ROME — After five weeks under a nationwide coronavirus lockdown, Cristiano Barberi’s children’s clothing store was among the few Roman shops allowed to reopen last week. But what may have looked like much-needed relief brought more financial punishment.
“It’s only for surviving,” said Barberi, wearing a mask and rubber gloves outside his family-owned boutique in one of Rome’s most fashionable neighborhoods, adding that he was opening to show “the people a new way, a new day.”
Almost a century old, his I Vippini Roma children’s clothing shop sells mostly handmade outfits. It had only a few customers on the day it reopened, and only one made a purchase.
Barberi’s tiny store and its customers are at the tip of the spear of Italy’s delicate economic reopening, one that will be watched by the rest of the world as policymakers try to prevent the pandemic from becoming an economic catastrophe.
Politicians, as well as medical and economic experts, warn that Italy may not make a convincing model for other countries — its death toll remains the highest in Europe, at 24,114, according to Johns Hopkins University. Some complain that Italy’s planning for its “phase two” of the outbreak is still too little, too late.
“Come on, you need to have a plan,” said Alessandro Vespignani, an Italian American physicist and expert on mathematical epidemiology at Northeastern University in Boston. “This is like everyone is talking about D-Day but they don’t know if they have ships, soldiers or support. But all everyone is talking about is when is [the date] of D-Day.”
Around two weeks before Italy is scheduled to reopen for business on May 3, an advisory task force of scientists, business and economy experts appointed by the Prime Minister Giuseppe Conte has yet to roll out a comprehensive plan to put Italians safely back to work. On Tuesday, Conte said that he was “confident” that he would be able to announce a plan for reopening the country by the end of this week.
The government describes this phase as the one in which Italians find a way to live with the virus — allowing people to return to work and use public transportation while still practicing social distancing, tracking personal associations and strengthening the health system to prepare for fresh outbreaks.
In Italy, as elsewhere, medical caution is colliding with hard economic realities. The heavily indebted country ranked among the least financially solvent in Western Europe even before the crisis, and recent estimates from the International Monetary Fund see Italy’s economy contracting by more than 9 percent by the end of the year — the worst projection in Europe.
Even after Silvio Brusaferro, president of Italy’s National Health Institute, said last week that the “contagion curve is dipping,” the government is debating whether to extend the lockdown past May 3 over concerns of a viral rebound.
The debate over Italy’s reopening has played out across familiar fault lines, pitting big business and industry against labor unions and the wealthy north against the much poorer south.
The government is tentatively planning to slowly reopen the economy in three stages across the north — by far the worst afflicted by the virus — the center and south of the country, according to the Italian news agency ANSA.
Which businesses open first and how has become a central sticking point in the debate.
Children’s clothing stores like Barberi’s were allowed to open last week, along with bookstores, stationery stores and logging activities — counterintuitive categories that labor and industry leaders said were meant to prevent swarms of new customers.
“I think it’s because children grow up,” Barberi said about why his store was allowed to open so early. “If there was someone that was born in December or January, they finished their little dress.”
Barberi’s shop is among the 95 percent of Italian businesses that employ fewer than 10 employees. Those companies, less equipped to provide protection for their employees and typically more financially exposed, are among the most vulnerable to the virus.
But representatives of major industries in the automobile and garment sectors have been applying substantial pressure on the government to allow large factories to reopen.
Of particular concern are the “Made in Italy” brands — labels in fashion, food, furniture and mechanical engineering (mostly automobiles) that are largely for export and considered iconic.
The newspaper Corriere della Sera reported over the weekend that such businesses may be allowed to reopen before May 3.
“There is a real risk that these industries will be severely damaged,” said a representative of Confindustria, the Italian employers’ federation, which has been pushing hard to reopen big brands. “You can find ways to allow safe work. But you can’t just stay at home … because the social consequences can be really very, very serious.”
The Confindustria representative argued that most new cases were transmitted within hospitals, private homes and nursing homes, not workplaces.
But epidemiologists have called such arguments misleading. While most patients who died from the disease are elderly and retired people, many probably contracted the virus from younger working people who carried few symptoms.
Labor unions have argued against returning to work while complaining that big business is prioritizing the economy over workers’ safety.
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“There’s a sort of contradiction between saying always ‘stay at home, stay at home, stay at home,’ but at the same time to tell workers to go to work without the security and conditions,” said Gianna Fracassi, deputy secretary-general of the Italian General Confederation of Labor, Italy’s main labor union.
