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Coronavirus: A timeline of how the deadly COVID-19 outbreak is evolving

7:47 am

Covid-19 impacting state and local tax revenues in US – leading macroeconomic influencers

The Covid-19 pandemic is impacting state and local tax revenues similar to any other recession. The level of impact, however, is far higher than historical figures. Macroeconomic influencers share their views on the Covid-19 impact.

David Wessel

David Wessel, director of Hutchins Center on Fiscal & Monetary Policy, shared an article on how state and local tax revenues have been impacted by the Covid-19 pandemic in the US. The impact of income tax revenues is recorded to be low as most of the employment losses are concentrated on low-wage workers.

Sales and other tax revenues, however, have fallen sharply compared to historical figures due to fall in consumption rate as more people are staying home. As a result, revenues generated from taxes and fees imposed on the tourism, travel and hospitality sectors have plummeted.

Revenues of state and local governments are expected to decline by 5.5% in 2020 and 5.7% in 2021, the article added. The fiscal aid provided by the government has helped in offsetting some of the revenue losses but state and local governments are expected to face further shortfalls forcing them to make spending cuts.

Any such spending cuts are expected to impact the economic recovery of the country, the article added.

Howard Archer

Howard Archer, Chief Economic Advisor to EY ITEM Club, shared an article on the new plans announced by UK Chancellor Rishi Sunak to assist workers and businesses impacted by the new restrictions imposed to curb the spread of coronarivus. The new plans include a job support scheme that will replace the existing furlough scheme, assistance for the self employed, apart from business loans and VAT cuts.

Under the job support scheme, the government will subsidise the pay of employees who are working fewer than normal working hours. The government and the employer will together pay for the hours that employees are not able to work.

The government is also providing a grant to the self employed to cover three months of profits from November to January. Further, business loans will be provided with the duration of repayment extended from six years to ten years and reduction of monthly repayments to half. A 15% reduction in VAT for the tourism and hospitality sector has also been announced from January to March.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on how wealthy businessmen with close relations with the former and current President have fuelled the economic crisis in Venezuela. The article notes that the wealth of these businessmen is often derived from government contracts that are meant to service the poor.

These businessmen also known as boligarchs have moved vast sums of public money meant for housing and other basic services out of Venezuela, which has led to the collapse of the country. For example, Alejandro Ceballos Jiménez, a construction mogul, is estimated to have moved approximately $116m from public housing contracts to offshore bank accounts.

Banks in Europe and the US have also played a vital role in facilitating the transfer of money out of Venezuela despite signs of financial improprieties. More than $4.8bn is estimated to have been transferred out of the country between 2009 and 2017 in suspicious transactions. Approximately 70% of this amount is estimated to be public money and included a connection to a government entity such as the Ministry of Finance, according the article.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared an article on how cyberattacks have increased amid the pandemic. The cyberattacks are not just limited to scams and schemes but are also being carried out by national intelligence agencies trying to steal information on the development of vaccines. For example, cyberattacks on the World Health Organization increased by five times during the early stages of the pandemic.

The article attributes the increase in cyberattacks to a range of factors including how hacking is longer being carried out by a single person. Cyberattacks are increasingly being performed by employees of national security agencies. Countries are investing additional resources in improving their cyber skills to level the playing field against their rivals.

Further, the advent of technologies such as 5G and internet of things where all devices are interconnected is making targets easily available. The article notes that so far the damage of cyberattacks has been economic and unless governments and technology companies take necessary action, these attacks may lead to public disasters.

7:53 am

Adopting a cooperative approach to development of Covid-19 vaccine essential to control the pandemic – leading macroeconomic influencers

An effective vaccine against the Covid-19 virus is the best way to curb the pandemic. Although many companies and countries are surging ahead with the development efforts, the question about how the vaccine will be distributed across the world remains. Macroeconomic influencers share their views on the Covid -19 impact.

Adam Tooze

Adam Tooze, director of European Institute, shared an article on how a vaccine is the best solution to curbing the Covid-19 pandemic yet it is triggering a new set of problems. The US has already declined to participate in the UN sponsored COVAX programme.

Further, countries across the world are moving ahead with their own vaccine development programmes. Russia, for example, approved an unproven vaccine, while China has approved the use of a vaccine for its military.

The article notes that the real problems will arise when a vaccine becomes available. Governments of rich countries have already signed agreements to procure four billion doses of vaccines. A lack of equitable distribution may damage the reputations of the countries who try to monopolise the vaccine, the article added.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on how South Dakota adopted Sweden’s no lockdown approach. The unemployment rate reached 10.6% and the death rate was similar to neighbouring states, he added.

The article notes that the state adopted a non-interventionist approach to handling the pandemic by trusting its citizens to use common sense in practicing good hygiene and social distancing. People aged above 65, however, were ordered to stay at home.

The state also did not enforce a mask wearing policy similar to Sweden permitting local authorities to make the decisions. The article notes that despite the free approach used by the state, the number of deaths and infections were low compared to other states questioning the effectiveness of lockdown measures.

South Dakota is the fifth least densely populated state in the US.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared an article on how the UK now has the fifth highest death toll due to Covid-19. The country is experiencing a second wave of infections, which has led the government to impose a new set of restrictions to curb the spread of the virus.

The restrictions include limits on the number of people who can attend a social gathering and re-imposition of work from home orders. These measures are also expected to be imposed in Northern Ireland, Scotland and Wales.

James Picerno

James Picerno, editor of US Business Cycle Risk Report, shared an article on how majority of the people in the US are expected to be vaccinated by July 2021. Approximately 700 million doses of vaccines are expected to be available by March or April, according to the U.S. Centers for Disease Control and Prevention (CDC).

Officials from Operation Warp Speed will be responsible for deciding how the vaccines are allocated.

7:29 am

Stock markets across Europe slide over possible new lockdowns, according to leading macroeconomic influencers

Stock markets across Europe witnessed one of the sharpest declines in recent months over reports of new lockdowns and measures that are planned to be implemented to curb the resurgence of infection cases. The sectors that were already impacted by the previous lockdown measures suffered most of the damage indicating at a slowdown in global economic recovery over the next few months. Macroeconomic influencers share their views on the Covid -19 impact.

John Ashcroft

John Ashcroft, an economist, shared an article on how stock markets across the world slumped after reports of additional lockdowns emerged. The UK’s index of leading shares, for example, had its sharpest decline since June of 3.4% or 202.76 points.

Further, the UK-focused FTSE 250 declined by 4% or 698.90 points to 16,870.78, which is its worst decline since mid-April. The pan-continental Stoxx 600 index also closed down by 3.2%, which is the biggest decline since June.

Oil prices also witnessed the sharpest decline in two weeks after fears that new lockdowns will impact the demand for fuel. Prices of Brent crude declined by 4% or $1.70 to $41.44 a barrel.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on an open letter signed by doctors and health professionals in Belgium to Belgian authorities and media. These professionals recommend that the lockdown measures be lifted and normalcy restored.

The open letter mentions that the infection rate in countries that have implemented lockdowns and those that did not was similar. The lockdown measures implemented had no relation to the rate of infection as it has not led to a lower mortality rate.

The coronavirus infection should be treated as any other flu virus and people should be allowed to develop immunity, while people with weak immunity should be protected the letter added. The letter further noted that the impact of social distancing and lockdowns is detrimental on the physical and mental well being of people.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared an article on the rising tensions between the US and China. The US has adopted a range of sanctions, bans and restrictions on China including a travel warning to Hong Kong following the enforcement of a national security law in the city.

The US also banned the import of certain goods including computer parts, clothing and cotton after reports emerged that they were made by slave labour. Another action implemented by the country includes the sanctions imposed on Union Development Group, a Chinese company, for demolition of land in Cambodia, where the Belt and Road Initiative is being undertaken. China’s TikTok and WeChat have also been banned in the US.

The article notes that the rising tensions will depend on who the next President of the US will be. If President Donald Trump is re-elected, the tensions may escalate, the article added.

Jonathan Portes

Jonathan Portes, professor of economics at King’s College London, shared an article on how restricting visa availability for immigrants is a wrong move. The article notes that immigrants do not take away jobs but rather create them and also boost the economy.

The visa restriction policies in the UK are based on the assumption that those born in the UK are likely to fill in the jobs that were held by immigrants. The article notes that this assumption is a myth and such policies will create a hostile environment for immigrants.

The article adds that immigrants have an economic value, which should not be ignored. The restrictive visa policies will only increase the skill shortages in the future.

Prem Sikka

Prem Sikka, Emeritus Professor of Accounting, shared an article on the number of deaths in the US reaching 200,000 within nine months of the start of the pandemic. The US now has the highest number of deaths, most of which comprise of people of colour and immigrants.

The article also highlighted the surge in infection rate in the UK, France, and Spain. Israel became the first country in the world to implement a second lockdown although protests erupted accusing the government of mishandling the pandemic.

8:52 am

Hospitality industry in the UK on the brink of collapse as new restrictions imposed, according to leading macroeconomic influencers

The UK is facing resurgence in cases forcing the government to take drastic measures to curb the infection rates. A new set of restrictions and the possibility of another national lockdown threaten to wipe out many sectors particularly the hospitality industry. Macroeconomic influencers share their views on the Covid -19 impact.

John Ashcroft

John Ashcroft, economics and financial markets expert, shared an article on how the hospitality industry in the UK is on the verge of collapsing. Owners of pubs and restaurants have warned that the new restrictions and a possible national lockdown are putting the industry and millions of jobs at risk.

Owners and operators in the hospitality industry are calling for the implementation of various steps including extension of the current furlough scheme until the end of October, extension of the VAT cut and reduction in beer duty.

The new restrictions are expected to impact the recovery of the UK’s economy and the recent increase in GDP growth may be short-lived, the article noted.

Max Roser

Max Roser, researcher at University Of Oxford, shared an article on the latest restrictions imposed by the UK government. The new restrictions imposed are aimed at curbing the resurgence in infections cases in the country.

These restrictions are focussed more on limiting social and personal interactions, while interactions being made for economic or commercial purposes have been excluded. The strategy was adopted to limit the implementation of a national lockdown and reduce the impact on GDP by allowing commercial activities to continue.

A complete assessment of the new rules, however, indicates that they may do more harm than good by impacting the overall well-being of the people. The article notes that the perceived impact of these restrictions on the society have been ignored, while trying to maximise the GDP.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, shared his views on how gold prices are rising due to increase in money supply. People across the world are aiming to increase the purchasing power of their savings by investing in gold.

Further, central banks are purchasing more gold as they increase money flow and to diversify their own reserves. Prices of gold as well as silver have been rising due to these factors as people try to maximum their savings and escape currency debasement.

Lacalle also expressed his thoughts on the speculations that the US dollar may be losing its status as a global reserve currency. He noted that the US dollar will continue to be the global reserve currency as there is no other alternative. For example, the euro has its own risks of redenomination and the yuan cannot be a global currency as China imposes massive capital controls.

Professor Steve Hanke

Professor Steve Hanke, an economist at Johns Hopkins University, shared a chart on how the US is losing its status as a superpower. A poll conducted by Pew Research Center has revealed that majority of respondents from countries such as Germany, the Netherlands, Italy, Belgium, Australia, and France felt that China is emerging as the biggest economic power.

The US was considered as the biggest economic power by respondents from Japan and South Korea. Hanke noted that the indiscriminate use of sanctions has impacted the soft power held by the US.

8:00 am

China expected to be the only country among G20 to post growth in 2020 – leading macroeconomic influencers

China’s economy was earlier predicted to contract but new estimates show that the country may post growth during the year. This growth, however, may not result from the usual exports but rather domestic consumption. Macroeconomic influencers share their views on the Covid -19 impact.

Ray Fisman

Ray Fisman, economics professor at Boston University, shared an article on how China is the only G20 country expected to witness a positive economic growth in 2020, according to the Organisation for Economic Cooperation and Development (OECD).

The OECD has revised its forecast for China’s growth to 1.8% from the previous forecast of 3.7% contraction in June. China has brought the coronavirus outbreak under control and has been able to reopen businesses enabling a quicker economic rebound than previously expected.

China’s recovery, however, will not be a driver for global growth as the country’s economy is now more dependent on domestic consumption rather than exports. The OECD also noted that the global economy is slowly moving towards recovery as household spending on consumer durables increased.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, tweeted on the monetary policies announced by the Bank of England during the September meeting. The bank aims to keep interest rates at 0.1% and keep targeted stock of asset purchases at £745bn.

Jeffrey Dorfman

Jeffrey Dorfman, Georgia’s state fiscal economist, shared an article on how the unemployment claims in the US may be over counted. Unemployment claims have been used as indicators for the unemployment rate in the US economy, but these claims may be plagued with errors and double counting, the article noted.

Experts believe that the fraudulent claims for unemployment insurance as well as the number of people receiving payments under the Pandemic Unemployment Assistance programme may overstate the true unemployment numbers by millions.

The ways in which the data is collected from different local and state unemployment offices also contributes to the miscalculation of the actual unemployment figures, the article noted. Although the official figures may still overstate the number of people unemployed, it may also underestimate the number of people whose livelihoods have been impacted by the pandemic.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on Venezuela and Iran defying US sanctions by trading oil. Venezuela received two million barrels of South Pars condensate, which state oil company, Petroleos de Venezuela SA (PDVSA), will use to blend with its crude oil.

PDVSA has been trying to address low production and revive its refining network, which is left crippled after years of mismanagement. This is the first time the country has imported oil, after the US imposed sanctions on the country.

Venezuela is facing a severe shortage of fuel as people are queuing up in long lines for hours or even days.

Stephen Tapp

Stephen Tapp, deputy chief economist and trade research director at Export Development Canada, shared an article on Canada’s economic recovery amid the Covid-19 pandemic. According to the latest figures, Canada’s economy has started to recover although economic activity is still 13% below pre-Covid-19 levels.

Financial markets have started to rebound although oil prices have weakened. Consumer spending has also returned to normal as labour data indicates that more people have started to return to work.

A recent in increase in Covid-19 cases, however, has led some provincial governments to impose restrictions. This could cause some setbacks to the recovery of the economy, the article noted.

7:10 am

US economy may recover to pre pandemic levels by Q2 2021, according to leading macroeconomic influencers

The US economy was earlier projected to return to pre Covid-19 levels by the fourth quarter of 2021. New analysis indicates that the country’s economy may recover sooner than previously forecast. Macroeconomic influencers share their views on the Covid -19 impact.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, tweeted about the projected recovery of the US economy. The US GDP is expected to recover to pre-Covid-19 levels two quarters earlier of Q2 2021 than the previously projected Q4 2021, according to Morgan Stanley.

Lacalle added that the recovery will mainly be supported by debt-fuelled government spending with the private sector requiring more time to recover.

Antonio Mele

Antonio Mele, economist at LSE Department of Economics, shared an article on the job crisis in the UK. The planned redundancies in the UK are twice that of the previous recession in 2008, according to statistics from the Institute for Employment Studies (IES).

More than 380,000 jobs were reported to be at risk between May and July 2020. Further, 445,000 jobs may be made redundant between July and September, according to the IES. Although the planned redundancies and actual redundancies may differ, the number of redundancies announced is still higher compared to the previous recession.

The UK government’s ‘Plan for Jobs’ programme may help in protecting and supporting job creation apart from the £2bn ($2.38bn) kickstart scheme that supports employers in creating training and apprenticeship positions.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on how the stimulus package announced by the UK government is giving rise to a wave of fraudulent claims under the job retention scheme. The error and fraud rate in the scheme is estimated to be between 5% and 10% causing the government to lose £3.5bn ($4.49bn) to fraudulent claims.

Apart from the job retention scheme, the Bounce Back Loan programme has also witnessed fraudulent applications. The loans are self-certified and banks are not liable for them hence background checks are rarely conducted. According to the Policy Exchange think tank, the fraud and error rate in these schemes could cost the government between £1.3bn ($1.66bn) and £7.9bn ($10.14bn).

