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Venezuela's Maduro Plans Shift to a Fully Digitalized Economy – BNN

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(Bloomberg) — Venezuela’s government is planning to move to a fully digital economy as hyperinflation has made worthless bolivar notes practically disappear, and dollarization expands through the local financial system.

The U.S. dollar has operated as an escape valve for Venezuela amid U.S. sanctions and collapsing oil revenues, President Nicolas Maduro said in a televised interview with Telesur on Friday. He said 18.6% of all commercial transactions are in dollars, while 77.3% are carried out in bolivars with debit cards. Only 3.4% are paid with bolivar notes.

“They have a war against our physical currency. We are moving this year to a more profound digital economy, in expansion. I’ve set the goal of an economy that’s 100% digital,” Maduro said, adding that physical money will eventually disappear.

Venezuela’s currency has lost 99% of its value during three years of hyperinflation, forcing the country to issue higher-denomination notes that in turn become useless in record time. The largest note now in circulation, 50,000 bolivars, is worth about $0.04. The government has delayed plans to issue a 100,000 bolivar bill, which currently would be worth less than $0.10.

After formerly subsidized fuel prices were increased in June, cash is now only used to ride public transportation, and the Caracas subway routinely stops charging passengers due to cash shortages.

Since late 2019, local banks have slowly started to offer accounts and financial products in U.S. dollars, but those remain limited as there’s no clearing system in place to allow for digital transactions in U.S. dollars.

Some banks have had technical meetings with Venezuela’s central bank in an attempt to solve the problem amid high skepticism and caution due to U.S. sanctions. But Maduro vowed to create “payment formats” allowing transactions using savings and checking accounts in U.S. dollars.

A press official with the Central Bank of Venezuela didn’t immediately respond to a request for comment.

Despite promising to expand the use of the U.S. dollar in the economy, Maduro said a formal dollarization wouldn’t happen. “Venezuela has its currency and we are going to defend it,” he said.

©2021 Bloomberg L.P.

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Indian economy to get shot in the arm from federal budget: Reuters poll – The Journal Pioneer

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By Tushar Goenka and Shaloo Shrivastava

BENGALURU (Reuters) – India’s path to economic recovery will be stronger than previously thought as fiscal expansion and vaccine hopes help the country heal from COVID-19, a Reuters poll of economists showed.

The world’s second-most populous country has begun a huge vaccination drive and a steep fall in new coronavirus cases over the past few months is supporting a recovery in Asia’s third-largest economy.

Alongside that, nearly 60% of respondents, 18 of 31, who responded to an additional question in the Jan. 13-25 poll said India’s federal budget, due on Feb. 1, would help a significant economic recovery in financial year 2021/22 and has already sent stocks to record highs.

“We expect global economic activity to return to normality in fiscal Q2 and India to grow in fiscal 2021/22, with government stimulus packages expecting to contribute,” said Hugo Erken, head of international economics at Rabobank.

“There is a strong sentiment the budget will aim to continue expenditure as growth is the only way India can come out of recent setbacks.”

The poll of over 50 economists showed the economy would grow 9.5% next fiscal year – the highest since polling began for the year in March 2020 – after contracting 8.0% in the current fiscal year.

It was expected to grow 6.0% in fiscal year 2022/23. The poll predicted the economy would grow 21.1%, 9.1%, 5.9% and 5.5% in each quarter of the 2021/22 fiscal year, largely upgraded from a poll taken two months ago.

But when asked how long it would take for the economy to recover to its pre-COVID-19 level, 26 of 32 respondents said it would take up to two years, including six analysts said longer than that. Twelve analysts said within a year.

“There is a lack of fiscal space to boost growth sufficiently and India is unlikely to reach its pre-COVID-19 levels any time soon despite policy support,” said Sher Mehta, director at Virtuoso Economics.

“Economic momentum will struggle to gain traction as there are fears of stagflation and the possible end of monetary policy easing.”

The Reserve Bank of India, which has slashed its main repo rate by 115 basis points since March 2020 to cushion the shock from the coronavirus crisis, was expected to keep its benchmark lending rate at 4.0% through at least 2023.

That was a shift in expectations from a survey taken two months back when a 25 basis point cut to 3.75% was predicted in the April-June period.

WILL BORROW MORE

India’s government will focus on fiscal expansion in next week’s budget and revise its borrowing target higher for the 2021/22 fiscal year, prompted by the expected economic slowdown and weak jobs growth, according to the latest poll.

Government borrowing has ballooned due to pandemic spending while revenues have severely dampened.

The median forecast showed the government would revise its fiscal deficit target for next fiscal year up to 5.5% from 3.3% of gross domestic product.

Around 55% of economists, 18 of 33, who answered an additional question about the focus of the budget said it would be more on fiscal expansion than prudence.

“Tight fiscal policy can do lasting damage by hurting potential growth that would have been negatively affected on account of the pandemic,” said Abhishek Upadhyay, senior economist at ICICI Securities PD.

(For other stories from the Reuters global long-term economic outlook polls package:)

(Reporting by Tushar Goenka and Shaloo Shrivastava; Polling by Vivek Mishra and Md. Manzer Hussain; Editing by Jonathan Cable and Steve Orlofsky)

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Northern Development reports unexpected pandemic related benefits to Northern BC's economy – mycariboonow.com

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(Files by Dione Wearmouth-MyPGNow)

The 2020 State of the North Economic Report by Northern Development outlined some surprising impacts the pandemic had on Northern BC’s economy.

