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Covid-19: What commentators are saying

Covid-19 pandemic causing disruptions in FDI, according to leading macroeconomic influencers

The Covid-19 pandemic has undone years of economic globalisation as foreign direct investments have been disrupted like never before. Developing countries are the most affected as foreign direct investment (FDI) inflows are expected to drop below the global average. As the recovery from the pandemic prolongs and FDI inflows drop, developing countries are expected to lose export revenues consequently impact employment opportunities.

Stephany Griffith-Jones

Stephany Griffith-Jones, an economist, shared an article on how the Covid-19 pandemic is impacting the flow of global FDI. The article notes that developing countries are expected to be the worst affected due to this disruption of FDI.

The pandemic led to a capital outflow of $83bn in late March from developing countries, which is the largest ever recorded. Further, global FDI flows are projected to contract by 30%-%40 between 2020 and 2021. All sectors are expected to be affected particularly airlines, leisure, and restaurants.

Linda Yueh

Linda Yueh, an economist at the University of Oxford, shared an article on how a second wave of Covid-19 infections in UK may lead to increase in unemployment rate to 15%, according to the Organisation for Economic Co-operation and Development (OECD).

The unemployment rate is expected to reach 11.7% even without a second wave, the OECD noted. With government plans to withdraw support for the economy by the end of 2020, the labour market is expected to take a long time to recover. Self-employed and low-paid young workers are projected to be the most affected among the labour force.

Gregory Daco

Gregory Daco, chief US economist at Oxford Economics, shared statistics related to the latest data on unemployment claims in the US. He noted that the initial unemployment claims increased to 1.31 million during the first week of July.

The four week average of unemployment claims reached 1.44 million, with unemployment insurance claims and pandemic related unemployment claims reaching 2.3 million. Daco added that taking backlogs and miscounts in account, more than two million claims in early July is worrisome.

Konstantina Beleli

Konstantina Beleli, an economist, shared an article on views expressed by billionaire investor Marc Lasry who notes that the stimulus package injected by the US government provides a golden opportunity for investors.

Lasry notes that the US economy is fundamentally fine and can survive the Covid-19 pandemic. He added that providing loans to underperforming companies can generate good returns to debt investors.

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Covid-19 pandemic may shift the international balance of power, according to leading macroeconomic influencers

The Covid-19 pandemic has highlighted the weaknesses of various countries in responding to a disaster of such as a viral outbreak. China has been quick in controlling the outbreak, while other countries are yet to bring it under control. The quick spread of the pandemic and inability to bring it under control led a series of blame games and rivalries among some of the biggest nations. As China quickly recovers, the balance of power may shift post-pandemic.

Konstantina Beleli

Konstantina Beleli, an economist and consultant, shared an article on how the Covid-19 pandemic is aggravating existing rivalries and blame games between nations. The article notes that in the differences in economic and demographic growth is expected to shift the balance of power from the west to the east.

The pandemic has exposed the weaknesses in the European Union (EU), while intensifying the rivalries between the US, China and Russia.

Erik Meyersson

Erik Meyersson, senior economist at Svenska Handelsbanken, shared an article on the increase in stock market trading in China despite the pandemic. Stocks have jumped by 15% in the previous week and increased by 30% from a decline in March.

The article attributes this to the projected growth for China during the year as well as a rebound next year. Investors are, therefore, rushing to invest in the country although their moves may be premature, the article adds. The long-term outlook in China is still uncertain as industrial profits have declined by 19% compared to the previous year.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the decline in demand for labour in the UK based on a study performed on online job advertisements. The article notes that labour demand declined drastically in May although demand rebound slightly in June.

Overall job vacancies remained below pre-pandemic levels signalling a job crisis, according to the Recruitment and Employment Confederation.

Richard Murphy

Richard Murphy, professor of international political economy at the University of London, shared an article on the economic measures announced by Chancellor Rishi Sunak for Scotland.

The measures announced by Sunak include a job retention bonus of £1,000 ($1,252.27) that will be paid to companies to keep their staff on for a period of three months even after the end of the furlough scheme in October. He also announced a £2bn ($2.5bn) scheme to create more jobs for young people along with a reduction in VAT on food and other attractions from 20% to 5%.

Prof. Steve Hanke

Prof. Steve Hanke, an economist at the Johns Hopkins University, shared an article on how bogus unemployment claims are delaying the clearing of applications filed by eligible workers. States are taking more time reviewing applications due to false claims leaving eligible workers without payments for weeks.

The article notes that false claims can cost the government up to $26bn in 2020. The impact can be devastating to families as they are unable to meet basic needs.

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Unemployment rates caused by Covid-19 to remain high until 2021, according to leading macroeconomic influencers

Unemployment rates have reached unprecedented levels globally due to the Covid-19 pandemic. The impact of the pandemic on jobs is ten times higher than the 2008 global financial crisis. Despite the job retention schemes and unemployment benefits offered by governments, unemployment rates are not expected to recover until after 2021.

Miles Corak

Miles Corak, professor of economics at The Graduate Center, shared statistics related to the job retention schemes implemented across various countries from an article published by the Organisation for Economic Co-operation and Development (OECD).

The article details how the Covid-19 pandemic is leading to a collapse in economic activity and increasing unemployment rates, which is expected to reach 12% globally and 10% for OECD countries by the end of 2020.

Corak noted that these job retention programmes have not succeeded in Canada as businesses have not adopted them. He added that temporary layoffs are turning into permanent layoffs resulting in an increase in the duration of unemployment and decline in earnings.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on Bank of England’s chief economist Andy Haldane’s views on how a second wave of Covid-19 will determine the future for the UK economy.

Haldane noted that the UK economy is recovering slowly with increase in consumer spending and reopening of businesses. He added that the intensity of a second or third wave of Covid-19 will determine whether this rebound will continue.

Fausto Panunzi

Fausto Panunzi, professor of economics at the University of Bocconi, shared an article on the revival of pawnshops in Italy. With banks declining to extend loans and government aid packages set to end next month, Italians are turning to pawnshops for loans.

Pawnshops have witnessed a surge in activity from 20% to 30% after the end of the lockdown and expected to increase further as aid packages come to an end. With the Italian economy expected to contract by 13% in 2020, pawnshops are projected to provide a vital service for working class people desperately in need of money.

Joe Sarling

Joe Sarling, an economist and head of research and analysis at Homes England, shared an article on how the 2008 recession has caused workers to shift and excel in other sectors. The article notes that the trends from the 2008 recession can be used to highlight how to quickly transition to other sectors and earn jobs.

The article notes that approximately 2% of workers in the hospitality and food services sectors moved to human resource roles, while 3.1% of retail workers shifted to accounting and finance roles by acquiring new skills. These trends highlight the re-skilling opportunities for labour forces to recover from the current Covid-19 recession.

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Resilient economies that can withstand worst case scenarios essential after Covid-19 pandemic, according to leading macroeconomic influencers

The Covid-19 pandemic has exposed the already deepening crises facing the world. Traditional economic theories did not provide the solutions needed to address these problems as it is limited to cost-benefit analysis and mathematical models. Post Covid-19, economists should focus on precautionary action that can help the world cope with unforeseen disasters.

Richard Murphy

Richard Murphy, professor of international political economy at the University of London, shared an article on how orthodox economics is proving ineffective during the current Covid-19 pandemic. The article notes that the world was already facing a number of crises before the pandemic including climate change, inequality and robots replacing humans.

Conventional economic theories have not been helpful in addressing these problems as solutions were often disregarded as being unaffordable and counter-productive. The article notes that the traditional cost-benefit way of decision making should be avoided and a bottom-up approach to economics must be adopted.

Rachel Glennerster

Rachel Glennerster, a development economist, shared forecasts made by the International Monetary Fund (IMF) and the World Trade Organisation (WTO). The IMF forecasts that global GDP is expected to contract by 4.9% in 2020 and rebound to 5.4% in 2021.

The WTO forecasts that world trade is expected to fall between 13% and 32% in 2020. Emerging markets focussed on the production of commodities are expected to be most affected.

Charlie Robertson

Charlie Robertson, global chief economist at Renaissance Capital, shared charts related to the rising number of Covid-19 cases in the US. He noted that considering the amount spent by the US on healthcare compared to other nations, it has not been able to control the Covid-19 pandemic.

The US has reported some of the highest deaths per 100,000 people in several states, according to the charts.

Stephany Griffith-Jones

Stephany Griffith-Jones, an economist, shared an article on some of the policy changes needed to recover from the damage caused by the pandemic. The article notes that the US government should avoid bailing out firms that have already been on the decline to avoid creating underperforming companies.

The focus should rather be on companies that can contribute to social and racial justice. Public spending should be directed towards green transition and labour intensive opportunities to address both the climate change and unemployment issues.

Christophe Barraud

Christophe Barraud, an economist, shared an article on US trade groups urging US and Chinese officials to implement phase one of the trade agreement signed in January.

The trade groups noted that implementing the trade agreement is essential to restore the damage caused by the pandemic and stimulating growth. The agreement includes the purchase of $200bn in goods and services by China from the US over the next two years.

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Oil demand expected to return to pre-pandemic levels by 2022, according to leading macroeconomic influencers

Oil demand witnessed an unprecedented shock in 2020 as the Covid-19 pandemic brought the world to a standstill. Lockdown measures and decline in mobility is expected to lead to the largest fall in oil demand in history in 2020. Although demand returned in the second quarter, oil demand may not return to peak before 2030.

Daniel Lacalle

Daniel Lacalle, an economist and chief economist at Tressis SV, shared an article on the forecasts on oil demand made by Goldman Sachs. Demand for oil is expected to return to pre-Covid-19 pandemic levels by 2022, according to analysts at Goldman Sachs.

The article adds that global demand for oil is expected to decline by 8% in 2020 and rebound by 6% in 2021. Further, Goldman Sachs analysts predict that oil prices are not expected to peak before 2030.

Prof. Steve Hanke

Prof. Steve Hanke, an economist at Johns Hopkins University, shared an article on hyperinflation in Zimbabwe, which is estimated to be approximately 800%. Prices of goods in the country continue to increase, while unemployment rate has reached more than 90%.

Zimbabwe is facing one of the worst economic crises as the Zimbabwean dollar has collapsed trading 1:90 against the US dollar. Apart from hyperinflation, the crisis has impacted wages for labour, fuel shortages, and high levels of starvation.

Linda Yueh

Linda Yueh, economist at the University of Oxford, tweeted on how Google and investment company Aberdeen Standard have informed their staff that they can work from home until January 2021.

Yueh further noted that the capacity for Transport for London declined by 25% capacity due to the social distancing rules implemented to prevent spread of Covid-19. The Pret a Manger sandwich chain is also expected to close one in ten stores out of its 470 stores in the UK.

Rob Elliott

Rob Elliott, professor of economics at the University of Birmingham, shared an article on the manufacturing powers of China. Government support in the form of loans and subsidies in addition to a vast a captive market has helped the country build a low-cost industry that can manufacture masks, testing kits and protective health gear in mass quantities.

China had a headstart in manufacturing these essential goods after the SARS outbreak in 2005. Other countries, however, have not been able to manufacture at the scale that China has achieved primarily due to reluctance in investment and lack of demand.

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Permanent job losses rising in the US due to Covid-19 pandemic, according to leading macroeconomic influencers

The US job market gained a significant number of jobs during June particularly in the retail, leisure and hospitality sectors, which were severely affected by the Covid-19 pandemic. Permanent job losses are still rising even as workers start to return to their jobs. As some states re-impose certain restrictions due to resurgence in Covid-19 cases, more jobs are projected to be lost.

Claudia Sahm

Claudia Sahm, an economist, shared statistics related to unemployment rates in the US. The data shows that permanent jobs losses are rising despite 4.8 million furloughed workers being brought back to work, according to the latest job report from the US Labour Department.

Further, the statistics reveal that the job market is still below the 15 million jobs registered during February. Sahm noted that the government should announce more relief measures for families, small businesses, and state/local government.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, shared an article on how the rush to end lockdowns in the US is leading to resurgence in Covid-19 cases. Before ending the lockdown, a proper system of testing and tracing was not put in place. As a result, several states including Florida, Texas, Arizona and California have witnessed a surge in cases with more cases expected in next few months.

The Centers for Disease Control and Prevention (CDC) estimates that the real number of cases may be ten times higher than the estimated 2.6 million cases.

John Ashcroft

John Ashcroft, an economist and consultant, shared an article on Primark’s plans to continue opening new stores in the UK despite the economic uncertainty caused by the pandemic. Primark’s sale declined by 75% during the last quarter due to the lockdown restrictions. After lockdown restrictions were lifted, majority of the company’s stores are trading again.

Customers have been flocking the company’s stores to purchase children’s wear, leisure and night wear. The pent-up demand during the lockdown period resulted in the increase in sales for the company. The strong sales is prompting the company to continue new stores opening in the US, France and Poland.

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Sustainable economic recovery plan essential to recover from the impact of the Covid-19 pandemic, according to leading macroeconomic influencers

Governments across the world have collectively injected more than $10tn in fiscal stimulus since the onset of the Covid-19 pandemic. Despite this stimulus, unemployment and business closures have been at an all time high. Governments, workers and employers need to work together to draft an economic recovery plan that is both sustainable and effective in the long run.

Colin Williams

Colin Williams, professor of public policy at the University of Sheffield, shared an article on the forecasts made by the International Labour Organization (ILO) on the tough road ahead for the global job market. The ILO noted that the Covid-19 pandemic has affected the job market more than initially predicted.

The article noted that working hours fell by 14% in the second quarter of 2020 equivalent to the loss of approximately 400 million jobs. A sustainable economic recovery plan is necessary to ensure that the pandemic does not increase the inequalities among the people.

Rob Gill

Rob Gill, managing director at Altura Mortgage Finance, shared an article on forecasts made by the Bank of England’s chief economist on a possible V-shaped recovery for the UK although a prolonged period of unemployment is expected.

The rebound is attributed to the return in consumer confidence as lockdowns are gradually lifted. The article also notes that the UK GDP is expected to contract by 20% down from the previously estimated 27%.

Prof. Steve Hanke

Prof. Steve Hanke, an economist at Johns Hopkins University, shared an article on the water crisis in Venezuela. He noted that the destructive economic adopted by President Nicolas Maduro’s government have led to the increase in inflation and forced citizens to adopt drastic measures to gain access to water.

The article noted that 86% of Venezuelans do not have access to reliable water service including 11% who do not have any water supply. The situation has led many people to dig their own wells to access water.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the jobs cuts announced by companies in the UK including retail and aviation. More than 12,000 people are expected to lose their jobs due to the announced made by the companies.

The job cuts are being announced to save costs as the government’s furlough scheme started to be pared back from August and end in October. The article noted that the government will need to announce more stimulus to deal with the impact of the pandemic.