Adam Tooze

Adam Tooze, director of European Institute, shared his article on the politics surrounding central banks and foreign exchange. The US Federal Reserve recently announced its new policies of targeting higher inflation in the US economy, which some experts feared would weaken the US dollar’s global dominance as a reserve currency.

During the European Central Bank (ECB) press conference, several market experts and commentators expected the bank to comment on the euro’s appreciation against the dollar. Tooze noted that commenting on exchange rates does not fall under the tasks of a central bank as the main focus is on ensuring price stability.

The ECB should focus on formulating fiscal and monetary policies that restore the balance in the euro area. Such actions will ensure that the exchange rate values will restore themselves, Tooze added.

6:52 am

Wearing masks may generate immunity against Covid-19 virus, according to leading macroeconomic influencers

Research has indicated that wearing masks can help in limiting the exposure of the Covid virus and in turn generate an immune response in the body. Masks can help in increasing asymptomatic cases and slow the spread of the disease. Macroeconomic influencers share their views on the Covid -19 impact.

Adam Ozimek

Adam Ozimek, chief economist at Upwork, shared an article on how wearing masks can help in providing immunity against the Covid-19 virus. Research published in the New England Journal of Medicine notes that wearing masks can help in reducing the severity of the virus.

Wearing a mask can help in creating a form of inoculation that can generate immunity against the virus and slow its spread as a vaccine is awaited. The research indicates that the amount of virus a person is exposed to determines the severity of the illness.

Masks can help reduce the amount of virus a person is exposed to and induce an immune response, while ensuring that a large proportion of new infections are asymptomatic.

Colin Williams

Colin Williams, professor of public policy at University of Sheffield, shared an article on the rise in Covid-19 cases in the UK. According to research conducted at the Imperial College London, the number of cases is doubling every 7.7 days. At this rate, the UK will have 10,000 new cases each day in the next two weeks.

Although social distancing rules have been tightened, only 46% of adults are maintaining social distancing, according to the Office for National Statistics. Further, as universities start to reopen the infection rate is projected to rise.

David Wessel

David Wessel, director of Hutchins Center on Fiscal & Monetary Policy, shared an article on the Federal Reserve’s recommendation for additional stimulus from the government. Democrats and Republicans in the US are yet to reach a consensus on the next round of stimulus.

Research indicates that increased spending rather than lower rates will stimulate the economy and help in preventing a deeper recession for the US.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared an article on how the composition of foreign students in the US. The US President Donald Trump previously announced at the start of the pandemic that foreign students may be forced to return if universities do not reopen.

India and China account for 52% of all international students arriving in the US. During the 2019-2019 academic year, international students contributed $41bn to the US economy. As universities formalise their plans for the next semester, the future of approximately one million students remains uncertain.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on Sudan declaring an economic emergency after the Sudanese dollar declined sharply. The country had declared a national emergency for three months after flooding led to several deaths.

The article notes that officials blamed the manipulation caused by opposing transitional government for the fall in the Sudanese dollar. Sudan is primarily a gold producer and had implemented steps to open up its markets by moving trade to private investors. The move, however, caused people to sell gold above market price aimed at moving the exchange rate. The government is setting up special courts to curb smuggling and other illegal activities.

8:33 am

US dollar not at risk of collapse as a reserve currency – leading macroeconomic influencers

The weakening of the US dollar and the new policies proposed by the Federal Reserve led to speculations that the US dollar is losing its dominance as a global currency. However, there is ‘push back’ that these speculations are exaggerated because ‘there are no other contenders’ for a reserve currency. Macroeconomic influencers share their views on the Covid -19 impact.

Daniel Lacalle

Daniel Lacalle, an economist and author, tweeted on how the US dollar index lost 10% since March and the speculations surrounding its collapse as a reserve currency. He noted that these speculations are false and that the US dollar index has weakened only relative to the Euro and the Yen.

Lacalle added that the status of the US dollar as a reserve currency is not at risk as there is no other contender. The Euro is at risk of redenomination due to political and economic issues and the Yuan cannot be considered as a global currency until the country maintains capital controls.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared an article on how the UK government plans to rewrite the terms negotiated for its exit from the European Union (EU). The article noted that such a move may breach international law.

UK’s exit agreement provided Northern Ireland the same trade rules as the rest of the EU, which was a primary condition included in the Good Friday Agreement signed in 1998 between the UK and Republic of Ireland.

The new terms of the agreement may alter these guarantees putting an open Irish border in jeopardy. Further, the US may not support any moves that block the borders between the Republic of Ireland and Northern Ireland. Any future US-UK free trade agreement may be undermined by the UK’s plans to renegotiate the terms of its exit, the article noted.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on how New York City’s Metropolitan Transportation Authority (MTA) is struggling to stay afloat. The MTA is posting losses of $200m per week as fare revenues and tolls are continuing to fall.

Fewer passengers are using public transportation due to the Covid-19 pandemic. Passenger numbers are 75% below the numbers in 2019. Federal funding of $12bn may help the MTA survive through the year and the next. Without funding, the MTA may need to resort to drastic measures including 40% reduction in subway and bus journeys.

In addition, several capital projects may be delayed, employees may be laid off and fares will likely be increased. The MTA has been facing fiscal problems for more than a decade and the new challenges are complicating existing issues.

Adam Ozimek

Adam Ozimek, chief economist at Upwork, shared an article on the challenges faced by the restaurants industry in the US amid the Covid-19 pandemic. Bars and restaurants have been held responsible for outbreaks in some of regions in the US due to the close proximity and enclosed spaces in these established spaces.

Public health experts have noted that continued restrictions on these spaces are essential to prevent any further spike in infections. Shuttering these businesses for too long can drive thousands of them into bankruptcy.

A more focussed strategy that can allow restaurants to open with outdoor dining and allowing bars to remain partially open along with federal aid is essential for the industry to survive, the article noted.

wonkmonk

wonkmonk, an economic policy activist, shared an article on how global output has been growing but the pandemic still casts a shadow on the forecasts. The worldwide Purchasing Manager’s Index (PMI) surveys for August indicated the fastest growth during the year.

The JPMorgan Global PMI increased from 51 in July to 52.4 in August, which is the highest increase recorded since March 2019. The PMI indicate an expansion of 3% in the annual rate of GDP.

The global PMI had declined to an all time low of 26.2 in April, following lockdown measures implemented across the world.

7:50 am

Climate change may adversely impact financial markets, according to leading macroeconomic influencers

Wildfires and flooding have become increasingly common due to the effects of climate change. As these changes increase, they are expected to majorly impact a financial system already under pressure from the Covid-19 pandemic. Macroeconomic influencers share their views on the Covid -19 impact.

Matthew E. Kahn

Matthew E. Kahn, Bloomberg Distinguished Professor of Economics and Business at Johns Hopkins University, shared an article on how a new report from the US Commodity Futures Trading Commission has highlighted the impact of climate change on financial markets.

The report states that the disruptions caused by climate change can threaten the fundamental conditions that support the country’s financial system. President Donald Trump had downplayed the impact of climate change on economic growth. The new report is a first from a government entity highlighting the damage that climate change can have on financial markets.

The first risk posed by climate change is expected to be rising prices of homes and mortgage default rates due to the wildfires and flooding. Climate change is also expected to impact agricultural commodity prices, the report added.

David Dayen

David Dayen, executive editor at The Prospect, shared an article on AstraZeneca and the University of Oxford’s Covid-19 vaccine trial being put on hold after one of the participants fell sick after receiving the vaccine. Although the step has been described as routine for such trials, it is expected to delay the clinical trial for the vaccine.

AstraZeneca initially reported positive data from the clinical trial in July raising hopes for a vaccine at the earliest opportunity. However, pausing the clinical trial now raises questions on how long it will take for a vaccine to be available to control the pandemic that has impacted the world.

Nine pharmaceutical companies that are carrying out phase three clinical trials on Covid-19 vaccine including AstraZeneca, GlaxoSmithKline and Sanofi released a statement committing to developing a vaccine based on ethical and scientific principles.

Pedro Nicolaci da Costa

Pedro Nicolaci da Costa, Federal Reserve & economy correspondent at Market News International, shared an article on the increasing pressure on the Federal Reserve to increase main street lending. Without the lending facility, the economy will witness a K-shaped recovery, in which large corporations will survive but small businesses may fail.

The Federal Reserve is distributing loans through large banks who are reluctant to offer them to small businesses. The article notes the Fed should explore extending loans through private lenders who can provide tailored loans to small businesses and help them survive.

Andreas Peichl

Andreas Peichl, professor of economics at the University of Munich, shared an article on how Germany’s stimulus measures have helped the country in addressing the downturn caused by the pandemic. As a result, Germany is performing much better than other industrialised countries.

The country’s Economics Ministry has revised its earlier forecast a downturn of 6.3% to 5.8% in 2020 and a growth of 4.4% in 2021. The government has earmarked an economic stimulus package of €130bn ($146bn) for the country for 2020 and 2021.

Germany’s central bank, however, has noted that the stimulus spending for 2020 will result in easing the recession by only 1% considering the huge amount of spending.

Prof. Steve Hanke

Professor Steve Hanke, economist at Johns Hopkins University, shared an article on more than 10,000 deaths related Covid-19 in Argentina. The majority of the infection cases are concentrated in the Buenos Aires metropolitan area putting the healthcare system under great stress.

Despite having a strict lockdown, the country has not been able to control the spread of the virus. Quarantine measures have been gradually relaxed but some regions are still under various forms of lockdown. Hanke noted that the situation in the country remains dismal as inflation has increased to 37.25% per year.

 

7:32 am

Lack of further stimulus for the US economy could prolong recovery, according to leading macroeconomic influencers

The Democrats and Republicans are yet to reach a consensus on further stimulus package for the US economy. The delay in releasing stimulus into the economy could worsen the unemployment rate and force states to increase spending cuts. Macroeconomic influencers share their views on the Covid -19 impact.

Adam Posen

Adam Posen, president of Peterson Institute for International Economics, shared an article on how additional stimulus is essential for the US economy to recover from the impact of the Covid-19 pandemic.

The Democrats propose a stimulus package of $3.4tn, while the Republicans have proposed $1tn. Lack of consensus on the stimulus may result in spending cuts by states causing a deeper recession, loss of between 4% and 5% of GDP and an increase in unemployment by 4% to 5%, the article noted. Black families and minorities are expected to be worst affected.

Mark Weisbrot

Mark Weisbrot, co-director of Center for Economic & Policy Research, shared an article on how states in the US are in a financial crisis due to lack of further stimulus from the government. States have started to implement several fiscal measures to cut funding and even Medicaid as Democrats and Republicans are deadlocked over the next round of stimulus.

Experts have already warned that any further reduction in spending could affect the economic recovery from the pandemic and impact state and local services. Programmes for education, public safety and health care remain at risk of funding cuts as the deadlock continues.

State and local governments are expected to face budget shortfalls of up to $500bn by 2022, according to Moody’s Analytics. In the absence of further aid, states and local governments will be forced to make further spending cuts that can impact all activities funded by the government.

Cdns 4 Tax Fairness

Canadians for Tax Fairness, an organisation promoting fair taxation, shared an article on how philanthropy benefits the rich. The article notes that the money donated through philanthropy often goes for elite causes rather than helping the poor.

The UN general assembly has cautioned governments to assess the potential risks and side effects involved in taking money from the rich donors. Individuals donating through philanthropy may divert focus from actual causes that need attention.

Further, governments across various countries offer tax exemptions to encourage people to donate. The move to abolish such tax exemptions to ensure that the rich cannot claim anything more than what tax payers can has been made several times but never implemented.

As the pandemic increases inequality among people, proposals to impose taxes on the rich have been put forth. While imposing taxes may need altering government policies, the focus of philanthropy should be on working to achieve democracy and equality, the article notes.

Kevin Denny

Kevin Denny, economist at University College Dublin, shared an article on how Ireland’s GDP figures may not be an actual representation of the country’s economy. According to official figures from the Central Statistic Office (CSO), Ireland’s economy contracted by only 6.1% in the second quarter compared to an average of 12% across the Euro area.

The modified domestic demand figures, which is an alternate measure of economic activity, indicate that the economy contracted by 16.4%. The difference between the CSO’s figures and modified domestic demand figures is attributed to €37.8bn ($44.58bn) in net exports of goods and services during the quarter according to the CSO.

Based on modified domestic demand figures, however, Ireland is officially in recession.

8:20 am

US Federal Reserve’s new policies may impact dollar dominance in global commerce, according to leading macroeconomic influencers

The US Federal Reserve’s new policies drafted to increase inflation are aimed to improve the country’s economy. These policies may, however, weaken the dollar. Macroeconomic influencers share their views on the Covid -19 impact.

Peter Morici

Peter Morici, an economist and professor at the University of Maryland, shared an article on how the Federal Reserve’s policies to increase inflation may threaten the dollar’s dominance as a global currency.

The article noted that although the Federal Reserve has announced the policy change, the central bank’s policy making powers have diminished over the years due to the globalisation of US securities markets and dollar’s dominance in global commerce.

The Federal Reserve needs to finance federal deficits and drive inflation by printing money to ensure the dollar’s dominance as the Chinese Yuan is fast emerging as a rival to the currency.

Jeff Stein

Jeff Stein, a journalist, shared an article on a survey conducted by the Morning Consult on how more number of people returned to work during August. The outlook for unemployed and furloughed employees, however, remains weak as they struggle to find jobs.

With lack of skills and training, unemployed people are struggling to find jobs in new industries. Unemployment benefits for some of these employees ended in July making approximately 50% or 8.3 million of them unable to pay for basic expenses in August.

Any further decline in unemployed people’s inability to pay basic expenses is expected to impact the recovery of the US economy, the article added.

Rupa Subramanya

Rupa Subramanya, an economist, shared an article on how the mishandling of India’s pandemic crisis will lead to long-term slowdown in the country’s growth. India is one of the worst performers in the G-20 group nations, according to the International Monetary Fund (IMF).

India’s economic growth was already slowing down before the pandemic and the demonetisation in 2016 further impacted low income groups. The economic stimulus package announced by the government accounted for only 1% of GDP, which is significantly lower than other emerging economies.

Further, the pandemic has delayed the implementation of much needed structural reforms for the land, labour and capital markets. These reforms may now be too late to be implemented as the country deals with the pandemic and the after effects.

Richard Tol

Richard Tol, an economist, shared an article on the impact of the pandemic on stock market capitalisation in the long run. While the world is grappling with the health crisis created by the pandemic, the stock markets have been performing beyond expectations reaching all time highs.

The article attributes this disconnect to the increase in market power for some firms against others in addition to the low discount rates. Although the market capitalisation is at historic levels, the risk of a stock market crash is still high and may be followed by poor returns, the article adds.

7:40 am

Remote working could lead to 1% loss in GDP for the UK, according to leading macroeconomic influencers

Many companies across the world have opted for remote working operations to safeguard their business and employees. Remote working, however, has an indirect impact on the businesses that are dependent on employees for their business. Macroeconomic influencers share their views on the Covid -19 impact.

Julian Jessop

Julian Jessop, an independent economist and writer, shared an article, how working from home (WFH) can cost £15bn a year for the UK, according to PricewaterhouseCoopers. WFH is expected to severely impact coffee shops, security guards and support jobs causing a GDP loss of 1%.

Various businesses who are reliant on office goers for their business have already started to feel the impact of the pandemic induced remote working. Pret A Manger, for example, operates primarily near to office blocks and has announced its plans to cut 3,000 jobs. Further, the company is planning to expand into suburbs to sustain its business.

Jessop opined that the impact of WFH on GDP, is a small price to pay compared to the improvements it will provide in wellbeing such as less commuting. Remote working can also help in controlling the pandemic, the influencer noted.

Claudia Sahm

Claudia Sahm, a policy analyst, shared an article on how Covid-19 related infection rate is rising in college campuses as students return to college. Iowa City has already turned into a hotspot for the pandemic with infection rate increasing rapidly.

