The US and Eurozone’s economies could take until 2023 to recover from the impact of the COVID-19 coronavirus crisis, according to a new report from consultancy McKinsey & Company.
If the public health response, including social distancing and lockdown measures, is initially successful but fails to prevent a resurgence in the virus, the world will experience a “muted” economic recovery, says McKinsey. In this scenario, while the global economy would recover to pre-crisis levels by the third quarter of 2022, the US economy would need until the first quarter of 2023 and Europe until the third quarter of the same year.
If the public health response is stronger and more successful – controlling the spread of the virus in each country within two-to-three months – the outlook could be more positive, with economic recovery by the third quarter of 2020 for the US, the fourth quarter of 2020 for China and the first quarter of 2021 for the Eurozone.
In these scenarios involving partially effective interventions, policy responses could partially offset economic damage and help to avoid a banking crisis, says McKinsey. The firm has modelled nine scenarios, ranging from rapid and effective control of the virus with highly effective policy interventions to a broad failure of public health measures and ineffective policy and economic interventions.
The economic impact in the US, however, could exceed anything experienced since the end of World War II.
The industries hardest hit by COVID-19, including commercial aerospace, travel and insurance, may see a slower recovery. Within the travel sector, the shock to immediate demand is estimated to be five-to-six times greater than following the terror attacks of 11 September 2001 – though recovery may be quicker for domestic travel. The crisis has also amplified existing challenges or vulnerabilities in the aerospace and automotive industries, which will affect their recovery rates.
As supply chains around the world are disrupted, the report warns that the full impact is yet to be felt. Business leaders must prepare for the effects on production, transport and logistics, and customer demand. These include a slump in demand from consumers leading to inventory “whiplash,” as well as parts and labour shortages due to manufacturing plants shutting or reducing capacity.
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Quebec looks to revive economy weakened by coronavirus crisis by fast tracking infrastructure projects – Global News
Quebec is looking to ramp up 202 infrastructure projects across the province in response to the novel coronavirus pandemic’s toll on the economy.
Bill 61, known as an “Act to restart Quebec’s economy and to mitigate the consequences of the public health emergency” due to the COVID-19 crisis, was unveiled by the government on Wednesday.
As part of the plan, the government wants to accelerate the construction of schools, seniors’ homes, roads and public transit systems. If passed, the bill will allow some projects to be fast tracked without all the regular procedures in place.
Treasury Board President Christian Dubé said the province wants to help people and sectors recover during the health crisis as lockdown measures implemented in March are slowly eased. He insisted that rigor will still be used when it comes to doling out contracts.
“We will not go against laws or regulations,” he said, adding the bill will permit for certain authorizations to be given more quickly.
The proposed legislation will revive the economy and allow for a less bureaucratic process, according to Dubé.
“We know we were all weathering an unusual storm,” he said.
Under the plan, about 90 infrastructure projects would be ramped up in the health sector, including construction on 48 seniors’ homes. This also includes renovation plans for hospitals in Montreal, such as the renovation and expansion of Lachine Hospital.
In the education sector, about 39 projects would be fast tracked. This includes the construction of new elementary and high schools as well as the expansion of other academic institutions such as Dawson College in Montreal.
When it comes to roads and public transit, the Legault government is looking at accelerating about 50 projects. This includes the long-awaited extension to the Montreal Metro’s blue line.
Finance Minister Eric Girard described the situation as “exceptional” when outlining the details of the bill alongside Dubé.
Girard also announced that he will provide an update on the province’s finances on June 19, but warned that the pandemic has had a grip on the economy.
“This year is going to be a negative year,” he said. “The worst year for the economy since World War Two.”
The announcement comes as Quebec saw 291 new cases of COVID-19, the disease caused by the virus, on Wednesday. It leads the country with 51,884 infections.
The death toll stands at 4,794 after 81 more fatalities were reported from the previous day.
As of Wednesday, the number of hospitalizations decreased by 34 for a total of 1,141. There are 158 people in intensive care.
— With files from the Canadian Press
© 2020 Global News, a division of Corus Entertainment Inc.
Mayor Watson asks province to consider local reopening of economy – Ottawa Citizen
Mayor Jim Watson has asked Premier Doug Ford to consider reopening the City of Ottawa’s economy as part of a regional approach to relaxing COVID-19 restrictions.
“Mayor Watson spoke to Premier Ford last night and expressed his support for a more regional approach given our city is doing better than many other parts of the province,” Watson’s press secretary Patrick Champagne said Wednesday morning.
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“As you know, we also have the added challenge of being a border city, creating an unlevel playing field, as businesses like hair salons and barber shops have reopened in Gatineau but not in Ottawa. Premier Ford fully understood our dilemma and committed to keeping the Mayor’s perspective in mind as they consider a regional approach to reopening the Ontario economy.”
Ford last week expressed interest in a regional approach to reopening Ontario’s economy based on COVID-19 testing and results, rather than tweak provincial emergency orders and have the rules apply to the entire province.
US services index shows biggest part of economy is stirring – BNNBloomberg.ca
U.S. service providers started to emerge in May from a pandemic-induced tailspin as nationwide lockdowns on business and social interaction began to lift.
The Institute for Supply Management said Wednesday that its non-manufacturing index rose 3.6 points to 45.4.
While the monthly increase was the largest in more than two years, the gauge remained below the 50 mark that shows most service-related industries continued to contract.
The purchasing managers group’s gauge of business activity, which parallels the ISM’s factory production index, jumped 15 points, the most in records dating back to 1997, to a still-tepid 41. Along with an improvement in new orders, the figures are a welcome sign that the economy is stabilizing and will gradually recover from a deep recession.
The median forecast in a Bloomberg survey of economists called for an improvement to 44.4 in the overall non-manufacturing index.
The report, however, also showed the labor market remains severely disrupted by the pandemic. The ISM measure of employment at services, which represent almost 90 per cent of the economy, only rose 1.8 points from the worst reading on record in April.
A Labor Department report on Friday is projected to show another 8 million decline in May payrolls after an unprecedented 20.5 million slump in April. The unemployment rate is forecast to soar to nearly 20 per cent.
A pickup in demand as states lift lockdowns and businesses begin to reopen is needed to help stabilize the job market. The ISM’s report showed an index orders at service providers climbed 9 points to a still-weak 41.9.
Meanwhile, the index of supplier deliveries in non-manufacturing industries fell for the first time in four months, indicating an easing in supply-chain bottlenecks and transportation delays.
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