(Bloomberg) — Once the world’s fastest-growing major economy, India is set to post the steepest quarterly decline in gross domestic product in Asia as it quickly becomes the global hotspot for coronavirus infections.
With more than 65,000 new infections a day and total cases topping 3 million in a country of 1.3 billion, India’s road to recovery appears a long and hard one. A mix of monetary and fiscal measures to prop up the economy have fallen short, leaving millions jobless and destitute, and businesses on the brink of bankruptcy.
Data due Aug. 31 will likely show GDP declined 19.2% in the quarter to June from a year ago, according to economists surveyed by Bloomberg as of Friday. That would be the sharpest contraction since the nation started publishing quarterly figures in 1996, and is worse than any of the main Asian economies tracked by Bloomberg.
Even before the pandemic struck, Asia’s third-largest economy was in the midst of a slowdown as a crisis in the shadow bank sector hurt new loans and took a toll on consumption, which accounts for some 60% of India’s GDP.
The lockdown from mid-March to contain the pandemic was a blow to the economy like no other. It brought activity to a virtual halt as businesses shut down and millions of workers fled the cities for their rural homes. That’s put GDP on course for the first annual contraction in more than four decades — a full-year decline of 5.6%, according to a separate Bloomberg survey.
The lockdown dealt an “unprecedented blow to the economy,” said Rahul Bajoria, the Mumbai-based chief India economist at Barclays Plc, who estimates GDP contracted by 25.5% last quarter.
“With the national lockdown measures being extended through all of April and May, and most states extending their own partial restrictions through all of June, the rural economy, government spending and essentials will likely be the only sectors mitigating some of the decline,” he said.
According to the Reserve Bank of India, transport services, hospitality, recreation and cultural activities are particularly affected in the $2.8 trillion economy. The shock to demand is so severe that “it will take quite some time to mend and regain the pre-Covid-19 momentum,” the RBI said in its annual report.
What Bloomberg’s Economists Say
Our analysis shows some sectors of the economy — agriculture, information technology services and central government expenditure — recorded an year on year growth despite the disruptions due to the pandemic. These sectors have slightly ameliorated the negative impact of the lockdown, but the drop in GDP is still expected to be large and only marginally better than our earlier expectation.
Click here to read the full note.
Abhishek Gupta, India economist
In addition, there’s a higher level of uncertainty around last quarter’s data, given the lack of field surveys conducted by the statistics office during the lockdown, which led to incomplete inflation and industrial production reports in April and May. With activity in India’s vast informal sector, which makes up almost half of the GDP, unlikely to be reported, output in the formal sector could be used as a proxy and overestimate growth.
Read More: Predicting India’s GDP Growth Is Getting Harder Than Usual
“The statistics office could announce GDP contraction of 17.5% year-on-year, which could subsequently be revised to a 25% contraction when the informal sector survey is available,” said Pranjul Bhandari, chief India economist at HSBC Holdings Plc. in Mumbai.
The pandemic has caused historic GDP contractions in economies around the world. In India, the situation is made worse by limited fiscal support, leaving the onus on the central bank to provide the bulk of the stimulus. The RBI has cut interest rates by 115 basis points so far this year, boosted liquidity and transferred billions of rupees in dividends to the government. But with inflation above the central bank’s target, it’s probably reaching the end of its easing cycle, leaving little scope for more support.
Economists expect growth to rebound to above 7% next year, mostly led by pent-up domestic demand, and a pickup in farming and exports. Yet, that’s likely to fall short of the recovery that followed the global financial crisis more than a decade ago, when growth averaged 8.2% in the two fiscal years after the crisis, boosted by massive fiscal spending, monetary easing and a swift global rebound.
The pandemic aside, India still has deep-rooted structural problems — from a struggling and weak banking sector to high public debt — which will divert government resources away from responding to the current crisis.
“What I am worried about is the structural fault lines that this extreme economic shock will expose over the longer term, and how many years it will take for the economy to get back where it was,” said Shumita Sharma Deveshwar, an economist at TS Lombard based in Gurugram, near New Delhi.
Source: – BNN
GUEST OPINION: Trails can stimulate the economy in Atlantic Canada – SaltWire Network
There are many things that this pandemic will have taught us, however for many it has reinforced the value of trails and greenspaces.
As a trail professional of nearly 20 years I’ve always valued trails and greenspaces, however in this fast-paced world with ever-changing technologies, many people began to take the great outdoors for granted.
With limited activities to do during the pandemic and many people stuck in the house most of the day, the opportunity to get outside and breathe some fresh air is now becoming something that is vital for their well-being.
These days I’m inundated by Facebook posts, tweets or Instagram posts of people relishing in the outdoors and thankful to have access to trails and greenspaces. As we begin to become accustomed to a new normal, it’s time for us as a society to start thinking about getting back to some of the more simple things in life and how these things can act as both a social and economic catalyst for communities. Many of these things don’t need to be complicated, but can have a tremendous impact as we begin to come back from the ramifications of COVID-19.
One of these opportunities is to foster the development of a trail economy. Many countries have capitalized on the trail economy; however Canada and Atlantic Canada have not come close to realizing the potential it has in developing a strong economy based on greenway trails. The trail economy is the idea of generating both indirect and direct revenue through the development and promotion of trails as a product.
This however is not a “build it and they will come” scenario; it requires significant engagement between trail managers working hand in hand with outfitters, business owners and community leaders to ensure that there is a strong integration between all stakeholders. What it doesn’t require, however, is significant investment of funds to get these relationships developed.
Prince Edward Island is perfectly positioned to take advantage of the trail economy and is in a unique position as an established tourist destination. The Island is well known for their hospitality and many people consider P.E.I. as a premier vacation destination.