Experts have warned that without proper contact tracing, containing infection rates on campus may be difficult. The article notes that it is unclear whether community outbreaks have links to college campuses but spreading of infection beyond the campus may adversely impact local communities.

Daniel Lacalle

Daniel Lacalle, chief economist Tressis SV, shared an article on how the Indian economy is heading towards a K-shaped recovery, which will widen the gap between sectors, companies as well as people.

The K-shaped recovery is already indicated through the healthy stock market, while millions have lost their jobs. The Covid-19 pandemic is expected to increase India’s fiscal deficit and public debt apart from three years of lost growth and decline in new investment.

Adam Tooze

Adam Tooze, Director of European Institute, shared an article on how Japan will handle the rift between China and the US. China is one of Japan’s biggest markets where Japanese firms have more than $130bn in assets. Further, 26% of profits for these firms are linked to China through suppliers and customers.

The cold war between the US and China is forcing Japan to consider the risk associated with trading with China rather than opportunities. The country has already issued certain restrictions on foreign direct investment in China and started diversifying its supply chains to other countries.

The article notes that majority of these Japanese firms are in wait and see mode until the elections in the US. The scope of sanctions that the US may issue on China will only become evident after the new government is formed, the article added.

James Picerno

James Picerno, editor of US Business Cycle Risk Report, shared an article on how the number of layoffs in the US is falling but the number of permanent job losses is rising. The unemployment rate in the US fell below 10% for the first time since March.

The fall in unemployment rate looks promising but may not indicate a robust growth as a major part of the new jobs added were due to temporary hiring for the US Census. Further, job growth in the private sector is falling as industries such as leisure and hospitality have been severely impacted by the pandemic.

Creating jobs for the unemployed people may prove difficult going forward as majority of these people have permanently lost their jobs.

8:32 am

Investing in healthcare can generate new jobs, say leading macroeconomic influencers

The Covid-19 pandemic has highlighted the importance of having a robust healthcare system for every country across the world. Increasing healthcare investment can not only create new jobs amid the pandemic but also create a more productive population. Macroeconomic influencers share their views on the Covid -19 impact.

Amanda Larsson

Amanda Larsson, campaigner with Greenpeace NZ, tweeted on how investment in care in the UK can create 2.7 times new jobs that are equivalent to investment in construction. Investment in care can also create 6.3 times as many jobs for women and 10% more for men.

Larsson added that the New Zealand government should consider investing in care as 10,000 out of 11,000 people in the country who were unemployed due to Covid-19 are women. The tweet was based on report from the Women’s Budget Group, an independent think tank, on how investment in care can stimulate employment and reduce gender employment gap.

Developing a better care system will require a major proportion of the population to be employed in the healthcare sector thereby increasing the overall employment rate. Further, it helps in creating a healthier and productive population.

Adam Posen

Adam Posen, president of the Peterson Institute for International Economics, shared a tweet comparing the impact of the pandemic on Australia and Sweden. Some experts initially hailed Sweden’s strategy to not implement lockdown measures in the country due to coronavirus.

Sweden’s strategy, however, led to some of the highest death rates in the world due to Covid-19. Although the country’s economy seemed to be performing well initially, the second quarter figures indicate that the strategy to avoid lockdowns may not have worked.

Sweden’s GDP fell by 8.3% in Q2 despite keeping its economy being open. Comparatively, Australia’s GDP fell by 7% during the same period with better economic and health outcomes.

Heather Long

Heather Long, an economics correspondent at the Washington Post, shared an article on the rising number of unemployment claims in the US. The article noted that more than 800,000 new unemployment insurance claims were made in during the last week indicating the weak labour market.

In total, more than 29 million people were receiving unemployment assistance until the middle of August. Although these numbers are slightly lower than those in March, they are still high compared to historic figures. Expiry of the unemployment insurance programmes is expected to further increase the unemployment rate in the future.

Christopher May

Christopher May, professor of political economy, shared an article on inflation in UK housing market. He noted that everyone who was expecting that the economic shock caused by the coronavirus would address the inflation in the housing market will be disappointed.

The pandemic has increased the prices to nominal average price range during August, he added.

8:05 am

Australia enters recession for the first time in 30 years, according to leading macroeconomic influencers

The Australian economy officially entered recession as it posted two consecutive quarters of negative GDP growth. Despite government measures such as increased spending and cutting interest rates to zero, the country has not been able to avoid a recession. Macroeconomic influencers share their views on the Covid -19 impact.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, shared an article on Australia entering recession for the first time in decades, following two consecutive quarters of negative growth. Even though the country was able to avoid any major impact from the 2008 global financial crisis, it has not been able to escape the impact of the pandemic.

Australia may find it difficult to recover in the post-Covid-19 scenario due to slowdown in growth of China, which is its biggest trade partner. Further, the country may face other long-term problems such as climate change disasters including wildfires, wage growth stagnation and a housing bubble.

Unemployment levels also remain high at 7.5%, which is the worst in 22 years. The figures are expected to rise as the downturn continues.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on warning issued by the Bank of England (BoE) that the UK economy is at a far greater risk from the Covid-19 pandemic. The BoE estimates that the economic output of the UK could permanently be 1.5% lower due to the pandemic.

The BoE had earlier estimated that the economy would recover to pre-Covid levels by the end of next year. The bank has revised its estimate that some sectors may not recover to pre-Covid levels, which may reorient the economy.

Charlie Robertson

Charlie Robertson, global chief economist at Renaissance Capital, tweeted a chart on the GDP figures in emerging markets. The chart shows that economies in eastern Asia are performing better than the Eurozone (-15%), US (-9%) and Japan (-10%) compared to a weighted average of -10%.

Robertson noted that majority of emerging economies do not have the risk of a second wave of lockdowns, which is encouraging for the second half of 2020.

Colin Williams

Colin Williams, professor of public policy at the University of Sheffield, shared an article on warnings issued by the Federation of Small Businesses (FSB) that the £2bn ($2.7bn) youth jobs scheme may not be enough to beat the recession caused by the pandemic.

The scheme covers 100% of pay on the relevant minimum wage apart from insurance and pension contributions. The government aims to support the new generation through the scheme and build a stronger economy.

The FSB noted that more action may be needed to support employers including clarity on plans for apprentices and increased focus on technical education and skills.

Justin Wolfers

Justin Wolfers, a professor at the University of Michgan, shared an article on how the official numbers are understating actual inflation rates. The reasons for this difference are attributed to the way inflation is measured.

The article notes that the Consumer Price Index considers the cost of a fixed basket of goods but the goods being purchased are constantly changing particularly during the pandemic.

Further, the pandemic has changed where and how people are buying goods. Instead of going to stores, people are purchasing online where prices are slightly higher. These differences are not being accounted for when inflation is being measured thereby distorting the actual figures.

7:56 am

Outlook for global manufacturing remains weak, according to leading macroeconomic influencers

Manufacturing activity is slowly returning to normal levels as countries begin to lift lockdown restrictions. The recovery is expected to remain constrained as some countries suffer from new waves of infections. Macroeconomic influencers share their views on the Covid -19 impact.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the increase in global manufacturing levels. Manufacturing activity increased to a 21-month high of 51.8 in August supported by stimulus packages across Europe, Asia and North America.

The recovery, however, is expected to be uneven as new waves of infections curb business activity. The resurgence of infections is discouraging companies to boost capital expenditure thereby delaying the rebound in the industry.

Experts note that recovery in manufacturing activity will grow at a modest pace, although China’s manufacturing activity has expanded at the fastest rate compared to other countries.

Justin Wolfers

Justin Wolfers, professor at the University of Michigan, shared an article on a new herd immunity strategy allegedly being proposed by one of the US President Donald Trump’s medical advisers to deal with the Covid-19 pandemic.

The new strategy would allow the virus to spread through majority of the population to build resistance against the virus, while protecting those people in nursing homes and aged population.

The new strategy is based on the approach adopted by Sweden, which has some of the largest infection and death rates in the world. Experts fear that this strategy could cost millions of lives in the US.

Stephen Koukoulas

Stephen Koukoulas, head of global strategy at TD, tweeted on the comments made by the Reserve Bank of Australia (RBA) on the country’s recovery. The RBA noted that a recovery for Australia is under way although a meaningful recovery for the labour market is expected to take several months.

The RBA further noted that wage and prices pressures have been restrained and will remain so for some time. Koukoulas noted that the comments from the RBA do not indicate towards a recovery in the Australian economy.

Rupa Subramanya

Rupa Subramanya, an economist, shared an article on how India is expected to face recession if the economy contracts in the third quarter. The country reported a GDP contraction of 23.9% in Q2, which is one of the worst contractions since 1996.

The real GDP figures of India are expected to be revised as data collection was impaired during lockdown and absence of real time data. Majority of the sectors in country including manufacturing, construction and mining contracted during the quarter except agriculture, which recorded a positive growth of 3.4%.

India’s economy was already experiencing a downturn before the Covid-19 pandemic. Unemployment rates were at a 45-year high and growth declined by 4.7%. During lockdown, approximately 121 million jobs were reported to be lost, according to the Centre for Monitoring Indian Economy (CMIE), an independent think tank. Some of these jobs have since returned following the reopening of the economy, CMIE added.

8:03 am

China’s GDP growing through debt rather than demand, according to leading macroeconomic influencers

China is the only country projected to growth amid the pandemic in 2020. The country, however, may not be growing through demand but rather through public debt and foreign debt. Macroeconomic influencers share their views on the Covid -19 impact.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, tweeted on how the weak consumption recovery and high inventory in China do not indicate GDP growth in the country as suggested by headlines. He noted that China is improving its GDP through production but not through demand.

Lacalle noted that the export side of the economy still remains weak and that the country is actually growing its GDP by increasing its debt as well as foreign debt.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on the political and economic crisis in Zimbabwe. Western diplomats have raised concerns over the country, which has been suffering with inflation at more than 800%.

Further, nurses have been on strike in the country and several political opponents have been arrested raising concerns over human rights violations and use of authoritarian tactics. Diplomats note that the pandemic must not be used as an excuse for restricting the freedom of citizens. Hanke opines that Zimbabwe is on the verge of collapse under these conditions.

Rupa Subramanya

Rupa Subramanya, an economist, tweeted on the impact of the lockdown measures in India. The country had one of the longest and strictest lockdowns in the world, which led to a decline of 24% in GDP in Q2.

India’s Q2 GDP contraction is the largest among other global economies and only second to Mexico at 18.7%. With more than 80,000 daily new cases, the pandemic has had a far greater impact on the country when compared to other countries.

Dean Baker

Dean Baker, senior economist at the Center for Economic and Policy Research, tweeted his views on the growing debt of Japan. The country has a debt to GDP ratio of 250%, which is twice that of the US. Despite the high debt, the country does not face any of the problems such as high interest rates of the debt burden as claimed by experts.

Japan pays 0.05% interest on its long-term bonds, while majority of its debt carries a negative interest rate making its debt burden zero. Further, the country does not have any inflation problem.

The inflation rate in 2019 was at 0.5% and the country has been struggling to increase it. Baker noted that there is little evidence to support the idea that Japan is suffering from problems due to high debt.

7:13 am

US Federal Reserve’s new monetary policy strategy aims to support employment, according to leading macroeconomic influencers

In a historic move, the US Federal Reserve announced a new monetary policy strategy aimed at building a strong labour market and stabilising prices. The new policy is a shift from the decades long strategy of curbing inflation. Macroeconomic influencers share their views on the Covid -19 impact.

James Picerno

James Picerno, editor at the US Business Cycle Risk Report, shared an article on the Federal Reserve’s new monetary policy strategy. The new strategy aims to target 2% average inflation, a big departure from the previous policy to curb inflation.

The strategy is aimed at building a strong labour market, which will require a range of policies apart from a supportive monetary policy. The policy change is still unclear as no guidelines have been provided on how long interest rates will be kept low and how high inflation will be allowed to go.

Investors may need to wait until September when the Federal Reserve issues guidance on interest rates and ensures to keep inflation at a threshold of 2.25% or 2.5%.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, shared an article with his views on the Federal Reserve’s new monetary policy strategy. Although the strategy is aimed at controlling deflation, Lacalle argues that the price increase caused by the policy will hurt households and small businesses.

The Covid-19 pandemic has led to rise in employment and decrease in wages. Lacalle notes that if the cost of goods increase due to the new policy, it will cause the economy to stagnate and worsen the quality of life.

Justin Wolfers

Justin Wolfers, professor at the University of Michigan, shared an article on the US President Donald Trump’s claims on the $660bn taxpayer-funded Paycheck Protection Program (PPP) having saved approximately 51 million jobs. The article notes that according to experts and economists, the actual number of jobs saved is not 51 million but rather a fraction of it ranging between one million and 14 million.

The discrepancies between the government’s claims and the actual figures stem from the way the jobs retained by the PPP are being counted. The article notes that the government should wait for businesses to apply for loan forgiveness to get the actual estimate of the number of jobs saved.

Harry A. Patrinos

Harry A. Patrinos, education economist and manager at World Bank, shared an article on the actual wages and GDP lost due to school closures. The article notes that the pandemic is expected to have lasting repercussions on the education and earnings.

The article assumed that each year of schooling equates to 8% of additional future earnings, 10% loss in learning due to the pandemic and a labour force participation of 70%-100%. Based on these assumptions, the article estimates a future earnings gap of $11,117 at the individual level and between $10.6tn and $15.1tn globally.

7:25 am

Global economic growth projected to fall by 4.3% in 2020, according to leading macroeconomic influencers

The global economy is gradually showing signs of recovery after a major decline in the first half of the year. The growth of the economy is expected to continue from the second half although the labour market will take a long time to recover. Macroeconomic influencers share their views on the Covid -19 impact.

Erik Meyersson

Erik Meyersson, senior economist at Svenska Handelsbanken, a Swedish bank, shared a report on the latest forecast issued by the bank. The report notes that the global economy is showing signs of recovery after a historic fall in economic activity in the first half.

The impact of the pandemic, however, has been different across countries. While Nordic countries managed to handle the pandemic better, the European Union and the US have been severely impacted.

The report notes that global growth is expected to decline by 4.3% in 2020, followed by a 5.2% growth in 2021 and 3.5% growth in 2022. Infection rates and lockdown restrictions, however, will play a major role in the growth of the global economy.

Adam Tooze

Adam Tooze, director of European Institute, shared an article on how China’s monetary stimulus is constrained despite the impact of the Covid-19 pandemic. The article attributes this to the People’s Bank of China’s (PBOC) policies adopted during the early 2000s. The policies limited the appreciation of yuan, while China had a huge trade surplus and the PBOC’s assets increased by 70% of GDP in 2008.

Compared to other banks such as the Federal Reserve, the European Central Bank and the Bank of Japan, which have increased purchase of government bonds, the PBOC has not added to its assets. The PBOC’s balance sheet is currently the same as the Fed at 35%.

The improved economic conditions in the country as the pandemic remains under control and the lower level of interventions by the bank are the main reasons for the constrained spending, the article adds.

BLackSUnrise

BLackSUnrise, an economist, shared an article on the declining value of the euro despite the steps taken by the European Central Bank (ECB) to prevent the European economy from slipping into a recession.

The ECB has purchased approximately €3tn of assets through quantitative easing programme and interest rates have entered the negative territory but the European economy has shown little signs of recovery.

The article notes that the current rebound of the euro is only temporary due to a weak US dollar, which could rebound any time undermining the value of the euro.

7:11 am

Covid-19 pandemic leading to permanent job losses similar to the Great Recession, according to leading macroeconomic influencers

The effects of Covid-19 pandemic have been multi-fold from shutting down businesses, causing widespread unemployment to a global healthcare crisis. Economies across the world were expected to recover in the second half of the year but the impact of the pandemic continues as it leads to permanent job losses and inflation. Macroeconomic influencers share their views on the Covid -19 impact.

Adam Ozimek

Adam Ozimek, chief economist at Upwork, shared an article on how the Covid-19 induced recession is leading to permanent job losses in the US similar to the Great Recession. The rise in unemployment rate during March and April was considered to be temporary. However, in July, approximately 33% of employees who were furloughed were permanently laid off, according to data from Gusto, a payroll and benefits company.