7:03 am

Wearing masks could benefit the economy and the public by controlling the spread of Covid-19, according to leading macroeconomic influencers

Covid-19 cases in the US are on the rise again as many states have withdrawn lockdown relaxations and imposed stay-at-home orders. Another round of lockdown measures could prove devastating to the US economy. A nationwide policy urging people to wear masks could help save the economy.

Christopher Ingraham

Christopher Ingraham, a journalist, shared an article on research conducted by a team of economists at Goldman Sachs that revealed that wearing masks can help in saving 5% of GDP in the US. The article notes that another round of lockdowns can be avoided if the US implemented a nationwide mask policy mandating everyone to wear a mask.

The US has not adopted a mask policy compared to Europe and Asia, where masks have witnessed a widespread uptake. The article notes that state-wise implementation of mask policy has helped in cutting infection rate by 25%. A country-level implementation may help in reducing the infection rate.

Stephen Kinsella

Stephen Kinsella, associate professor of economics at University Of Limerick, shared an article on how the Covid-19 pandemic is speeding up, according to the World Health Organisation.

The article notes that the pandemic is far from over and tracing contacts of people with Covid-19 infection is the only way to fight and control the disease. Countries such as South Korea have been effective in controlling the pandemic through effective contact tracing.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, shared an article on the complications surrounding a second round of lockdowns in the US. As Covid-19 cases continue to rise, the government is under pressure to once again implement lockdowns.

The article notes that another round of lockdown may be difficult to implement as the first round led to wide-spread unemployment and business closures. A second lockdown is expected to be longer and pose a huge economic risk for people. It may lead to a severe depression and require another round of stimulus, which will drive up government debt.

Marc F. Bellemare

Marc F. Bellemare, Northrop Professor in the Department of Applied Economics at the University of Minnesota, shared an article on the emergence of a new flu virus in China that has the potential to become a pandemic. The virus is carried by pigs and has the ability to infect humans.

The article notes that current flu vaccines may not be able to protect against the virus. Although the virus is not an immediate threat, it should be monitored closely to avoid another pandemic like situation.

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Misleading and contradictory claims on asymptomatic transmission led to global spread of Covid-19, according to leading macroeconomic influencers

Health officials and government authorities ignored the risk of asymptomatic transmission of Covid-19 despite mounting evidence from scientists across the world. Acknowledgement of the risk would have necessitated drastic containment measures, something which government officials were reluctant to implement. Timely response was the most crucial element for stopping the global spread of the disease.

Paul Romer

Paul Romer, an economist, shared a New York Times article on how a two-month delay over public health response to the Covid-19 pandemic led to its global spread. The delay was due to faulty scientific assumptions and resistance towards new evidence on the evolving nature of the disease, which resulted in a sluggish response to controlling the spread of the virus.

Despite some scientists raising red flags over asymptomatic transmission, the warnings were dismissed by health officials and political leaders. Asymptomatic transmission would have required more aggressive methods of containment including wearing of masks by healthy persons and restriction of international travel.

The reluctance of adopt such drastic measures was one of the main reasons for the global spread of the disease that has cost thousands of lives, the article adds.

Adam Posen

Adam Posen, president of the Peterson Institute for International Economics, shares an article comparing the job retention schemes and other support provided to households, and small and medium size enterprises by the US and France.

The article notes that despite the Paycheck Protection Program (PPP) initiated by the US being twice in size in terms of proportion of GDP as that implemented by France, it has been less effective in serving its purpose. The PPP was poorly implemented and failed to reach people and curbing unemployment.

The French approach, however, was far more effective as it was open to all companies that suffered a loss in business due to the pandemic.

Ugo Panizza

Ugo Panizza, professor and Pictet Chair at the Graduate Institute Geneva, shared an article on how the sub-Saharan Africa sub and poorest parts of South Asia face the biggest economic risks from the recession caused by the Covid-19 pandemic.

The GDP in Africa is expected to be permanently 1% lower than that expected in a no Covid-19 scenario provided the pandemic is contained quickly. In a case where the pandemic lasts more than 18 months, the GDP is expected to be permanently 4% lower than that expected in a no Covid-19 scenario.

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7:11 am

Strength of recovery from Covid-19 pandemic highly uncertain, according to leading macroeconomic influencers

Countries across the world have started reopening their economies despite the rising number of cases in hopes of a quick recovery from the pandemic. Global recovery from the pandemic, however, seems very uncertain as it has caused an uneven impact on various sectors and countries.

Konstantina Beleli

Konstantina Beleli, economist, shared forecasts made by the International Monetary Fund (IMF) about an uneven and uncertain recovery from the Covid-19 pandemic as 75% of countries start to lift lockdown restrictions. The IMF forecasts that the global economy will witness a deeper contraction of 4.9% and an uneven recovery as different countries and sectors were impacted at different levels by the pandemic.

The global impact of the pandemic is impacting export-dependent economies, while trade tensions are further compounding the recovery of global trade. Policy makers should watch the situation as it evolves and provide sufficient fiscal and monetary support, the article adds.

Steve Keen

Steve Keen, an economist, shared an article pointing towards a weak recovery and declining living standards in the Australia for 2020-2021. The article is based on a survey of 22 economists from 16 universities across the Australia. The survey indicates that the panel of economists predict an average growth of 2.4% over the next four years.

The panel also notes that unemployment rate is expected to peak to 10% in 2020 and remain above 7% in 2021. The economists note that the economy may recover in the September quarter but if the Jobkeeper policy is scrapped as planned, it may lead to a W-shaped recovery.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared an article on the impact of the Covid-19 pandemic on economies that are dependent on tourism. He notes that travel contributed approximately $8.8tn to the global economy in 2018 accounting for 10.4% of global economic activity.

The article notes that among the 50 of the largest economies in the world, Philippines (24.7% of GDP), Thailand (21.6% of GDP), Greece (20.6% of GDP), Portugal (19.1% of GDP) and Hong Kong (17.4% of GDP) are heavily dependent on tourism. These economies are expected to be severely impacted due to the travel restrictions and social distancing rules implemented due to the Covid-19 pandemic.

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Foreign direct investments to decline by 40% in 2020 due to Covid-19, according to leading macroeconomic influencers

Foreign direct investments are projected to plunge by 40% in 2020 due to the recession caused by the Covid-19 pandemic. Developing and emerging economies are expected to be the worst affected with export-oriented and commodity linked investments projected to be severely impacted. The decline in FDIs may transform international production and increase sustainability.

Olga Solleder

Olga Solleder, an economist, tweeted forecast made by the United Nations Conference on Trade and Development (UNCTAD) on the decline on foreign direct investment (FDI) by 40% in 2020. The projections are based on UNCTAD’s new report World Investment Report 2020.

The new report notes that FDI will decline below $1tn for the first time since 2005. FDI is expected further decline by 5%-10% in 2021, the report adds.

Ben Oquist

Ben Oquist, executive director of the Australia Institute, shared an article on how free childcare can be a big boost to the Australian economy. The article notes that free childcare will provide short-term stimulus and act as driver for economic growth.

The article notes how Nordic countries have achieved higher female participation rates through high quality child care. These countries have free or low-fee child care services. If Australia implements a similar strategy, its economy could be $60bn larger and GDP could be 3.2% higher.

Andrew Leigh

Andrew Leigh, Labor MP in the Australian Parliament and an economist, shared an article on the decline in job vacancies by 43.2% in May 2020 in Australia. The arts and recreation segment suffered the biggest decline of 95%, followed by real estate (67.9%) and accommodation and food services (65.9%).

Konstantina Beleli

Konstantina Beleli, an economist and journalist, shared an article on how the US could have the same level of government debt as that of Japan by 2050, according to an well-known anti-deficit group. Japan is estimated to have a government debt of more than 200% of GDP in 2019.

The US Congressional Budget Office already forecast that the country’s public debt will increase to 101% of GDP in 2020. The article forecasts that public debt in the US will increase to 118% of GDP by 2030, 159% by 2040 and 220% by 2050.

7:25 am

Well-targeted economic policy response needed to ensure a V-shaped recovery, according to leading macroeconomic influencers

Central banks of various economies have announced stimulus packages to deal with the impact caused by the Covid-19 pandemic. These measures offer a short-term solution for the crisis. More targeted policies that address various aspects of the economy are essential to enable a quick economic recovery.

Jonathan Portes

Jonathan Portes, professor of economics at King’s College London, shared his article on the long-term impact of the Covid-19 crisis. In the article, Portes notes that the unemployment caused by the pandemic may be severe for young people and reduce future employment and wage prospects.

The article also notes that 30% of firms in Europe are expected to face liquidity issues, while business investments are likely to remain weak during the short and medium term. Expansionary macroeconomic policies may be required to deal with the impact of the pandemic, Portes adds.

Prof. Steve Hanke

Prof. Steve Hanke, an economist at Johns Hopkins, shared a chart on how countries such as Syria, China, Russia and Vietnam have complete control over media in their countries. He noted that this is one of the reasons why corruption is rampant in these countries.

Hanke added that considering this control over media, these countries cannot be trusted for the accuracy of their Covid-19 data.

Branko Milanovic

Branko Milanovic, an economist shared an article on the European Union’s plans to ban travellers from the US from entering the region citing failure to contain the Covid-19 pandemic. Covid-19 cases in the US are reported to be more than 2.3 million including more than 120,000 deaths, the highest in any country.

As the European Union begins to reopen its economies, the region has decided to ban the entry to travellers from Brazil, Russia as well as the US. The decision may have economic and geopolitical ramifications, according to the article.

Colin Williams

Colin Williams, Professor of Public Policy at the University of Sheffield, shared an article on how the UK must be ready for a second wave of Covid-19 infections. The article notes that health leaders have called for a review of the UK government’s preparation for handling another local outbreak or second wave of infections as the country prepares to lift lockdown restrictions.

The need for increasing testing capacity and improving contact tracing was highlighted in the article. The public should practice social distancing and infected persons should self-isolate to prevent local flare-ups.

7:27 am

Covid-19 induced recession the worst since World War II, according to leading macroeconomic influencers

The Covid-19 pandemic has pushed the global economy into a level of recession that was last witnessed during the World War II. Emerging markets and developing economies are the worst affected as five out of six economies are expected to fall into outright recession as per capita income declines drastically.

Linda Yueh

Linda Yueh, an economist at the University of Oxford, shared an article by World Bank on the global impact of the Covid-19 pandemic. The article notes that the recession caused by the pandemic will be the deepest since World War II and twice as deep as the 2008 global financial crisis.

The article further notes that emerging markets and developing economies are expected to contract for the first time in 60 years. The global unemployment rate is also expected to rise to the highest levels since 1965, the article adds.

Dany Bahar

Dany Bahar, an economist and Senior Fellow at the Brookings Institute, shared an article on the suspension of foreign work visas by the US government. The article notes that the government will suspend visas for the H-1B programme designated for high-skilled workers and other categories. The new order will prevent hundreds of people from coming to the US for work.

Bahar noted that the decision made by the government will result in a long-term, self-induced recession for the US. He added that these policies are xenophobic and lack evidence to prove their rationale.

Ian Bremmer

Ian Bremmer, a political scientist an author, shared an article on how the Covid-19 pandemic has forced developing countries to choose between paying lenders or funding hospitals.

Developing countries such as Angola, Sri Lanka, the Gambia, and the Republic of Congo were focussed more on paying off their external debt debts than investing in their healthcare facilities. As a result, the healthcare systems in these countries were underfunded posing a major hindrance in containing the spread of the virus.

Guntram Wolff

Guntram Wolff, economist and director of Bruegel, an international economics think-tank, shared an article on how India should retaliate economically for the border clashes initiated by China. The article notes that India should join a coalition of countries addressing some of the specific aspects of China’s economic behaviour.

The articles adds that India should try to reduce its interdependence on China so that its economic vulnerability does not increase.

7:41 am

Three quarters of global workforce at risk of losing their jobs, according to leading macroeconomic influencers

The Covid-19 pandemic has severely impacted the job market leaving millions of people without jobs. The services sector, which employs a large portion of low income workers, is one of the hardest hit sectors. As social distancing and lockdown measures continue to control the spread of the virus, many of these jobs are unlikely to return any time soon.

Colin Williams

Colin Williams, professor of public policy at University of Sheffield, shared an article based on statistics from the International Labour Organisation (ILO) on the impact of the Covid-19 pandemic on workers and businesses.

The article notes that approximately three quarters of the global workforce is at risk of losing their jobs due to lockdown measures and business closures caused by the pandemic. The article noted that South East Asia and the Pacific regions are the most affected with 76% of the workforce at risk followed by the Americas, Africa and Europe.

Christopher May

Christopher May, professor of Political Economy, shared an article on how the Covid-19 pandemic is impacting people over the age of 50 in the UK. The article notes that universal credit claims, which is offered to households with income of less than £16,000 ($19,753), has doubled since March from people who are over 50 years old.

People over 50 years may be forced into an early retirement due to the pandemic, the article adds. The need for government support in the form of job centres and back-to-work support measures should be offered to this demographic.

Mohamed A. El-Erian

Mohamed A. El-Erian, chief economic adviser at Allianz, shared an article on how women workers are the most affected due to the Covid-19 pandemic. The article notes that majority of the service sectors jobs such as food service and personal care, which are held by female workers, have been severely affected by the pandemic.

The article notes that as the current crisis persists, employment prospects for female workers remain limited. In the long run, this situation will hinder economic growth as female dominated sectors will be left with fewer workers.

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7:03 am

Projections for a quick economic recovery in the US are premature, according to leading macroeconomic influencers

Stock markets have been performing above average despite a warning from the World Health Organisation that a new and dangerous phase of the pandemic is emerging. The possibility of a fourth phase of stimulus package in the US and reopening of the economy are some of the factors fuelling this performance leading investors to predict a quick V-shaped recovery. The huge impact of the pandemic and a possible resurgence of cases may not lead to such a quick recovery.

Timothy McBride

Timothy McBride, Bernard Becker Professor at the Washington University, shared an article on how some investors are too optimistic of a quick economic recovery. The article notes that stock markets are performing well in the US despite the rise in the number of Covid-19 cases.

Over the last few weeks, markets have performed above average prompting some investors to predict a V-shaped recovery, the article adds. Such projections seem premature as they do not take into account the permanent damage caused by the pandemic.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, shared statistics on the impact of Covid-19 on emerging economies. He noted that emerging economies face a difficult recovery in future mainly due to the growth stagnation they were already experiencing in 2019.

Lacalle further noted that the recovery of these economies will be slow due to the huge trade and fiscal deficits despite the growth posted over the last few years. He added that these economies also have weaker commodity revenues and lower foreign exchange reserves making recovery difficult.

Romesh Vaitilingam

Romesh Vaitilingam, an economics writer, shared an article on how countries led by female leaders have been far more successful in tackling the Covid-19 pandemic than those led by male leaders. The article notes that countries such as New Zealand, Taiwan and Germany have been able to control the spread pandemic more effectively as they are led by female leaders.