Fracassi said that even after major industries had agreed with the government to keep the economy shut in public meetings Friday, they then privately lobbied the prime minister to reopen early.
The representative from Confindustria denied that industrial lobbies had disagreed with the government’s decision to extend the lockdown.
But the arguments around the reopening point to an emerging realization about phase two: For many, in particular labor unions such as Fracassi’s, it’s less a new phase than a new reality.
“We will be in a different world, and we will need to be in a very different social and economic situation,” Fracassi said. “We know that we are going to be different at the end of this story, which will be very long.”
Iran economy could rebound to 4.4% growth if U.S. sanctions lifted: IIF – TheChronicleHerald.ca
By Davide Barbuscia
DUBAI (Reuters) – Iran’s economy could grow 4.4% next year if U.S. President-elect Joe Biden lifts sanctions that have contributed to a deep three-year recession, although the COVID-19 crisis could limit foreign investment, the Institute of International Finance (IIF) said.
Biden’s victory in the Nov. 3 U.S. election has raised chances that the United States could rejoin a deal Iran reached with world powers in 2015, under which sanctions were lifted in return for curbs on Iran’s nuclear programme.
This is unlikely to happen overnight, however, and the prospects remain uncertain as the adversaries would both want additional commitments.
Iran’s rial currency has lost about 50% of its value against the U.S. dollar in 2020, reflecting economic damage from sanctions and the coronavirus pandemic, although it strengthened in late October in anticipation Biden would unseat U.S. President Donald Trump.
Iran has the highest COVID-19 death toll in the Middle East.
Trump abandoned the nuclear deal in 2018, and Tehran responded by scaling down its compliance.
The IIF, a trade body for the global financial industry, said that if United States lifted most of the economic sanctions on Iran by the end of 2021, the economy could expand 4.4% next year after an expected 6.1% contraction in 2020.
It would then grow by 6.9% in 2022 and 6% in 2023, the IIF said, adding that if oil exports increase, Iran could see its foreign reserves rise to $109.4 billion by the end of 2023.
Tehran has spoken optimistically about the return of foreign companies under a new U.S. administration, but lack of financial transparency could still curb interest from firms who had made tentative moves to invest after the 2015 deal was struck.
Garbis Iradian, IIF’s chief economist for the MENA region, told Reuters foreign direct investment inflows would increase progressively from this year’s $890 million to over $6.4 billion in 2025.
Assuming most sanctions could be lifted by late next year, FDI is likely to remain below $2 billion in 2021, with most of the money coming from China, Iradian said, adding: “Moreover, the coronavirus pandemic will limit FDI inflows in 2021.”
The Iranian economy would remain fragile, though “not to the brink of collapse” if most of the sanctions remain in place, the IIF said.
Under such a “pessimistic” scenario, Iran would post 1.8% growth next year and its foreign reserves would steadily decrease from about $80 billion this year to $46.9 billion by the end of 2023.
About 90% of Iran’s official reserves are frozen abroad due to U.S. sanctions.
(Reporting by Davide Barbuscia; Editing by Catherine Evans)
Picture of US economy is worrisome as virus inflicts damage – Investment Executive
The number of Americans seeking unemployment aid rose last week for a second straight week to 778,000, evidence that many employers are still slashing jobs more than eight months after the virus hit. Before the pandemic, weekly jobless claims typically amounted to only about 225,000. Layoffs are still historically high, with many businesses unable to fully reopen and some, especially restaurants and bars, facing tightened restrictions.
Consumers increased their spending last month by just 0.5%, the weakest rise since the pandemic erupted. The tepid figure suggested that on the eve of the crucial holiday shopping season, Americans remain anxious with the virus spreading and Congress failing to enact any further aid for struggling individuals, businesses, cities and states. At the same time, the government said Wednesday that income, which provides the fuel for consumer spending, fell 0.7% in October.
The spike in virus cases is heightening pressure on companies and individuals, with fear growing that the economy could suffer a “double-dip” recession as states and cities reimpose curbs on businesses. The economy, as measured by the gross domestic product, is expected to eke out a modest gain this quarter before weakening — and perhaps shrinking — early next year. Mark Zandi, chief economist at Moody’s Analytics, predicts annual GDP growth of around 2% in the October-December quarter, with the possibility of GDP turning negative in the first quarter of 2021.
