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Economy

Indian government consumption key to growth in economy amid pandemic, central bank says – TheChronicleHerald.ca

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By Swati Bhat

MUMBAI (Reuters) – Indian government spending will support the economy during the pandemic, but private consumption will be needed to drive any economic recovery once the coronavirus threat eases, the central bank said on Tuesday.

“An assessment of aggregate demand during the year so far suggests that the shock to consumption is severe, and it will take quite some time to mend and regain the pre-COVID-19 momentum,” the Reserve Bank of India said in its annual report.

April-June quarter GDP data, set to be released on Aug. 31, is expected to show a contraction of 20%, according to a Reuters poll.

Private consumption will come back gradually with non-discretionary spending leading the way, until a durable increase in disposable incomes enables discretionary spending to catch up, the bank added.

“Upticks that became visible in May and June after the lockdown was eased … appear to have lost strength,” the bank said.

This weakening was mainly due to reimposition or tougher imposition of lockdowns, suggesting the contraction in economic activity was likely to prolong into the second fiscal quarter, it added.

Key downside risks to growth are wider pandemic spread, a deviation of seasonal monsoon rains from the predicted normal volume and global financial market volatility, the bank said.

The RBI advised that fiscal incentives for industry ought to be re-aligned in favour of productive labour-intensive companies so as to generate employment.

It also highlighted the need for specialised infrastructure-focused lending companies to help drive funding of major infrastructure projects. It also called for the diversification of financing options for companies, saying capital markets and foreign direct investment offer opportunities to bring in investors with a longer-term view, as also more durable capital.

The RBI said the banking sector needs to be freed of risk aversion, which is impeding the flow of credit to productive sectors and undermining the role of banks in the economy.

Despite a reduction in banks’ bad loans as of March 2020, the system’s resilience will be tested by the economic fallout of the pandemic, since measures to alleviate it masked the consequent build-up of stress in the system, the RBI said.

“Against this backdrop, a recapitalisation plan for public and private sector banks assumes critical importance,” it added.

In a separate report, the RBI had warned that banks’ bad loans could nearly double by the end of this fiscal year, while the capital adequacy ratio could fall to 11.8% in a severely stressed situation.

Data in the annual report showed frauds of 100,000 rupees and above at banks increased by 159% in terms of value in 2019/20, but the RBI said the date of occurrence of these was spread out over several previous years.

Total frauds stood at 1.86 trillion rupees in FY20 versus 715.43 billion rupees in FY19, data showed.

In the April-June quarter of 2020, however, frauds came down to 288.43 billion rupees in value versus 422.28 billion in the corresponding quarter in 2019.

The RBI’s own balance sheet increased 30.02% by June 30, it added.

The increase on the asset side was due to a rise in domestic and foreign investments, loans and gold while on the liability side it was due to the increase in notes issued, deposits and other liabilities, RBI said.

(Additional reporting by Nupur Anand and Manoj Kumar in New Delhi; Editing by Clarence Fernandez and Steve Orlofsky)

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Fonds de solidarité FTQ is Solid and Committed to Supporting the Economy and Jobs – Canada NewsWire

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“It’s up to us to build the future we believe in
and to invest in a better society.”
– Gaétan Morin

Highlights as at May 31, 2020:

  • $1.4 billion invested in Québec economy (40% more than projected);
  • Share value at $44.24 (down $1.96 from December 31, 2019, and up $0.34 over July 5, 2019);
  • Annual return of 0.8%;
  • Six-month return of -4.2%;
  • Comprehensive annual income of $230 million (profit);
  • Net assets of $13.8 billion;
  • $3 billion in redemption requests;
  • 707,935 shareholders-savers.

MONTRÉAL, Sept. 19, 2020 /CNW Telbec/ – At the Annual General Meeting of Fonds de solidarité FTQ shareholders, management reported on the year ended May 31, 2020. The AGM was held virtually for the first time due to the COVID-19 pandemic and public health directives aimed at limiting its spread.

“The Fonds’ last financial year was marked by two diametrically opposed periods. During the first nine months, the economy was in full swing and Québec continued to build on the momentum of recent years. This boom then came to a screeching halt when COVID-19 hit. But this is not the first time the Fonds has had to deal with a crisis. Throughout the year, before and after the start of the pandemic, the Fonds has shown that it plays a key role in the Québec economy,” said Fonds Chairman Claude Séguin at the start of the AGM.

“Overnight, the economy came to a stop, weakening many companies and their workers. We quickly adjusted to meet the needs of our savers and to support our partner companies,” said Gaétan Morin, President and Chief Executive Officer of the Fonds.

“These are tough times, to say the least. But Québec has many strengths to help it meet the challenges that lie ahead. It’s up to us to build the future we believe in and to invest in a better society. The Fonds will be there to help Québec realize its dreams of an ever more prosperous, greener society. With assets of nearly $13.8 billion as of May 31, the Fonds is solid and committed to supporting the economy and jobs,” added Mr. Morin.

Record investments

Taking into account the additional financing provided to companies in response to the pandemic, the Fonds invested a total of $1.4 billion in the Québec economy during the fiscal year ended May 31, 2020, or 40% more than originally planned.

The Fonds also acted quickly to ensure that its partner companies had the financial leeway they needed to get through the crisis and save jobs. More than 1,300 of them have taken advantage of the offer to defer their loan payment for six months.