A total of 3.7 million people were unemployed in July, according to official figures from the Labour department. By the end of the year, the figure is expected to rise to between 6.2 million and 8.7 million, which is close to the 8.6 million during the Great Recession. Long-term unemployment may lead to slow economic recovery and have the most impact on the minority communities of the society.

Shirley Yu

Shirley Yu, a political economist, tweeted on the US President Donald Trump’s plans to bring back one million manufacturing jobs from China. The US added 1.6 million jobs in China in 2016, according to the National Committee on U.S.-China Relations.

President Donald Trump’s plans include bringing back approximately two thirds of these jobs back to the country. China, on the other hand, is providing massive incentives to attract foreign direct investment (FDI) to the country. Yu noted that attracting FDI may be China’s top priority.

George Magnus

George Magnus, a macroeconomist, shared an article on the expected rise in inflation in the UK. The article notes that the UK economy is slowly emerging from its deepest recession into recovery but inflation is increasing due to the rising public debt.

The UK economy experienced a 20% fall in GDP in the second quarter but the projections for the third quarter indicate a rebound of 14%-15%. This rebound is already being witnessed with rise in retail sales, home purchases and auto sales.

The ending of the furlough scheme, rising public debt and uncertainty regarding the Covid-19 pandemic still pose challenges to the economy. Higher taxation may be one of the ways to address rising public debt but it may not make a substantial difference to public finances. Restructuring and inflation may be the only way to address the public debt, the article adds.

Shane Oliver

Shane Oliver, head of investment strategy and chief economist at AMP Capital, tweeted on the decline in consumer confidence in the US by 6.9 points to 84.8 in August. Despite the decline, new home sales in July increased by 13.9% on a month on month basis.

7:36 am

Brexit may have a higher impact on the UK GDP than Covid-19, according to leading macroeconomic influencers

The Covid-19 pandemic appeared at a time when the UK was preparing for Brexit. The debate on a no deal Brexit and a Brexit with a free trade agreement continue, although the impact of the pandemic adds another element to the debate. Macroeconomic influencers share their views on the Covid -19 impact.

Dina D. Pomeranz

Dina D. Pomeranz, economics professor at University of Zurich, shared an article on how the impact of Brexit could be two to three times greater than Covid-19 on the UK economy. The UK GDP is projected to decline by 1.7% over the next to three two years without much long-term impact.

The impact of Brexit on GDP, however, is expected to emerge gradually. Analysis by the government has indicated that a no deal Brexit could result in a decline of 7.6% in GDP after 15 years, while Brexit with a free trade agreement could lead to a 4.9% decline in GDP.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the increase in footfalls in the retail sector by 4.1% during the third week of August, according to Springboard, a research firm. Although the footfall was 30.7% lower than the same week in 2019, the increase is an improvement compared to an annual decline of 32.5% in the previous week.

Footfall still remains low in big city centres as shoppers and workers failed to return despite reopening of shops. Local high streets and holiday towns, however, recovered with more footfall compared to the previous year.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, tweeted on US Representative Alexandria Ocasio-Cortez’s calls for additional stimulus. He noted that government spending is already at a high, which has pushed the US federal debt to more than $26.6tn.

The tweet was in response to Cortez’s criticism over comments made by the US Presidential candidate Joe Biden’s advisor, on how the growing deficit could limit government spending under Biden’s administration in the future.

Hanke questioned as to how the deficit created by the increased spending will be addressed. The article, however, noted that many economists recommend that the US should increase spending without worrying about deficit citing the cheap cost of borrowing and low inflation.

Dr Arvind Virmani

Dr Arvind Virmani, a macro economist, tweeted on the India’s delay in approving foreign direct investment (FDI) proposals from China. India has placed such proposals from China on hold and is maintaining status quo due to the Covid-19 pandemic and Line of Control standoff between the two countries.

Virmani noted that with the increase in capital inflows in 2020 and a competitive auto industry, the delay in approving FDI proposals will have little impact on the country. He added that the auto parts and components that are being imported from China are a different case altogether.

7:39 am

Wearing face masks can help prevent GDP decline in US, according to leading macroeconomic influencers

Healthcare officials have repeatedly highlighted the importance of wearing face masks to control the spread of the Covid-19 pandemic. Economists have gone a step further, by translating the importance of mask wearing into economic terms to understand the impact on GDP. Governments should spread awareness and encourage people to wear masks. Macroeconomic influencers share their views on the Covid -19 impact.

Dr. Malini Nair

Dr. Malini Nair, an economist, shared an article on how wearing masks can help in improving the US GDP. Wearing masks can act as an alternative for lockdowns and enable more shops and offices to open. According to Goldman Sachs, if 15% of the population wears a mask, the increase in number of cases can be reduced by 1%.

The Economist further notes that if each person in the US wears a mask for a day, it will help in preventing a fall in GDP of $56.14. Based on these projections, the article notes the government should place more emphasis on the importance of wearing masks.

Brett House

Brett House, deputy chief economist at Scotia Economics, shared an article on the economic overview of the Latin American region. Despite having some of the strongest pandemic control measures in the world, the Latin American region is still among the top Covid-19 hotspots. Stringent control measures are expected to be maintained to ensure economic recovery.

The article also notes that the central banks in Chile and Colombia are expected to announce a cut of 25 basis points to their monetary policy rates.

Pedro Nicolaci da Costa

Pedro Nicolaci da Costa, Federal Reserve and economy correspondent at Market News International, shared an article on the increase in effective unemployment in Australia to above 13% by the end of September.

More than half a million people are expected to lose their jobs due to the lockdown restrictions imposed in Victoria following a second wave of infections. Although effective unemployment declined in July to 9.9%, the second wave of infections is expected to result in the increase in unemployment rate.

Robin Brooks

Robin Brooks, chief economist at Institute of International Finance, tweeted on the GDP levels in the Latin American region. He noted that after the 2008 global financial crisis, the Latin American region needed two years to return to pre-crisis levels. The recovery was aided by huge stimulus packages provided by China in 2009.

With the current crisis, the region does not have access to any such stimulus and hence are at risk of bigger decline in GDP levels.

 

7:21 am

Wave of unemployment expected in the UK as furlough scheme ends, according to leading macroeconomic influencers

The UK has managed to keep its unemployment rate low with the help of the furlough scheme. However, the unemployment rate is expected surge once the furlough scheme comes to an end, with many companies already announcing redundancies. Macroeconomic influencers share their views on the Covid -19 impact.

Duncan Weldon

Duncan Weldon, Britain economics correspondent for The Economist, shared an article on the expected increase in unemployment in the UK. The unemployment rate in June was 3.9%, which is very low compared to the US at 11.1%. The low unemployment rate is attributed to the furlough scheme, which involved the government paying 80% of the wages of the employees.

As the furlough scheme comes to an end in October, companies have to start contributing to the cost of their furloughed employees. As a result, a number of redundancies have been announced or planned to be announced by various companies. Marks & Spencer, for example, announced its plans to cut 7,000 jobs.

The Bank of England estimates that the unemployment could peak between 7.5% and 12% once the furlough scheme ends. Further, the lack of active labour market policies in the UK may lead to mass unemployment rates not seen in decades.

Daniel Lacalle

Daniel Lacalle, chief economist at Tressis SV, tweeted on the unemployment rates in the UK and Europe. He noted that as the furlough scheme ends, some furloughed jobs will be lost.

Lacalle added that adequate supply-side measures are essential for new and small companies to enable job creation.

Lisa D. Cook

Lisa D. Cook, an academic economist, shared an article on how per capita GDP can be 0.6% to 4.4% higher through greater participation from women and minorities in innovative processes. The article notes that adopting policies to increase participation of these minorities from the science, technology, engineering, and mathematics fields will help in improving innovation.

Further, equal access to tools for all such minorities and addressing problems related to workplace climate are some of the other ways, in which innovation can be improved.

Philipp Heimberger

Philipp Heimberger, an economist, shared an article on the impact of the Covid-19 pandemic on Italy’s GDP. He noted that the pandemic has drastically affected Italy’s economic activity causing the country’s GDP to fall to levels last seen in 1993.

Heimberger noted that the pandemic has led to the loss of 27 years of progress made by Italy. He added that fiscal austerity and market-liberal reforms may not help as the country was on the verge of a permanent crisis and triple dip recession for several years.

BLackSUnrise

BLackSUnrise, an economist, shared an article on Bank of Japan’s (BoJ) innovative strategies to counter deflation in the country. BoJ is incentivising banks to lend more by offering them bonuses.

The bonus scheme is designed to offer bonuses to those banks extending credit to people particularly in the rural areas who were already suffering long before the pandemic hit. As a result, lending has increased by 7.8% in July.

8:00 am

Unemployment benefits and direct payments key to protect millions from poverty in the US, according to leading macroeconomic influencers

As the debate on the next fiscal stimulus package continues, experts highlight the importance of unemployment benefits to keep millions out of poverty. Both unemployment benefits and direct payments are essential to support people until the pandemic is controlled. Macroeconomic influencers share their views on the Covid -19 impact.

Fabio Ghironi

Fabio Ghironi, a professor of economics at University of Washington, shared an article on the importance of unemployment benefits and direct payments to keep millions of people out of poverty. More than 72 million people have been unemployed in the US and unemployment benefits along with direct payments of $1,200 have helped these people to make ends meet.

However, some of the unemployed people have not been able to receive unemployment benefits despite applying weeks in advance. The article notes that the next stimulus package should ensure unemployment benefits along with direct payments until the pandemic is under control.

Direct payments will help in keeping approximately eight million people out of poverty and further direct payments will help 18 million people.

Brett House

Brett House, deputy chief economist at Scotia Economics, tweeted on the decline in Canada’s inflation rate and how it should be treated cautiously. He noted that the decline was mainly due to decrease in gasoline prices and airfares as travel increased.

House’s comments were based on the latest Consumer Price Index (CPI), which increased by 0.1% on a year-on-year (Y-o-Y) basis. Gasoline prices declined by 14.9% Y-o-Y during the month, while air transportation prices declined by 8.5% for the first time in five years.

Ashraf Laidi

Ashraf Laidi, a strategist and author, tweeted on Apple’s market cap crossing $2tn. He noted that at $2tn, the company’s market cap is more than the GDP of many countries including Italy, Brazil, Canada, Russia, South Korea, Spain, and Australia.

James Picerno

James Picerno, editor of US Business Cycle Risk Report, shared a chart on which countries in will recover faster from the Covid-19 induced crisis. The chart shows that countries in Asia such as South Korea are expected to return to pre-pandemic GDP levels by the next year.

Countries such as Russia, Mexico, Italy and Japan, however, are expected to take four to five years to return to pre-Covid-19 GDP levels.

7:38 am

Covid-19 pandemic leading to increase in wealth gap in China, according to leading macroeconomic influencers

China has been successful in controlling the Covid-19 outbreak and is expected to recover before the rest of the world. The policies adopted by the government, however, may be increasing the wealth gap between high-income and low-income groups in the country. Macroeconomic influencers share their views on the Covid -19 impact.

Adam Tooze

Adam Tooze, an economist and director of European Institute, shared an article on how the Covid-19 pandemic is widening the wealth gap in China. Wealthier people in the country have not been affected by pandemic as much as the lower income groups who are struggling financially.

The reason behind this uneven recovery is the policies adopted by the government, which has focussed on stimulating investment and construction instead of providing direct cash to people as other countries have done. These policies have helped the wealthy people and not the middle and low income groups.

The International Monetary Fund (IMF) has projected a 1.2% GDP growth for China but the policies adopted by the government will not help in consumption recovery, which accounted for 57.8% of GDP. The low and middle income groups account for majority of the overall consumption compared to the high-income group. The situation is expected to worsen as job losses increase, which will push the low income groups into poverty.

Christopher May

Christopher May, professor of political economy at Lancaster University, shared an article on the fall in household finances as the unemployment rate continues to increase in the UK. The article notes that the IHS Markit UK household finance index fell from 41.5 in July to 40.8 in August. A number above 50 indicates an increase in household finances.

Households have put non-essential spending on hold amid the uncertainty caused by the pandemic. Across various industries including manufacturing and hospitality, job redundancies have increased in addition to the number of hours worked remaining at 80% compared to the levels in February.

Rupa Subramanya

Rupa Subramanya, an economist, tweeted on how approximately 400 million workers in India are at risk of falling into poverty due to the pandemic, according to the International Labour Organisation (ILO).

A large number of educated people are becoming unemployed in India due to the pandemic, reversing the gains made over the last two decades. The pandemic has forced millions of youth who shifted to cities to earn a living to go back to rural areas without any job prospects.

Nasser Saidi

Nasser Saidi, president of Nasser Saidi & Associates, shared an article on the consequences of the Trump administration’s calls for decoupling of corporate ties between the US and China. The government already issued executive orders directing US-based companies to break ties with Chinese firms including ByteDance and WeChat.

The policies announced by the government could hurt American firms in terms of lost revenues in China, and increase in expenses incurred due to shifting factories out of the country. The impact could cost global technology firms more than $3.5tn over the next five years. Global firms earn 5% of their sales in China, which could be lost if they shift their operations.

7:36 am

Japan’s economy shrinks to record levels for the first time in decades, according to leading macroeconomic influencers

The third largest economy in the world, Japan’s economy is experiencing the biggest economic downturn in years. Despite fiscal and monetary measures consumption and exports have remained low signalling a deeper recession unless improved policy actions are implemented. Macroeconomic influencers share their views on the Covid -19 impact.

Christophe Barraud

Christophe Barraud, an economist, shared an article on Japan’s economy experiencing the biggest slump in the second quarter of 2020 at 27.8%. The real GDP level of the country has declined to record low levels for the first time in decades despite injecting fiscal stimulus into the economy to deal with the impact of the pandemic.

The decline in Japan’s GDP is being attributed to the decrease in consumption and exports although a rebound is being projected for the July-September quarter. The possibility of a surge in Covid-19 infections has, however, cast doubts on the outlook and highlighted the need for more policy action to prevent the country from going into a deeper recession.

Peter Morici

Peter Morici, an economist, shared an article on how some Americans are shifting from cities such as San Francisco, Los Angeles, Portland, New York and Chicago to regions such as Texas, Tennessee and Florida. Lower taxes, fewer regulations and safer lifestyles have prompted people to shift to these regions.

Cities such as New York have some of the highest income tax rates compared to Florida and Texas, which have no income tax. Americans are choosing to shift rather than pay the high wealth taxes imposed by the government, particularly since the pandemic has provided the option to work remotely.

Stephen King

Stephen King, senior economic adviser to HSBC, shared an article on how foreign workers in the UK are returning to their home countries as the pandemic has wiped out their job prospects particularly the hospitality sector. Although the furlough scheme does cover these workers many depend on tips for their income, which the scheme does not cover and hence chose to return.

Foreign workers in the UK indicate the dynamic nature of the region’s labour market. The exodus of these workers points towards a collapse in economic activity particularly in the hospitality sector, which shrank by 86.7% in the second quarter of 2020.

Lars Christensen

Lars Christensen, an economist, tweeted on how the inflation expectations in the US market have returned to pre-lockdown levels but still remain at below 2%. He noted that the crisis created by the pandemic can no longer be termed as deflationary.

Christensen also noted that a V-shaped recovery for the US economy is underway although the stock market may face tough times in the future.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the UK government providing a second support grant for self-employed people who have been affected by the pandemic.

Chancellor Rishi Sunak announced that this will be the final support grant that will be provided by the government. More than three million people can apply for payment of up to £6,570 each under the scheme.

Although the first support scheme faced some issues due to fraudulent claims, the scheme did reach millions of people. The second round of the scheme is being considered as an alternate to extending the furlough scheme for employed workers.

Certain self-employed people such as directors, freelancers, and newly self-employed, however, are not eligible for the scheme.