The article takes into account the policy measures implemented by these countries and other factors such as timing of the lockdown to assess their effectiveness in containing the pandemic. Countries led by female leaders were more effective in controlling the number of COVID-19 cases and related deaths compared to male-led countries.

Nasser Saidi

Nasser Saidi, president of Nasser Saidi & Associates, shared the weekly commentary on the economic situation across the world. He noted that although the stock markets are currently performing well, they may soon discover the geopolitical risks that are emerging across the world.

Saidi added that the clashes between Indian and Chinese troops, the tensions between North Korea and South Korea, and the contradictory messages from the US regarding the trade deal with China will soon impact the performance of the stock markets.

7:27 am

Seven million primary and secondary school students may drop out due to Covid-19 pandemic, according to leading macroeconomic influencers

The Covid-19 pandemic has led to the closure of schools and colleges across the world to contain the spread of the disease. The closures have left billions of students out of school impacting learning and schooling levels. In the long-term, the pandemic may impact marginalised groups and hurt the future earnings of millions of students.

João Pedro Azevedo

João Pedro Azevedo, a development economist, tweeted on how the Covid-19 pandemic is expected to result in the loss of $1,408 in yearly earnings for students from the current cohort. Further, students may lose between $6,472 and $25,680 in earnings over their lifetime.

The statistics are based on a new report from the World Bank containing data from 157 countries on how the pandemic is impacting schooling and learning outcomes. The new report notes that the pandemic may exacerbate inequality and students from minority groups are more likely to be affected.

Konstantina Beleli

Konstantina Beleli, an economist, shared an article on the European Union’s plans to levy digital service taxes on multinational companies if the US withdraws from negotiations at the Organization for Economic Cooperation and Development. The negotiations were initiated after the US announced its plans to probe countries that impose digital service taxes targeting US-based companies.

US Treasury Secretary Steven Mnuchin informed his British, Italian and Spanish peers of the US’ plans to pull out of the negotiations. European Commissioner for Economy Paolo Gentiloni noted that if a global consensus on taxation is not reached by the end of the year, the EU may retaliate with its own digital tax levy.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, shared a tweet on the latest data from the US labor department that states that 1.5 million more workers have filed for unemployment benefits in the US in the second week of June.

The latest data indicates the 11th straight week of decline in applications since peaking at seven million in March. The job market also showed signs of recovery as 2.5 million jobs were added. The unemployment rate also declined to 13.3% from the earlier 14.7%.

Claudia Sahm

Claudia Sahm, a macroeconomist, shared an article on how wealthy Americans are not spending as much as the lower-income group families. The article notes that the decline in spending by the wealthy may hinder economic recovery.

The decline in spending is attributed to reduction in discretionary spending on restaurants, theatre, or travelling, which is currently limited due to the lockdown restrictions and fears surrounding the spread of the Covid-19 disease.

7:07 am

Inherent structural forces within the US economy hindering recovery, according to leading macroeconomic influencers

The US economy is predicted to contract by 40% in 2020 although a strong rebound is forecast in the fourth quarter. The recovery of the economy, however, will be dependent on global conditions as the US economy is more dependent on global demand than it was 50 years ago.

Michal Rozworski

Michal Rozworski, an economist and author, shared an article on the structural forces that are working against the recovery of the US economy. Although economists have forecast a strong recovery in the fourth quarter of the year, the inherent structural changes that occurred over the last 50 years may not allow the US economy to recover a quickly as predicted.

The US economy is dependent on global demand in various sectors including aerospace, information technology, defence, oilfield services, and finance. Consumers are more wary of spending on non-essential things related to these sectors in the current uncertain environment created by the Covid-19 pandemic. Demand in some of these sectors, therefore, may not return to normal and help the economy rebound as predicted by experts.

John Ashcroft

John Ashcroft, an economist, shared an article on the fall in inflation in the UK to 0.5% due to drop in prices of petrol, toys and other leisure items. The prices of these items decreased to a four-year low in May.

The price of fuel declined by 16.7%, while clothing and footwear prices dropped by 3.1%. The drop in inflation is expected to attract fresh stimulus package from the Bank of England.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, shared an article on the need to strengthen the World Health Organisation (WHO) through crucial reforms. The WHO has been conducting a wide range of activities despite the paltry funding it receives.

The article notes that the WHO can be strengthened by providing sufficient funding, ensuring compliance with norms among member states, and strong political support.

Prof. Steve Hanke

Prof. Steve Hanke, applied economist at Johns Hopkins, shared an article on the drop in currencies across the world and instability of exchange rates amid the Covid-19 pandemic. He notes that private currency boards backed by either stable fiat currencies or gold are more reliable in the current scenario.

Hanke adds that a private currency board can issue notes and coins that can be converted into a foreign anchor currency at a fixed rate of exchange. Further, the board will hold low-risk interest-bearing bonds denominated in the anchor currency in the form of reserves in addition to gold.

7:34 am

Additional relief measures and stimulus packages needed to prevent stunted economic growth in the US, according to leading macroeconomic influencers

The Federal Reserve has announced trillions of dollars in stimulus packages but it may not be sufficient as the damage caused by the Covid-19 pandemic is severely impacting the US economy. Experts feel the need for additional relief measures including unemployment benefits to prevent a prolonged recovery for the economy.

Joseph Zeballos-Roig

Joseph Zeballos-Roig, a journalist and writer, shared an article on how former Federal Reserve chairs and 130 economists signed a letter requesting additional relief measures to stop the US economy suffering a prolonged recovery.

Although the Federal Reserve has announced $3.5bn in stimulus package, the experts felt that more needs to be done to ensure that the US economy recovers at a faster pace. Prolonged economic downturn can damage the economic and wealth creation opportunities especially minority communities, the article added.

Constantin Gurdgiev

Constantin Gurdgiev, an economist, shared an article on the ban imposed by China on salmon imports from Europe due to a suspected link to virus outbreak. Norway’s Food Safety Authority, however, has noted that fish is unlikely to carry the virus.

Gurdgiev tweeted that the virus is capable of travelling across different locations through many pathways. He noted that restoration of socio-economic activity should not be limited to just treating cases and increasing beds capacity in local hospitals but also goods and people mobility.

Prof. Steve Hanke

Prof. Steve Hanke, applied economist at Johns Hopkins, shared an article on how the lockdown imposed in India has been ineffective as the country now has the fourth highest number of Covid-19 cases in the world. Hanke noted that the number may be even higher considering the outdated data.

The article notes that although number of cases is rising, the improvement in recovery rate and low mortality rates are some of the factors helping the Indian economy recover.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on how the labour market in the UK deteriorated further in May despite unemployment rate being stable at 3.9%. The article notes that the economy registered further jobs losses in May after a 20.4% contraction in April.

The total number of people who claimed unemployment benefits increased to 1.56 million between April and May. The performance of the labour market will play a key role in the recovery of the economy, the article adds.

7:17 am

Global economy headed for a V-shaped recovery, according to leading macroeconomic influencers

The number of Covid-19 cases continues to increase across the world particularly in developing and emerging nations and fresh outbreak being reported in China. Some countries, however, have started reopening their economies and easing lockdown restrictions increasing the possibility of a V-shaped recovery.

John Ashcroft

John Ashcroft, an economist, shared an article on Morgan Stanley’s projections that the global economy is headed for a V-shaped recovery. The article notes that the global economy will return to pre-crisis levels by the fourth quarter of 2020.

The predictions are based on the latest economic data in addition to policy actions taken by various governments. Morgan Stanley predicts that the recession will be sharp but short although uncertainty still remains around this outlook.

Mohamed A. El-Erian

Mohamed A. El-Erian, chief economic adviser at Allianz, shared a chart on how the majority of recent job losses in the US are due to reallocation shock. The situation occurs when companies and sectors suffer lasting damage due to the Covid-19 pandemic.

Hospitality and retail sectors are some of the biggest sectors hit by the pandemic, followed by education and health, and manufacturing. El-Erian noted that the economic shock caused by the pandemic may not be temporary or reversible, which is cause for worry.

Linda Yueh

Linda Yueh, economist at the University of Oxford, shared an article on how the Covid-19 pandemic is impacting Latin America. The region is home to only 8% of the world’s population but has reported more than of the deaths resulting from Covid-19.

The number of infections continues to rise despite the implementation of lockdowns. The damage caused by the pandemic is leading experts to fear that the region may lose another decade of growth and fall into a new debt crisis.

Holger Zschaepitz

Holger Zschaepitz, an author, shared a chart on how the global markets started with a risk-off mode after fears of a second wave emerged. More than 20 states in the US reported an increase in cases, while Tokyo reported a jump in cases apart from a new outbreak in Beijing.

The situation caused US, European and Asian futures to retreat, while Brent oil dropped to 37.58.

7:22 am

New policy changes needed as countries exit Covid-19 lockdown measures, according to leading macroeconomic influencers

Governments across the world introduced various policies such as unemployment benefits, and tax deferrals to enable people to deal with the impact caused by the Covid-19 lockdowns. As countries begin to reopen their economies, it is essential that governments introduce new policy changes that enable them to adjust to the new normal.

Adam Posen

Adam Posen, president of Peterson Institute for International Economics, shared an article on the need for a new policy toolkit as lockdown measures are lifted across the world. The article notes that some measures adopted during the lockdown such as employment benefits, grants and loans will come to an end.

In this environment, policy makers need to take into account the uncertainty facing the economies due to the Covid-19 pandemic, the article adds. Governments should design new policies that enable people to adjust to the new changes after the lockdown is lifted. A combination of unemployment benefits and pay cuts, tax deferrals and guaranteed loans are some policies that governments can consider.

Prof. Steve Hanke

Prof. Steve Hanke, applied economist at Johns Hopkins, shared a chart on how the worst of the Covid-19 crisis is yet to come for South Asia. Testing for Covid-19 is low and the region is known for manipulation by the government about the actual numbers.

Hanke noted that the region is unlikely to avoid a future Covid-19 crisis barring Singapore, which is known for its small and efficient government.

Daniel Lacalle

Daniel Lacalle, author and chief economist at Tressis SV, shared a chart on how massive liquidity cannot disguise a solvency problem in the US. The chart shows the corporate bond defaults for the second quarter of 2020.

Defaults were at multi-year high levels particularly in May 2020, according to the chart.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, shared an article on the lockdown imposed in Beijing amid fears of a second wave of Covid-19 outbreak. The lockdown was imposed following a new outbreak at the Xinfadi food market in Beijing.

The new cases were reported after nearly 55 days of no new cases being reported in the country. The article noted that this new outbreak should serve as a warning for other countries that are reopening their economies. The need to take the necessary precautions and maintaining social distancing was stressed in the article.

7:13 am

Global trade projected to shrink by 27% in Q2, according to leading macroeconomic influencers

Lockdown restrictions and closure of international borders due to the Covid-19 pandemic has had a great impact on global trade, causing it to shrink. Supply and demand in industries such as automotive and energy declined drastically. Although the lockdown restrictions are being eased in some countries, it will be a long time before global trade returns to normal.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the decline in global trade by 27% in the second quarter, according to the UN Conference on Trade and Development (UNCTAD). Trade in the automotive and energy industries collapsed although agri-products trade remained stable.

UNCTAD also projects that global trade to decline by 20% in 2020, according to the article.

Danny Blanchflower

Danny Blanchflower, an economist and academic, tweeted about how the US economy may face underemployment, which may be higher than the current unemployment rates. He noted that underemployment is returning to normal slower than anticipated and has not returned to the pre-recession levels.

Blanchflower added that the US Bureau of Labor Statistics should conduct surveys on the actual and desired hours for all workers.

Megan Greene

Megan Greene, senior fellow at Harvard Kennedy School, shared an article on how public debt in the US is evolving during the Covid-19 pandemic. The article notes that the US federal government’s debt may exceed by 100% of GDP in 2020 and increase further in 2021.

The article notes that big tax increases or spending cuts may not be required to reduce the debt-GDP ratio although a permanent higher ratio may pose risks. Policy makers should maintain the right balance of fiscal stimulus until the economy recovers, the article adds.

Richard Murphy

Richard Murphy, professor of International Political Economy at University of London, shared an article on how inequality in the UK will increase due to the Covid-19 pandemic. The article notes that the pandemic will greatly impact vulnerable groups unless the government takes necessary action.

Although this outcome in inevitable considering the wide impact of the pandemic, the lack of better education and training will make it difficult for children from poor households to survive, the article adds.

7:15 am

Global economy to contract by 6% in 2020 due to Covid-19 pandemic, according to leading macroeconomic influencers

The Covid-19 pandemic has led to widespread unemployment and potential bankruptcies of businesses and companies across the world. The economic downturn caused by the pandemic is considered to be one of the biggest in the past century. Developed nations are expected to feel the impact of the pandemic for a long time posting a slow economic recovery.

Stephany Griffith-Jones

Stephany Griffith-Jones, an economist, shared an article on how the global economy is expected to suffer the worst recession in a century. The article is based on a report from the Organisation for Economic Cooperation and Development (OECD).

The article notes that the global economy is expected to contract by 6% due to the pandemic and by 7.6% if there is a second wave of infections. The report from OECD notes that this is the worst contraction in 100 years.

Linda Yueh

Linda Yueh, economist at University of Oxford, shared an article on how the UK economy is expected to suffer the most damage among all other developed nations in the world, according to a report by the OECD.

The OECD report notes that the UK economy is expected to contract by 11.5% in 2020. If a second lockdown is imposed, the economy may contract at a higher rate of 14%. The economies of other countries in Europe are projected to contract at a lower rate compared to the UK. The economy of France is projected to contract by 11.4%, Italy by 11.3% and Spain by 11.1%.

Howard Archer

Howard Archer, Chief Economic Advisor to EY ITEM Club, shared an article on how the European Central Bank to preparing to develop a scheme to deal with the billions of Euros in unpaid loans due to the Covid-19 pandemic.

The scheme is aimed at protecting commercial banks from any fallout from the pandemic as widespread unemployment will make it difficult for people and businesses to repay their loans.

Prof. Steve Hanke

Prof. Steve Hanke, applied economist at Johns Hopkins, shared an article on the record number of foreign deposits from bank accounts in Hong Kong to banks in Singapore during the pandemic. In April, the deposits from non-residents increased by 44% to $44.37bn.

The political stability and AAA credit rating of Singapore makes it a preferred destination for capital flows. The political unrest in Hong Kong has led to an exit in capital from the city, which has been further compounded by the pandemic.

7:03 am

Central banks need to adopt investment-led growth policies to support economies after the Covid-19 pandemic, according to leading macroeconomic influencers

Central banks of various economies have injected new money into financial markets to deal with the economic downturn caused by the Covid-19 pandemic. These actions although useful may not be enough to post a strong recovery. Investment-led growth policies and long-term investments are essential to reverse some of the damage caused by the pandemic.