The Confederation Trail provides tourists and residents alike with a 450-km trail that spans the province and provides access to many of the most scenic coastal regions on the Island. A feature that the Confederation Trail has over many of its counterparts is the relative short distance between communities thus allowing trail tourists with good access to food and beverage, accommodation and other critical amenities to ensure that they have a memorable experience.
It’s now time for these communities and the provincial government to take advantage of this feature and ensure that they are properly equipped to take on the task of welcoming these tourists to their beautiful towns and villages. The development of programs such as Trail Towns, where the business community and other key stakeholders work together to assess their attributes and work together to fill in their service gaps in the next key step of the development of the Confederation Trail as a tourism product.
Trails and greenspaces connect us to the land, the people and histories of our communities. With many people staying close to home this year and perhaps in the years to come, let’s take this time to get better connected, learn more about the region, create a stronger and healthier population and a more vibrant economic outlook for Atlantic Canada.
Jane Murphy-McCulloch is a principal at Terminus Consulting and was national director of Trail with the Trans Canada Trail, developing 10,000km of land and water trail along with road cycling infrastructure to ensure the successful connection to the national trail system in 2017.
Fed's Powell says US economy faces long, uncertain recovery – BNN
Federal Reserve Chair Jerome Powell said the U.S. economy has a long way to go before fully recovering from the coronavirus pandemic and will need further support.
“The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government,” he told the House Financial Services Committee on Tuesday. While a recovery is underway, “both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain.”
Read More: Powell and Mnuchin Set to Get Grilled on Need for More Stimulus
In his own remarks, U.S. Treasury Secretary Steven Mnuchin said he and the White House continue to seek an agreement with both parties in Congress on another fiscal relief package.
“The President and I remain committed to providing support for American workers and businesses,” he said in testimony released Tuesday. “I believe a targeted package is still needed, and the administration is ready to reach a bipartisan agreement.”
Powell and Mnuchin’s appearance is a quarterly exercise mandated by the Cares Act passed by Congress in March, which appropriated about US$2 trillion to help speed the U.S. recovery. The pair are likely to face questions about their use of Cares Act funds and about what else should still be done.
Prospects for another round of fiscal support have further dimmed amid spiraling partisan tension over the battle to replace Supreme Court Justice Ruth Bader Ginsburg, with just 42 days remaining before the U.S. election.
Powell was prepared for questions about the Fed’s troubled Main Street Lending Program, a US$600 billion facility aimed at providing credit to small- and mid-sized companies. He said Fed officials had responded to feedback by making adjustments to the program.
Still, he added, “Main Street loans may not be the right solution for some businesses, in part because the Cares Act states clearly that these loans cannot be forgiven.”
The Fed has come under criticism for the low take-up so far from the Main Street program. It has so far purchased just US$1.5 billion in loans, as of Sept. 16. Some banks, especially larger institutions, have balked at lending through the program to the riskier businesses that may need them the most.
Most Canadians say economy needs fundamental changes: report of COVID-19 priorities – News 1130
VANCOUVER (NEWS 1130) — More than six months into the pandemic, many Canadians say the economy isn’t working the way it should, according to a survey.
A Better Canada: Values and Priorities after COVID-19 report found 44 per cent of Canadians think the way the economy works needs to be changed, and many people want more climate action.
The report from the Environics Institute and Vancity surveyed 3,008 Canadians online between Aug. 17 and 24.
“There is a big appetite among the public for change,” Andrew Parkin, with Environics Institute, says. “They want to see the economy work better, they want to address inequality between rich and poor, they would like to see progress on making essential medicines free through the public health care system.”
He says about one in 20 people believe everything is fine the way it is.
“One of the things I found interesting is that even among those who are the highest income earners, fewer than one in 10 think the economy is fine the way it is.”
And when it comes to the environment, there is a lot of support for investing in clean energy technologies.
“They want to kickstart the economy by investing in green technologies or new businesses that can promote both the environment and growth at the same time,” Parkin says.
Even if it slows down economic development, the survey found three in four Canadians want the environment to be protected in the country. Eighty-four per cent also say it’s important for corporations to have policies and programs in place to protect the environment.
According to the report, almost all parents agree Canada should be a country where affordable and high-quality daycare for young children is available to all who need it.
Read the full report:
iOS 14 widgets leads Pinterest to break its daily App Store download record – 9to5Mac
Follow COVID-19 isolation rules or face $5000 daily fine: Ottawa's top doctor – CTV Edmonton
If dark matter is a particle, it should get inside red giant stars and change the way they behave – Universe Today
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Richmond BBQ spot speaks out about coronavirus rumours Vancouver Is Awesome
- Health24 hours ago
Ontario pediatricians warn 'crisis looming' unless more kids get flu vaccine this year – CP24 Toronto's Breaking News
- Politics20 hours ago
The two most divisive events in US politics are about to take place at the same time – CNN
- Tech4 hours ago
Xbox Series X and S preorders are basically sold out — for now – The Verge
- Sports23 hours ago
Kirk’s breakout game against Yankees comes at ideal time for Blue Jays – Sportsnet.ca
- Investment21 hours ago
COVID-19 forces one of the biggest surges in technology investment in history, finds world's largest technology leadership survey – Canada NewsWire
- News22 hours ago
Survey finds working Canadians are better off financially, more stressed about money – CTV News
- Science21 hours ago
New NASA images show 'fresh ice' forming on Saturn’s moon – Yahoo Canada Sports
- Politics22 hours ago
Vaughn Palmer: 'The best way forward is to put politics behind us,' says Horgan – Vancouver Sun