(Bloomberg) — Economies around the world will start to get a sense of the damage wrought by the coronavirus this week, as global central banks and governments continue their running battle to allay market fears over the scale of their response.
In the U.S., a Goldman Sachs analysis showed weekly filings for unemployment benefits are poised to surge to a record 2.25 million, up from 281,000, as business shut down because of coronavirus-containment efforts.
Purchasing manager indexes in Europe, the U.S. and Asia will be the first clear signs off the scale of the economic hit in those countries, and South Korean export numbers will be closely watched as a barometer for global commerce.
While traditional central bank calendars mean little in an age of emergency actions, the Bank of England, which has already cut interest rates twice this month, holds a scheduled meeting. Monetary policy announcements are also due from Colombia, Hungary and Nigeria.
Here’s what happened last week and below is our wrap of what else is coming up in the world economy.
U.S. and Canada
With no Fed speeches scheduled due to the virus outbreak, all eyes are on the economic data rolling in for signals of how deep the economic hit will be.
Thursday’s report on initial jobless claims for the week ended March 21 will be the first to show the depth and breadth of the pandemic on the U.S. labor market, with estimates running as high as 4 million — almost 20 times the typical level in the past year. The IHS Markit PMI measures on Tuesday and Michigan consumer sentiment on Friday will give a sense of how shutdowns are hitting manufacturers and Americans’ opinions of the economy.
In Canada, where half a million people, or about 2.5% of the labor force, applied for jobless claims last week, consumer confidence data on Monday is likely to provide another sign the country may already be in a deep recession.
For more, read Bloomberg Economics’ full Week Ahead for the U.S.
After a week of extraordinary central bank and fiscal action across Asia, things are set to quieten a little — at least according to the list of scheduled events. South Korean exports for the first 20 days of March will be closely watched on Monday as a barometer for global commerce, and Japan releases its PMI estimate a day later.
The Bank of Thailand meets on Wednesday after an emergency rate cut late last week.
For more, read Bloomberg Economics’ full Week Ahead for Asia
Europe, Middle East and Africa
The euro-area economy is due to suffer the worst output ever in its two decades of existence, according to Bloomberg Economics, and surveys this week will give a first sense of the downturn. Confidence gauges and initial PMIs for Germany, France and the euro area as a whole are set to show dire readings.
PMI for the U.K. also are due, before the scheduled BOE decision on Thursday. There are central bank meetings in Hungary, the Czech Republic and Albania.
Kenya’s central bank is likely to lower its key interest rate for a third consecutive meeting Monday. After announcing two stimulus packages in a week, the Nigerian central bank may hold on Tuesday as it seeks to shore up its currency.
In South Africa, a possible downgrade to junk by Moody’s Investors Service on Friday could weaken the rand even further. Turkey publishes figures on tourism, confidence and manufacturing.
For more, read Bloomberg Economics’ full Week Ahead for EMEA
Central bank publications this week in Brazil offer up-to-date readings on Latin America’s biggest economy. The minutes of the central bank’s March 18 meeting — where it cut the key rate to a record-low 3.75% — may help explain policy makers’ hawkish tone amid the unprecedented global pandemic, while the quarterly inflation report will serve up technical assessments, scenario analysis and should address any shifts in thinking and reaction function due to the outbreak.
The central banks of Colombia and Guatemala both have scheduled meetings and may cut rates for the first time since 2018 and 2017, respectively.
For more, read Bloomberg Economics’ full Week Ahead for Latin America
©2020 Bloomberg L.P.
Coronavirus: Premier François Legault offers glimmer of hope for Quebec’s economy – Global News
Quebec Premier François Legault expressed optimism about the possibility of getting Quebec’s economy back on track, after taking a hit due to the COVID-19 pandemic.
Non-essential businesses have been shuttered for weeks in an effort to contain the spread the virus, which has had an impact on the economy.
Legault said he was encouraged by COVID-19 projections — made public on Tuesday — and believes Quebec is leaning towards a best-case scenario because of its social-distancing measures.
Coronavirus outbreak: Quebec projections show COVID-19 peak likely in mid-April
Public health officials project the number of cases will peak around April 18 and Legault said he was hopeful businesses could start opening next month.
“But we have to restart the economy without restarting the pandemic,” he warned.
Quebec’s public health director Dr. Horacio Arruda said social-distancing measures will continue be as important as ever. He also stated that most gatherings will still be forbidden in order to avoid a resurgence of the virus.
Legault said re-imagining the workplace should be top of mind.