Stephany Griffith-Jones

Stephany Griffith-Jones, an economist, shared an article on how central banks need to take more action to support economies after the Covid-19 pandemic. G7 nations injected approximately $2.5tn into financial markets in March and April using quantitative easing and liquidity programmes to prevent a collapse in the financial sector.

The article notes that banks need to play a bigger role by lending to sectors that are productive and create more jobs. These jobs also need to be sustainable to create green infrastructure that enables transition towards a zero carbon economy.

Gregory Daco

Gregory Daco, Chief US Economist at Oxford Economics, shared an article on a survey conducted among small business owners. The survey results showed that small business owners believed that the recession will be short-lived and were optimistic about a rebound.

Although consumers were still wary of returning to small businesses, owners are taking the necessary precautions to reopen safely. Further, business owners were planning to rehire workers due to the government’s Paycheck Protection Program aimed at saving small businesses and their workers.

Adam Posen

Adam Posen, President of Peterson Institute for International Economics, shared an article on how China’s unemployment data does not account for those people from rural areas who travel to urban areas for employment. The Covid-19 pandemic has wiped out millions of jobs in the urban areas forcing people to return to their villages.

Despite this data, China’s official unemployment rate has remained stable. Experts have noted that these unemployment figures may not be accurate as it does not take into account those people from rural areas who have been recently unemployed.

Christophe Barraud

Christophe Barraud, an economist and forecaster, shared an article on the changes made by the Federal Reserve to its Main Street lending program. The Federal Reserve has lowered the minimum loan that can be borrowed and increased the maximum loan that can be borrowed in addition to increasing the loan term to five years.

The new changes are aimed at directing money towards small and medium-sized enterprises that have been affected by the Covid-19 pandemic and achieve a broader economic recovery. These changes are part of a number of new measures being implemented to increase lending and liquidity during the pandemic.

7:24 am

Economic prediction models irrelevant due to the unprecedented changes brought by the Covid-19 pandemic, according to leading macroeconomic influencers

The Covid-19 pandemic has forced experts to predict what lies ahead as economies gradually start to re-open. The economic forecasts made by economists using known models, however, may not be relevant in the current scenario as these models do not take into account the unpredictable changes brought by the pandemic.

Branko Milanovic

Branko Milanovic, an economist, shared his article on how the Covid-19 pandemic has brought unpredictable social and political changes to the world. Economists use models that consider an economy as a self-contained system that is vulnerable to economic shocks.

The current pandemic, however, has aggravated several social and political changes such as the trade war between the US and China, and the protests against racism in the US. The pandemic also presents a number of unknown challenges such as the possibility of a second wave and its impact on countries. In such a situation, any economic models may not closely predict the future of the global economy.

Linda Yueh

Linda Yueh, an economist at the University of Oxford, tweeted about how the closure of international travel and the ban on entry of foreign citizens has helped several Pacific nations to remain free from the Covid-19 virus.

Yueh noted that the closure has impacted the economy, which is heavily dependent on tourism. In countries such as Fiji, Palau and Vanuatu, tourism accounts for a third of jobs and also accounts for at least 40% of gross domestic product.

Konstantina Beleli

Konstantina Beleli, an economist and journalist, shared an article on how the pandemic has impacted the aerospace manufacturers in France’s fourth largest city, Toulouse.

The aerospace manufacturers in the region were working overtime for supplying parts for the aerospace industry, until the pandemic halted all manufacturing activity. While France’s economy shrank by 33% during the initial weeks of the pandemic, Toulouse’s economy shrank by 38% due to its reliance on aerospace industry.

As the pandemic continues, manufacturers fear that Toulouse may face a similar fate as that of Detroit after the recession in the auto industry.

Stephany Griffith-Jones

Stephany Griffith-Jones, an economist, shared an article on World Bank’s projections on emerging markets. The World Bank in a new report noted that the global economy is projected to shrink by 5.2%, while emerging markets are projected to shrink by 2.5% for the first time in 60 years.

The report notes that the recession caused by the pandemic is expected to push millions of people below the poverty line as per capita incomes decline by 3.6%.

 

8:00 am

International monetary system needed under the current crisis affecting the world, according to leading macroeconomic influencers

The Covid-19 pandemic followed by the widespread protests against racism in the US and UK, have highlighted the suffering faced by marginalised communities and economies across the world. A monetary system that provides equal access to finance for all economies and not just advanced economies is needed.

Claudia Sahm

Claudia Sahm, a macroeconomist, shared an article on the need for a global monetary system that is based on principles of social justice and sustainability. The article notes that lessons from past crises may give us clues on achieving such a system.

The pandemic has already impacted developing and emerging economies, with more than $100bn in portfolio funds exiting from these markets. The monetary autonomy and fiscal capacity that advanced economies have is needed for these emerging markets as well to ensure public good.

Prof. Steve Hanke

Prof. Steve Hanke, an applied economist, tweeted an article on the possibility of India’s economy shrinking by 10%. Moody’s Investors Service downgraded India’s rating to Baa2, which is the lowest investment grade. India’s economy is one step away from being given a junk rating.

The downgrading was not just the result of the impact of the Covid-19 pandemic rather India’s pre-existing economic conditions including rising debt have worsened the economy, according to Moody’s.

Daniel Lacalle

Daniel Lacalle, an economist and author, shared statistics related to Purchasing Managers’ Index (PMI) for May 2020.

He noted that despite optimism related to the recent data, global PMI during the last month contracted for majority of the sectors including tourism and recreation, transportation, automobiles and telecommunication services.

Brett House

Brett House, Deputy Chief Economist at Scotia Economics, shared an article on how the impact of the Covid-19 pandemic is going to remain for a long time. The article notes that although some economies have started to reopen, the decline in economic activity is expected to remain, according to Scotiabank’s chief economist.

The article also notes that a second wave of infections may halt the progress made. The lack of a vaccine is another risk factor impeding the ability of economies to reopen.

7:32 am

ECB predicts Euro zone GDP to contract by 8.7% in 2020

The European Central Bank’s (ECB) growth forecast for the euro zone predicts GDP to contract.

Europe was designated as the new epicentre of the Covid-19 outbreak, which originated in China, in March 2020 by the World Health Organisation.

Italy, Spain, France, Germany, and UK are some of the worst affected countries in the region. The outbreak forced countries in the region to implement lockdown measures, which is expected to result in a massive contraction of GDP growth.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, tweeted on the European Central Bank’s (ECB) growth forecast for the euro zone in 2020. The ECB forecast that the euro zone GDP will contract by 8.7% in 2020, followed by a partial rebound of 5.2% in 2021 and 3.3% in 2022.

The ECB also announced a stimulus package of €1.85tn ($2.03tn) under the Pandemic Emergency Purchase Programme.

Gregory Daco

Gregory Daco, chief US Economist at Oxford Economics, shared an article on the expansion of US trade deficit by 16.7% to $49.4bn in April as imports and exports declined due to the Covid-19 pandemic.

Total trade flows including export and imports declined by 25% since the onset of the Covid-19 induced recession. The lockdowns implemented due to the pandemic impacted global commerce by disrupting supply chains and closing down factories, the article adds.

Stephen Kirchner

Stephen Kirchner, director of trade and investment at United States Studies Centre, shared his article on the impact of the Covid-19 pandemic on globalisation and labour productivity in the Organisation for Economic Cooperation and Development (OECD) economies.

Kirchner notes in the article that the Covid-19 pandemic has come at a time when globalisation was already under pressure due to US President Donald Trump’s trade war. Countries are increasingly focusing on economic sovereignty to increase resilience amid the pandemic, which is expected to further hamper globalisation.

Konstantina Beleli

Konstantina Beleli, an economist and journalist, shared an article on 1.9 million people filing for unemployment benefits during the last week of May, according to the US Department of Labor. In total, more than a quarter of the labour force or 42.6 million people have filed for unemployment benefits since the beginning of the pandemic.

The number of claims in the last week of May was higher than those predicted by economists. In addition to unemployment claims, more than 600,000 people filed for pandemic unemployment assistance, which provides assistance to people who do not quality for regular unemployment benefits.

7:16 am

Unemployment surge in US due to Covid-19 pandemic is unique, according to leading macroeconomic influencers

The US has witnessed unprecedented rates of unemployment due to the Covid-19 pandemic.  The unemployment rate in the US is expected to touch 20%, similar to the rates during the Great Depression. Experts, however, note that the unemployment rate may be reaching its peak before declining in the second half of the year.

Paul Krugman

Paul Krugman, Nobel laureate and author, shared the latest unemployment statistics from Eurostat, which estimates that the unemployment rate in the Euro zone was 7.3% in April 2020 and in the EU it was 6.6%.

Krugman noted the unemployment rate in the US is unique being very high compared to other regions at 14.7% in April 2020, according to Bureau of Labour Statistics.

Konstantina Beleli

Konstantina Beleli, an economist and journalist, shared an article on how the Covid-19 pandemic is rapidly changing the shape of global geopolitics. The pandemic has caused the competition between the US and China to intensify as the latter tries to fill in a gap left by strong leadership.

As resources are diverted towards fighting the virus, the readiness of the US military forces is being questioned. In countries such as Russia, the pandemic is exposing the inherent weaknesses such as declining living standards and a weak currency. Further, the pandemic is worsening the economies of developing countries

Ian Bremmer

Ian Bremmer, a political scientist and president of Eurasia Group, shared an article how the Covid-19 pandemic is impacting the same set of people who are protesting against the killing of George Floyd, an unarmed black man, in the US.

The article noted that the pandemic has disproportionately impacted the black and Latin American community in the US, who are now protesting against police brutality and racial injustice. Bremmer noted these protests will have local, national and global implications.

Trinh Nguyen

Trinh Nguyen, senior economist for Emerging Asia, tweeted an article on the impact of the Covid-19 pandemic and the way forward. The article contains views from prominent economists who note that the pandemic has caused an economic downturn that has shocked people. In addition to economic upheaval, the pandemic has broken international trade and finance.

The article also noted that the recovery in some economies is on track but may be slower than anticipated. The pandemic is expected to impact developing nations and the Latin American region, which is expected to contract by 6.3% between 2020 and 2022 in a modest scenario.

7:39 am

Developing economies facing one of the worst economic downturns, according to leading macroeconomic influencers

The Covid-19 pandemic is estimated to impact developing and underdeveloped countries the most as the lockdown measures have left millions of people jobless and on the verge of poverty. The majority of the developing nations are expected to face a sharp decline in economic output in 2020.

Miles Kimball

Miles Kimball, Eaton Professor of Economics at the University of Colorado, shared an article on how the Covid-19 pandemic is causing an economic downturn in developing economies. The article refers to the latest economic results released in Brazil, Turkey and India, which indicates that the economic output of these countries is expected to fall in 2020.

Kimball noted that any country experiencing a decline in inflation during the current crisis after adjusting for temporary price movements due to the disruption in productivity has a monetary policy that is too tight.

Stephen Koukoulas

Stephen Koukoulas, Australia’s leading economist and Head of Global Strategy at TD Securities, shared an article on Reserve Bank of Australia Governor Philip Lowe’s views on the economic depression in the country.

Lowe noted in the article that the current situation is a depressing scenario with high unemployment rates, low inflation and weak employment opportunities. He added that unemployment rates will continue to remain high for the coming years and inflation will be lower than 2%.

Jim Tankersley

Jim Tankersley, a tax and economics reporter, shared an article on the US government’s plans to launch an investigation into taxes on digital commerce in nine countries and the European Union.

The investigation may lead to imposing of tariffs on these countries creating another global trade war and resulting in retaliatory taxes on US goods, the article adds. The move is to target digital services taxes that discriminate against US companies.

Gregory Daco

Gregory Daco, chief US economist at Oxford Economics, shared results of a survey conducted in an article on the budget problems at state and local levels in the US as a result of the closures initiated due to the Covid-19 pandemic.

The survey indicates that approximately 90% of cities across the country expect a shortfall in revenues. Further, more than 50% are anticipating cuts to public safety services and a third are anticipating layoffs.

7:22 am

Federal Reserve should resist taking additional policy actions as the benefits outweigh the consequences, according to leading macroeconomic influencers

The economic downturn caused by the Covid-19 pandemic has led experts and politicians to call for policy actions to be taken by the Federal Reserve. Any policy actions, however, may not result in the necessary potential benefits.

Mohamed A. El-Erian

Mohamed A. El-Erian, chief economic adviser at Allianz, shared an article on how the Federal Reserve should resist pressure to take additional policy actions such as negative interest rates, asset-purchase programmes and more aggressive forward guidance. Such policies, however, may lead to investment in risky assets and push their prices even higher.

The Federal Reserve may distort the market by interfering too much. The markets in turn may not send accurate price signals and fail to direct and mobilise capital, the article adds.

Linda Yueh

Linda Yueh, economist at the University of Oxford, tweeted on the International Monetary Fund’s fiscal tracker. According to the tracker, China’s support packages for the Covid-19 outbreak including spending, loans and guarantees accounted for only 2.5% of GDP by April.

Comparatively, the support packages announced by Germany accounted for 34% of GDP, 20.5% for Japan and 11.1% for the US. The Chinese government is planning to pump more money into the economy to ensure rebound although experts have warned that this could lead to long-term pain.

Philip Smith

Philip Smith, an economist, shared a chart on the decline in GDP across various economies in the world in Q1. The chart shows that the GDP decline was much higher in France, Italy and Spain at more than 5.

Of the 16 nations that reported their numbers, Canada had the seventh deepest drop in GDP, while Sweden had the smallest decline at 0.3% owing to milder lockdown.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the purchasing manager’s report on UK’s manufacturing sector. The article notes that the manufacturing sector recorded a reduced contraction in May rising to 40.7 from a record low of 32.6 in March.

The consumer, investment and intermediate goods sectors were the weakest sectors, although healthcare and PPE showed growth.

Prof. Steve Hanke

Prof. Steve Hanke, an applied economist, shared an article on how the lockdown in India is pushing millions of people below the poverty line. The lockdown is expected to lead to a 6% contraction in India’s GDP, the article adds.

The article notes that the unemployment rate in India is estimated at 24% much higher than the US. The lockdown is further driving up the unemployment rate particularly among migrant workers who make up approximately 140 million of the country’s workforce.

7:25 am

Collaboration amongst economists and other disciplines needed to address Covid-19 impact, according to leading macroeconomic influencers

Understanding the consequences of the Covid-19 pandemic on employment, global trade, and public finances is essential to develop the necessary policies and restoration measures. While economists are already working towards assessing the impact of the pandemic, collaboration with experts from other fields is essential to develop a holistic approach towards recovery.

Rob Elliott

Rob Elliott, Professor of economics University of Birmingham, shared an article on how economists across the world should collaborate with experts from other fields to respond to the urgency of the Covid-19 pandemic.

