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Youth unemployment: a scourge of the COVID-19 economy – The Journal Pioneer

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(Reuters) – As 2020 was dawning, the oldest members of the world’s youngest generation – Generation Z – were preparing to emerge into one of the strongest global job markets in decades.

That promising landscape was shredded in a matter of months with the onset of the global coronavirus pandemic. Unemployment soared everywhere, but it visited with a fury on the ranks of the youngest workers, often over-represented in service industries like restaurants and travel that were struck hardest by business shutdowns and restrictions on consumer movement and activities.

Graphic: The youngest workers have lost labor market share https://graphics.reuters.com/HEALTH-CORONAVIRUS/GENERATION-Z/xlbvgmmbzvq/chart.png

When the pandemic struck in the first quarter of 2020, the youth labor market bracket – 15-to-24-year-olds in most economic statistics – had only just begun to claw back some of their share of the job market lost during the 2007-2009 Great Recession. In the Group of 7 advanced economies, young workers went from accounting for 11.2% of all those employed at the end of 2019 to just 10% at the end of June, according to data from the Organization for Economic Cooperation and Development. More than 6.4 million youths lost work across the G7 in the first half of 2020.

Graphic: Gen Zers hit hard by COVID job loss https://graphics.reuters.com/HEALTH-CORONAVIRUS/GENERATION-Z/yxmpjqexzvr/chart.png

In the United States, Gen Z members were more likely than any other age group to report being affected by unemployment or lost income.

A Pew Research Center survey from the spring found that half of those aged 23 or younger said they or someone in their household had lost their job or had their pay reduced because of the pandemic. That compared with just 40% of Millennials, 36% of Gen Xers and 25% of Baby Boomers.

Graphic: U.S. Gen Z unemployment https://graphics.reuters.com/HEALTH-CORONAVIRUS/GENERATION-Z/azgpoyyknpd/chart.png

While the U.S. unemployment rate has dropped to 6.7% from a post-World War Two high of 14.7% in April, it remains well into the double-digits for teens and workers in their early 20s, according to Bureau of Labor Statistics.

Beyond the immediate damage to education and job prospects is the risk of what economists call “scarring,” where the knock-on effects do long-term harm to income levels, access to training, career prospects and even mental well-being.

Data show that periods of youth unemployment cause serious long-term damage. A study by the London-based Centre for Economic Policy Research found that even one month of unemployment for those aged 18-20 knocked 2% of total lifetime income.

(Reporting by Dan Burns in Newtown, Connecticut, and Mark John in London; Editing by Leslie Adler)

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

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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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South Korea Sees One of Strongest Recoveries Among Major Economies – BNN

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(Bloomberg) — President Moon Jae-in expects South Korea’s economy to rebound to pre-pandemic levels in the first half of the year, saying it will have one of the strongest recoveries among major economies.

“South Korea managed to minimize the economic damage of Covid last year,” Moon told the World Economic Forum’s Davos Agenda on Wednesday. “The combined growth rate last year and this year is expected to be the highest among the OECD nations,” Moon added, referring to the Organisation for Economic Co-operation and Development.

Moon said South Korea will begin its Covid-19 vaccination program next month. Although it’s later than many advanced economies, South Korea has posted relatively low infection and death rates after it slowed the virus’s initial spread without a lockdown, relying instead on rapid testing and contact-tracing to mitigate flareups.

South Korea ended the pandemic year of 2020 with a 1% contraction in gross domestic product, likely to be the smallest among OECD members. Government spending that included four extra budgets helped limit the damage from a slump in consumer spending, with exports powering the recovery from the second half of the year.

Korea Economy Shrinks Just 1% in 2020 on Exports, Virus Control

The Bank of Korea expects the economy to expand 3% this year. The government’s plan to increase housing supply is helping the construction industry, while policies to provide more pandemic relief are being mulled.

The small annual contraction leaves South Korea in better shape than most developed economies. Finance Minister Hong Nam-ki said in a Facebook post Tuesday that the country’s performance stood out when considering that the world’s 10 biggest economies probably shrank between 3-10%.

©2021 Bloomberg L.P.

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

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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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