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Monetary Nerves Fray on Four Continents: Economy Week Ahead – Yahoo Canada Finance

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Monetary Nerves Fray on Four Continents: Economy Week Ahead

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(Bloomberg) — Central banks on four continents will project a collective message of nervous unease in interest-rate decisions this week as the persistence of the coronavirus impedes economic recoveries throughout much of the world.

Monetary authorities in Brazil and India — both enduring acute outbreaks of the disease — will probably cut benchmark borrowing costs. Others from the U.K. to Australia are likely to pledge heightened vigilance and continued support, similar to that offered by the U.S. Federal Reserve when it left rates near zero on Wednesday.

The unprecedented growth crisis caused by the Covid-19 virus has provoked easing from central banks everywhere by officials who know the most optimal stimulus — a vaccine — is one they can’t offer. Monetary institutions normally guided by economic forecasting are being forced to wait instead for advances in medical science to clear the fog around their policy outlooks.

Such is the uncertainty that the Bank of England, which would normally unveil new growth projections at its decision on Thursday, insists on describing them as “scenarios” because the coronavirus is defeating its officials’ attempts to attach probabilities to the varying outcomes.

What policy makers will have to work with at the seven central banks scheduled to meet in coming days — including the Czechs, Thailand and Georgia too — is more evidence of the economic damage caused by disruptions to combat the disease. Global purchasing managers indexes in most jurisdictions are likely to confirm that the rebound from the worst of the world’s lockdowns remains weak, while jobs data in the U.S. is predicted to show a rebound in hiring slowed significantly last month.

What Bloomberg’s Economists Say…

“A likely cut from Brazil, moves in India to give more traction to past easing, and a reassessment of the shape of the UK recovery shows central banks are not out of the game. Still, with the first urgency of the crisis past, markets stable, and space to act severely depleted, the focus of attention has shifted to fiscal policy.”

— Tom Orlik, chief economist

Click here for what happened last week and below is our wrap of what else is coming up in the world economy.

U.S. and Canada

The U.S. labor market’s V-shaped recovery in May and June probably lost substantial vigor in July, as a resurgent coronavirus forced a renewed wave of business closings and layoffs.

Employers likely added just over 1.5 million workers to payrolls last month, or about a third of the prior month’s pace, according to a Bloomberg survey ahead of Friday’s Labor Department report, which covers the period through mid-July. The jobless rate is projected to drop by 0.6 percentage point to 10.5%, compared with a 2.2-point decline in June, and still triple the pre-pandemic level of 3.5%.

A day before the jobs report, the weekly figures on filings for unemployment benefits will indicate whether the labor market’s slowdown further deepened in late July. Last week’s report showed a second straight increase in initial filings, along with the biggest jump in continuing claims since May, ominous trends that could presage a stall or even a drop in jobs in August.

For more, read Bloomberg Economics’ full Week Ahead for the U.S.

Europe, Middle East and Africa

With the Bank of England not expected to take any action in its meeting next week, the focus will be on signals of future moves, particularly whether policy makers are inclined to take interest rates below zero. The Czech central bank, which announces its decision on the same day, is also expected to keep rates on hold.

On the data front, high-frequency indicators for the U.K. and the euro area are expected to confirm the rebound taking place in the third quarter. Figures from Sweden, on the other hand, will give a fresh glimpse into whether the country’s relatively lax approach to the Covid-19 pandemic has paid off in economic terms. Bloomberg Economics expects an 8 percent slump in output.

For more, read Bloomberg Economics’ full Week Ahead for EMEA

Asia

Japan re-revises its first quarter GDP data on Monday, just two weeks before far-worse second quarter figures are due out. Purchasing manager reports from across the region will be watched Monday to see if the supply-side recovery is holding into the second half.

Australia’s central bank meets Tuesday and is set to keep its overnight cash rate and three-year yield target unchanged. On Wednesday, Bank of Thailand is expected to keep rates steady at an all-time low, seeking to preserve its limited policy space in case the economy worsens further in one of the last MPC meetings chaired by Governor Veerathai Santiprabhob. India’s monetary policy committee is likely to cut rates on Thursday to shore up the growth outlook despite a recent surge in headline inflation. On Friday, China will release trade data for July.

For more, read Bloomberg Economics’ full Week Ahead for Asia

Latin America

On Monday, Colombia’s central bank posts the minutes of its July 31 meeting, where the key rate was cut to 2.25% with possibly one more quarter-point reduction on tap for August. Two days later, Brazil’s central bank looks set to extend its third-longest easing cycle of the last decade with a quarter-point cut to push the overnight rate to a record-low 2%.

Reports on Chile’s economic activity and Brazil’s industrial output for June will indicate nascent rebounds even as the year-on-year figures show double-digit declines. Lastly, July consumer price data from Peru, Colombia, Mexico, Chile and Brazil should confirm that inflation rates are either within or even below their respective target ranges.

For more, read Bloomberg Economics’ full Week Ahead for Latin America

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Thai leader says unity necessary to revive virus-hit economy – News 1130

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BANGKOK — Thailand’s prime minister, facing growing demands from students for change, warned Thursday that the nation must pull together to overcome the economic damage caused by the coronavirus pandemic.