Collaboration among experts from various sciences is essential to conduct co-ordinated research and policies that will help in rebuilding the economy, while minimising climate change.

Paola Subacchi

Paola Subacchi, Professor of International Economics at the University of London’s Queen Mary Global Policy Institute, shared an article on the limits on extreme monetary policy. The Covid-19 pandemic has forced central banks across the world to cut interest rates to negative levels.

The European Central Bank, the Bank of England, and the Bank of Japan are considering cutting interest rates to negative levels. The article notes that policy makers should focus on expanding fiscal policy rather than cutting interest rates. Such a policy would help individuals and businesses impacted by the pandemic, while driving economic recovery.

Jonathan Davis

Jonathan Davis, wealth adviser and economist, tweeted an article on the estimated fall in housing prices by 13.8% in the UK, according to the Nationwide building society. The article notes that first-time buyers are reluctant to purchase a new home amidst the recession caused by the Covid-19 pandemic.

Some buyers were also looking to buy larger homes with a home office and garden, while others wanted to purchase homes near high street shops.

Diane Coyle

Diane Coyle, Bennett Professor of Public Policy at the University of Cambridge, shared an article on the emergence of digital currency as a result of the Covid-19 pandemic. Mobiles phones, digital social networks and authentication technology are changing the way people buy and sell.

Digital wallets are expected to perform complex and automated transactions with various currencies, with future currencies projected to have a global reach.

7:24 am

Covid-19 pandemic may increase China’s deficit to historic high, according to leading macroeconomic influencers

Economies across the world have announced stimulus packages to deal with the impact caused by the Covid-19 pandemic. Although these packages are essential, they are not reaching the people who need it the most and increasing the deficit-to-GDP ratio.

Adam Posen

Adam Posen, president of the Peterson Institute for International Economics, shared a tweet on China’s deficit-to-GDP ratio. The article notes that China had a policy of placing a 3% ceiling on its deficit-to-GDP ratio.

The Covid-19 pandemic has broken this ceiling with the ratio exceeding 3.6% of GDP. The pandemic has added RMB1tn ($140.2bn) to the government’s deficit spending.

Mohamed A. El-Erian

Mohamed A. El-Erian, chief economic adviser at Allianz, shared details about the number of unemployment benefits in the US. He noted that 2.123 million people have filed for unemployment benefits in the week ending 23 May bringing the total number to more than 40 million.

El-Erian added that the US GDP contracted by 5% in the first quarter against the previously predicted 4.8%. He noted that the economic downturn in the US is deepening.

Anders Åslund

Anders Åslund, an economist and author, shared a tweet on how the funds from $660bn Paycheck Protection Program, part of the Covid-19 stimulus package, were distributed to companies that have evaded tax payments. The programme was aimed at saving small businesses, which were impacted by the pandemic and help them to pay their workers.

The article notes that bottlenecks in the programme resulted in the non-payment of funds to several small businesses. Further, much of the funds were distributed to more affluent companies that have avoided tax payments. Out of 110 companies that have received funds $4m or more, 46 companies had not paid any corporate tax during the last year, the article added.

Gregory Daco

Gregory Daco, Chief US Economist at Oxford Economics, shared charts on how the Covid-19 pandemic has impacted durable goods orders and shipments in the US. The charts indicate that durable goods orders declined by 17.2% in April and by 29% on a year-on-year basis, while core orders declined by 5.8%.

The charts also indicate that shipments declined by 17.7% on a monthly basis and by 22% on a year-on-year basis, while core shipments declined by 5.4%.

7:35 am

Covid-19 may result in a housing crisis in the US, according to leading macroeconomic influencers

The lockdown measures imposed due to the Covid-19 pandemic has forced workers to stay home and unable to work and earn money. The unemployment benefits offered by the US government are not reaching the workers due to delays and eligibility issues. As a result, the pandemic may cause a housing crisis as workers are unable to pay rent.

Pedro da Costa

Pedro da Costa, Federal Reserve and economy watcher at Market News International, on how the pandemic may result in homelessness in the US. California is expected to face an increase of 20% in homelessness and a more severe rate in other parts of the US.

If the economic downturn continues, the US is expected to witness more evictions and foreclosures than those recorded during the Great Recession. Experts believe that it is essential that the government cover the costs of rent and help workers and landlords to avoid a housing crisis.

Yanis Varoufakis

Yanis Varoufakis, a professor of economics, shared an article on three recommendations made by DiEM25, a pan-European political movement, on dealing with the damage caused by the Covid-19 pandemic.

The DiEM25 notes that the government should issue €1tn in ECB-Eurobonds, which will reduce the burden of the increasing public debt. It also recommends that a €2000 European solidarity cash payment should be announced for people forced to stay home without work. The last recommendation made is the introduction of a European green recovery and investment programme for industries facing bankruptcy.

Daniel Lacalle

Daniel Lacalle, an economist and author, shared a chart on China’s economic recovery. The chart shows that the Chinese economy has an L-shaped recovery in majority of the sectors. The recovery is rising in those sectors that are driven by government spending.

Christophe Barraud

Christophe Barraud, chief economist of Market Securities, shared an article on a €750bn stimulus package proposed by the European Union. The package includes the provision of €500bn as grants to member states.

The proposal, however, will require the agreement of all 27 EU nations

7:12 am

Covid-19 pandemic may lead to a decade of depression and debt, according to leading macroeconomic influencers

The global economy is expected to face a prolonged downturn due to the Covid-19 pandemic. Many have predicted a U-shaped recovery as countries slowly ease restrictions. However, as the threat of a second wave of infections looms, the recovery may be more L-shaped with a sluggish recovery ahead.

Nouriel Roubini

Nouriel Roubini, Professor at Stern School NYU, shared an article containing his views on the damage caused by the Covid-19 pandemic. He noted that the economic recovery will not be U-shaped as claimed by many economists but rather L-shaped resembling a greater depression.

Roubini noted that an L-shaped recovery means the economy will contract sharply and stay there for an extended period of time.

Danae Kyriakopoulou

Danae Kyriakopoulou, Chief Economist & Director of Research at The Official Monetary and Financial Institutions Forum, tweeted an article on Bank of England’s plans to take the cost of borrowing to below zero.

The bank cut interest rates to 0.1% in March to stimulate the economy, which was battered by the Covid-19 pandemic. Although the bank is still assessing the impact of negative interest rates on the economy, support from the banking sector may help in preventing any negative impact of the policy on the sector.

Mohamed A. El-Erian

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, shared a chart from an article depicting the decline in world trade. The chart depicts how world trade declined at the fastest pace since the global financial crisis in 2008. The article noted that the pandemic has exposed the extent to which countries are dependent on each other for manufacturing.

El-Erian added that the global business will shift towards de-globalisation, which will be driven by companies, governments and households.

Saifedean Ammous

Saifedean Ammous, an economist, shared a tweet on an estimate by King’s College London on the rise in poverty levels due to the Covid-19 pandemic. The article notes that if global GDP falls by 10% it will result in extreme poverty for approximately 200 to 300 million people.

7:24 am

Limited Covid-19 lockdown measures key to economic revival, according to leading macroeconomic influencers

Experts across world continue to highlight the need to reopen economies to limit the economic upheaval caused by the Covid-19 pandemic. However, some believe that unless testing capabilities are ramped up, reopening the economy may result in an upsurge in infection rate. A testing ramp up with limited lockdown measures may be the most optimal solution to reopening the economy.

Kaushik Basu

Kaushik Basu, Professor of Economics at Cornell University, shared a chart comparing the mortality rates across various countries. He noted that the mortality rates are so different that emerging economies cannot blindly imitate the economic policies of those implemented by European and North American nations.

Basu added that economic revival will depend on a limited lockdown that will enable the economy to function.

Axel Mangelsdorf

Axel Mangelsdorf, an economist and consultant, shared a tweet on the testing capabilities of China. The country tested nine million people in ten days at an average of 1.4 million per day, following an upsurge in cases in Wuhan.

Sampled pooling method was used for the mass testing regimen resulting in 180 asymptomatic cases, which were isolated. Despite scepticism regarding the mass testing, China was able to test nine million people in Wuhan. The country eventually plans to test all of the city 11 million people.

Barrett Kirwan

Barrett Kirwan, senior economist at Amazon.com, shared an article on the need for developing more tests. He noted that considering the level of GDP that is being lost due to the Covid-19 pandemic, more funds should be spent on developing tests.

The article notes that the best strategy to deal with outbreak and relax lockdown measures would be to develop a system of targeted testing. By testing each citizen with a test that costs approximately $20, the total cost would be $6.6bn, which is less than one tenth of the cost of the Cares Act.

Stephen Koukoulas

Stephen Koukoulas, an economist, shared an article on the Australian government’s $60bn JobKeeper Payment scheme. The scheme aimed to pay $1,500 per fortnight per employee to businesses that retained their staff and passed on the payment to them. If the business closed or the employees were sacked, they would not receive the payment.

The article noted that though the scheme looked simple, the delay in making the payments forced businesses to sack their employees. The rules and regulations related to the scheme made some businesses ineligible, resulting in its failure.

https://twitter.com/TheKouk/status/126479740741961728

4:41 pm

UK Office of National Statistics puts ‘excess’ death figure during Covid pandemic at 55,000

As the UK has climbed the tables that count the number of Covid-19 cases and deaths in each country, it has become obvious that it is one of the worst affected countries globally.

The UK has passed countries that suffered severe early outbreaks such as China, Italy and Spain in numbers of coronavirus deaths. Whilst the quality of official data varies dramatically between countries, the only assessment for the UK governments’ response to the pandemic is now poor.

As the UK government has rightly pointed out, however, the true test of the damage done will come from the statistics that measure the total number of excess deaths above the usual average. By that measure, according to the ONS, the UK has now exceeded 55,000 additional deaths since the beginning of the year.

Read more here

4:29 pm

Covid-19 will accelerate workplace automation, say business leaders

The majority of professionals expect the Covid-19 pandemic to accelerate the adoption of workplace and industry automation.

This is according to a survey by Internet of Things company Pod Group, which found that 73% of the 500 UK business leaders surveyed believed that Covid-19 will spark a new wave of automation.

Workplace automation refers to the use of software to automate part of a workflow, carrying out tasks that may be repetitive or mundane, the types of tasks humans are not well-suited to but robots are.

Read more here

7:46 am

Global economy may start to expand once lockdown restrictions are lifted, according to leading macroeconomic influencers

Lockdown measures implemented due to the Covid-19 pandemic have led to contraction of GDP levels globally. Research indicates that some of the damage caused by the pandemic may be undone by lifting the restrictions. The lockdown measures, however, should be lifted based on a strategic approach to avoid the threat of a second wave of infections.

Alicia Garcia-Herrero

Alicia Garcia-Herrero, an economist, shared a chart comparing the fiscal stimulus provided in G20 countries. The chart shows how various economies are providing guarantees and loans to protect businesses particularly small and medium size enterprises (SMEs).

Garcia-Herrero noted that the US is not adopting a similar strategy. She added that the US is focussing on keeping the markets active rather than SMEs.

Gregory Daco

Gregory Daco, Chief US Economist at Oxford Economics, shared an article on how lifting of lockdown restrictions in China helped in returning the industry value to positive levels in April. Retail sales, however, were lagging due to consumers’ maintaining voluntary social distancing.

The article notes that based on the trends in China, the global economy may start to expand again if the lockdown restrictions are lifted. Consumers may start to spend on goods and services that they could not purchase in the second quarter but will also cut back their spending on other areas, the article added.

Christian Odendahl

Christian Odendahl, Chief economist at the Centre for European Reform, shared an article on how the Covid-19 pandemic will create economic divergence in various regions of Europe. The article notes that lockdowns wil remain for longer periods of time in European countries with larger outbreaks. With each month of lockdown, approximately 3% of GDP is expected to be lost.

European countries reliant on tourism will suffer larger and longer recessions, the article adds. In addition, the higher debt levels are expected to impact the recovery in some European regions.

Paul Krugman

Paul Krugman, Nobel laureate and economist, shared a chart indicating UK’s debt in the mid-20th Century. He noted that people who are questioning how the huge debt incurred due to the Covid-19 pandemic is going to be paid should look at the history of the UK in the 20th Century.

Krugman noted that the UK had debt more than 250% of GDP after World War II and did not have a debt crisis. The debt as a share of GDP eroded as the UK economy continued to expand.

https://twitter.com/paulkrugman/status/1263431204746952705/

7:30 am

Covid-19 induced recession projected to impact careers of 2020 graduates for a decade, according to leading macroeconomic influencers

Unemployment levels have reached new highs over the last three months since the lockdown was initiated in the US. As millions of students graduate during this uncertain time, their future job prospects remain bleak. Careers and earnings may be impacted for graduates.

Konstantina Beleli

Konstantina Beleli, an economist and journalist, shared an article on how million of students in US are graduating in one of the worst job markets witnessed since the Great Depression.

The article notes that the unemployment rate in the US currently stands at 14.7% but for people aged between 20 and 24, the rate increases to 25.7%, according to statistics provided by the Bureau of Labor Statistics.

Research suggests that the careers and earnings of these students are expected to be impacted for more than a decade.

Ian Bremmer

Ian Bremmer, political scientist and author, shared an article on how 29 million of people in Latin America and the Caribbean who overcame poverty are at risk of being pulled back due to the economic downturn caused by Covid-19.

Latin America’s economy is expected to be most impacted by the recession than any other region. The economy is expected to contract by 5.2% in 2020, undoing the social and economic progress made over the past two decades.

Daniel Lacalle

Daniel Lacalle, economist and author, shared an article on how consumers in the UK are creating an isolation economy worth £13bn ($15.7bn) amidst the Covid-19 lockdown. Research from Legal & General, an insurer indicates that consumers are spending an additional £247m ($298.7m) on food, groceries and entertainment during the lockdown.

The overall consumer spending, however, has declined by 31% per person due to the shutdown of the economy. The pandemic is expected to create a fundamental shift in consumer spending pattern even after the crisis.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, shared an article on a survey conducted among chief financial officers (CFO) in the US. Approximately 60% of the CFOs opine that the US economy may not return to normal until 2021.

Further, the CFOs surveyed were focussed on cost cutting and near-term survivability rather than growing their business in the current economic downturn.

8:18 am

Global trade wars may ensue as countries call for enquiry into spread of Covid-19, according to leading macroeconomic influencers

Global trade wars could result from the devastating economic impact caused by the Covid-19 pandemic. Some countries have held China accountable for not controlling the spread of the disease.

Prof. Steve Hanke

Prof. Steve Hanke, Applied Economist Johns Hopkins University, shared an article on the 80% tariff imposed by China on barley exports from Australia for five years. China is imposing the tariff after Australia became one of 100 countries that called for a probe into the spread of the Covid-19 disease.

Similar actions on other countries are also expected in the near future, with experts predicting that global trade wars are in the making.

