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Senegal's economy struggles amid COVID-19 pandemic – Africanews English

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Senegal’s recent protests have shone a light on simmering frustrations over sluggish economic activity and unemployment in the West African state, which have been compounded by a year of coronavirus restrictions.

But many argue that anger also boiled over because of deepening poverty in the nation of 16 million people, especially among the young.

– Tourism sector hit hard –

At the Soumbédioune craft market in central Dakar, usually a draw for tourists looking for souvenirs, merchants are struggling as the pandemic drags on.

Moulaye Ndiaye, a sculptor from Dakar’s crafts market, shares his local observations.

“Everything is slowed down, or rather, everything has completely stopped. For other sectors, the shopkeepers in the city centre, for example, it’s not that bad, they are still working. But we, who are craftsmen, who depend directly on tourism, are very affected by all this.”

Gorra Sarr, a crafts vendor, expresses what he believes is the frustration of the Senegalese people.

“What I can say is that the Senegalese are tired, and they are hungry. If you notice, they have attacked the stores where we sell food. For example, they didn’t attack us because we don’t sell anything to eat.”

Situated in the westernmost part of Africa, Senegal is bordered by Mauritania, Mali, Guinea and Guinea-Bissau. It is surrounded by the Gambia, an English-speaking country with one of the smallest land areas on the continent.

Senegal has a tropical, dry climate and a population of 15.4 million, a quarter of which lives in the region of the capital, Dakar, on 0.3% of the territory.

The country is one of the most popular tourist destinations in West Africa, which is home to Dakar and Saint Louis, two dynamic cultural hubs.

Senegal is also home to several diverse wildlife parks, including the Niokolo-Koba National Park, the Oiseaux du Djoudj National Park, and the Bandia Game Reserve. Senegal is known as the land of “teranga”, which is the Senegalese value of hospitality, respect, and community. Teranga is a Wolof word (one of the national languages) that encompasses the Senegalese spirit of warmth and friendliness to visitors.

Visitors to Senegal are sure to experience a warm welcome on their arrival, as well as throughout their visit. The Senegalese beaches are beautiful and sandy, with rich populations of fish. Savoury Senegalese food is sure to tempt your taste as well.

The pandemic not only hit the hospitality and tourism industries but also slashed foreign remittances which represent about 10% of the country’s GDP.

About two million people had fallen into poverty since the onset of the coronavirus crisis.

Pape Abdou Fall, President of Soumbédioune crafts market’s sculptor’s association, provides some more insight into the situation.

“Before COVID, we were already in a state of crisis, which COVIDhas aggravated. We who work in the tourism sector, it is a total crisis. I can say that 95% of our work is the tourists, because we make wooden sculptures, and the sculptures are bought by tourists.”

– Economic situation –

Between 2014 and 2018, Senegal recorded some of the strongest economic growth in Africa, consistently above 6% per year. Real GDP growth was 5.3% in 2019, down from 6.3% in 2017. It is mainly driven by the services sector, while on the demand side, the main drivers of growth are investment (+12.5%) and exports (+7.2%).

Since the beginning of 2020, the coronavirus pandemic (COVID-19) has significantly changed the country’s economic outlook. In 2020, growth has slowed sharply to an estimated 1.3%, with services (such as tourism and transport) and exports particularly affected. Senegal has responded with containment measures and an ‘economic and social resilience programme’ (ESRP) to protect lives and livelihoods. However, weak budgetary reserves and safety nets, a vulnerable health system and a large informal sector pose challenges.

Economic recovery is likely to be gradual and driven by a strong return of private consumption and investment. The reforms envisaged under the Plan Sénégal Émergent (PSE) need to be deepened so that growth returns to its pre-pandemic trajectory.

A significant influx of private investment is essential to increase Senegal’s productive capacity and sustain export growth. Services continue to dominate GDP, while the primary sector (agriculture, in particular) is the most dynamic engine of growth. The current health crisis has delayed oil and gas projects, which are only expected to contribute to revenues and exports around 2025.

The COVID-19 pandemic risks jeopardising the socio-economic gains from improved access to key services, both in terms of affordability and infrastructure deployment. It could result in severe losses to households through reduced in-work and out-of-work income (especially private remittances), domestic price inflation and disruption of essential service provision.

Senegal’s economy was growing before the pandemic, with its GDP increasing by 5.3% in 2019, according to the International Monetary Fund (IMF).

However, despite the IMF forecasting a recovery this year after a slowdown in 2020, coronavirus restrictions have ravaged Senegal’s large informal sector and growing numbers of people are struggling to make ends meet.