7:35 am

Russia’s new Covid-19 vaccine could make or break the country’s economy, according to leading macroeconomic influencers

Russia became the first country to approve a vaccine for the Covid-19 virus. Experts have questioned the effectiveness of the vaccine as it has been tested in only a few people. The vaccine could boost Russia’s economy if it is as effective as claimed. However, it could damage its global image if proven ineffective. Macroeconomic influencers share their views on the Covid -19 impact.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared an article on the doubts cast on Russia’s new Covid-19 vaccine. Developed by the Gamaleya institute in Moscow, the vaccine has been approved by Russian health authorities without undergoing phase III clinical trials required to prove the efficacy and safety of the vaccine. Although Russia has announced mass vaccination to begin in October, the effectiveness of the vaccine is yet to be known.

If the vaccine in fact proves effective, it could provide several advantages to Russia. Firstly, the vaccine could enable Russia’s economy to recover faster than the other countries. The demand for vaccine will also increase boosting the country’s global image, while generating huge revenues. However, if the vaccine proves ineffective Russia’s image could be badly damaged.

Prof. Steve Hanke

Prof. Steve Hanke, an economist at Johns Hopkins, shared an article on how Sweden adopted a laissez-faire approach to the pandemic and experience fewer deaths per capita and half the GDP decline of 8.6%.

The UK on the other hand adopted a stricter approach recommended by the National Health Service (NHS) but still experience similar number of deaths and a GDP decline of 22.2% in the first half of 2020. Hanke noted that the UK National Health Service is the most overrated health system in the world.

The article noted that using a slightly variant approach adopted by Sweden instead of a complete lockdown could have helped with UK’s economic recovery.

Konstantina Beleli

Konstantina Beleli, a european civilisation economist, shared an article on how temporary and contract workers are facing an uncertain future without jobs and access to furlough programmes. Across Europe, furlough programmes cover only employees that on company payrolls than contract workers. Such workers are eligible for unemployment benefits only, which provide very less benefits compared to furlough programmes.

In June, more than 15,000 workers had been unemployed with four out of ten workers working in industries worst affected by the pandemic such as tourism, catering and restaurants. As recession across Europe continues, the future for these workers looks bleak due to lack of jobs. Although governments are spending on retraining some of the workers, it may be work in the short-term as they need access to jobs immediately.

Mohamed A. El-Erian

Mohamed A. El-Erian, chief economic adviser at Allianz, shared an article on how the month of August will be prominent in terms of data and other economically-relevant developments. He noted that new data emerging during the month will highlight the level of manufacturing activity in Europe and the US.

Erian added that the earnings of companies such as Target and Walmart will indicate the performance of the retail sector, while minutes from the Federal Reserve’s meeting will indicate the next steps planned to be taken by the government.

7:55 am

Supporting unemployed people and public-sector job creation essential for recovery of the UK economy, according to leading macroeconomic influencers

The economic impact of the Covid-19 pandemic has thrown the UK into one of the worst recessions in history. As the government reviews the next steps to be taken to ensure recovery to pre-Covid-19 levels, experts highlight the need to support the poor and make more public sector investments. Macroeconomic influencers share their views on the Covid -19 impact.

Rob Gill

Rob Gill, managing director at Altura Mortgage Finance, shared an article on how there is no trade-off between people’s lives and economic growth. The contraction in UK GDP has left experts questioning if the strict and long lockdowns in the country were necessary.

The article notes that a short-term trade-off between human lives and economic growth does not exist. However, the poor handling of the lockdown measures in the UK has badly affected the country’s economic performance.

Three policies have been recommended in the article including the extension of universal credit to support the unemployed, provide retraining grants of funds to start a new business and create more public-sector jobs.

Trinh

Trinh, senior economist for emerging Asia, tweeted on how lockdowns are not a sustainable strategy. She shared statistics comparing the impact of lockdowns on Sweden and the UK. Sweden did not have any lockdowns but had control measures to handle the pandemic. Though the country’s economy was not impacted as much as the UK, it has one of the highest death rates related to Covid-19.

The UK comparatively had one of the toughest lockdowns and a similar death rate, while the economic impact was devastating. Trinh noted that lockdown measures are not sustainable particularly in emerging economies as they severely impact the poor.

Shane Oliver

Shane Oliver, head of investment strategy and chief economist at AMP Capital, tweeted on the decline in the initial unemployment benefit claims since January. Further, the unemployment benefit claims have continued to decline over the previous week.

Oliver noted that the continuing decline indicates that the US labour market is starting to recover.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the increase in demand for workers in the first week of August. More than 126,000 new job adverts were released during the period, which is the highest since the start of the Covid-19 pandemic.

Demand for workers was prominent for skilled and low skill jobs in construction, and debt collection, according to the Recruitment & Employment Confederation. Despite the positive news, official statistics indicate the largest decline in employment in the last ten years.

Jobs opportunities were low compared to 2019 figures particularly for hairdressers, postal workers, and restaurant managers, among others, the article noted.

Armine Yalnizyan

Armine Yalnizyan, an economist, shared an article on how Canada’s labour market has experienced fundamental shifts due to the pandemic. The article provides recommendations for accommodating the changes particularly the needs to women to transform the work culture in the country.

The article recommends the need to identify the diverse requirements of women, while providing a flexible working environment. Employers should also provide all the tools and equipment necessary to work remotely as every employee may not have access to a computer or internet connection.

Further, training and guidelines should be developed to work remotely apart from providing funding for equipment and tools, childcare and other allowances.

7:25 am

The UK officially enters recession for the first time in 11 years, according to leading macroeconomic influencers

The UK economy is entering recession, having recorded its biggest contraction in history in Q2 due to the Covid-19 pandemic. Experts believe the worst is over and the economy is showing signs of recovery. The government should focus on the steps needed for maintain and improve the recovery. Macroeconomic influencers share their views on the Covid -19 impact.

Linda Yueh

Linda Yueh, an economist at the University of Oxford, tweeted on the UK officially entering the largest recession for the first time in 11 years. The lockdown measures implemented due to the Covid-19 pandemic caused the UK GDP to contract by 20.4% in the second quarter of 2020.

A video in the tweet includes views expressed by Rupert Harrison, an economist, on how the recession is deeper than expected but the economy is showing signs of a V-shaped recovery. The majority of the sectors that were impacted by the lockdown measures are shown to be bouncing back. The full recovery of the economy and decline in unemployment still remains uncertain, Harrison added.

Stephany Griffith-Jones

Stephany Griffith-Jones, an economist specialising on financial crises, tweeted on how the GDP contraction of the UK economy at 20.4% is in line with the estimates provided by the Bank of England at 21%.

The tweet also includes a comparison of the GDP contraction across the world in Q2. Contraction of the UK GDP is the worst compared to other countries and is second only to Spain and twice as severe as the US.

Christophe Barraud

Christophe Barraud, an economist and strategist, shared an article on the stimulus impasse in the US. Despite the Federal Reserve considering that another round of stimulus is vital for the recovery of the US economy, Republicans and Democrats are yet to reach a consensus on a stimulus package.

Republicans want the Democrats to reduce their demands for state and local aid to restart discussions. The impasse is expected to continue until September, which could worsen the economic downturn in the country.

Adam Posen

Adam Posen, president of Peterson Institute for International Economics, shared an article on how the pandemic is increasing purchases by sovereign wealth funds (SWFs). Designed to diversify the investments made by Saudi Arabia, these funds have the potential to expand their authoritarian rule over the population in other countries.

Oil rich countries such as Saudi Arabia have failed to diversify their economies and face an uncertain future once their oil reserves are gone. SWFs act as a buffer and enable them to diversify their non-resource asset base. The purchases made by SWFs may have long-term effects that can heighten geo-political tensions.

7:32 am

New IMF support facility can help emerging economies secure financing, according to leading macroeconomic influencers

Large populations, lack of access to healthcare facilities and poor public healthcare infrastructure have led to an increase in Covid-19 cases in emerging economies. The impact of the pandemic in these economies is expected to last for a number of years. A new support facility from the IMF may help in assisting emerging economies fulfill their financing needs, macroeconomic influencers share their views on the Covid -19 impact.

Tony Addison

Tony Addison, professor of economics at the University of Copenhagen, shared an article on how the International Monetary Fund (IMF) should create a new pandemic support facility for emerging countries impacted by the pandemic.

Emerging economies are some of the worst affected nations by the pandemic and expected to seek financing from the IMF as well as support for debt restructuring. These economies are in need of financing to improve their public healthcare services and provide a social safety net to the most vulnerable.

An IMF support facility can help emerging countries with their financing needs, while providing options for more lenient repayment periods without disturbing already existing facilities.

Pedro Nicolaci da Costa

Pedro Nicolaci da Costa, Federal Reserve & economy correspondent at Market News International, shared an article on how the Covid-19 pandemic has destroyed more than half of Black-owned small businesses.

The article noted that Black-owned businesses were the most affected facing an acute decline of 41%, followed by Latin-owned businesses by 32% and Asian-owned business owners by 26%. Comparatively, white-owned businesses faced a decline of 17%.

The main reason for this disparity was attributed to where the businesses were located, which were among the top 50 most affected regions with Covid-19 cases. Further, only 20% of eligible businesses received government relief.

Jonathan Portes

Jonathan Portes, professor of economics at King’s College London, shared an article on the tough future ahead for the UK labour market as the furlough scheme comes to an end. More than 2.5 million people are expected to be unemployed after the scheme ends, according to the Bank of England. The National Institute of Economic and Social Research (NIESR), however, forecast the number to be higher at 3.5 million.

Experts argue that the scheme should be extended as the short-time cost will be small at £10bn ($11.75bn), while the long-term benefits are expected to be higher with increased consumer spending.

Extending the scheme also comes with risks as it could interrupt the normal flow of workers from one firm to another. Further, the pandemic is leading to fundamental shifts in the labour market as some jobs may no longer exist and people will still be receiving payments for such jobs.

Supporting people who have lost their jobs, while helping them find new jobs is one of the solutions to these risks, the article notes. The public sector should also step in to create jobs that cannot be created in the private sector.

8:17 am

Strong supply-side measures needed to address unemployment rate in the US, according to leading macroeconomic influencers

The unemployment rate in the US is slowly falling but the country still has a long way to go before returning to pre-Covid-19 levels. The US government still needs to implement policies and supply-side measures to reduce unemployment rate, macroeconomic influencers share their views on the Covid -19 impact.

Daniel Lacalle

Daniel Lacalle, chief economist Tressis SV, shared an article on the need to bring unemployment rates to pre-Covid-19 levels quickly in the US to ensure economic recovery. He notes that the government should reduce cut red tape to increase job creation and avoid copying interventionist measures implemented in other countries.

Although unemployment rate fell to 10.2% in July, the rate of job creation is slow. Compared to the Eurozone, however, the US is better placed. Unemployed, furloughed and people receiving subsidised jobless schemes account for more than 23% of the labour force in the Eurozone, according to Morgan Stanley. In the US, unemployed, people staying home from work and others account for 16.5%.

The article noted that strong supply-side measures, tax incentives and policies to attract capital were required to bring unemployment rates to the levels before the pandemic.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, shared an article on how one third of people in the US are unwilling to get vaccinated against Covid-19. Approximately 76% of surveyed people in the age group of 18 to 29 were willing to take the vaccine in addition to 70% of senior citizens aged above 65.

The high interest from senior citizens was majorly attributed to the risks that the disease posed to them. Further, the middle-aged group was the most reluctant to take the vaccine.

Pedro da Costa

Pedro da Costa, Federal Reserve and economy correspondent at Market News International, shared an article on how the stimulus packages provided to oil and gas companies was a mistake. Providing relief to such companies that are leading to climate change poses risks to financial institutions and markets, the article notes.

The oil and gas industry was in a slump long before the crisis due to surplus supply and competition from alternative energy sources. By providing support to such companies, the Federal Reserve is bailing out creditors such as banks, hedge funds and equity firms. The emergency funds provided to such companies should rather be diverted to help protect public funds, the article added.

Alex von Witzleben

Alex von Witzleben, an economic historian, shared an article on how climate change concerns have dropped amid the pandemic. According to a survey in the article, more than third of the people considered climate change as being unimportant. Further, majority of the people surveyed responded that they would drive more than use public transport.

The pandemic, however, has brought some positive changes as more number of people move away from meat, which is one of the biggest sources of greenhouse gas emissions. Further, two thirds of the people noted that they recycled at home and will do so in the future.

7:27 am

Public health measures should continue until a highly effective coronavirus vaccine is found, according to leading macroeconomic influencers

Scientists across the world are racing to find a vaccine against the Covid-19 virus, which has battered the global economy. As the world awaits the discovery of a new vaccine, the chances of it being highly effective seem low. Although 50% effectiveness is still being viewed as acceptable, public health measures need to continue until a highly effective vaccine is found, macroeconomic influencers share their views on the Covid -19 impact.

Daniel Lacalle

Daniel Lacalle, chief economist Tressis SV, shared an article on White House coronavirus advisor Dr. Anthony Fauci views of the effectiveness of a coronavirus vaccine. Dr. Fauci noted that the chances of developing a vaccine that is highly effective are very narrow.

The scientists currently working on vaccines are expecting that the vaccine would be at least 75% effective. The US Food and Drug Administration (FDA) has noted that it would approve a vaccine if it was at least 50% effective.

Dr. Fauci noted that considering the relatively average effectiveness of the vaccines, the public health approach of social distancing and wearing face masks should not be abandoned.

Chad P. Bown

Chad P. Bown, Reginald Jones Senior Fellow at Peterson Institute for International Economics, shared an article warning how countries should not try to hoard Covid-19 vaccine once it is discovered.

Bown noted that wealthy countries that prioritise vaccine doses for themselves at the cost of poorer nations will lead to a failure in controlling the global pandemic. Countries such as the US and UK have already signed agreements with pharmaceutical companies to secure vast quantities of vaccine doses.

The article notes that considering the ability of the virus to spread from country to another, vaccinating one country at time will only prolong the pandemic and impact the global economy.

Colin Williams

Colin Williams, professor of public policy at the University of Sheffield, shared an article from the World Bank on how informality is aggravating the Covid-19 pandemic in emerging and developing economies (EMDEs). According to the World Bank, informality includes lack of development, widespread poverty, poor health and medical services, and insufficient access to financial systems.

Due to the lack of access to healthcare services and poor sanitation facilities, the pandemic is expected to have a higher impact on EMDEs. Further, lockdown measures impact the informal sector in these economies. For example, approximately 72% of companies in the service sector of these economies are informal.

Howard Archer

Howard Archer, Chief Economic Advisor to EY ITEM Club, shared an article on how following the increase in the number of companies planning to cut jobs in June in the UK, many companies have cut or threatening to cut jobs in July and early August.

The pandemic has led to increase in redundancies by five times. Approximately 1,778 companies planned to cut more than 139,000 jobs. The number of redundancies is expected to be higher than the last recession in 2008, according to the article.

 

8:22 am

Multilateral sovereign debt buyback facility can address the global debt crisis, according to leading macroeconomic influencers

Government debt is rising across the world as countries continue to borrow to release funds for economic recovery amid the pandemic. The rising debt could lead to a global crisis plagued by unemployment, fuel instability and violence. Macroeconomic influencers share their views on the Covid -19 impact.

Tony Addison

Tony Addison, professor of economics at University of Copenhagen, shared an article on the ways in which a global debt crisis can be prevented. It is estimated more than 100 low to middle income countries will have to pay $130bn in debt service in 2020, out of which approximately half of it will need to be paid to private creditors.

An alternative to avoid such a debt crisis is voluntary sovereign debt buybacks, which can help in reducing debt burdens by obtaining discounts on the face value of sovereign bonds. A multilateral buyback facility managed by the International Monetary Fund (IMF) can be implemented to manage funds from a global consortium of countries.

To ensure debt reduction, IMF can conduct auctions and buyback certain amounts of bonds.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the easing of the downturn in UK’s labour market. According to a survey based on 400 recruiters by the Recruitment and Employment Confederation (REC), demand for staff continued to decline and increased to 43.4 in July from 34.3 in June. A level above 50 implies an increase in hiring, the article noted.