Claudia Sahm

Claudia Sahm, a macroeconomist, shared a tweet from the Joint Economic Committee Democrats, on how US President Donald Trump’s pre-pandemic measures of individual and corporate tax cuts and global trade wars have failed to deliver the promised growth.

The article notes that these measures have now left the US more vulnerable than before and the Covid-19 pandemic is further worsening the country’s economic growth.

Howard Archer

Howard Archer, Chief Economic Advisor to EY ITEM Club, tweeted on the sharp rise in unemployment rates in the UK in April. The number of workers who applied for unemployment benefits increased by 856,500 to 2.1 million in April, showing an increase of 69% from March.

The increase in unemployment rates is the biggest ever recorded since July 1996, when the country was recovering from a deep recession. The unemployment rate is expected to reach 10% during the April-June period, according to experts.

Pedro da Costa

Pedro da Costa, Federal Reserve & economy watcher at Market News International, shared an article including a report by the World Economic Forum on the impact of the Covid-19 pandemic. The report notes that the Covid-19 pandemic is expected to create a long-lasting global recession.

The report predicts bankruptcies and consolidation in the industry, apart from high levels of unemployment. Further, the report notes that governments should adopt a green approach to recovery focussing on building sustainable and inclusive economies.

2:06 pm

Covid-19 contact-tracing app risks excluding those without smartphone access

The digital divide may exclude vulnerable people from the Covid-19 tracing app, according to cybersecurity company Anomali.

A study conducted by Censuswide on behalf of Anomali surveying thousands of people across the UK has revealed that several hurdles may stand in the way of the app making a difference in slowing the spread of coronavirus.

Half of respondents said they know at least one person who does not have the technology, such as a smartphone, needed to use the Covid-19 tracing app.

Read more here

7:28 am

Covid-19 induced recession increasing online spending, according to leading macroeconomic influencers

The Covid-19 pandemic has forced retail and food outlets to remain closed to avoid the spread of the disease and comply with the lockdown measures. Consumers unable to make purchases in physical stores are increasingly opting for online services for a variety of products.

Gregory Daco – online spending

Gregory Daco, Chief US Economist at Oxford Economics, shared a chart on how the recession caused by the Covid-19 pandemic is shifting consumer spending towards online shopping, which increased by 15% to 25%. Consumers are purchasing various products online including office supplies, consumer electronics, home furnishings, auto parts etc.

In the article, UBS Group notes that approximately 100,000 retail stores will close over the next five years as online shopping picks up. Clothing, electronics and home furnishings stores are expected to be most affected by this trend.

Daniel Lacalle – EU recovery grants

Daniel Lacalle, Chief Economist at Tressis SV, tweeted an article on France and Germany’s joint proposal for a €500bn ($543bn) recovery fund to provide grants to regions and sectors in the European Union (EU) that have been impacted by the Covid-19 pandemic.

The two countries proposed that the European Commission can borrow the funds on behalf of the entire EU and spend it as part of the 2021-2027 EU budget, which is estimated at €1tn ($1.08tn) over that period.

Timothy McBride – youth unemployment crisis

Timothy McBride, Bernard Becker Professor at Washington University, tweeted an article on how the pandemic has created an unemployment crisis among the youth. The article estimates that approximately 7.7 million young workers in the US, including 40% from the retail and food sectors, are unemployed due to the pandemic.

The article suggests that the government should create a 21st-century version of the Civilian Conservation Corps that was created during the Great Recession. Investments in ecological restoration and natural projects can create millions of jobs for the demographic groups and regions, which have been severely affected by the recession.

https://twitter.com/mcbridetd/status/126250883929280512

Adam Posen – government power grab

Adam Posen, President of the Peterson Institute for International Economics, shared an article on how the Covid-19 pandemic is expected to permanently increase the powers of the government.

The pandemic necessitated the government to develop policies to mobilise medical resources, impose lockdown measures and support businesses and workers. These policies are expected to benefit the general public in the long-run but may also give the government the power to trace, track and control.

4:32 pm

Coronavirus business recovery: Three data-driven steps

The uncertain and fast-changing nature of the Covid-19 pandemic is an uncomfortable rollercoaster ride for business leaders.

But as the situation stabilises, organisations need to focus on how they are going to rise to the challenge of safeguarding the long-term viability of their business in the ‘new normal’.

By optimising existing data and analytics processes, automating tasks, reducing total cost of ownership of data platforms and embracing artificial intelligence, business leaders can maximise their chances of emerging from the Covid-19 crisis on a positive trajectory of profitable growth.

Read more here. 

4:30 pm

London job vacancies fell by 23% in the week before lockdown easing

Job vacancies in London dropped by 23% during the week ending 10 May.

This is according to real-time statistics from Broadbean Technology, a recruitment software company.

Despite Prime Minister Boris Johnson announcing the start of a lockdown ‘exit strategy’, job vacancy levels have fallen in the UK by 9%, suggesting that recruiters are exercising caution.

Read more here. 

 

7:30 am

Unemployment rate in the US due to Covid-19 may increase to 25%, according to leading macroeconomic influencers

The latest report from the US Labour Department pegs the unemployment rate at more than 20%. Although new unemployment claims have slowed down, the unemployment rate is still one of the highest since the Great Recession.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, tweeted on the US Labour Department’s latest report on unemployment claims.

The report notes that an additional 2.98 million claims were filed over the last two months bringing the total unemployment claims to 36.5 million.

McBride noted that the unemployment rate is expected to be more than 20% or even 25% by the time the next official report is released.

Jonathan Davis

Jonathan Davis, a wealth adviser and economist, shared an article on the rise in food prices in the US. The article is based on a report from the US Labour Department, which notes that consumers in the US the prices for groceries increased by 2.6% in April. This was the single biggest increase since February 1974.

Davis noted that inflation is rising with respect to groceries, while deflation is making its way into the property market.

Armine Yalnizyan

Armine Yalnizyan, an economist, tweeted on the $50bn fund announced by the New Zealand government to deal with the impact of the Covid-19 pandemic. The fund announced by the government is equal to 17% of the country’s GDP and aims to reduce unemployment and save jobs within two years. It relies on long-term borrowing, which could increase government debt to 53.6% of GDP by 2023.

Under the plans announced by the government, Covid-19 wage subsidy will be extended by eight weeks. Approximately $3.3bn will be spent on health and education and another $3bn on infrastructure projects to create jobs.

Edward Stringham

Edward Stringham, Professor at Trinity College, shared an article on the decline in the filing of new unemployment claims. The article notes that the total number of unemployment claims crossed 36 million but new claims continued to decline.

The number of unemployment claims peaked towards the end of March at 6.87 million but have since declined over the last few weeks. At the end of the first week of May, new claims totalled 2.98 million.

7:38 am

Additional stimulus packages may be needed to avoid a protracted recession in the US, according to leading macroeconomic influencers

The US has already announced more than $2.2tn in stimulus packages to protect the economy from the impact of the Covid-19 pandemic. As unemployment rates continue to rise, additional stimulus packages may be needed even if they are costly and increase debt.

Paul Krugman

Paul Krugman, an economist and Nobel laureate, tweeted an article on the slowdown in unemployment rate due to Covid-19 in the US. The article is based on surveys conducted by Civis Analytics, which shows that women, part-time workers and workers earning more than $100,000 are still facing unemployment. However, the unemployment rate among full-time employees, men and workers earning less than $50,000 was falling by mid-to-late April.

Victoria Guida

Victoria Guida, a financial services reporter, shared her article on the latest update provided by Federal Reserve Board Chairman Jerome Powell on the US economy. Powell noted that the Covid-19 pandemic may result in a longer recession for the US economy. He added that further stimulus packages may be costly but necessary to avoid a protracted recession.

Howard Archer

Howard Archer, Chief Economic Advisor to EY ITEM Club, shared an analysis of the UK economy, where GDP contracted by 5.8% on March. In the first quarter, the economy contracted by 2%, which is the biggest contraction since 2008.

The services sector was the most affected where output dropped by 6.2%. The article forecasts that the UK GDP is expected to contract by 7.5% in 2020.

Linda Yueh

Linda Yueh, an economist at the University of Oxford, shared an article on the impact of the Covid-19 pandemic on the UK economy. Based on a confidential Treasury assessment, the article notes that the pandemic is expected to create a deficit of £337bn ($414.87bn) or about 17% of GDP.

The deficit may require various measures such as increase in income tax, and public sector pay freeze.

Trinh Nguyen

Trinh Nguyen, senior economist at Natixis, tweeted on the stimulus package announced by India. She shared a chart comparing the fiscal support packages announced by various countries as a percentage of GDP.

Nguyen noted that governments should provide consumption oriented or investment spending similar to what the US is doing such as cash-handouts and $2,400 per month in unemployment benefits. She added that countries in Asia were not adopting similar measures although some have announced but they are yet to reach people.

8:02 am

US economy may face deflation as consumer price index (CPI) continues to fall, according to leading macroeconomic influencers

The consumer price index (CPI) continues to fall as the Covid-19 pandemic has forced businesses to shutdown and people to remain under lockdown. The consumer spending has drastically reduced amid this environment with the threat of rising inflation or even deflation.

Pedro da Costa

Pedro da Costa, a journalist, shared an article on the decline in consumer prices in the US. The consumer price index (CPI) dropped 0.8% in April after falling 0.4% in March, which is biggest decline since December 2008 when the country was going through recession.

The article is based on a report from the Labour Department that showed a record decline in prices in April raising the possibility of deflation.

Howard Archer

Howard Archer, Chief Economic Advisor to EY ITEM Club, shared an article on the forecast made by Ben Broadbent, Deputy Governor Bank of England, on the UK economy. The article notes that CPI in the UK may be negative in the UK towards the end of 2020 but may not result in deflation.

The article added that inflation may be around zero in the fourth quarter of 2020.

Tim Bartik

Tim Bartik, Senior economist at the Upjohn Institute for Employment Research, shared an article on the next round of federal aid needed to counter the impact of the Covid-19 pandemic.

The article notes that revenue shortage due to closure of businesses and collapse in economic activity may be around $1tn by the end of 2021. The government should focus on providing federal aid to state and local governments in the next relief package being planned, the article adds.

Christopher Whalen

Christopher Whalen, an author and investment banker, shared an article on how hidden defaults are expected to rise amid the Covid-19 induced recession. The article notes that there will be a rise in companies trying to use debt or distressed exchanges to overcome liquidity issues by swapping debt.

This approach, however, usually results in losses for creditors and eventually the companies go bankrupt. During the 2008 global financial crisis, a similar trend was noticed with distressed rising by 10% initially and 40% in subsequent years.

8:43 am

Stimulus packages for Covid-19 may lead to higher taxes in future, according to leading macroeconomic influencers

The lockdown measures imposed due to the Covid-19 pandemic has affected countries across the world with decline in revenues, high unemployment rates and economic uncertainty. Governments are releasing stimulus packages to combat the impact but this may lead to higher taxes and debt, which will further burden people after the crisis.

Prof. Steve Hanke

Prof. Steve Hanke, Applied Economist at Johns Hopkins University, tweeted an article on the stimulus packages announced by the government and its consequences. He noted that the US government has already created $1.48tn in deficit in 2020 and is still planning to announce more stimulus packages.

Hanke noted that future taxpayers will have to bear the hefty costs of the stimulus packages being announced by the government.

Isaah Mhlanga

Isaah Mhlanga, chief economist at Alexander Forbes, tweeted on how debt financing due to Covid-19 will lead to increase in taxes in the future. He shared an article on how Saudi Arabia has tripled VAT from 5% to 15% to support the economy and suspended cost of living allowance.

The measures were implemented as the country had a $9bn (£7.2bn) budget deficit in the first quarter of 2020 in addition to fall in oil revenues by 22%.

Tim Harcourt

Tim Harcourt, an economist and author, shared an article how working from home can mitigate the impact of the Covid-19 pandemic. According to the International Labour Organization, only 7.9% of the global workforce worked from home before the pandemic.

After the pandemic, the number of workers who are working from home has increased dramatically. In Argentina, for example, 93% of the workforce adopted teleworking. The article adds that workers in advanced economies are more capable of working from home rather than developing nations where the job profile did not allow work from home.

Gregory Daco

Gregory Daco, Chief US Economist at Oxford Economics, tweeted a chart on temporary jobs. He noted that those temporary jobs, which have been lost due to the coronavirus pandemic, are likely to turn be permanently lost as due to the recession caused by the pandemic.

4:11 pm

Coronavirus digital health passport to be supplied to 15 countries

Manchester-based cybersecurity firm VST Enterprises has signed a deal with digital health company Circle Pass Enterprises (CPE) to create a digital health passport designed to make it easier for individuals to return to work after the Covid-19 coronavirus pandemic.

The two companies have partnered to create “the world’s most secure digital health passport”, known as Covi-pass, and will work with governments and the private sector to deploy the technology to 15 countries around the world.

The Covi-pass will work using a colour system of green, amber, red to indicate whether the individual has tested positive or negative for Covid-19 and relevant health information.

Read more here

 

11:29 am

Unemployment will be a major issue amid Covid-19 pandemic, according to leading macroeconomic influencers

The Covid-19 pandemic may lead to unknown economic challenges as countries across the world face rising unemployment rates and inflation. Governments are trying to minimise the impact of the pandemic through economic relief packages but it may lead to huge debts.

Anders Åslund

Anders Åslund, an economist and author, tweeted about the unknown consequences of the Covid-19 outbreak. He noted that the pandemic may lead to deflation or inflation or both in different parts of the world over different periods of time.

Åslund made this commentary while sharing a tweet on Germany’s €1 store increasing prices by 10%. He noted that macroeconomic stability will be challenging during the current pandemic.

Jonathan Portes

Jonathan Portes, professor of economics at King’s College London, tweeted about the basic things that need to be done to address the unemployment issue in the UK. He noted that people’s income should be supported, viable jobs should be made available for workers after the crisis and help should be provided to workers to find new type of jobs if their old jobs are no longer viable

Portes added that assistance should be provided to young people who are entering the labour market amid the economic downturn.

Linda Yueh

Linda Yueh, an economist and author, shared an article on the measures being considered by the US government to address the unemployment rate in the country. The government is considering another round of stimulus to provide aid to workers who are facing unemployment and cannot meet basic needs.

The article adds that the unemployment rate predicted by the government is more that 20% in May and June.

Claudia Sahm

Claudia Sahm, a macroeconomist, tweeted that the direct cost of unemployment benefits offered to workers in the US will be $800bn in 2020 and $2tn over next ten years.

Sahm noted that considering that the US is a $20tn economy a year, workers will need to be provided far more benefits in order for them to survive the economic downturn caused by the COVID-19 pandemic.

Joe Sarling

Joe Sarling, an economist, tweeted the top economic events expected to occur over the next week including trade wars, GDP woes and labour market concerns.