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The rapid growth the U.S. economy has seen is about to hit a wall – CNBC

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A National Park Service worker replaces a flag at the Washington Monument which reopened today following a six month closure due to COVID-19 safety measures, in Washington U.S., July 14, 2021.
Kevin Lemarque | Reuter

The U.S. economy is expected to post another roaring growth spurt in the second quarter, before a slow and steady dose of reality starts to sink in.

Gross domestic product is projected to accelerate 9.2% for the April-to-June period, according to a FactSet survey. The Commerce Department will release its first estimate for second-quarter GDP on Thursday.

In a pre-pandemic world, that would have put annualized growth at its fastest level since the second quarter of 1983. However, the current circumstances and the outsized policy response they generated make this merely the third straight quarter of GDP that sits well above the post-Great Recession trend.

Things are about to change, however.

The economy is creeping back toward normal, the open checkbook from Congress is about to get tighter, and millions of sidelined American workers will be returning to their jobs. That means a gradual reversion to the mean for an economy more used to growing closer to 2% than the much stronger levels it has turned in during the reopening.

“Growth has peaked, the economy will slow a bit in the second half of this year, then much more noticeably in the first half of 2022 as fiscal support fades,” said Mark Zandi, chief economist at Moody’s Analytics. “The contours of growth are going to be shaped largely by fiscal policy over the next 18 months. The tailwind just blows less strongly, and may stop altogether by this time next year.”

It’s been a long road getting here, but the economy has gotten very close to its pre-pandemic self.

In fact, according to a running gauge that Jefferies keeps, overall output is at 98.6% of its “normal” level before Covid-19 turned everything upside down. The firm uses a slew of indicators to measure then versus now, and finds that while some areas such as employment and air travel are lagging, retail and housing have helped push overall activity to just below the 2019 level, at 98.6%.

“When I look holistically at household income dynamics and balance sheets, I see a very, very positive situation, very healthy fundamentals, and it’s hard to be pessimistic on the outlook,” said Aneta Markowska, chief financial economist at Jefferies.

Indeed, household net worth totaled $136.9 trillion at the end of the first quarter, a 16% increase from its 2019 level, according to the Federal Reserve. At the same time, household debt payments compared with disposable personal income fell to 8.2%, a record low going back to 1980.

But much of that net worth has been driven by increases in financial assets such as stocks, and personal income has swelled due to government stimulus payments that are slowing and eventually will stop.

Demographics holding back growth

Keeping up such a rapid pace of growth will be difficult in an economy that has long been held back by an aging population and lackluster productivity. Those issues will be exacerbated by dwindling policy support as well as an ongoing battle against Covid-19 and its variants, though few economists expect widespread lockdowns and the plunge in activity that happened in early to mid-2020.

“What we see is an economy growing robustly above trend albeit at a slower pace through 2023,” said Joseph Brusuelas, chief economist at consulting firm RSM. “Absent any productivity-enhancing policy support, we eventually will move back to trend because there’s not much we can do about the demographic headwinds, which will eventually drag growth back to the long-term trend.”

But there also are shorter-term headwinds that should temper those gaudy growth numbers.

An aggressive spurt of inflation brought on by supply constraints and huge demand related to the economic reopening will hit output. While many economists, including those at the Federal Reserve, are willing to write off the inflation as temporary with soaring used auto and truck prices contributing a large component, officials including Treasury Secretary Janet Yellen warned that the price increases are likely to continue for at least several months.

Gasoline prices at a Royal Dutch Shell Plc gas station in San Francisco, California, U.S., on Wednesday, July 7, 2021.
David Paul Morris | Bloomberg | Getty Images

Inflation combined with fading fiscal support also then will serve as a growth limit.

“The economy is facing supply constraints with residential investment likely a drag and the change in inventories remaining negative,” Bank of America U.S. economist Alexander Lin said in a note. “Looking ahead, this is likely the peak, with growth cooling in the coming quarters.”

Capital Economics forecasts a below-consensus 8% GDP figure for the second quarter, then a drop to 3.5% in the following period.

“With surging prices squeezing real incomes we suspect the pace of monthly growth will remain lackluster, setting the stage for a sharp slowdown in consumption and GDP growth in the third quarter,” wrote Paul Ashworth, chief North American economist at Capital Economics.

The pandemic is another wild card.

Cases of the delta variant are spiking in a handful of states, and health officials worry that the U.S. could face a surge like the one hitting some European and Asian countries. Few if any economists expect another wave of lockdowns or similar constraints in the U.S., but pressure from abroad could hit domestic growth.

“Export platforms like Vietnam are being locked down now,” Brusuelas said. “Vietnam is becoming a more important cog in the global supply chain, so we are watching that closely.

