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% 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 $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% of all global stimulus was spent in wealthy countries and less than 3% 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 $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 $600-a-week benefit for the unemployed, $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.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