Sarling also tweeted statistics related to the UK economy, which is predicted to contract by 14% in 2020 and unemployment rate is expected to reach 8%. He added that the German economy will shrink by 6.3%, which is biggest contraction since World War II.

8:45 am

Public debt due to Covid-19 pandemic projected to burden societies for several years, according to leading macroeconomic influencers

Public debt concerns are being voiced by leading macroeconomic influencers. Governments across the world are providing stimulus packages to protect people from the impact of the Covid-19 pandemic. Although these packages are essential, as millions have lost their jobs due to lockdown measures, it may lead to huge levels of public debt. The consequences of the debt are expected to impact economies for a long time.

David W Versailles on public debt

David W Versailles, an economist, shared an article on how public debt in advance economies will reach high levels amid the Covid-19 pandemic.

The article notes governments should find a balance between stimulus and restraint as too much public debt can burden societies for years to come.

Claudia Sahm on unemployment

Claudia Sahm, a macroeconomist, tweeted that an additional 3.2 million workers filed for jobless benefits between 26 February and 2 May. She added that based on the claims filed since 1 March, the estimated unemployment rate is at 23%.

Sahm shared a chart depicting the unemployment rates between 1950 and 2020, which shows that 2020 has the highest levels of unemployment rates.

Daniel Lacalle on stagflation

Daniel Lacalle, an economist and author, shared his article on next crisis waiting for countries across the world including deflation to stagflation. In the article, he notes that the stimulus packages, liquidity injections and public spending programmes may eventually cause deeper problems leading to a prolonged recovery.

Lacalle shared a few ways in which governments can address the damage caused by Covid-19 pandemic. He noted that governments should eliminate taxes throughout the lockdown period and keeping supply chains open.

Stephany Griffith-Jones on recession

Stephany Griffith-Jones, an economist, shared an article detailing the warnings issued by the Bank of England of a deep recession in the UK. The article notes that the UK economy will shrink by 14% in 2020, provided lockdown measures are eased in June.

The economy contraction will be sharpest for the UK since 1706. Although the economy is expected to rebound to 15% in 2021, the size of the economy will not be the same as before the crisis until mid-2021.

1:41 pm

Healthcare organisations are being targeted by state-backed hackers, governments warn

Government agencies in the UK and US have issued a cybersecurity warning for healthcare organisations over a rise in attacks by hackers with nation-state backing.

UK’s National Cyber Security Centre (NCSC) and the US Cybersecurity and Infrastructure Security Agency (CISA) have advised staff to change passwords to three random words to make them more difficult to guess, and implement two-factor authentication.

The two agencies said that ‘advanced persistent threat’ (APT) groups, typically nation state or state-sponsored groups, are targeting such organisations likely with the aim of gaining information about the coronavirus outbreak.

Read more here

9:47 am

Moderate inflation can help in dealing with the huge debt created by the Covid-19 pandemic, according to leading macroeconomic influencers

The Covid-19 pandemic has led to unprecedented levels of unemployment, huge levels of debt and an imminent threat of inflation or even deflation. Economists believe that moderate levels of inflation can help economies around the world to deal with the debt and recover from the crisis.

Atif Mian

Atif Mian, an economist, tweeted that the world is witnessing the highest levels of debt for the first time in many years. He added that the best way to reduce this debt will be moderate inflation particularly in advanced economies.

Mian noted that implementing moderate targeted-inflation may be a challenge in the near term.

Adrian Saville

Adrian Saville, founder and Chief Executive at Cannon Asset Managers, shared an article on how inflation has declined to the lowest levels in advanced economies plunging the world into recession. The article added the prolonged recession may lead to lower levels of inflation.

Failure to stimulate demand and too much support from central banks can lead to below-target inflation or deflation, which can be more damaging, the article added.

Miles Kimball

Miles Kimball, professor of economics at the University of Colorado, tweeted about the impact of the Covid-19 pandemic on the manufacturing sector. He shared an article that noted that the manufacturing index fell by 41.5 in April from 49.1 in March, according to the Institute of Supply Management. The article added that any number below 50 indicates a contraction in the manufacturing sector.

Kimball added that interest rates will need to be reduced for investment and for durables purchases.

Steve Hanke

Steve Hanke, applied economist at the Johns Hopkins University, shared an article on the bankruptcies filed by Hertz, Gold’s Gym, and J. Crew. Lenders provided some reprieve to Hertz from a potential bankruptcy and the company has until 22 May to develop a financing strategy.

Hanke noted that together the three companies employed more than 50,000 people. He added that the impact of unemployment will be more that of the coronavirus outbreak and will continue until the lockdown restrictions are lifted.

 

9:35 am

Advance market commitments needed to develop Covid-19 vaccine, according to leading macroeconomic influencers

As the US economy continues to contract due to lockdown measures, there is an ongoing debate on whether to open up the economy to save jobs or risk a second wave to infections. The best way to deal with this conundrum is to identify sectors that can be safely reopened, while accelerating the development of a vaccine against Covid-19 disease.

Erik Brynjolfsson

Erik Brynjolfsson, professor at Massachusetts Institute of Technology, shared an article by four prominent economist on the development of a vaccine against Covid-19 disease. The article notes that the government should invest billions of dollars into a vaccine development programme, while providing advance market commitment to manufacturers.

Advance market commitment can be provided by the government by ensuring the purchase a set number of vaccines at a specified price within a specified time frame. Manufacturers can also be provided with partial reimbursement to reduce the risk associated with investing in building production capacity.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared his views on US President Donald Trump’s threats to wage a new trade war against China. He noted that Trump should provide reciprocal suspension of tariffs with China instead of a trade war.

Bremmer noted that this is the easiest way to deal with the current recession and that workers in the US need the help.

Daniel Lacalle

Daniel Lacalle, an economist and author, shared a chart depicting how the US economy has deteriorated at the fastest pace during the lockdown. He added that this is the first time in recent history that the economy has weakened so quickly.

Lacalle added that recovery will be faster in Europe and the rest of the world but it will be very complicated.

Richard Murphy

Richard Murphy, professor of international political economy at the University of London, tweeted that the UK is expected to witness an unemployment rate of 30%. He shared an article containing a chart that shows percentage of jobs at risk in various areas of the UK including Richmondshire, Eden, East Lindsey, South Lakeland and Derbyshire Dales. One in three jobs in some of these areas are at risk due to the Covid-19 pandemic.

6:10 pm

London tech recruitment slumps 57% during pandemic

Recruitment for permanent technology roles has fallen by 57% in London during the coronavirus pandemic, according to recruitment firm talent.io.

Across Europe as a whole, 38% of companies are freezing most or all of their tech recruitment.

Firms have also been scaling back during the economic downturn, with tech companies Lyft, Bird, Eventbrite, Groupon, Magic Leap and Yelp among some of the firms that have made job cuts.

Read more here

9:15 am

Federal job guarantee can avoid mass unemployment amid Covid-19, according to leading macroeconomic influencers

Over the last two months the US has witnessed more than 30 million workers filing for unemployment benefits. Although unemployment benefits are being provided to some of the people, these benefits are not reaching everyone due to wide disparity in processing claims and eligibility criteria. A federal job guarantee programme can help in providing basic necessities.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University in St. Louis’ Brown School, tweeted an article detailing how mass unemployment can be avoided if a federal job guarantee is provided.

The current unemployment benefits programme is inefficient and uses disparate policies to process claims leaving many unemployed workers at risk of food insecurity, depression and losing their homes.

A federal job guarantee programme can help unemployed people by providing minimum wages enabling them to meet basic needs and maintaining their health.

Ludovic Subran

Ludovic Subran, chief economist at Allianz, tweeted about the consequences of premature easing of lockdown measures and withdrawal of public health interventions and economic stimulus packages. He noted that such measures can lead to second wave of infections prolonging economic recovery or a W-shaped recovery.

Subran shared examples of previous epidemics such as the Spanish flu, which affected the US for more than two years due to resurgence in infections. Similarly, the premature ending of economic stimulus packages in 2011 after the global financial crisis impeded economic recovery. Subran noted that the US should learn from these mistakes and not repeat them to ensure a quick economic recovery.

Lawrence Lepard

Lawrence Lepard, an investment manager, shared an article on about the possibility of increase in inflation in the current economic downturn. The article details that in the current environment of fiscal easing and commodity shortages can lead to inflation.

Some central bankers believe that a little inflation may be good considering the amount of stimulus spent. An environment where thousands of workers are facing unemployment inflation, however, can cause further damage.

9:21 am

Vaccination against Covid -19 estimated to cost more than $20bn, according to leading macroeconomic influencers

The trillions of dollars in lost GDP due to the Covid-19 pandemic has highlighted the importance of vaccinating the population and realignment of business models in order to reopen the economy. Investment in vaccination is essential even if the cost is high to ensure that the pandemic does not resurface and cause greater damage in the long run.

George Magnus

George Magnus, an economist, shared an article on the cost of vaccinating billions of people against the Covid-19 disease, which is estimated at $20bn. He noted that the pandemic is estimated to cost the world more than $2tn in lost GDP.

Magnus added that even if the cost of vaccination is $100bn, it will still be worth the investment to protect both the population and the economy.

J.C. Bradbury

J.C. Bradbury, an author and economist, tweeted that focus should be more on how businesses can operate in the current pandemic instead of rushing into opening up the economy, which can lead to further damage in the long run.

Bradbury added that existing businesses should change their business model. For example, restaurants can start taking online orders and unemployed people can be moved into sectors that have grown such as home delivery.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University in St. Louis’ Brown School, tweeted about unemployment benefits not being received by more than 70% of workers in March. Each state has its own set of rules on who qualifies for benefits and how much they can receive in benefits, which is further delaying the distribution of benefits.

Despite efforts to ramp up the provision of aid to jobless workers, majority of them have not received any benefits making it difficult for them to pay rent and cover basic expenses.

Paul Krugman

Paul Krugman, a Nobel laureate, compared the US government’s false predictions on the rapid decline in coronavirus cases. He noted that the false claims on the declining number of cases is comparable to the monetary projections made after 2010.

Krugman added that after 2010, the Federal Reserve predicted that the interest rates will normalise but that never happened. He added that the government should rethink their model as their projections continue to remain wrong.

9:27 am

Majority of unemployment claims in the US filed by women, according to leading macroeconomic influencers

Women accounted for majority of the 30 million workers who filed for unemployment benefits in the US in the last two months. The unprecedented surge in claims has made it difficult for states to clear them. While some experts recommend an increase in unemployment benefits others warn that it may lead to more unemployment as workers may be reluctant to return to work.

Shoshana Grossbard

Shoshana Grossbard, professor of Economics emerita at San Diego State University, shared an article on how women filed the majority of the unemployment claims in 17 states in the US due to the closure of schools and workplaces.

Women working as waitresses, hairdressers and cosmetologists, retail salespeople, bartenders, and childcare workers were some of the hardest hit by the lockdown measures implemented to curb the spread of Covid-19.

Peter Morici

Peter Morici, an economist and Business Professor at the University of Maryland, shared his interview on how increasing unemployment benefits can lead to a spike in unemployment rates. In the interview, he notes that unemployment benefits can help in the short-term but in the long-term the impact of small businesses will be huge.

Morici added that once the lockdown restrictions are lifted, employers should be provided with money to hire workers instead of providing workers with unemployment benefits.

Gregory Daco

Gregory Daco, Chief US Economist at Oxford Economics, tweeted a chart depicted the estimated decline in US GDP in the second quarter of 2020 due to the COVID-19 pandemic. He noted that the GDP fell by 4.8% in the first quarter, which is largest contraction since the global financial crisis in 2008.

Daco estimated that the GDP contraction in the second quarter to be 40%, which will be the largest since the World War II.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, tweeted statistics related to the GDP contraction in the Eurozone. Across 19 countries in Europe, the GDP contracted a higher rate of 14.4% in the first three months of 2020 compared to a 4.8% decline in the US.

The higher drop is due to the implementation of lockdown earlier than the US.

Harry A. Patrinos

Harry A. Patrinos, an education economist and manager at the World Bank, tweeted an article on the impact of lockdown on education. He noted that each additional year of schooling equates to 10% of future lifetime earnings. School closures due to the COVID-19 pandemic will result in lost future earnings.

Patrinos added that the cost to the future earnings due to school closures will be an estimated $2.5tn or 12.7% of GDP for the US and $10tn globally.

11:34 am

GDP of majority of the economies to be below pre-Covid-19 levels for two to three years, according to leading macroeconomic influencers

The impact of the Covid-19 pandemic is expected to last more than three years for the majority of the countries affected. GDP levels are likely to fall to new record lows and the majority of the global workforce is expected to face unemployment.

Daniel Lacalle

Daniel Lacalle, an economist and author, shared a chart showing GDP levels of various countries until the end of 2022. The chart shows that the GDP levels of several countries will remain below the levels recorded before the Covid-19 pandemic.

Turkey and Spain are expected to have the lowest GDP levels, followed by Mexico, Brazil and Italy.

Ian Bremmer

Ian Bremmer, a political scientist and President of the Eurasia Group, tweeted about the fall in US GDP levels by 4.8% in the first quarter of 2020. He noted that the second quarter will witness a much greater fall in GDP levels.

Brian Riedl

Brian Riedl, senior fellow at Manhattan Institute, shared a chart depicting the 2020 US budget deficit, which is projected to reach 19% of GDP. He noted that federal spending is currently estimated at 28.8% of GDP, which is the highest since 1945, and revenues are estimated to be below 10% of GDP for the first time since World War II.

Colin Williams

Colin Williams, Professor of Public Policy at the University of Sheffield, tweeted an article that includes projections from the International Labour Organization regarding unemployment. The article states that more than half of the global workforce are at risk of losing their jobs due to the Covid-19 pandemic.

Further, more than 430 million businesses in sectors such as retail and manufacturing are expected to face serious disruption.

Claudia Sahm

Claudia Sahm, a macroeconomist, tweeted a chart depicting the unemployment levels between 1948 and 2020. She noted that more than 30 million workers have filed for unemployment benefits since March.

Considering the number of layoffs and the unemployment claims, Sahm estimated the unemployment rate to be more than 20%.

4:02 pm

Investment in UK startups hit £663m in first month of lockdown, led by tech sector

British startups raised £663m investment in the first month after the country went into lockdown, with the tech sector seeing the most activity, according to new research released today by Plexal and Beauhurst.

The total value of investments has increased by 34% compared to the same period in 2019, but deal numbers were down by 39%.

However, nearly 263 small businesses are currently in administration and 707 are in liquidation. The week after lockdown was announced in the UK saw the lowest level of investment since w/c 28 March 2016.

Read more here

6:00 pm

How to build a secure remote working organisation

The recent impact of coronavirus has placed massive strain on businesses all around the world, changing working culture virtually overnight to make remote working an urgent priority.