Brusuelas added that the negotiations over the debt ceiling also could shake up things in the U.S. Yellen said Friday that extraordinary measures the U.S. may need to take to continue paying its debts could hit troubles as soon as October.

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Restarting a sustainable, export-oriented economy – Business in Vancouver

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Clean, sustainable products and services will be key to B.C.’s economic recovery | Chung Chow

This column was originally published in BIV Magazine‘s Trade issue.

As B.C. looks to restart its economy, the demand for our province’s clean and sustainable products and services is surging across a variety of sectors, demonstrating the key role that trade will play in our economic recovery.

Exports increased 24% year-to-date for April – that’s up $3 billion over the same time last year. It’s a big boost for the provincial economy, with a majority of our exports being commodities in great demand. Our stringent environmental standards in wood exports, burgeoning clean tech sector and high standards in labour protections mean that when other markets buy from us, they’re also contributing to a cleaner and more socially responsible global economy.

B.C. was committed to international trade long before the pandemic. It creates new opportunities for businesses, and more importantly, it creates good jobs and prosperity for people in B.C. When businesses export, they are more resilient. Access to more markets means they have a more diverse customer base and aren’t as impacted by fluctuations in their local economies.

We have a program perfectly designed to help small businesses get their goods and services to new markets. It’s called Export Navigator. This program offers businesses free expert guidance on exporting. Businesses get connected with an expert advisor who will help “navigate” them through the export process. It’s hugely beneficial, helping businesses reach new customers for the first time and making the process a lot easier along the way.

We continue to support B.C. businesses in other ways as well. For example, we developed a series of grant programs to meet their unique needs, making over half a billion dollars available in direct supports. The Launch Online program helps businesses improve their online presence to attract and keep customers and meet demand as online shopping hit new heights during the pandemic. The Supply Chain and Value-Added Manufacturing grant helps B.C.-based manufacturers in the aerospace, shipbuilding, food processing and forestry sectors recover and grow, supporting them to seek efficiencies to continually keep goods flowing into the marketplace.

From natural resources and agrifoods to manufactured goods and high-tech goods and services, B.C. has a lot to offer to the world. We are a responsible, low-carbon producer of natural resources and manufactured goods, and we are working hard to make sustainability a larger part of B.C.’s brand and our global competitive advantage. Our priority is to help B.C.-based businesses start up, scale up, access global markets and succeed in the highly competitive world marketplace. The more we export, the more new dollars we bring into B.C. and generate revenue that supports government investments in health care, education and critical infrastructure.

We stand behind the high-quality goods that B.C. has to offer to the world. Globally, companies large and small are increasingly applying environmental, social and governance filters to their investment decisions. We are committed to growing our economy in a sustainable way, and are working on a new trade diversification strategy that will provide us with the opportunity to develop an updated, forward-looking and ambitious approach that aligns closely with these principles, while ensuring that our exporting businesses are maximizing the opportunities afforded to them through Canada’s existing free trade agreements. Our recently announced Mass Timber Demonstration Program is an example of how we are advancing technologies that can showcase to the world the possibilities of building with a more sustainable and environmentally friendly product from B.C.

The pandemic leaves behind many lessons and creates a once-in-a-generation opportunity for B.C. to redefine itself. We know the pandemic is not impacting everyone equally, with women and visible minorities being disproportionately impacted. This is why we are committed to continuing to grow strong, robust industries that can provide good jobs for all of B.C.’s diverse populations.

Growth in trade will be a big part of our economic recovery, and as we transition through our restart plan, we will continue to engage with businesses, industry and key stakeholders to ensure we’re supporting their efforts to expand globally.

Our goal is to diversify our trade sectors to include not just our natural resources, but clean tech, high tech, agritech and advanced manufacturing. We need to support our exporters and encourage new exporters to expand our opportunities in global markets and strengthen our resilience.

We’re committed to invest in people and in businesses to restore economic growth and we are confident that the entrepreneurial spirit of B.C.’s business community will rise to the challenge as we work together to build a better future with meaningful jobs and a strong, sustainable economy for all. 

Ravi Kahlon is B.C.’s minister of jobs, economic recovery and innovation. George Chow is the province’s minister of state for trade.

This column was originally published in the July 2021 issue of BIV Magazine. The digital magazine can be read in full here.

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ECB Lifts Restrictions on Bank Dividends as Economy Rebounds – Bloomberg

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The European Central Bank said it will lift a cap on how much lenders can return to shareholders with dividends and share buybacks, while urging them to remain cautious given uncertainty in the pandemic.

The ECB “decided not to extend beyond September 2021 its recommendation that all banks limit dividends,” the central bank said in a statement on Friday. “Instead, supervisors will assess the capital and distribution plans of each bank as part of the regular supervisory process.”

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