WASHINGTON — The U.S. economy is expected to rebound from a disastrous spring. Paralyzed by the coronavirus, economic output collapsed at a 31.4% annual pace from April through June — the worst such plunge on records dating to 1947.
Growth is believed to have surged back in the July-September quarter. Yet the economy is still scarred. The Associated Press spoke recently with Timothy Adams, president of the Institute of International Finance, a trade group for the financial services industry that expects the economy to shrink 2.5% for 2020 before growing nearly 5% in 2021. The interview was edited for length and clarity.
Q: The second quarter was terrible. What do you expect from the economy from here?
A: This is a health crisis — the pandemic. We need to do testing and diagnostics and treatment and tracing and ultimately vaccination. Those elements will really determine the contours and the pace of how we recover.
We have seen a faster recovery than most people expected back in April and May. It has lost a bit of momentum in the last few weeks, but we’ve seen over 50% of the jobs we’ve lost have been recovered. Financial markets are buoyant. We’re seeing small business confidence coming back.
Certain parts of the economy are doing quite well — anything that’s interest rate-sensitive because rates are at historically low levels. People are buying autos, appliances, bicycles, gym equipment. So the production side, where people can distance and machinery is cranking out products, is doing OK.
But there’s a different economy for anyone who’s in a high-touch, service- or transportation-related job. You can’t work from a remote location and are certainly at risk and suffering from economic stress. And there are industries that are going to be permanently scarred. I can’t imagine anyone going to a movie theatre or going on a cruise anytime soon.
Q: Assess the policy response to the crisis.
A: Policymakers around the world, including and especially in the United States, really jumped into the breach and were able to work across the aisle. The Federal Reserve did a remarkable job ensuring that credit continues to flow to the real economy.
We do need additional fiscal support going forward, and we need it as soon as possible. We have an enormous amount of firepower if we can just get our politicians to focus and come together and work collectively for a common outcome.
Q: Is the economy going to be different once we’ve emerged from this?
A: Maybe in ways we don’t fully appreciate yet. Knowledge workers have become adept with remote working. The way we operate and interact with our colleagues and our clients has changed and will forever change. We’ll have to think through the implications and what they mean for the nature of work.
Paul Wiseman, The Associated Press
5 Strongest Growing Provinces and Territories in Canada
Canada’s economy (Gross Domestic Product) increased at an annual rate of 1.9 % in 2018.
- The Yukon Territory takes the top spot for Economic Growth with an increase of 8.0 % in 2016.Government expenditures account for almost half the territorial GDP. Infrastructure investment has helped bolster the territory, and exploration of resource assets continues.
- Alberta saw the 2nd largest increase with a 6.1 % increase in 2017. Strong oil prices and foreign demand triggered the growth. Activity in the energy sector increased demand for related machinery and equipment, and the influx of workers increased demand for services.
- British Columbia supplies wood products for the Canadian and US homebuilders. They benefited from the tide of heightened residential construction in the North American market. Investment growth was strong with home building experiencing double digit growth in three of the last four years. British Columbia’s Gross Domestic Product increased at a rate of 2.6 % in 2018.
- Saskatchewan saw an increase of 3.9 %. Strong foreign demand contributed to higher exports of potash and fertilizer. Saskatchewan’s oil-patch, much smaller than Alberta’s, struggled in terms of volume, but the healthy prices ensured an ongoing profitability and higher corporate profits
- Ontario growth was down slightly to 2.8 % in 2005. The increase in commodity prices hampered production in Ontario. The export driven economy felt the pinch of a rising Canadian dollar and the impact of higher fuel costs. Demand for the cars and trucks being produced by Ontario remained strong, but overall the province below the national average of 2.9 %
Canada as a whole experienced an economic growth of 1.9 % in 2018. In 2002 much of Canada’s growth was due to investment and manufacturing in the Eastern half of Canada. In the years following a shift has become notable, the growth in the economy is shifting west. Due to the increase in energy and commodity prices the oil-patch in Alberta, Saskatchewan’s wheat fields and mines and British Columbia’s forests all profited from increased export demand.
Exclusive: China comfortable with yuan rises for now as economy recovers, sources say – The Journal Pioneer
By Kevin Yao
BEIJING (Reuters) – Chinese policymakers are comfortable with the yuan’s rise to two-and-a-half-year highs as a rebound in the world’s second-biggest economy accelerates and the central bank gives the market greater leeway in setting the currency’s value, sources said.
But the central bank might take action if further rises in the closely managed currency, especially if they were rapid, were to hurt the country’s exports, the sources involved in internal policy discussions told Reuters.
Amid broad expectations for further yuan gains and more prolonged weakness in the dollar, the PBOC’s acceptance of the currency’s rise runs counter to recent market speculation that the bank might take steps to stabilise the rising yuan.
“Yuan appreciation is supported by China’s economic fundamentals,” said Yu Yongding, an influential government economist who previously advised the People’s Bank of China.
“We don’t need to intervene as we haven’t seen any shocks from big capital inflows or outflows,” Yu told Reuters. “The exchange rate is mainly driven by the current account.”