Despite the positive news, the outlook for the market in the future remains weak as unemployment rates are expected to increase after the government’s furlough scheme comes to an end. The furlough scheme supporting 9.6 million jobs will end in October.

Ian Bremmer

Ian Bremmer, a political scientist and author, shared an article on the next steps of recovery for Lebanon following the massive explosion in Beirut. Lebanon is already one of the highest indebted countries in the world due to decades of mismanagement.

The economic crisis in Lebanon is expected to push 50% of the country into poverty. Although the country has appealed to the IMF for providing funds, the organisation has refused to provide any aid until reforms are implemented for the corrupt public sector. Unless Lebanon takes steps to implement reforms, the country will face an impending humanitarian crisis.

Adam Ozimek

Adam Ozimek, chief economist at Upwork, shared an article on how the workforce has changed amidst the pandemic. Companies such as Google, Twitter and Facebook have already given employees the option to permanently work from home. It is estimated that after the pandemic, one in six workers is expected to work from home.

The fundamental shifts occurring in the workforce due to the pandemic may bring cultural, social and economic changes to the US economy. Remote working may create less job opportunities for other sectors such as restaurants and leisure. Further, business travel is expected to fall by 10%-20% leading to fewer jobs in the airlines as well as hospitality industry.

Remote working can shift the population towards cheaper metros and alter demographics. It can also weaken social relationships leaving workers emotionally depleted.

7:31 am

Covid-19 and job losses putting people’s health insurance at risk in the US, according to leading macroeconomic influencers

The Covid-19 pandemic has led to millions of job losses in the US. Apart from losing their income, people are at risk of losing employer based health insurance. Although the government has alternate measures such as the Affordable Care Act, its ability to serve all those in need will be tested during the pandemic, macroeconomic influencers share their views on the Covid -19 impact.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University, shared an article on how more than 26.8 million people in the US are at risk of losing their health insurance due to the Covid-19 pandemic and related job losses.

The Affordable Care Act (ACA) has, however, acted as a safety net for those people with low or moderate income that are losing employer based health insurance. The pandemic will test how the ACA is able to serve all the people who lose health insurance from employers.

Without ACA, more than 19 million people could become uninsured and unable to access healthcare facilities.

Arthur Delaney

Arthur Delaney, a journalist, shared an article on how unemployment benefits might not have amounted to more than what people usually earned from their jobs.

The article notes that data from liberal advocacy group Groundwork Collaborative and the National Employment Law Project shows that most people who claimed unemployment benefits earned less than what they did from their jobs.

A previous study by the University of Chicago found that 68% of people were earning more through unemployment benefits. Politicians argued against extending unemployment benefits as they felt these benefits discouraged people from going back to work.

Despite the conflicting findings, people cannot be blamed as they are unable to go back to work due to the pandemic, the article added.

Prof. Steve Hanke

Prof. Steve Hanke, an economist at Johns Hopkins University, tweeted on Lebanon President Michel Aoun’s plans to release LBP100m from the 2020 budget as emergency funds after the explosion in Beirut.

Hanke noted that with inflation in the country skyrocketing to 433% per year, the only ideal solution to the country’s problems is to immediately establish a currency board.

Joshua Goodman

Joshua Goodman, an education and labour economist, shared an article on New York’s plans to reopen schools and colleges as infection rates have reduced in the city. A significant number of issues still remain to successfully reopen schools and colleges including lack of nurses to staff all schools and opposition from teachers.

New York’s plans are expected to serve as a template for other cities to reopen schools. The initial plans include opening schools for one or three days a week with measures such as face masks and social distancing and conducting online classes for the remaining days.

The city currently has a test positivity rate of approximately 1% but health experts believe that reopening schools may increase the rate of infections.

 

7:11 am

US budget deficit in June more than combined debt of two centuries, according to leading macroeconomic influencers

The US recorded the largest budget deficit in its history in June owing to the stimulus packages released to manage the impact of the Covid-19 pandemic. Equity markets are forecast to remain flat and infection rate continues to rise casting doubts on the duration of pandemic-induced recession, macroeconomic influencers share their views on the Covid -19 impact.

Jon Matonis

Jon Matonis, chief economist at Cypherpunk Holdings, shared an article on how the US printed more money than in the first two centuries since its founding. The US had a budget deficit of $864bn in June, which is larger than the total debt incurred between 1776 and the end of 1979.

The article notes that the government should tackle the deficit by moving away from paper money to bitcoin, as there is no inflation or hyperinflation associated with the cryptocurrency. A decentralised financial structure in which everyone can participate at a very low cost is needed, the article added.

Daniel Lacalle

Daniel Lacalle, an economist and author, shared an article on the forecast on equity markets made by Goldman Sachs. The article notes that the equity markets are expected to remain ‘fat and flat’ due to the lower returns and market volatility. Although stock markets have returned to normal levels, bond yields and real yields are declining leading to lower returns for investors.

Analysts at Goldman Sachs, however, see recovery for growth stocks and purchasing managers’ index is pointing towards growth.

Jonathan Davis

Jonathan Davis, a wealth adviser and economist, shared an article on how the new lockdown restrictions imposed in Melbourne are expected to prolong Australia’s recession until the end of the year. Australia recorded two consecutive quarters of negative growth and the fresh lockdowns may lead to another quarter of negative growth.

NAB chief economist Alan Oster in the article notes that the current recession is worse than that witnessed in the 1980s and 1990s. The biggest impact is expected to be on Victoria, which accounts for a quarter of the country’s GDP. The impact on the construction sector in Victoria may further prolong the recession into the third quarter.

Colin Williams

Colin Williams, professor of public policy at University of Sheffield, shared an article on the possibility of second wave of Covid-19 infections in France. The government’s scientific council has already noted a second wave is highly likely. Although the pandemic is currently under control, the situation could change any time.

The new warnings were issued followed spike in cases over the last few weeks. Despite strict lockdowns, infections are rising in several European countries including France. Germany is already in a second wave as people are not following social distancing rules.

James Picerno

James Picerno, editor at US Business Cycle Risk Report, shared an article on BP’s plans to cut dividends due to decline in sales of fossil fuels.

BP plans to increase its investments in low-carbon technology by ten times to $5bn a year over the next ten years. The cut in dividends is part of this shift in investment. The move will also help the company to achieve its net zero carbon emissions goal by 2050 or sooner.

Picerno noted whether this move by BP signalled the end of rich dividend payouts from big oil companies.

6:50 am

Economic survival package needed rather than a stimulus package for the US, according to leading macroeconomic influencers

The next stimulus package in the US is one of the most debated issues as to what should be included and what should be avoided. While experts argue that the weekly supplements to unemployment benefits should continue some politicians claim that they are discouraging people to search for jobs, macroeconomic influencers share their views on the Covid -19 impact.

Dean Baker

Dean Baker, senior economist at the Center for Economic and Policy Research, shared an article on how the government should focus on an economic survival package rather than a stimulus package.

The government is yet to take a decision on the next stimulus package with politicians claiming that unemployment benefits are discouraging people from going back to work. With the infection rate being at high levels, people have good reason to stay at home and avoid getting infected.

The article notes that the next stimulus package should not be focussed on getting people back to work rather it should focus on taking care of their needs in every way during the pandemic. Continuation of the $600 weekly payments, reopening of schools, and ensuring adequate child care facilities is important to ensure economic recovery.

Pedro da Costa

Pedro da Costa, a journalist, shared an article on how emergency financial assistance can be released more quickly to the American population if the government changes a simple rule.

The current method of direct payments as part of the stimulus package took nearly three weeks to reach the people and is not helping the families in need. Further, the overdraft fees and bank interest rates cut in the money provided by the government.

Incorporating changes to the Expedited Funds Availability Act of 1987, which covers how long a bank can hold money will help address this issue. The changes can help in releasing funds immediately and does not cost anything for the government.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on former Vice President Joe Biden’s calls for increasing the minimum wages in the US to $15 per hour. He noted that increasing the minimum wage will leave 1.3 million low-skilled workers to become unemployed, according to the Congressional Budget Office (CBO).

The CBO report found that the increase in minimum wages can, however, boost the wages of 17 million workers although it does not take into account the current economic impact of the pandemic. The US Chamber of Commerce supports increasing the minimum wages to $10, which may result in a smaller number of job losses.

Increasing minimum wages and unemployment benefits can increase consumer demand, which will ultimately help businesses when they reopen after the pandemic.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the increase in manufacturing activity in the UK to a 16-month high of 53.3 in July. The increase was driven by expansion in consumer intermediate goods sectors as lockdown restrictions were eased.

The numbers indicate that the UK economy is expected to return to growth in the third quarter assuming no new lockdown restrictions are imposed. Growth in the fourth quarter, however, is projected to slowdown due to increase in unemployment.

8:14 am

Coordinated effort to distribute vaccines essential to ending the Covid -19 pandemic, according to leading macroeconomic influencers

Development efforts towards Covid-19 vaccines are going at a fast pace but doubts remain on the worldwide availability of them. Hoarding of vaccines and lack of cooperation to distribute them may further complicate the efforts to control the pandemic. A coordinated effort towards distribution of vaccines is needed, macroeconomic influencers share their views on the Covid -19 impact.

Chad P. Bown

Chad P. Bown, senior fellow at Peterson Institute for International Economics, shared a video on the need for cooperation when it comes to vaccination. As pharmaceutical companies continue to carry out research into the development of a vaccine for Covid -19, uncertainty remains on the availability once a viable vaccine is discovered.

Every country in the world may not be able to produce these vaccines particularly developing countries. Further, sufficient doses of vaccines may not be available in the beginning leading to hoarding of vaccines.

The video highlights the need for a coordinated effort to distribute vaccines equally to curb the spread of the disease. With all the countries interdependent on one another for their economic growth, it is essential to distribute the vaccines and reduce the economic damage caused by the disease.

Konstantina Beleli

Konstantina Beleli, an economist, shared an article on the steps taken by the Zimbabwe government to curb anti-government protests in the country due to rising inflation and food shortages.

The Covid-19 pandemic has pushed Zimbabwe into economic crisis with the rate of inflation reaching 700%. The World Food Program has issued a warning that by the end of 2020 60% of people in the country will not have food security and leading to a potential humanitarian catastrophe.

The rate of corruption, which costs the country $2bn each year, has also increased during the pandemic leading to increase in costs of medical supplies and personal protective equipment.

Nasser Saidi

Nasser Saidi, president of Nasser Saidi & Associates, shared an article on the rising hyperinflation in Lebanon. In June, hyperinflation in the country was 20% month-on-month compared to the previous year. Prices of goods and services change in a daily basis in the country with food prices soaring by 108.9% during the first half of 2020.

The inefficient economic policies and overvalued exchange rate have created huge deficits in the country. The national public debt in the country in 2020 reached 184% of GDP, which is the third highest in the world.

The article notes that a capital control act should be implemented to control the outflow of capital and stabilise the exchange rate. Reduction in public spending particularly in the power sector and raising the prices of subsidised commodities should be implemented to improve Lebanon’s economic crisis, the article adds.

Prof. Steve Hanke

Prof. Steve Hanke, an economist, shared an article on how Chevron has written off $2.6bn worth of investments in Venezuela due to political instability in the country. He noted that the oil production by the national oil producer, Petróleos de Venezuela was its lowest in 70 years.

Hanke added that the vast oil reserves in the country are going untapped due to the political turmoil in the country.

7:57 am

Unpredictable Covid-19 virus may require annual vaccinations, according to leading macroeconomic influencers

Several pharmaceutical companies are racing to develop a vaccine for the Covid-19 virus that has wreaked havoc on the world economy. While one shot of the vaccine was initially thought to provide immunity against the virus, reports are now emerging that two or more annual vaccinations may be required.

Macroeconomic influencers share their views on the Covid -19 impact.

Daniel Lacalle

Daniel Lacalle, an economist and author, shared an article on AstraZeneca CEO’s concerns that the unpredictable nature of the Covid-19 virus may require annual vaccinations. AstraZeneca is currently working on a vaccine in partnership with the Oxford University, which has produced a positive immune response in early stage human clinical trials.

Based on the technology used for developing a vaccine for SARS 1, the immunity provided by the vaccine may last for only 12 to 18 months. The exact required vaccination period is not known due to the unpredictable nature of the virus.

Harry A. Patrinos

Harry A. Patrinos, education economist and manager at World Bank, shared an article on the impact of school closures due to Covid-19 pandemic on future earnings. According to a study in the article the school closures are expected to result in $2.5tn or approximately 12.7% of annual GDP in lost future earnings in the US.

School closures were not limited to the US but across the world 192 countries closed schools impacting more than 90% of students. The article notes that school closure can have long-term consequences on the education, income and life expectancy of a child.

Gregory Daco

Gregory Daco, chief US economist at Oxford Economics, shared statistics related to the GDP contraction in the US. He noted after a 5% annualised contraction in the first quarter, the US GDP contracted by 32.9% annualised in the second quarter.

Daco added that the Q1 and Q2 numbers represent a 10.6% peak-to-trough contraction, which is third largest contraction over the last decade after the WWII demobilisation and the Great Depression.

Ludovic Subran

Ludovic Subran, chief economist at Allianz, shared an article on a surge in insolvencies in the second quarter of 2020 across the world. Approximately 147 companies with a turnover of more than €50m ($56.2m) went insolvent during the quarter.

The largest increase was witnessed in Western Europe and the US with 64 and 52 cases of insolvencies. Retail, services and energy were the major sectors impacted during the quarter with retail and service recording 37 and 24 insolvency cases, followed by energy with 17.

The insolvencies are expected to create a domino effect impacting providers along the supply chain, the article added.

7:43 am

National debt held by public to reach $41tn by 2030 in the US, according to leading macroeconomic influencers

The global economy earlier lent money to the US enabling the country to manage its public debt. With the majority of the countries facing economic turmoil due to the Covid-19 pandemic, the US may not find lenders for its rising public debt. Macroeconomic influencers share their views on the Covid -19 impact.

Brian Riedl

Brian Riedl, senior fellow at the Manhattan Institute shared an article on the rising national debt. The Covid-19 pandemic and the subsequent stimulus packages has led to the increase in national debt in 2020 to $4tn. By 2030, the national debt held by the public is expected to reach $41tn without accounting any additional stimulus packages planned to be announced.

The article questions as to who will lend the government the trillions of dollars, which is expected to create an unprecedented burden. Further, social security and Medicare is expected to face a shortfall of more than $100tn.

Earlier the global economy was a big lender to the US but that may not happen considering the rest of the world is facing a similar situation of rising debt due to the Covid-19 pandemic. The Federal Reserve may have to continue buying government debt in the future.

Arthur Delaney

Arthur Delaney, a journalist, shared an article on the end of unemployment benefits and the implications for the economy. The government is yet to take a decision on the extension of them, and by the time a decision is taken it may be too late for some people.

Several politicians have argued that the extra $600 benefits are discouraging people for going back to work. Research, however, has revealed that there is no evidence for this argument as the jobs opportunities that were available earlier are not available now.

The government is considering a proposal to reduce the $600 per week benefits to $200 per week until October. After October, a new formula will be adopted to ensure that total benefits do not exceed 70% of what workers earned at their jobs.

Christophe Barraud

Christophe Barraud, an economist, shared an article on the forecasts on Japan’s GDP, which is projected to contract by 4.5% from the previously forecast 1.4% in 2020. Japan is the world’s third largest economy and is projected to have contracted by 23.9% in the second quarter.

The Japanese government has a more positive outlook for the economy and has pledged $2.2tn in two stimulus packages to deal with the impact of the pandemic. It had earlier set a target to increase nominal GDP to 600 trillion yen ($5.7tn) by 2020 but it will now be delayed to 2023.