According to the report, the overall impact of COVID-19 has been more moderate in the North as the region’s economy doesn’t depend as heavily on hospitality and recreation.

“Our economy in the North is more traditionally on industries like mining, forestry, oil and gas and clean energy,” explained Joel McKay, CEO of Northern Development, “and those particular sectors weren’t hit as hard by the shutdowns involved with the pandemic.”

Since there are fewer service-sector jobs that were heavily impacted by the changing provincial health guidelines, the North was better off than other areas of the province.

The forestry sector managed to do surprisingly well in the North throughout 2020, as the pandemic presented a unique opportunity to the sector.

“Once COVID hit, a lot of people at home took on home improvement and renovation projects and housing starts remained relatively strong, both of which are key indicators of the lumber being manufactured in BC,” noted McKay.

This led to the price of lumber reaching a record high last summer.

This comes after a particularly hard 2019 for forestry, as nine mills closed permanently in Northern BC, resulting in over 1,000 lost jobs.

According to the report, lumber prices are expected to remain relatively high through the end of 2020 and into 2021.

McKay also explained that major energy projects including Site C, Coastal Gaslink projects and the LNG Canada site had a major impact on the North’s economy last year.

“The multi-year construction horizon, the thousands of workers, all the companies and businesses in places like Prince George that are working to support the construction of those projects meant that there was money flowing in the North,” he explained, “which saved the North’s economic bacon.”

Even though the tourism and hospitality sectors didn’t see as many visitors in 2020,  there were many construction workers that came and supported businesses such as restaurants and hotels.

“These three projects are expected to bring people to spend money in the North for the next 4 to 5 years,” McKay added.

Commodity prices for some base and precious metals such as copper spiked as well, which presented an opportunity for the mining industry to thrive in the North.

“That’s driving renewed interest in exploration activity and also some projects that are well established could also start being built for the first time,” McKay added, “we single out the Blackwater project south of Vanderhoof in the report.”

He explained that the Blackwater project could create significant long-term construction jobs filled by people that will spend money on hospitality businesses in the North.

Even though 2020 presented some significant opportunities for economic development in the North, the report explained the region will continue to face economic challenges for some time.

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Indian economy to get shot in the arm from federal budget: Reuters poll – TheChronicleHerald.ca

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By Tushar Goenka and Shaloo Shrivastava

BENGALURU (Reuters) – India’s path to economic recovery will be stronger than previously thought as fiscal expansion and vaccine hopes help the country heal from COVID-19, a Reuters poll of economists showed.

The world’s second-most populous country has begun a huge vaccination drive and a steep fall in new coronavirus cases over the past few months is supporting a recovery in Asia’s third-largest economy.

Alongside that, nearly 60% of respondents, 18 of 31, who responded to an additional question in the Jan. 13-25 poll said India’s federal budget, due on Feb. 1, would help a significant economic recovery in financial year 2021/22 and has already sent stocks to record highs.

“We expect global economic activity to return to normality in fiscal Q2 and India to grow in fiscal 2021/22, with government stimulus packages expecting to contribute,” said Hugo Erken, head of international economics at Rabobank.

“There is a strong sentiment the budget will aim to continue expenditure as growth is the only way India can come out of recent setbacks.”

The poll of over 50 economists showed the economy would grow 9.5% next fiscal year – the highest since polling began for the year in March 2020 – after contracting 8.0% in the current fiscal year.

It was expected to grow 6.0% in fiscal year 2022/23. The poll predicted the economy would grow 21.1%, 9.1%, 5.9% and 5.5% in each quarter of the 2021/22 fiscal year, largely upgraded from a poll taken two months ago.

But when asked how long it would take for the economy to recover to its pre-COVID-19 level, 26 of 32 respondents said it would take up to two years, including six analysts said longer than that. Twelve analysts said within a year.

“There is a lack of fiscal space to boost growth sufficiently and India is unlikely to reach its pre-COVID-19 levels any time soon despite policy support,” said Sher Mehta, director at Virtuoso Economics.

“Economic momentum will struggle to gain traction as there are fears of stagflation and the possible end of monetary policy easing.”

The Reserve Bank of India, which has slashed its main repo rate by 115 basis points since March 2020 to cushion the shock from the coronavirus crisis, was expected to keep its benchmark lending rate at 4.0% through at least 2023.

That was a shift in expectations from a survey taken two months back when a 25 basis point cut to 3.75% was predicted in the April-June period.

WILL BORROW MORE

India’s government will focus on fiscal expansion in next week’s budget and revise its borrowing target higher for the 2021/22 fiscal year, prompted by the expected economic slowdown and weak jobs growth, according to the latest poll.

Government borrowing has ballooned due to pandemic spending while revenues have severely dampened.

The median forecast showed the government would revise its fiscal deficit target for next fiscal year up to 5.5% from 3.3% of gross domestic product.

Around 55% of economists, 18 of 33, who answered an additional question about the focus of the budget said it would be more on fiscal expansion than prudence.

“Tight fiscal policy can do lasting damage by hurting potential growth that would have been negatively affected on account of the pandemic,” said Abhishek Upadhyay, senior economist at ICICI Securities PD.

(For other stories from the Reuters global long-term economic outlook polls package:)

(Reporting by Tushar Goenka and Shaloo Shrivastava; Polling by Vivek Mishra and Md. Manzer Hussain; Editing by Jonathan Cable and Steve Orlofsky)

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