In a speech marking the appointment of a new team of financial specialists to his Cabinet, Prayuth Chan-ocha said the economic crisis will not go away quickly.

Thailand has been praised for its handling of the health effects of the coronavirus, with no local cases reported for 80 days. But it has suffered an especially strong shock to its economy because of its heavy dependence on tourism and exports.

Prayuth’s speech comes at a time of growing political pressure, as a student-led protest movement issues increasingly strident calls for his government to step down, the military-installed constitution to be revised, and limits to free speech to be lifted to promote democracy.

Some of the protesters’ criticisms challenge aspects of the country’s constitutional monarchy, setting them at odds with the conservative political establishment led by royalists and the military.

Prayuth, as army commander, led a coup in 2014 that ousted an elected government, served as prime minister in the military regime that followed, and returned as prime minister after a general election last year that was widely seen as free but not fair.

He declared Thursday that “our future is in the hands of the young,” but pushed aside the demands of the mainly young protesters at frequent rallies around the country.

“Right now, we must focus on the economic survival of tens of millions,” he said. “Let’s get the economy going first, first get that done by working together, and we can look to fixing the other issues, collaboratively, later.”

He also referred to the political conflict that has afflicted the country for much of the past decade and a half, including street clashes and two military coups.

“The politics of division that rejects a united approach to solving problems belongs to another era in history,” he said.

Prayuth said he appointed experts rather than politicians to the Cabinet to manage financial policy because “the economy is as big a threat to our lives as is the health threat.”

The Asian Development Bank recently forecast that the economy will contract by 6.5% in 2020, compared to its December 2019 projection of 3.0% growth.

“We are a small boat in a big ocean, and our economy can only start returning to normality when the rest of the world starts returning to normality,” Prayuth said.

Grant Peck, The Associated Press

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As economy recovers, some Toronto restaurants commit to end tipping – CP24 Toronto's Breaking News

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TORONTO – As the Canadian economy continues to adapt to the reality of the COVID-19 pandemic, some restaurants in Toronto are saying goodbye to a service industry staple: tipping.

So far three restaurants — Richmond Station, Ten and Burdock Brewery — have publicly signed onto doing away with the practice.

The aim is to make the industry more equitable and provide service workers with access to the social safety nets afforded to other professions.

Each of them has instead implemented what is known as a “hospitality included” fee — essentially an enforced gratuity, usually set at 18 per cent of the bill.

Unlike the practice of “tip-pooling,” which typically pays back-of-house staff such as cooks and dishwashers significantly less than front-of-house staff, a hospitality included fee is designed to be more evenly distributed.

Ryan Donovan, co-owner of Richmond Station, says his team decided it was the right choice when they saw how badly service workers were hit by the pandemic.

But James Rilette, vice-president of the industry group Restaurants Canada, doesn’t think ending tipping will go over well with customers.

He says conversations with restaurant owners and customers over the years have led him to believe that consumers tend to prefer tipping over price increases on menu items.

Rilette says the biggest problem is sticker shock — since people are going to react to seeing the price of their burger go up 20 per cent.

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Thai leader says unity necessary to revive virus-hit economy – 570 News

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BANGKOK — Thailand’s prime minister, facing growing demands from students for change, warned Thursday that the nation must pull together to overcome the economic damage caused by the coronavirus pandemic.

In a speech marking the appointment of a new team of financial specialists to his Cabinet, Prayuth Chan-ocha said the economic crisis will not go away quickly.

Thailand has been praised for its handling of the health effects of the coronavirus, with no local cases reported for 80 days. But it has suffered an especially strong shock to its economy because of its heavy dependence on tourism and exports.

Prayuth’s speech comes at a time of growing political pressure, as a student-led protest movement issues increasingly strident calls for his government to step down, the military-installed constitution to be revised, and limits to free speech to be lifted to promote democracy.

Some of the protesters’ criticisms challenge aspects of the country’s constitutional monarchy, setting them at odds with the conservative political establishment led by royalists and the military.

Prayuth, as army commander, led a coup in 2014 that ousted an elected government, served as prime minister in the military regime that followed, and returned as prime minister after a general election last year that was widely seen as free but not fair.

He declared Thursday that “our future is in the hands of the young,” but pushed aside the demands of the mainly young protesters at frequent rallies around the country.

“Right now, we must focus on the economic survival of tens of millions,” he said. “Let’s get the economy going first, first get that done by working together, and we can look to fixing the other issues, collaboratively, later.”

He also referred to the political conflict that has afflicted the country for much of the past decade and a half, including street clashes and two military coups.

“The politics of division that rejects a united approach to solving problems belongs to another era in history,” he said.

Prayuth said he appointed experts rather than politicians to the Cabinet to manage financial policy because “the economy is as big a threat to our lives as is the health threat.”

The Asian Development Bank recently forecast that the economy will contract by 6.5% in 2020, compared to its December 2019 projection of 3.0% growth.

“We are a small boat in a big ocean, and our economy can only start returning to normality when the rest of the world starts returning to normality,” Prayuth said.

Grant Peck, The Associated Press

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