7:14 am

Fiscal policies focussed on promoting growth needed to revive the US economy, according to leading macroeconomic influencers

As the US government deliberates on the next stimulus package, experts urge the need for a sustainable fiscal policy that can promote economic growth. Unemployment levels have been rising across the world impacting the earnings of the future generations, macroeconomic influencers share their views on the Covid -19 impact.

Mohamed A. El-Erian

Mohamed A. El-Erian, chief economic adviser at Allianz, shared an article on his outlook for the US economy. He noted that policy makers should not repeat the same solutions to deal with the economic crisis caused by the Covid-19 pandemic. The solutions should rather focus on promoting economic growth in the future.

The US economy showed signs of recovery in June as retail and home sales increased but later flattened out as lockdown restrictions were re-imposed. El-Erian noted that the government should offer more money to states to cover the revenue lost due to the pandemic. He also noted that testing and healthcare should be improved to bring the infection rate under control.

Colin Williams

Colin Williams, professor of public policy at the University of Sheffield, shared an article on how recruiters have been receiving numerous applications as the Covid-19 pandemic impacts the UK labour market.

The current volume of people applying for jobs has not been witnessed over the last 20 years. Paid employment has declined for 650,000 employees since March leaving even small businesses inundated with applications. A front-of-house position had more than 400 applications in June compared to 40 in February.

Gregory Daco

Gregory Daco, chief US economist at Oxford Economics, shared an article on how the pandemic is expected to impact the earnings of future generations in Canada. The unemployment rate for youth increased from 10.3% in February to a historical high of 29.4% in May.

The current year’s high school, college and bachelor degree graduates are expected to lose approximately $25,000 or more over the next five years. Further, annual unemployment rate among youth is expected to reach 28%. The earnings losses for women are expected to be higher.

James Picerno

James Picerno, editor at US Business Cycle Risk Report, shared an article on the second-quarter economic release expected this week. As per initial estimates, the US GDP is expected to contract by 14.3%, which is deeper than any decline since 1947.

The article notes that the estimates are not surprising as a decline in GDP was already expected. Although business activity showed some signs of stabilisation in July, lack of growth and falling demand were major concerns. A key economic indicator will be the weekly jobless claims that continue to rise.

7:21 am

More than 28 million people in the US may be evicted by October, according to leading macroeconomic influencers

Rising unemployment rates, end to unemployment benefits and surge in Covid-19 cases may soon leave people homeless in the US. As fresh outbreaks continue across the world, there is a need for local measures and more stimulus, macroeconomic influencers share their views on the Covid -19 impact.

Sudeep Reddy

Sudeep Reddy, managing editor at Politico, shared an article on how the recession induced by the Covid-19 pandemic is causing a housing crisis that is worse than the 2008 crisis. Approximately 50% of tenants in the US have been burdened by rent during pandemic.

The situation has mainly resulted as fiscal aid has not been distributed among everyone as applications for unemployment benefits are not being cleared quickly. As a result, one third of US households have not been able to make their full housing payments for July. By October, more than 28 million people in the US may be evicted if prompt action is not taken.

Christophe Barraud

Christophe Barraud, an economist, shared an article on how the several countries are struggling to control a second wave of Covid-19 infections and imposing fresh lockdowns. The fresh outbreaks have led to new travel restrictions being imposed across the world.

Australia and Vietnam recorded a daily rise in cases after appearing to have the pandemic under control. Hong Kong also banned public gatherings and closed restaurants, while the UK was forced to ban travellers from Spain after new infections were reported in the country.

The article noted that rather than lockdowns, local measures such as social distancing and making face masks mandatory should be implemented.

Linda Yueh

Linda Yueh, an economist at the University of Oxford, shared an article on UK Chancellor Rishi Sunak’s plans to impose a new tax on online retailers to generate sustainable revenue for the government. The move is also expected to help bricks-and-mortar retailers to compete with online retailers.

The new tax will enable the tax system to raise sufficient revenue and provide a fair platform for high street retailers who were suffering amid the pandemic.

Daniel Lacalle

Daniel Lacalle, an economist and author, shared an article on the closure of consulates of the US and China over rising tensions between the two countries. Disagreement over the origin of the Covid-19 disease and tensions over the South China Sea have increased tensions.

The article notes that the biggest error made by China was to alienate the business community in the US. The South China Sea has also remained a point of tension for the two countries as China claims it as its own, while the US promotes freedom of navigation.

 

7:33 am

The US economy may require trillions of dollars in stimulus to over the economic downturn, according to leading macroeconomic influencers

Additional stimulus to deal with the impact of the Covid-19 pandemic in the US will be required over the next few years. Sectors such as child care have been impacted by the pandemic leaving parents vulnerable to lower incomes in the future. Automatic stabilisers are required within the stimulus packages to ensure long-term effectiveness, macroeconomic influencers share their views on the Covid -19 impact.

John Van Reenen

John Van Reenen, professor at MIT Economics, shared an article on the next stimulus package being considered by the US government. Although politicians project that the US economy may require $3tn in stimulus, macroeconomists highlight the need to incorporate automatic fiscal stabilisers.

Unemployment benefits under the CARES Act are set to end in July although experts have called for an extension of the benefits. As jobs are yet to return to normal levels, unemployment benefits are essential to protect households from bankruptcy.

Anthony DeRosa

Anthony DeRosa, a journalist, shared an article on the impact of the Covid-19 pandemic on the child care system in the US. The article notes that the economic impact of the collapse of the system will be visible for the next 20 to 30 years.

Both parents in approximately two thirds of families in the US work apart from majority of the 13.6 million single parents, according to the Bureau of Labor Statistics. The lack of child care facilities is forcing some of these parents to quit or switch to part time jobs, which is expected to significantly impact their income over the rest of their lives.

The article notes that more stimulus was injected to save airlines rather child care, which is expected to impact a whole generation of children and their job prospects.

Gregory Mannarino

Gregory Mannarino, a financial expert, shared an article on President Donald Trump’s economic advisers expecting a V-shaped recovery despite the surge in cases and rising unemployment rates.

The projections are based on the increase in sales of existing homes by 20.7% in June apart from a slow decrease in unemployment rolls as employers call back workers. Federal Reserve officials are taking a cautious approach before announcing the next economic stimulus to better understand the full impact of the pandemic on the economy.

Treasury Secretary Steven Mnuchin noted that the US economy may witness a 17% economic growth in the third quarter.

Howard Archer

Howard Archer, Chief Economic Advisor to @EY_ITEMClub, shared an article on how the UK economy may not recover from the contraction caused by the Covid-19 pandemic until 2024. The UK GDP is expected to decrease by 11.5% rather than the previously predicted 8%.

Despite easing of lockdown restrictions and surge in retail sales, consumer caution are increased and may take at least 18 months to return to pre-Covid levels.

7:23 am

Bankruptcy surge expected in US due to Covid-19, according to leading macroeconomic influencers

The US government is yet to decide on the whether to continue the federal Paycheck Protection Program. Lack of aid from the government may push companies into bankruptcy and increase unemployment rates, macroeconomic influencers share their views on the Covid -19 impact.

Prof. Steve Hanke

Prof. Steve Hanke, economist Johns Hopkins University, shared an article on an expected surge in bankruptcy cases in the US due to the Covid-19 pandemic. Decline in consumer demand, social distancing rules and lack of government support is hurting the operations of small and medium businesses.

More than 3,400 companies filed for Chapter 11 bankruptcy protection during the first half of the year with economists warning more to come once the federal Paycheck Protection Program aid ends. A Goldman Sachs survey among more than 1,100 businesses has found that 84% of them will not have sufficient cash flow to keep operations going.

Heather Long

Heather Long, economics correspondent at Washington Post, tweeted about unemployment statistics in the US. She added that 1.4 million new unemployment aid applications were filed during the last week of July, which is an increase of 109,000 from the previous week.

Long noted the surge in the number of unemployment applications filed is an indication that layoffs are on the rise. She added that more than one million unemployment applications have been filed over the 18 weeks.

Timothy McBride

Timothy McBride, Bernard Becker Professor at WUSTL, shared an article on the pricing concerns related to Covid-19 vaccine. The US government has signed an agreement to invest $2bn in Pfizer for the development of a Covid-19 vaccine. Experts raised concerns that the deal could lead to price gouging.

The agreement allows Pfizer to price the vaccine at $20 per dose, while other companies such as AstraZeneca and Johnson & Johnson expect their vaccine to be priced at $3 and $10 a dose respectively. The higher the price of the vaccine, the cost of the vaccine may or may not be transferred to consumer in the form of high insurance premiums and fees.

Kenan Fikri

Kenan Fikri, research director InnovateEconomy, shared an article on how the stimulus package announced by the US has helped in easing the impact caused by the recession compared to Europe. The article notes that although Europe has fared better in controlling the Covid-19 outbreak, the US has been able to able to manage the economic fallout in a better way.

The US announced a stimulus package corresponding to 12.3% of GDP, while the projected decline in GDP in the second half of 2020 is 10%. Countries in Europe have announced stimulus packages ranging from 9% to 3%, while their economies are projected to contract by 10% to 20% in the second half of 2020.

7:26 am

Ending unemployment benefits in the US could impact millions of workers and damage the economy, say leading macroeconomic influencers

As economies start to reopen cautiously, unemployment benefits announced during the start of the pandemic will soon come to an end. The abrupt ending of these unemployment benefits along with high unemployment rates could further damage economic recovery, macroeconomic influencers share their views on the Covid -19 impact.

Paul Krugman

Paul Krugman, Nobel laureate, shared an article on how ending the unemployment benefits scheme in the US may push millions of workers into poverty. The $600 per week in unemployment benefits helped workers to meet their expenses.

The benefits scheme is scheduled to expire at the end of July, which economists fear will further damage the economy. Without these benefits, workers will cut their spending and may even be evicted from their homes.

Without unemployment benefits, workers will be forced to look for jobs that may expose them to the virus unless the government takes necessary steps.

Jim Stanford

Jim Stanford, economist and director at Centre for Future Work, shared an article on how Australian companies that received payments under the jobkeeper scheme laid off more than 700,000 workers who were ineligible.

The government’s decision to exclude more than one million short-term casual workers and temporary work visa holders from wage subsidies has highlighted the impact on these workers. The exclusion led to the majority of the job losses due to the pandemic to be borne by these workers.

Timothy McBride

Timothy McBride, Bernard Becker Professor at WUSTL, shared an article on how the number of coronavirus cases in the US could be as much as two to 13 times higher than those actually reported. According to a study based on antibody tests, people showing no symptoms may be spreading the virus.

The study indicates how in some areas the gap between estimated infections and reported cases narrowed as testing capacity improved. The article notes the need to increase testing to control the spread of the disease and highlighted the need for face masks and social distancing.

Mohamed El Dahshan

Mohamed El Dahshan, a development economist, shared an article on the impact of the Covid-19 pandemic on Egypt. The tourism industry was the first to be impacted by the pandemic, which quickly spread to related industries such as hospitality, travel, food and beverages.

The informal sector accounts for more than 50% of the economy employing two thirds of labour. Workers employed in this sector do not have access to social protection. During 2017-2018, approximately 60% were under the poverty line as per estimates by the World Bank. The economic downturn may push even more people into poverty, the article adds.

7:52 am

US GDP to contract by 6% and Eurozone GDP to contract by 9% in 2020, according to leading macroeconomic influencers

The US GDP is projected to contract by 6% due to the economic downturn caused by the Covid-19 pandemic. Foreign direct investment inflows from US into China continue to rise despite these projections. Macroeconomic influencers share their views on the Covid -19 impact.

Robin Brooks

Robin Brooks, chief economist at Institute of International Finance, shared a chart on the expected GDP contraction in the US by 6%. He added that the Eurozone is expected to contract by 9%.

Brooks noted that a larger output gap and deflationary momentum is expected in the Euro zone as a result of the GDP contraction.

Matt Grudnoff

Matt Grudnoff, an economist at the Australian Institute, shared an article on the dangers of prematurely ending the Jobseeker payments in Australia. The government plans to reduce jobseeker payments from $550 a fortnight to $220 a fortnight from September.

The jobseeker payments have helped in supporting several Australians and lowering the payments could push them into poverty, the article adds. Further, cutting jobseeker payments may not provide the savings for the government as projected.

The article notes that the jobseeker payments should continue as they will ensure the physical and mental wellbeing of people, while encouraging them to seek employment opportunities. The cost of the payments can be absorbed by the government budget in the long run.

Stephany Griffith-Jones

Stephany Griffith-Jones, financial markets director at Initiative for Policy, shared an article in the rise in FDI inflows from US to China despite the rising tensions between the countries. Between January and June, FDI inflows into China increased by 6% compared to the previous year.

US businesses have been investing in China due to the vast potential of the economy with investments in April along totalling $10bn. The long-term scope of FDI inflows, however, looks bleak. A survey conducted by the American Chamber of Commerce in China indicates that businesses are delaying investments in the country and moving production out to protect their supply chains.

China is seeking FDIs and also reduced the number of industries that are excluded from FDI from 40 to 33. The rising tensions between the US and China and implementation of national security law in Hong Kong, however, is further creating new uncertainties.

Adam Tooze

Adam Tooze, director of European Institute, shared an article on how cutting the furlough programmes in Europe could increase unemployment rates. The euro area is projected to have an unemployment rate of 10% by the end of year, which is projected to increase by 4%-6%, if the furlough schemes end.

According to a survey, more than half of the businesses in the UK are expected to cut their staff after the furlough programme ends. Urgent measures are needed to address the impending rise in unemployment levels to prevent a prolonged economic recovery, the article adds.

7:08 am

Covid-19 surge in the US may lead to double dip recession, according to leading macroeconomic influencers

Strict lockdown measures may be needed to control the surge in cases in the US as the country faces the risk of a double dip recession. As inequalities continue to rise in emerging economies, there is an increasing need to minimise offshore shore tax havens, macroeconomic influencers share their views on the Covid -19 impact.

Rafael Domenech

Rafael Domenech, head of economic analysis at BBVA Research, shared an article on how a surge in Covid-19 cases may lead to a double dip recession in the US. Additional federal funding, severe lockdowns and increased spending on Covid-19 testing may be needed to address the surge in cases.

Compared to other countries, lockdowns in the US have not been effective in controlling the surge in cases posing a threat to economic recovery. Further, the delay in testing with a seven day wait for results is proving ineffective in curbing the spread of infections.

A double-dip recession maybe the worst case scenario if the virus is not brought under control, the article adds.

Gillian Findlay

Gillian Findlay, an economist and data analyst, shared an article on how economies with the highest inequalities have several common economic indicators, which have emerged into the forefront amid the Covid-19 pandemic.

South Africa, Namibia, Eswatini, Lesotho and Brazil are of the countries plagued by high unemployment rates, tax-to-GDP ratios, government wage bill, and government debt. Traditional economists believe that more government spending will help fix the inequalities but rather the focus should be on fixing inefficiencies and crime, the article adds.

Massive reforms aimed at removing inequalities, corruption and poverty are essential to break the cycle, according to the article

Konstantina Beleli

Konstantina Beleli, an economist, shared an article on how money stashed away in offshore financial centres (OFCs) has drained countries of the resources needed to fight crises such as the pandemic. OFCs are estimated to hold more than $36tn in cash, gold, and other securities.

Countries such as the US and UK have taken steps to identify such accounts and taking necessary legal action but minimising or eliminating these tax avoidance mechanisms remains challenging. A collective effort by countries to eliminate tax havens can help in securing the much needed resources to fight future crises.

Prof. Steve Hanke

Prof. Steve Hanke, an economist, shared an article on Lebanon’s currency crisis. A medical centre of the American University of Beirut has laid off more than 500 people due to the crisis bringing the country onto the verge of a health crisis.

The currency crisis ensued after the Lebanese pound, known as the lira, lost approximately 80% of its value. The pandemic further aggravated the crisis resulting in the loss of more than 220,000 jobs between October and February. The layoffs at the medical centre are the latest among job losses in the country.