Economists at JPMorgan Chase have slashed their forecast for the first quarter to a negative 1% annual GDP rate.
“This winter will be grim,” they wrote in a research note.
Zandi warned that until Congress agrees on a new stimulus plan to replace a now-expired multi-trillion-dollar aid package enacted in the spring, the threat to the economy will grow.
“The economy is going to be very uncomfortable between now and when we get the next fiscal rescue package,” Zandi said. “If lawmakers can’t get it together, it will be very difficult for the economy to avoid going back into a recession.”
Some corners of the economy still show strength, or at least resilience. Manufacturing is one. The government said Wednesday that orders for durable goods rose 1.3% in October, a sign that purchases of goods remain solid even while the economy’s much larger service sector — everything from restaurants, hotels and airlines to gyms, hair salons and entertainment venues — is still struggling. But economists caution that factories, too, remain at risk from the surge in coronavirus cases, which could throttle demand in coming months.
And sales of new homes remained steady in October, the latest sign that ultra-low mortgage rates and a paucity of properties for sale have spurred demand and made the housing market a rare economic bright spot.
But at the heart of the economy are the job market and consumer spending, which remain especially vulnerable to the spike in virus cases. Most economists say the distribution of an effective vaccine would likely reinvigorate growth next year. Yet they warn that any sustained recovery will also hinge on whether Congress can agree soon on a sizable aid package to carry the economy through what could be a bleak winter.
“With infections continuing to rise at an elevated pace and curbs on business operations widening, layoffs are likely to pick up over coming weeks,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
The government said he total number of people who are continuing to receive traditional state unemployment benefits dropped to 6.1 million from 6.4 million the previous week. That figure has been declining for months. It shows that more Americans are finding jobs and no longer receiving unemployment aid. But it also indicates that many jobless people have used up their state unemployment aid — which typically expires after six months.
More Americans are collecting benefits under programs that were set up to cushion the economic pain from the pandemic. For the week of Nov. 7, the number of people collecting benefits under the Pandemic Unemployment Assistance program — which offers coverage to gig workers and others who don’t qualify for traditional aid — rose by 466,000 to 9.1 million.
And the number of people receiving aid under the Pandemic Emergency Unemployment Compensation program — which offers 13 weeks of federal benefits to those who have exhausted state jobless aid — rose by 132,000 to 4.5 million.
The data firm Womply says that 21% of small businesses were shuttered at the start of this month, reflecting a steady increase from June’s 16% rate. Consumer spending at local businesses is down 27% this month from a year ago, marking a deterioration from a 20% year-over-year drop in October, Womply found.
The heart of the problem is an untamed virus: the number of confirmed infections in the United States has shot up to more than 170,000 a day, from fewer than 35,000 in early September. The arrival of cold weather in much of the country could further worsen the health crisis.
Meanwhile, another economic threat looms: the impending expiration of the two supplemental federal unemployment programs the day after Christmas could end benefits completely for 9.1 million jobless people. Congress has failed for months to agree on any new stimulus aid for jobless individuals and struggling businesses after the expiration of a multi-trillion dollar rescue package it enacted in March.
The expiration of benefits will make it harder for the unemployed to make rent payments, afford food or keep up with utility bills. Most economists agree that because unemployed people tend to quickly spend their benefits, such aid is effective in boosting the economy.
When the viral outbreak struck in early spring, employers slashed 22 million jobs in March and April, sending the unemployment rate rocketing to 14.7%, the highest rate since the Great Depression. Since then, the economy has regained more than 12 million jobs. Yet the nation still has about 10 million fewer jobs than it did before the pandemic erupted.
All of which has left many Americans anxious and uncertain. The Conference Board, a business research group, reported Tuesday that consumer confidence weakened in November, pulled down by lowered expectations for the next six months.
And the University of Michigan’s Surveys of Consumers reported Wednesday that sentiment declined slightly this month, and remained far below where it was before the pandemic struck. With the resurgence of the virus depressing the outlook of consumers, the sentiment index fell to its lowest point since August.
“Gloomier consumer expectations will weigh on spending as the holidays approach,” cautioned Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.
Israel’s Gaza blockade has devastated Hamas-ruled territory’s economy, UN agency says – Global News
Israel’s blockade of the Hamas-ruled Gaza Strip has cost the seaside territory as much as $16.7 billion in economic losses and sent poverty and unemployment skyrocketing, a U.N. report said Wednesday, as it called on Israel to lift the closure.