The yuan, which closed at 6.5302 to the dollar on Friday, has gained about 6.6% against the U.S. currency this year, although that is largely explained by a nearly 6% decline in the dollar’s value against a basket of currencies.
The yuan is on course to post the biggest annual rise since its 6.8% appreciation in 2017.
Some policy advisers think the yuan may strengthen to 6.4 per dollar next year, a further 2% rise. The authorities could still take steps to brake a rapid rise if Chinese exporters were to feel the pinch or speculative “hot money” were to flood in, the sources said.
The PBOC has recently taken some technical steps that analysts read as a willingness to allow some weakness in the yuan but are not aimed at actively depressing the currency.
The relatively light approach to a stronger yuan may reflect the PBOC’s efforts to give market forces a greater role, part of longer-term reforms to make the yuan a more international currency, insiders said.
The central bank did not respond to Reuters request for comment.
EXPORTERS IN MIND
Policymakers believe this year’s yuan climb is supported by the sharp recovery from the economic damage of COVID-19, which emerged in China a year ago.
Beijing countered the disease with aggressive lockdowns and the downturn with a raft of stimulus measures. China’s economy is expected to grow 2.1% this year, the only major economy to expand – although at its slowest since 1976 – then surge by 8.4% in 2021, a recent Reuters poll showed.
Still, policy insiders do not expect the PBOC to tighten monetary policy any time soon, as domestic demand remains weak, a new wave of coronavirus infections could cloud global recovery prospects and tensions with the United States may not ease in the near term.
Also supporting the yuan are solid exports, fund inflows and a widening gap between Chinese and U.S. interest rates.
“We should not worry too much about yuan rises,” said a policy insider.
“The yuan is still within a normal range and there is no big deal if it rises a bit further,” this source said. “There could be some impact on exports going forward, but the impact is not big now.”
Further gains, are indeed, expected.
Bullish positions in the yuan were at their highest in almost three years, according to the latest fortnightly Reuters poll of analysts and fund managers.
The dollar is likely to keep weakening for at least six months as investors continue to shift to risky assets and seek higher returns, a Reuters poll of currency strategists showed on Friday.
A source close to the commerce ministry, a staunch defender of Chinese exporters, said those companies might be hurt if the yuan strengthens beyond 6.5 to the dollar, but other insiders believe greater official tolerance over yuan gains.
A major concern would be the speed of further gains.
“We cannot let it rise too fast,” one insider said. “The main concern is exports. It could also affect market expectations and lead to more hot-money inflows.”
(Reporting by Kevin Yao; Editing by William Mallard)
Niagara's new economic development director looks forward to regrowing economy in 2021 – WellandTribune.ca
Niagara’s new economic development director George Spezza is optimistic about the year to come, despite the devastation many businesses have suffered under COVID-19 pandemic restrictions.
“If we can weather the storm and look forward to an economic recovery based on some of the successes of the vaccines that are coming forward, I think 2021 could be an opportunity to really gain that momentum and start growing the economy again,” said Spezza, who started his new job on Monday.
“I’m always really impressed with people’s ability to fight against some of these crises and survive. We want to do everything we can from an economic and regional perspective to support that growth and recovery efforts. I believe it will take some time, but the future is bright moving forward.”
Spezza suspects the economic recovery will begin slowly in the first few months of 2021, and quickly increase as restrictions are lifted.
When that happens, he said the industries that have been impacted the most such as tourism, and hospitality “should see an influx of people coming back to that sector, and they’ll start seeing some of that growth.”
“Companies will have to be ready and prepared for that influx of tourism and hospitality.”
In the meantime, he said, Niagara’s economic development office will continue to assist businesses, keeping them up to date on information about programs and assistance accessing upper-tier government funding.
“The provincial and federal governments are coming forward with significant dollars and our role really is to ensure that our business community has access to that, and we can provide some assistance in accessing those programs,” Spezza said.
Navigating through the ever-changing information about programs that are available can be difficult for business owners, who are already working long hours running the day-to-day operations of their companies.
Spezza had been paying attention to Niagara while working as director of business growth services for Toronto’s economic development and culture office, prior to joining the Region’s economic development office. The Mississauga resident said he could see Niagara’s potential.
“It’s really a region with a lot of upside and a bright future,” he said, adding he often visited Niagara to explore the area.
“It was growing and doing well, and I think there’s a great opportunity for success there.”
Spezza’s interest in helping the region realize its potential led him to apply for the job running the economic development office and brought some new ideas to the job on ways to accomplish that goal.
“Niagara has a global brand already, and there are some great opportunities on how we can continue to build on that brand.”
Through collaboration and teamwork, Spezza said he hopes to leverage Niagara’s well-known brand to drive expansion into other markets and drive increased investment.
“Certainly we have a hospitality industry that is very well recognized around the world, but how can we best capture the visitors and tourism in the area to talk about all the other amazing opportunities to invest in the region?” he said.
Spezza described Valerie Kuhns — the Niagara Region Economic Development department’s strategic economic initiatives manager who had been filling the vacancy for most of the past two years — as a “consummate professional,” adding he is looking forward to working with her and other office staff.
“I think we’re going to make a very good team working together, Val and I and the rest of the office,” he said.
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