What quickly became clear, however, is not all companies were in a position to enable their employees to work remotely at such short notice.

While remote access greatly benefits productivity, if the organisation is not equipped with the proper security tools, it leaves them vulnerable to a number of threats. So, what can organisations do to ensure their employees are working securely from any location, no matter what disruptions may arise?

Read more here

8:46 am

Stimulus packages key to recovery from Covid-19 impact, according to leading macroeconomic influencers

As Covid-19 lockdown measures continue across the world, unemployment rates have spiked, and several businesses have collapsed. Stimulus packages are key to addressing these issues and reviving the economy. Although these packages may increase national debt, they are essential to avoid a protracted recession.

Rory Johnston

Rory Johnston, Managing Director and Market Economist at Price Street, shared a graph depicting the various rescue packages announced by countries across the world to deal with the impact of the Covid-19 pandemic.

The graph shows that emerging markets are leading in handing out direct cash payments compared to advance economies.

Ernie Tedeschi

Ernie Tedeschi, former US Treasury economist, tweeted that the Covid-19 outbreak and unemployment rate of more than 20% is a bigger problem than national debt. The tweet was in response to US Senator Mitch McConnell’s comment stating that states should declare bankruptcy rather than seek federal assistance.

Tedeschi added that the government should spend what is needed and reassess fiscal policy when the outbreak is controlled.

Pedro da Costa

Pedro da Costa, a reporter, shared an article about the impact of Covid-19 pandemic on low-income communities. He added that low-income jobs in the fields of retail, hospitality and childcare are at risk during lockdowns imposed by governments. Such jobs do not offer paid sick leave or health insurance.

Governments should target their stimulus packages towards these low-income communities and create an adequate standard of living for everyone, the article added.

Ludovic Subran

Ludovic Subran, chief economist at Allianz, shared an article detailing how household saving rates in Europe are expected to increased by an average of 36% in the second quarter of 2020 due to lockdown restrictions. This will equate to €1.3tn in additional savings or 10% of GDP.

Government should develop policies that focus on unlocking these savings by creating a conducive environment for increasing spending, the article adds. Some of the ways in which spending can be increased include supplementing existing unemployment and public guarantee schemes, and access to wealth management facilities.

9:32 am

Covid-19 lockdown restrictions should be lifted based on the needs of the economy, say leading macroeconomic influencers

The measures being implemented by governments across the world to control the spread of the Covid-19 are having devastating impact on the economies. Governments have tried to introduce unemployment benefits and implement fiscal stimulus measures but they seem ineffective. Assessing the needs of the economy and easing lockdown measures is essential to revive the economy.

Raoul Pal

Raoul Pal, founder and CEO of Global Macro Investor and Real Vision Group, tweeted that negative bond rates are expected to follow as the US has now witnessed negative crude oil prices.

Pal added that the negative bond rates will become a reality regardless of the steps taken by the Federal Reserve.

Ferdinando Giugliano

Ferdinando Giugliano, an author, tweeted about the taxes expected to be imposed by governments after the Covid-19 pandemic to spread the cost of the crisis.

Giugliano cautioned that governments should be careful in raising the taxes as the Covid-19 pandemic has impacted both businesses and individuals alike. A simple wealth tax may not be the answer to raising taxes rather it should be based on how individuals and companies fared during the lockdown.

Stephen Koukoulas

Stephen Koukoulas, an economist, shared an article that details the views of 122 economists in Australia who have signed a letter against the easing of lockdown measures.

Koukoulas opined that although lockdown was the right response to containing the spread of the Covid-19 disease and saving lives, it also led to the increase in unemployment rate and folding of businesses.

He added that the government should consider implementing strong fiscal measures and gradual easing of lockdown measures to undo the damage caused by the pandemic.

Pam Herd

Pam Herd, Professor of Public Policy at Georgetown University, shared an article detailing the number of workers who have filed for unemployment benefits in Florida. More than 1.5 million workers have filed for unemployment benefits in March but only 3% of them have received the benefits.

Herd noted that the consequences of relying on unemployment insurance are visible with many not receiving payments, while some being ineligible for the benefits.

5:32 pm

Tips for scaling up VPNs to meet the remote working surge

The current Covid-19 pandemic is heralding a seismic shift in the way businesses work. Many companies have been required to switch to wholly remote working practices.

When it comes to working remotely, most people imagine they will need a computer and an internet connection. For an individual employee, that’s enough, but for a company, it also requires a solid virtual private network, or VPN for short. It is arguably the most essential piece of infrastructure.

A VPN is designed to mitigate against the risk of an insecure network that could threaten business continuity or intellectual property issues.

Read more here

4:10 pm

Future Fund: The tech sector reacts to UK Chancellor’s plans to help startups

Chancellor of the Exchequer Rishi Sunak has pledged £1.25bn to support UK startups struggling to survive during the Covid-19 pandemic, including funding for high-growth companies and a “Future Fund”.

This £500m Future Fund, created in in partnership with the British Business Bank, will see the UK government provide £250m.

£750m of support for research and development-intensive small and medium-size businesses will also be available through Innovate UK’s grants and loan scheme.

Organisations from across the UK start-up ecosystem warned that previous measures  did not go far enough to support startups.

Read more here

3:19 pm

“The mental health challenges are really significant”: How the switch to remote working is impacting wellbeing

Due to lockdown measures imposed in many countries due to the ongoing Covid-19 pandemic, many non-key workers have made the rapid switch to working from home for the first time, a significant change for both employers and employees.

Although the flexibility to work from home, driven by technology, may be something a growing number look for in a job, many now find themselves away from their routine, increasingly isolated or juggling other commitments.

Along with the current state of worry and uncertainty caused by the pandemic, this may lead to employees experiencing new mental health challenges.

Read more here

12:21 pm

The four contests that will shape the post-Covid-19 world

David Miliband in the New Statesman

The global pandemic has shown the limits of the politics of anger. Issues of contact tracing, health capacity, trust in government, cannot be solved by demonisation. So what comes next?

No one can yet know the social, economic and political consequences of this disease. Remote working could help lower carbon emissions. Mass volunteering for health and social services could help rebuild social solidarity. Or the new walls against foreigners could become the norm.

As the global order fragments, the alternative is not utopia. It is common sense as well as common humanity.

Read the full article on the New Statesman

More from the New Statesman

5:06 pm

Coronavirus layoffs expected by almost half of companies

Layoffs in response to the economic downturn caused by the Covid-19 coronavirus are either expected or have begun happening at 44% of companies, according to a survey conducted by Verdict.

The survey was answered by 1,136 of Verdict readers, who primarily are from the US, the UK, India and Canada, and who primarily work in technology, finance and related industries.

The survey, which ran from 25 March to 15 April on our website, found that 24% of respondents expected their company to conduct layoffs as a result of the coronavirus, while 20% said this had already begun to happen.

Read more here

5:32 pm

Living with a pandemic: How networks can support the transition to a new normal

As the Covid-19 pandemic has taken hold over the past few weeks and months, it has become clear that we are facing an unprecedented situation on a global scale.

One of the most crucial components in enabling this ‘new normal’ to succeed has been the continuation of fast and reliable telecommunication networks.

In the space of a few short weeks of working ‘statically’ at home, this has become a secondary priority for operators who now need to ensure there is enough network capacity throughout the entirety of the day. It’s a situation compounded at weekends as people stay at home rather than go out, or travel to see friends and family.

Read more here

4:12 pm

Job market slump spreads amid growing economic gloom

The mining, oil and gas and automotive industries are the latest to see big falls in the number of active jobs.

The GlobalData jobs index – which counts posts open for application in real-time across the world – shows jobs in the automotive industry dropped by 16 per cent in the last week alone.

Jobs in mining were down 13 per cent and the automotive industry by 16 per cent. Over a slightly longer time-scale – since March 1 – the automotive, insurance and medical sectors have seen the biggest fall-off in active jobs.

Travel and tourism remains the worst-hit sector, with jobs down by 15 per cent week-on-week, and by a total of 61 per cent since the start of March. However, pharma and food service jobs have seen an increase.

9:43 am

Why UK Covid-19 deaths are being undercounted – and by how much

Data analysis from the New Statesman

Each day, in the early afternoon, the UK government announces a grim figure: the number of new deaths connected with Covid-19. But there are two problems with this statistic. One involves lag. Just because a patient’s death is reported on a particular day, this doesn’t mean that it happened on that day.

The second involves gaps. The government’s daily count doesn’t include people who died after contracting Covid-19 but either weren’t in hospital when they died, or were never formally tested.

In the New Statesman, David Ottewell examines new ONS figures showing that the government’s daily death totals are substantially lower than the actual number of Covid-19-related deaths on any given day.

 

9:00 am

Can governments escape prolonged recession?

Data analysis from the New Statesman

One of the striking features of the novel coronavirus outbreak is that it triggered near-unanimity among economists about how to tackle it. But now that unanimity is beginning to fracture: not over what should be done to weather the recession, but over whether the economy can in fact rebound. Initial hopes of a “Cape Cod economy” seasonal recovery have been replaced in some quarters by something far gloomier.

With that in mind, the New Statesman’s political editor Stephen Bush examines the possibilities of the optimists’ V-shape recovery against the more recent concerns of a deep and profound crash.

6:13 pm

How to place employees on furlough leave: The Coronavirus Job Retention Scheme

The coronavirus is affecting businesses right around the world. From retail to hospitality, many firms have had to make the tough decision to put staff on furlough leave in a bid to protect themselves and preserve jobs during this crisis.

For companies based in the UK, there are a range of funding measures and support schemes available. The Coronavirus Job Retention Scheme, in particular, provides a crucial lifeline to both employers and employees.

But when it comes to furloughing an employee, this is something many businesses won’t have done before. In order to do this and receive funding from the government, there are several things businesses must be aware of and do. Here’s everything you need to know as an employer.

Read more here

6:11 pm

Vodafone app turns your phone into a coronavirus-fighting supercomputer

Want to do your bit to help fight the coronavirus pandemic? Thanks to Vodafone and Imperial College London all you need is a smartphone and the DreamLab app.

By pooling the processing power of thousands of phone owners it creates a virtual supercomputer that researchers say can carry out millions of calculations.

And the more people that download and switch on the app each night, the more calculations the researchers can complete – increasing the likelihood that scientists can glean useful insights to help treat coronavirus.

Read more here

10:47 am

Startups: Five ways to find funding during the pandemic

We live in unprecedented times as the Covid-19 pandemic sweeps across the globe from East to West. Economic inactivity globally is at its highest for almost a century, and the consequences will be long-lasting, well after the virus subsides.

There is no doubt that we face a difficult trading environment that will only get worse. Investor activity will not be as prolific as it was just a few months ago, as funds become more internally focused, and concentrate on stress-testing their portfolios, and banks field a jump in demand for loans.

And yet amid all the market uncertainty, the world is still awash with investable cash: all of which will eventually find a home. Those with capital have their sights on the other side, and are looking for the innovative startups that will lead us through this crisis and beyond.

Read more here

4:50 pm

Covid-19 daily death totals: “are we flattening the curve”?

While every nation is giving regular updates on deaths linked to the virus, it can be difficult to interpret this data. Daily death totals are volatile and can fluctuate rapidly from day to day; countries can change the time they report, or their methodology, leading to sudden and abrupt change.

In these charts we smooth out the data by using a rolling three-day average of deaths. Each day is plotted against the average number of new deaths reported over the previous three days. The percentage increases (or decreases) are plotted separately. The chart covers the countries where the highest number of deaths overall, excluding China – where daily confirm deaths have slowed to a trickle – and Iran, where the data may not be reliable. The charts start at the point each country passed 50 Covid-19 deaths in total.

10:02 am

Why wasn’t the UK ready for Covid-19?

In the UK, a lethal pandemic was considered by the government a “level 5” threat – the most serious security risk. The only other level 5 threat has been large-scale biological or nuclear attack.

The coronavirus closely resembles the threat anticipated in government planning documents, and yet the government appears to have been unprepared. The UK lacks ventilators, personal protective equipment and testing kits, while emergency procedures for manufacturers and hospitals are being improvised on the fly.

In the New Statesman, Harry Lambert suggests that Britain may in fact have been prepared, just for the wrong outcome.

Read the full article.

3:57 pm

Planning digital transformation during a pandemic

We are now entering a time of unpredictability and volatility for businesses, triggering the imagination when it comes to the impact of technology on private life, business and society.

In many cases, the coronavirus pandemic will bring into question how we use and engage with digital technologies, which have now become intimately entwined with business change.

To this extent ‘digital transformation’ has become a pleonasm and the next twelve months will be defined by businesses’ ability to survive in a time of uncertainty and a renewed quest for simplicity.

Simplicity is what is needed – in the form of simple messages, instant action, zero friction and a continuous stream of exciting and rewarding signature moments.

Read more here

 

3:12 pm

Coronavirus cybersecurity: Ten tips for secure remote working

As the ongoing Covid-19 pandemic continues to affect numerous aspects of daily life, workers and employers are adapting to new ways of working.

Although social distancing and social isolation are key to slowing the spread of the virus, they have tested organisations’ infrastructure and remote working practices.

“Remote working on a scale we’ve never seen before has now become a fact of life; doing this without compromising security will be more important than ever,” says Jeremy Hendy, CEO at cybersecurity firm Skurio.

Here are ten key pieces of advice from experts from the cybersecurity industry to help organisations maintain robust security while remote working.

Read more here

10:19 pm

Global GDP may drop by 1% in 2020, says Goldman Sachs

Goldman Sachs expects global real gross domestic product to contract by about 1 per cent in 2020, a sharper economic decline than in the year following the 2008 global financial crisis.

“The coronacrisis or more precisely, the response to that crisis — represents a physical (as opposed to financial) constraint on economic activity that is unprecedented in postwar history,” the investment bank said in a note to its clients published late on Sunday according to India Today.

10:08 pm

UBS Securities cuts India’s FY21 real GDP growth forecast to 4%

Financial Express has reported on a UBS Securities research note that expects India to clock a 4.8% growth in FY20. “For the full year, we now expect India’s real GDP growth to slow further to 4% year-on-year in FY21 (previously 5.1%).”

“The challenge for India vs its peers is starker if infections spread rapidly considering the higher density of population per capita and weaker health infrastructure,” UBS’ economist Tanvee Gupta Jain said.

7:36 pm

OECD expects economic fallout to be felt ‘for a long time to come’

Speaking to CNBC, the OECD’s secretary general, Angel Gurria, stated: “What you have is an economic effect now that, very clearly, is going to be prolonged beyond the period of the pandemic.”

“We’ll hopefully get rid of the pandemic in the next two or three months and then the question is how many unemployed (will there be), how many small and medium-sized enterprises will be in a very, very severe situation if not disappeared by that time.”

“Life, and economic activity, is not going to be normalized any time soon,” he said. “We’re going to have the impact of this crisis for a long time to come.”

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