The report by the U.N. Conference on Trade and Development echoed calls by numerous international bodies over the years criticizing the blockade. But its findings, looking at an 11-year period ending in 2018, marked perhaps the most detailed analysis of the Israeli policy to date.
Israel imposed the blockade in 2007 after Hamas, an Islamic militant group that opposes Israel’s existence, violently seized control of Gaza from the forces of the internationally recognized Palestinian Authority. The Israeli measures, along with restrictions by neighbouring Egypt, have tightly controlled the movement of people and goods in and out of the territory.
Israel says the restrictions are needed to keep Hamas from building up its military capabilities. The bitter enemies have fought three wars and numerous skirmishes over the years.
But critics say the blockade has amounted to collective punishment, hurting the living conditions of Gaza’s 2 million inhabitants while failing to oust Hamas or moderate its behaviour. Gaza has almost no clean drinking water, it suffers from frequent power outages and people cannot freely travel abroad.
“The result has been the near-collapse of Gaza’s regional economy and its isolation from the Palestinian economy and the rest of the world,” the U.N. agency said in a statement.
The report analyzed both the effects of the closure, which has greatly limited Gaza’s ability to export goods, as well as the effects of the three wars, which took place in 2008-2009, 2012 and 2014.
Video appears to show Israeli missiles intercept rockets fired from Gaza Strip
The last war was especially devastating, killing over 2,200 Palestinians, more than half of them civilians, and displacing some 100,000 people from homes that were damaged or destroyed, according to U.N. figures. Seventy-three people, including six civilians, were killed on the Israeli side, according to Israel’s Foreign Ministry, and indiscriminate Hamas rocket fire brought life to a standstill in southern Israel.
Using two methodologies, the report said that overall economic losses due to the blockade and wars ranged from $7.8 billion to $16.7 billion. It said Gaza’s economy grew by a total of just 4.8 per cent during the entire period, even as its population grew over 40 per cent.
These economic losses helped propel unemployment in Gaza from 35 per cent in 2006 to 52 per cent in 2018, one of the highest rates in the world, UNCTAD said.
It said the poverty rate jumped from 39 per cent in 2007 to 55 per cent in 2017. Based on Gaza’s economic trends before the closure, the report said the poverty rate could have been just 15 per cent in 2017 if the wars and blockade had not occurred.
“The impact is the impoverishment of the people of Gaza, who are already under blockade,” said Mahmoud Elkhafif, the agency’s co-ordinator of assistance to the Palestinian people and author of the report.
Israel has long accused the U.N. of being biased against it. The report, for instance, included only a brief mention that indiscriminate rocket fire at Israeli civilian areas is prohibited under international law. “Palestinian militants must cease that practice immediately,” it said.
Israel’s Foreign Ministry accused UNCTAD of failing its mission to assist developing economies and presenting a “one-sided and distorted depiction” that disregards ”terrorist organizations’ control over the Gaza Strip and their responsibility for what occurs in the Gaza Strip.“
Palestinian officials say Gaza ceasefire reached with Israel
“In light of all this, we cannot take the findings of the reports it publishes seriously, and this report is no different,” it said.
In Gaza, Hamas spokesman Hazem Qassem said the report revealed “the level of the crime” committed by Israel.
“This siege has amounted to a real war crime and pushed all services sectors in the Gaza Strip to collapse,” he said. “These figures also reveal the international inability to deal with the illegal siege on Gaza.”
Gisha, an Israeli human rights group that pushes for freedom of movement in an out of Gaza, said it was Israel’s “moral and legal obligation” to life the closure. “The true price paid by Palestinians in lost time, opportunities, and separation from loved ones is inestimable,” it said.
The U.N. agency said it compiled the report at the request of the U.N. General Assembly and noted that it did not include other costs of Israeli occupation over the Palestinians. Israel captured the West Bank, east Jerusalem and Gaza Strip in the 1967 Mideast war, though it withdrew from Gaza in 2005.
UNCTAD, a technical agency that seeks to reduce global inequality, recommended that Israel lift the blockade to allow free trade and movement. It also called for reconstruction of Gaza’s infrastructure, addressing Gaza’s electricity and water crisis, allowing the Palestinians to develop offshore natural gas fields and for the international community to push Hamas and the Palestinian Authority to reconcile.
Associated Press writer Fares Akram contributed reporting from Gaza City, Gaza Strip.
© 2020 The Canadian Press
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