank says.
The National Capital Region’s GDP is expected to shrink by nearly six per cent this year, the Conference Board of Canada predicts in its latest economic outlook released this week. To put that number in context, the city’s economy has grown by an average of 2.7 per cent annually over the last five years.
“Ottawa-Gatineau’s position as the nation’s capital and home to the federal government often insulates the city from big swings in economic growth,” said the organization, which forecast back in May that the region’s economy would contract by 2.4 per cent in 2020. “However, the city will not escape the impacts of the COVID-19 pandemic.”
It would be the first time Ottawa-Gatineau’s GDP has contracted since 1996, but the think-tank says the capital region is still in better economic shape than most other Canadian centres.
The Conference Board forecast says Canada’s overall GDP will shrink by 6.6 per cent in 2020 as households tighten their pursestrings and many sectors struggle to recover from a devastating spring and summer. The organization paints an even grimmer long-term picture for industries such as air transportation, accommodations and food and beverage services, declaring they “might never fully return to normal.”
The organization says public administration is the only sector of the local economy that’s expected to grow in 2020. Not surprisingly, the accommodation and food services industry – which has been largely shuttered for much of the pandemic as part of public health efforts to contain the virus – is expected to take the biggest hit, with the Conference Board’s forecast calling for the sector to decline by a whopping 35.6 per cent.
Other sectors facing big declines include retail, which is expected to shrink 6.4 per cent – only the third time in the last two decades its output has fallen year-over-year.
Still, the think-tank says it expects both the local and national economies to bounce back in a big way in 2021, with Ottawa-Gatineau’s GDP expected to grow by 5.2 per cent and the national GDP forecast to rise by 5.6 per cent.
The Conference Board is predicting Ottawa-Gatineau to continue on a growth path in the years ahead, albeit at a slower rate, forecasting GDP increases of 3.6 per cent in 2022 followed by consecutive 1.3 per cent bumps in 2023 and 2024.
The organization made several other economic forecasts, including:
- Ottawa-Gatineau’s unemployment rate – which peaked at 9.5 per cent in June – will finish at 7.4 per cent for the year, compared with a mark of 4.8 per cent in 2019. Employment in accommodation services will feel the biggest impact, plummeting 34 per cent from last year;
- Housing starts – which reached a 35-year high of 11,200 units in 2019 – will fall to 10,700 units this year before dipping below 10,000 in 2021 and the next few years ahead;
- The region’s population will grow 1.5 per cent in 2020, its smallest annual increase in the last five years;
- Ottawa-Gatineau’s per capita household income will rise 3.8 per cent this year, while per capita disposable income is forecast to grow 5.8 per cent.
Why the US economy won't gain any traction until 2021 – CNN
St. Michael's Hospital in Toronto declares COVID-19 outbreak among ER staff – pentictonherald.ca
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