“I think it’s important that managers, owners of different businesses, that they start thinking about a new way to work in the next weeks or months,” he said.
On Monday, the government announced a $100-million employee training program to help businesses adjust to a new reality. The idea is to ensure employees are trained to use new technologies and can learn new workflows.
Other measures put forward by the government to boost the economy include the Panier Bleu, an online platform to encourage Quebecers to buy locally, as well as various subsidies for businesses and individual workers alike.
Legault said government officials are also working with various company representatives to see how businesses will be able to re-open, provided the “figures stay good in the next few days.”
It’s a reminder that everyone has a crucial role to play in the pandemic.
“I know it’s tough, tough to continue all our efforts, but as we say in English: April showers bring May flowers,” he said.
— With files from Global’s Raquel Fletcher
© 2020 Global News, a division of Corus Entertainment Inc.
Expert weighs in on Kenney’s economic plan for Alberta, suggests PST could be an answer – Global News
While Jason Kenney’s televised address to the province on Tuesday night gave details on how the COVID-19 pandemic in the province could play out in terms of cases and deaths, some political scientists say the comments the premier made in regards to the economic future of Alberta didn’t provide a lot of specifics.
One political scientist in the province said there is one option for the government to increase revenue: implementing a provincial sales tax (PST).
Alberta premier warns devastating economic impact of COVID-19 could mean record unemployment, negative oil prices
Mensah said the pandemic has completely changed the circumstances of the province, and that while the UCP had campaigned on a platform of fiscal conservatism, there needs to be a way of balancing the books going forward.
“The only way available is to look at a modest PST, to provide options for the government to be able to fund programs.”
Kenney said in his Tuesday night address that the social distancing and closure orders in the province would be in place at least until the end of May. He also said that the province would eventually roll out a “relaunch strategy” to get the economy moving again, involving mass testing to get those with immunity back to work, and increasing border screening.
Explaining Alberta’s probable, elevated and extreme COVID-19 modelling numbers
However, once the premier addressed the situation with the global oil markets, experts said there was a lack of clarity on how the province could move past this.
“There didn’t seem to be a whole lot of answers, and just some real dangerous situations,” Mount Royal University political science professor Duane Bratt said.
“[Kenney] talked about a budget deficit that will triple to about $20 billion dollars, [he] talked about negative prices for energy — where we may have to pay people to take it — and there was no sense of how we’re going to get out of that,” said Bratt.
In his address Tuesday, Kenney said he could not “overstate how grave the implications of this will be for jobs, the economy and the financial security of Albertans.
“Much of this is due to the COVID-19 recession, but it has been made worse by a predatory price war led by Saudi Arabia and Russia, who are trying permanently to damage North America’s energy industry.”
Bratt said that while Kenney did reference the Keystone XL pipeline project as an important energy investment made by the government, as well as the work being put into collaborating with its federal counterpart and the U.S in regards to the energy sector, when it came to the province’s economic future, “he didn’t go into the same degree of details, the same strength of numbers as was on the health side.”
While the PST has been a difficult policy option for governments in the past, the COVID-19 situation has put the government into a spot that would be tricky to get out of without it, Mensah said.
“It’s the time to really put aside the ideology of fiscal conservatism,” Mensah said. “I think there’s room for a modest PST, to generate revenue in these uncertain times. You could even put a sunset on the PST— you could have it for five years or so, for the revenue to start to improve.
“The government really has to re-calibrate here and come up with an alternate approach to the province’s finances,” he said.
Kenney has shut down PST idea
However, on March 9, just over a week before Alberta declared a health emergency due to COVID-19, Kenney shut down the idea.
“I cannot imagine a dumber thing to do in the midst of a time of economic fragility, an oil price collapse and a global recession, than to add a multi-billion-dollar tax on the Alberta economy and on Alberta families,” he said.
Jason Kenney says government will not implement a PST
“You’re talking about a PST that would generate several billion dollars of revenue. That would take several thousand dollars out of the pockets of Alberta families at the worst possible time.
“This government is not going to take thousands of dollars out of people’s household budgets at a time of real economic challenge,” Kenney said.
On Wednesday, a spokesperson for the premier said in a statement that Kenney’s previous comments on the idea of a provincial sales tax still stand.
Cases of COVID-19 have spiked and mass layoffs have been handed out in Alberta since March 9, when there were just seven confirmed cases in the province. Just under a month later, on April 8, there were 1,423.
© 2020 Global News, a division of Corus Entertainment Inc.
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