Share issues and redemptions

During the year, the Fonds issued $961 million in Class A shares, a new record. The organization welcomed more than 46,000 new shareholders, of which 61% are under age 40 and 18% under age 25. Automatic saving through payroll deduction or automatic bank withdrawals accounted for 79% of inflows ($759 million).

During the same period, the Fonds received $3 billion in redemption requests. Thanks to its solid financial position and prudent liquidity management, the Fonds can meet the needs of its shareholders in difficult times. The decrease in assets under management in the second half of the year is explained primarily by the sharp increase in redemption requests.

“We would like to express our gratitude to all the people who have placed their trust in the Fonds over the years. Thanks to their support, we’ve been able to deliver on our mission, and we’re proud to give them back their savings along with the gains they’ve realized over the years,” said Gaétan Morin.

The 2020 Operations and Sustainability Report is available on the Fonds’ website here.

About the Fonds de solidarité FTQ

The Fonds de solidarité FTQ is a capital development fund that channels the savings of Quebecers into investments. With net assets of $13.8 billion as at May 31, 2020, the Fonds has helped create and protect 221,267 jobs. The Fonds has 3,329 partner companies and 707,935 shareholders-savers.

SOURCE Fonds de solidarité FTQ

For further information: For media representatives only: Patrick McQuilken, Senior Advisor, Media Relations and Communications, Fonds de solidarité FTQ, Mobile: 514 703-5587, Email: [email protected]

Related Links

www.fondsftq.com

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Hungary extends loan moratorium as economy struggles to recover from pandemic – TheChronicleHerald.ca

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By Krisztina Than

BUDAPEST (Reuters) – Hungary will extend a moratorium on loan repayments for some households and companies until the middle of 2021, as its finance minister warned the economy could struggle to grow next year unless a coronavirus vaccine is found.

Prime Minister Viktor Orban introduced the moratorium for all companies and private borrowers in March as one of his government’s key measures to help reduce the economic fallout from the pandemic. It was due to expire at the end of the year.

In a video posted on his official Facebook page on Saturday, Orban said the moratorium would be extended by six months for families with children, the retired, unemployed and those in public works programmes.

The extension until the middle of 2021 will also apply to companies that have seen revenues drop by at least 25%.

Orban also said loan contracts for all households and companies agreed before the pandemic could not be terminated for six months.

The moves come as the government prepares to announce more steps to try to revive growth, after the economy plunged more than expected in the second quarter and prospects for a recovery next year have worsened.

The weak economic outlook could represent the biggest threat to nationalist Orban’s decade-long rule as he prepares to face parliamentary elections in the first half of 2022.

Finance minister Mihaly Varga said in an interview published earlier on Saturday that if a coronavirus vaccine was not available by the middle of 2021 the economy might struggle to grow next year, based on a pessimistic scenario.

Under an optimistic scenario, the economy could grow by 4-5% if a vaccine was available in the second quarter, he told newspaper Magyar Nemzet.

A third scenario was for a protracted recovery with 3%-4% growth, also conditional on a vaccine being available, he added.

Hungary’s economy is expected to shrink by 5%-6% this year.

Varga said the government was working on new stimulus measures that could include targeted tax cuts for crisis-hit sectors.

After a spike in new cases in recent weeks, Hungary reported 809 new coronavirus infections on Saturday, bringing the total to 16,920, with 675 deaths.

(Reporting by Krisztina Than; Editing by David Clarke and Mark Potter)

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Hungary extends loan moratorium as economy struggles to recover from pandemic – The Guardian

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By Krisztina Than

BUDAPEST (Reuters) – Hungary will extend a moratorium on loan repayments for some households and companies until the middle of 2021, as its finance minister warned the economy could struggle to grow next year unless a coronavirus vaccine is found.

Prime Minister Viktor Orban introduced the moratorium for all companies and private borrowers in March as one of his government’s key measures to help reduce the economic fallout from the pandemic. It was due to expire at the end of the year.

In a video posted on his official Facebook page on Saturday, Orban said the moratorium would be extended by six months for families with children, the retired, unemployed and those in public works programmes.

The extension until the middle of 2021 will also apply to companies that have seen revenues drop by at least 25%.

Orban also said loan contracts for all households and companies agreed before the pandemic could not be terminated for six months.

The moves come as the government prepares to announce more steps to try to revive growth, after the economy plunged more than expected in the second quarter and prospects for a recovery next year have worsened.

The weak economic outlook could represent the biggest threat to nationalist Orban’s decade-long rule as he prepares to face parliamentary elections in the first half of 2022.

Finance minister Mihaly Varga said in an interview published earlier on Saturday that if a coronavirus vaccine was not available by the middle of 2021 the economy might struggle to grow next year, based on a pessimistic scenario.

Under an optimistic scenario, the economy could grow by 4-5% if a vaccine was available in the second quarter, he told newspaper Magyar Nemzet.

A third scenario was for a protracted recovery with 3%-4% growth, also conditional on a vaccine being available, he added.

Hungary’s economy is expected to shrink by 5%-6% this year.

Varga said the government was working on new stimulus measures that could include targeted tax cuts for crisis-hit sectors.

After a spike in new cases in recent weeks, Hungary reported 809 new coronavirus infections on Saturday, bringing the total to 16,920, with 675 deaths.

(Reporting by Krisztina Than; Editing by David Clarke and Mark Potter)

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