7:35 am

Covid-19 pandemic may lead to deep cuts in education and infrastructure investments, according to leading macroeconomic influencers

State and local governments are expected to face budget shortfalls due to rising healthcare costs and widespread unemployment rates due to the Covid-19 pandemic. Governments may soon be forced to consider cutting spending allocations in other areas, such as education. Macroeconomic influencers share their views on the Covid -19 impact.

Konstantina Beleli

Konstantina Beleli, an economist, shared an article on how the Covid-19 pandemic may impact government budgets at the state and local levels. The article notes that government may be forced to cut budget allocations to areas such as education and infrastructure.

Lockdown measures and social distancing have led sharp decline in sales taxes, which is one of the biggest source of revenue for state governments. The pandemic is expected to result in a budget shortfall of $650bn over the next three years, according to the Center on Budget and Policy Priorities (CBPP). Education and infrastructure investments are expected to the worst affected due to the shortfall.

Pedro da Costa

Pedro da Costa, Federal Reserve and economy watcher at Market News International, shared a chart from the Peterson Institute for International Economics (PIIE) related to unemployment rates in the US. The chart shows that unemployment rate in the US is not driven by the lack of willingness to work rather it is driven by lack of employer demand.

The PIIE notes that unemployment insurance should be continued taking into account the changes in unemployment rates. Ending unemployment benefits could lead to a decline in GDP by 2.5% in the second half of 2020. Further, a permanent reform of the unemployment insurance system is needed to address the inherent weaknesses, the PIIE adds.

Edward Harrison

Edward Harrison, a banking and finance specialist at Global Macro Advisors, shared an article on how the Federal Reserve’s attempts to assist companies impacted by the Covid-19 pandemic including both weak firms and large organisations, which do not require any assistance.

The steps taken by the Federal Reserve is inflating stock prices and increasing wealth inequality, while directing funds towards poorly operated companies that sustain their business by borrowing cheaply. The article adds that the moves made by the Federal Reserve will only delay a wave of eventual bankruptcies.

Nasser Saidi

Nasser Saidi, president of Nasser Saidi & Associates, shared an article on how the Covid-19 pandemic along with drop in oil prices are expected to result in a decline in growth rate in the Gulf Cooperation Council (GCC) region by 7.1%, according to the International Monetary Fund (IMF).

The article adds that inflation in the US increased by 0.2% due to higher gas and food prices. Monthly deficit in the US also increased to $864bn in June as federal spending tripled and tax revenues declined.

1:03 pm

Jobless rates and a prolonged Covid-19 pandemic will be concerns for economic recovery, say macroeconomic influencers

Macroeconomic influencers tracked by GlobalData share their views on Chinese Q2 gross domestic product (GDP), rising unemployment in Australia and the UK threatening recovery, and how Covid-19 remains to be the biggest risk to the global economy.

Stephen Tapp

Stephen Tapp, Deputy Chief Economist and Trade Research Director at Export Development Canada (EDC) tweeted that a prolonged Covid-19 pandemic is the biggest among the top ten risks facing Canadian businesses in 2020.

US-China trade war, global protectionism, and increasing government and corporate debt are among other significant risks EDC has identified.

Covid-19 has inflated the majority of the other business risks facing Canada, adds EDC which suggests Canadian exporters be wary of default risks in emerging markets, especially those already reeling under massive debts.

Robin Brooks

Robin Brooks, the chief economist at The Institute of International Finance (IIF) and former chief FX strategist at Goldman Sachs, tweeted that although current account balances typically move slowly, Covid-19-induced recession is resulting in sharply shrinking deficits.

Robin cites the examples of Pakistan and Ukraine to illustrate his point and adds Turkey is an exception.

The analysis is based on the current accounts between January and May in 2020, compared to 2019.

Ludovic Subran

Lockdowns to fight the second wave of coronavirus infections will be detrimental to economic recovery, opines Ludovic Subran, Chief economist at insurance and asset management services provider Allianz.

Subran expects global gross domestic product (GDP) to fall by 4.7% during the year, but to grow by 4.8% in 2021.

Stimulus measures, both fiscal and monetary, announced so far exceed 1.3 times Chinese GDP, at $1.8t.

In its latest economic outlook, Allianz doesn’t expect global trade to return to pre-Covid levels before 2023 and anticipates the subdued capacity utilisation situation to persist until Q4 this year.

George Magnus

Economist and Associate at China Centre, Oxford, George Magnus tweeted about the Chinese Q2 (April to June) GDP, which grew by 3.2% compared to 2019 beating forecasts.

Recovery is witnessed in production and construction, fuelled by bigger stimulus and credit creation at a rapid pace. Retail sales year-over-year improved compared to May.

However, Magnus expects the growth momentum to slow down going forward, unless more stimulus measures are announced.

Pedro da Costa

Pedro da Costa, Federal Reserve and economy watcher at Market News International, tweeted about unemployment in June in Australia rising to a level unseen since the late-1990s.

Data released by the Australian Bureau of Statistics (ABS) shows that unemployment levels reached a 22-year low of 7.4% despite a surge in employment following the reopening of the economy after Covid-19 lock-downs, reported Reuters.

Howard Archer

Howard Archer, the chief economic adviser to EY Item Club, a non-governmental economic forecasting group, tweeted about Ernst & Young Global’s (EY) views on the latest UK labour market data.

Job losses in June declined in the UK to approximately 74,000 compared to a much higher 450,000 in April, according to the Office for National Statistics as reported by Reuters.

Archer calls the situation better than feared, quoting the data released by International Labour Organisation (ILO), which indicated that unemployment rate reached 3.9% although the number employed witnessed the biggest drop since 2011, by roughly 126,000 in the three months to May.

However, unemployment will still challenge the UK’s recovery despite a slower decline, according to EY.

A significant number of businesses, especially those in retail, have announced redundancies in July adding to the concerns over the labour market, adds Archer, who also quotes a survey by Make UK, which hinted at more concerns.

The survey found that 46% of participant manufacturers are planning to announce redundancies through the rest of the year, compared to 25% in May as furlough scheme under the government’s Coronavirus Job Retention Scheme that currently covers 9.4 million workers ends in October.

 

11:03 am

UK annual GDP to record the biggest decline in 300 years – Eurozone recovery to suffer once jobless schemes end

The UK is set to suffer a major GDP decline due to the coronavirus pandemic at a scale unseen in three centuries. Meanwhile, the Eurozone recovery will be impacted by the end of subsidised jobless schemes. Macroeconomic influencers tracked by GlobalData share the latest updates on the Covid-19 impact on global economies.

Daniel Lacelle

Economist Daniel Lacelle expects the Eurozone recovery to continue to be severely impacted following the end of subsidised jobless schemes citing Bloomberg Economics, which anticipates consumption to fall by 4% in four of the Eurozone’s biggest economies.

The fall in consumption could result in a 1.3% drop in gross domestic product (GDP).

Konstantina Beleli

European Civilization economist Konstantina Beleli retweeted about S&P Global Ratings’ outlook on Kenya’s economy. S&P downgraded its Kenyan rating from stable to negative as the Covid-19 crisis is expected to lead to a significant economic slowdown in 2020.

Kenya’s external debt is expected to remain high over the next three years, according to S&P as quoted by Reuters.

Beleli also retweeted about the UK’s latest GDP growth in May, which improved by 1.8% following a 20.3% fall in April diminishing hopes for a bounce-back with the dominant service sector recovery being weak.

Claudia Sahm

Claudia Sahm, a policy analyst, opines that the US government must continue Covid relief measures to the unemployed until they find work and adds that jobless benefits must be enhanced.

Sahm also says that funding for the CARES Act needs to be increased by three-fold as economic crisis looms in the US causing income loss to 40% of American families and 20% which have lost the major income earner due to the coronavirus pandemic.

Jonathan Davis

Wealth adviser and economist Jonathan Davis retweeted a post which said that the UK’s annual GDP is set to witness the biggest decline in the last three centuries citing the UK Office for Budget Responsibility.

Davis says the government’s pumping money into the economy is going to increase inflation leading to high unemployment resulting from increased cost of doing business, all of which are expected to lead to house prices crash.

However, he doesn’t expect the mortgage rates to fall despite the price fall.

8:57 am

Increasing global debt due to Covid-19 will not help economic recovery, say macroeconomic influencers

Global debt levels have been increasing due to the Covid crisis, with those of the G20 economies expected to grow by 120% more than the level seen post World War II. From impact on small businesses to the latest GDP figures announced by Singapore, macroeconomic influencers share their views on the Covid-19 impact.

Daniel Lacelle

Daniel Lacelle, Chief Economist at investment services provider Tressis, tweeted his views on the increasing global debt levels due to Covid-19.

Increase in public spending through stimulus plans combined with a fall in output could drive the global debt to approximately 105% of gross domestic product (GDP).

Government and private debt together increased by more than 35% of GDP, much higher than the 20% witnessed following the 2008 crisis, he adds.

However, Lacelle opines that the new debt will not help economic recovery but will result in a prolonged recovery since most of it is meant for a cyclical boom rather than targeting the new crisis caused by Covid-19.

Countries that have not fallen into the massive government spending trap have recovered faster.

BLackSUnrise

A new study published by the National Bureau of Economic Research that showed that approximately 110,000 small businesses are at the danger of shutting down due to the Covid-19 crisis was retweeted by influencer economist BLackSUnrise.

The finding is based on a survey conducted by researchers from Harvard, University of Illinois, and The University of Chicago Booth School of Business, on more than 5,800 small businesses.

The businesses that were surveyed are members of the Alignable small businesses network. The majority of the struggling businesses are planning to seek funding through the CARES act, found the study.

Approximately 43% of the businesses surveyed are temporarily closed down, while 40% of the employees were removed.

Simon Baptist

Chief Economist at The Economist Intelligence Unit (EIU), Simon Baptist shared his opinion about reports that Singapore’s Q2-2020 GDP plummeted by 41%.

Baptist says the drop is as expected and doesn’t represent steady state circumstances, adding that the year-on-year GDP fall is 12.6% compared to a 14.3% drop expected by The EIU.

Another economist Christian Zimmermann tweeted about the drop stating that it corresponds to the effect of a 0.81% mortality rate on loss of consumption and appears realistic.

https://twitter.com/CZimm_economist/status/1283115951739801601

Adam Tooze

Adam Tooze, Director of European Institute and an influencer, tweeted about the forecasts based on IMF and Barclays Research about the public debt post Covid.

The forecasts show that the average public debt levels for advanced G20 economies could exceed 120% beyond the levels witnessed at the end of the World War II.

According to Tooze, Italy and Japan’s debt to GDP ratios indicate the same.

8:23 am

UK house prices could fall amidst the deepest global recession since World War II and Russia’s economic recovery takes a long road, say macroeconomic influencers

From Africa’s increasing public debt levels raising an alarm over the issuers of Eurobonds to Vladimir Putin’s decision to postpone investment in his flagship project, and a possible UK house price crash, macroeconomic influencers discuss the impact of Covid-19 on the global economies.

Jonathan Davis

As Covid-19 is expected to cause the worst global recession since the World War II according to the World Bank’s analysis, the UK housing prices could crash by 20%-30%, opined Jonathan Davis sharing an article published by Anthony Codling, CEO at property platform twindig.

The article highlights that the current situation in housing is different from that during the credit crunch. Anthony Codling articulates the housing situation during Covid crunch as seller drought and that during the credit crunch as buyer drought.

Despite the seller drought, Anthony Codling feels downward pressure on housing prices due to growing fear of unemployment and mortgages getting more expensive and limited as banks step up to protect their balance sheets.

Anthony Codling was former Executive Director at JP Morgan Cazenove.

Nadia Ouedraogo

Nadia Ouedraogo tweeted about Africa’s increasing external public debt burden, which reached 56% of the country’s gross domestic product (GDP) increasing the exchange and interest rate risks of the lending countries, majority of which are European as Eurobonds account for nearly 20% of the debt.

Africa’s debt as a percentage of GDP increased from 38% a decade ago, according to Africa’s Economic Outlook 2020 report published by Africa Development Bank Group.

End of the commodity super-cycle combined with sluggish growth and export revenues caused the increase in external debt ratios, according to the report which adds that Africa’s extreme poverty will not be eliminated for at least a decade if current trends persist.

 

Adam Tooze

Adam Tooze tweeted about an article originally published in Financial Times about deferring Vladimir Putin’s flagship national investment plan by six years due to the Covid-19-induced recession in Russia.

The $360bn plan includes projects that would boost the living standards and improve GDP growth beyond the global average. Postponement of the investment is expected to delay Russia’s economic recovery.

The article adds that Russia’s economy is expected to contract by 6% in 2020 according to the World Bank, due to falling natural resource export revenues among major reasons.

 

Branko Milanovic

As the world stares at recession due to Covid-19, Branko Milanovic tweeted about how the ultra-rich suffered income erosion over five years following the 2008 recession, compared to the middle-class that may have an imperative for the current times.

Based on a paper by economist Branko Milanovic, who is one of the co-authors of what became popular as the elephant chart, global income inequality declined during 2008-2013 following the recession.

The economist studied a household survey dataset covering more than 95% of the global population across 130 countries to analyse the changes in income distribution. The analysis revealed that the world’s Gini co-efficient fell from 66.4 to 61.6 during the period.

While the income growth of the top 1% of earners increased by a mere 6% during the five-year period between 2008 and 2013, that of the top 90th percentile grew by 15%. The income of those in the middle of the global distribution grew by approximately 60% over the period.

The trend differed among countries, however. While the incomes of the super-rich in India benefitted from the recession, the situation was opposite in the US where the super-rich witnessed incomes falling by roughly 5% compared to a 5% income growth witnessed by most of the population.

 

8:07 am

US economy can recover faster than the Eurozone, say macroeconomic influencers

As the recession induced by Covid-19 affects the world economies, economists recall the situation caused by the 1918 flu pandemic. Although the June economic data suggests that the US economy has improved, emerging trends suggest that the situation is getting worse again.

However, Daniel Lacalle, chief economist at Tressis Gestion, is upbeat about the recovery in the US compared to the Eurozone.

Daniel Lacalle

Daniel Lacalle, in one of his latest live shows, opined that the economic recovery in the US will be better than that of Eurozone, where demographics, high taxes, and bloated government spending work to a disadvantage.

Daniel believes that US will outperform the Eurozone over the long run despite the temporary setbacks caused by Covid-19.

Brad DeLong

Brad DeLong tweeted about a research paper by Harvard University economist Raj Chetty and his Opportunity Insights colleagues who emphasised the necessity of enhancing social insurance in the US during the recession induced by Covid-19.

Consumer spending in the US declined significantly in the last few months due to Covid-19 health and safety concerns, causing a dip in in-person services purchase by people, especially those high-income groups. Considering that in-person services account for 66% of all consumer spending, a rebound in the services is crucial for the overall recovery in spending.

The research has found that households in the top 25% of the income distribution accounted for two-thirds of the reduction in credit card spending over the first five months of 2020. On the contrary, household spending in the bottom quartile returned to normalcy.

The research team suggests that fixing the public health crisis in the country is a must to fixing the US economy, rather than just reopening the economy.

The research also found that investing in social insurance programs would help mitigate the economic crisis better compared to stimulus measures that would benefit businesses. Further, the paper suggests that the situation calls for increased government spending, creating employment in healthcare, and taking steps to improve investment spending.

David G. Blanchflower

Economist David G. Blanchflower shared an article that says real-time economic indicators suggest that just after two months of rebounding, the recovery from the recession due to Covid-19 is levelling-off.

The article quotes Neil Dutta, head of economics at Renaissance Macro Research, who said that real-time economic data shared by certain government and private sources indicate that the economic condition is worse, following an uptick in the June economic data.

The US government data shows that 4.8 million jobs were added in June, whereas the latest trends suggest a flattening or a downtrend.

6:59 am

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.

7:09 am

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.

7:11 am

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.

7:09 am

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.

6:45 am

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.

7:47 am

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.

7:13 am

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.

7:26 am

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.

https://twitter.com/voxeu/status/1277615323169075201/photo/1

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.

6:54 am

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.

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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.

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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.

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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.

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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.