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What's Ahead For The Economy In 2021? – NPR

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Economy

Australia's Surging Terms of Trade Delivers Boost For Economy – BNN

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(Bloomberg) — Australia’s surging terms of trade — a measure of export prices relative to import prices — is set to deliver a much-needed windfall for government coffers while posing a currency headache for the Reserve Bank.

Export prices jumped 5.5% in the final three months of last year, reflecting surging demand for iron ore from China’s recovering economy, government data showed Thursday. That came in the face of a higher currency that compressed import prices by 1% in the period.

Iron ore, Australia’s largest export, soared more than 70% last year as stimulus-aided demand in China helped drive steel production to an all-time high. It has edged back a little in recent days, but is still trading at over $160 a ton, levels unseen since Australia’s last mining-investment boom at the beginning of the last decade.

Australia’s government persistently lowballs its budget estimate of the metal’s price in an effort to avoid repeating past downside fiscal surprises. It forecasts a return to $55 a ton by the end of September, so the excess will bring a windfall to government coffers through company tax payments and associated charges. The Aussie dollar, meanwhile, has surged 33% since its March nadir when it hit 55 U.S. cents.

The typical complication of a higher currency is muted at present with restricted international people movements due to Covid-19. Yet, Thursday’s data highlighted the negative currency impact on commodity lines such as meat, where competition is greater in the global market.

Previously, the RBA estimated a 10% gain in the real exchange rate could cut export volumes by 3% and increase import volumes by 4% after two years, implying a net drag on gross domestic product of 1.5 percentage points. For a recovering economy, these sorts of calculations are going to count.

©2021 Bloomberg L.P.

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Kenya Economy Slumps Into Recession on Third Quarter Contraction – BNN

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(Bloomberg) — Kenya slid into a recession for the first time after the economy contracted for a second straight quarter as measures introduced by the East African state to slow the spread of the Covid-19 pandemic continued to hurt output.

Gross domestic product fell 1.1% during the quarter July through September, compared with a year earlier, after shrinking a revised 5.5% in the previous three months, the Kenya National Bureau of Statistics said Thursday by email. The outcome was in line with the median of three economists’ estimates in a Bloomberg survey.

Before the decline in the second quarter, sub-Saharan Africa’s third-biggest economy last contracted in 2008, when post-election violence led to a 1.6% drop in output, according to the statistics office.

Kenya confirmed its first coronavirus infection in mid-March and later imposed a partial lockdown. Shutdowns in key markets such as the European Union and the U.K. as well as global travel restrictions hit the country’s main foreign-income earners, including tourism and exports of tea, flowers, fruit and vegetables.

Highlights:

  • Agriculture, which makes up a third of GDP, continued to buoy the region’s biggest economy and grew by 6.3%, compared with 7.3% expansion in the April to June period. That was helped by tea production, which increased 14% in the quarter compared with a year earlier, thanks to favorable weather. Kenya is the world’s biggest exporter of the black variety.
  • Education and accommodation and food services, which suffered the most during the nation’s lockdown, contracted by 42% and 58%. They contracted 56% and 83% respectively in the second quarter.
  • The World Bank sees Kenya’s economy rebounding to growth of 6.9% in 2021, from an estimated 1% contraction last year, according to the lender’s latest Global Economic Prospects report.

©2021 Bloomberg L.P.

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Major event cancellations taking toll on Lethbridge economy – Global News

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Exhibition Park is postponing its early 2021 events due to ongoing COVID-19 restrictions.

“Obviously our hand is a little bit forced,” Mike Warkentin, the chief operating officer for Exhibition Park, said.

Read more:
Lethbridge trade and consumer shows at Exhibition Park postponed

He added health and safety has to be the number one priority, but said they also know many businesses and organizations depend on their venue.

All those vendor transactions trickle into the community, adding millions to the local economy.

Read more:
Province announces nearly $28 million for Exhibition Park in Lethbridge

“In an average year we were generating in upwards of $70 million to $75 million of economic impact, we do anticipate that to be significantly down,” Warkentin said.

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Trevor Lewington with Economic Development Lethbridge said that the impact of the event cancellations will likely be felt widely in the community.

“Any of these events — whether its at Exhibition Park or anywhere else in the city — these are people that come to the city and buy meals, they potentially go to the mall and spend money in a retail store, they are often staying at a hotel,” Lewington said.

He said seeing major events delayed or cancelled slows down the whole flow of the economy.

“It’s the deals that happen during those shows, it’s the sales transactions, that’s the larger economic impact.

“You are bringing together vendors and potential customers and so, as those events get cancelled or postponed, you are also delaying some of those interactions.”

Hannah Lee with Sill and Soil is a Lethbridge business owner and past vendor at the Home and Garden Show, one of the events that has been postponed.  She is giving other businesses without a storefront the chance to set up in her shop during COVID-19 while things like markets are on hold.

Read more:
Southern Alberta businesses find success opening during pandemic

“It’s a really anxious feeling knowing, like what do I do with all of this stock, should I sell it, or do I stay prepared and ready to go at the drop of a hat. So it’s such a stressful feeling for sure,” added Lee.

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She also said postponing can be hard for vendors trying to juggle inventory, but it’s usually a better option than cancelling. That’s something the exhibition is hoping to avoid.

“We are very cautiously optimistic things will open up a little bit and we will be able to run these events and get the nearly 600 small businesses through the park in a safe and responsible way,” Warkentin said.

He added they are taking a “wait and see” approach before announcing any further delays or cancellations.

© 2021 Global News, a division of Corus Entertainment Inc.

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