Tag: global growth

BofA survey reveals investors worried about global growth expectations: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The latest survey by the Bank of America (BofA) found fund managers were least bullish since October 2020 as global growth expectations turned negative on concerns over inflation and China. This is the first time that global growth expectations have turned negative since April 2020.

Of the respondents, a net 6 percent expected global growth to weaken over the next 12 months even as cash levels jumped to a 12-month high, the BofA Global Fund Manager Survey in October showed. The net total represents the percentage of those surveyed expecting the economy to weaken minus the percentage of those expecting it to strengthen.

About 15 percent believe profit growth would slow down with margin outlook standing at its worst level since May 2020.

Predictions of ‘boom’ fell to 61 percent, while that of ‘stagflation’ increased 34 percent.

Also read: Latha Venkatesh explains ‘Stagflation’

The survey, however, showed allocations to stock remained high at 50 per cent, while a net 28 percent increased allocation in commodities.

“Allocation to bonds slumped to all-time low,” Michael Hartnett, the BofA Chief Investment Strategist, wrote.

While 48 percent of the respondents believe inflation is the biggest tail risk, 23 percent worry about China and 3 percent are concerned about COVID-19.

Other top tail risks mentioned in the survey were tapering of the stimulus programme by the US Federal Reserve and US’s fiscal policy.

Investors want to cut their exposure in emerging markets in the next 12 months.

Compared to healthcare and staples, banks and energy sectors held out more promise. Globally, banks were the most-preferred sector, with the highest overweight since May 18.

The survey was conducted between October 8 and 14 on 430 managers with $1.3 trillion assets under management.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Supply disruptions pose risk to global economic recovery: Gita Gopinath

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The International Monetary Fund (IMF) has published its new growth forecasts as part of the World Economic Outlook Report. The IMF has retained its FY22 growth forecasts for India at 9.5 percent but it has lowered the global growth projection for 2021 to 5.9 percent. It has cited the possibility of aggressive COVID variance, and dangerous divergences in global economic prospects as the reason for the concern. The report also said the prolonged impact of COVID could lead to global GDP dropping by a significant $5.3 trillion over the next five years.

To talk about the economic outlook for India and the world in-depth, CNBC-TV18’s Shereen Bhan caught up with Gita Gopinath, the chief economist at IMF.

On the global growth forecast, Gopinath said they have a very small downgrade for the world, it is a .1 percent downgrade. “We were at 6 percent, before going down to 5.9 percent. What we have seen is weaker momentum in several countries in these last few months. Indeed, in terms of the pandemic itself, we see overall global numbers coming down. It’s not down to levels we would like it to be, but it is in the right direction but the risks remain. I would say that, that in terms of the near term, the risks come from supply disruptions, and the supply-demand mismatches that we are seeing in different sectors, including the prolonged semiconductor chip shortage, in terms of shipping costs going up dramatically long delivery lags. More recently, in terms of the energy price spikes that we are seeing in many parts of the world, including the concerns with coal supply in India.”

When asked if there was an expectation of an upward bias to their growth projections for India, Gopinath said, “We had a downgrade for India in July because of the catastrophic second wave. Now, we are seeing recovery in manufacturing and services. It is not back to where it would have been in the absence of the pandemic. ”

“Again, we have to keep in mind that there is a lot of recovery that just comes from bouncing back from a very deep recession last year, where it was minus 7.3 percent. So, there is again, a distance to go in terms of where the economy would have been in the absence of the pandemic, you can see that in employment numbers, you can see that in the activities of MSMEs. So again, it’s an incomplete recovery but we are seeing recovery, nevertheless, and the growth numbers reflect the fact that you’re coming off a very deep recession last year,” she added.

One of the concerns that the IMF had was the impact of the pandemic on banks on NBFCs, so when asked if that was less of a concern today for India, she said, “I would say it remains a concern. It is good that the recovery has started from the big shot that hit the economy, the second wave, so that certainly helps. If you look at listed firms, they are certainly doing better than maybe was expected. But if you look at MSMEs, I would say that the stress is still there, the risk in terms of the increase in non-performing loans remains. And this just adds on top of what was their pre-pandemic in terms of non-performing loans..”

Answering the question if there was a case for more intervention by the government in India, she said, “We see grounds for having some more fiscal stimulus, so an additional fiscal push this year, which then you can unwind in future years. So, we believe that more can be done on the fiscal front. In terms of the financial sector, it is important to have a proper accounting of what’s going on in terms of non-performing loans.”

Also Read: IMF lowers global growth forecast to 5.9% for 2021, sees India growing by 9.5% this fiscal

When asked about the impact of commodity price hikes and shortages of semiconductors on global inflation, she said, in the energy space, we are certainly seeing prices go up in many parts of the world, natural gas prices are at a record high and we have seen that spill over into the price of coal and to the price of oil.

Also Read: Long-term policies will ensure India’s success: Jamie Dimon

For the full interview, watch the accompanying video

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IMF lowers global growth forecast to 5.9% for 2021, sees India growing by 9.5% this fiscal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The International Monetary Fund (IMF) lowered its projection for global growth this year on supply disruptions impacting growth outlook for advanced economies, and worsening pandemic dynamics in low-income economies.

Its latest World Economic Outlook report pegs world economic growth at 5.9 percent for 2021, marginally lower than its July forecast of 6 percent. The global growth forecast for 2022 was left unchanged at 4.9 percent, IMF said.

“The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions,” Gita Gopinath, Chief Economist at IMF, said in a blog.

The modest headline revision in the growth forecasts masks large downgrades for some countries, Gopinath said.

If COVID-19 was to have a prolonged impact into the medium-term, IMF warned, it could reduce global GDP by a cumulative $5.3 trillion over the next five years relative to its current projection.

The report also pointed out that dangerous divergence in economic prospects across countries remains a major concern. “Aggregate output for the advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9 percent in 2024. By contrast, aggregate output for the emerging market and developing economy group (excluding China) is expected to remain 5.5 percent below the pre-pandemic forecast in 2024, resulting in a larger setback to improvements in their living standards,” Gopinath said.

According to IMF, these divergences are a consequence of the ‘great vaccine divide’ and large disparities in policy support. While over 60 percent of the population in advanced economies are fully vaccinated and some are now receiving booster shots, about 96 percent of the population in low-income countries remains unvaccinated.

Also Read: Basic scientific research a key driver of economic growth, says IMF 

Furthermore, many emerging markets and developing economies faced with tighter financing conditions and a greater risk of de-anchoring inflation expectations are withdrawing policy support more quickly despite larger shortfalls in output, the report pointed.

Supply disruptions pose another policy challenge, IMF said. “On the one hand, pandemic outbreaks and climate disruptions have resulted in shortages of key inputs and lowered manufacturing activity in several countries. On the other hand, these supply shortages, alongside the release of pent-up demand and the rebound in commodity prices, have caused consumer price inflation to increase rapidly in, for example, the United States (US), Germany, and many emerging market and developing economies,” IMF Chief Economist said.

She added that food prices have increased the most in low-income countries where food insecurity is most acute, adding to the burdens of poorer households and raising the risk of social unrest.

According to the report, the emergence of more transmissible and deadlier SARS-CoV-2 variants, more persistent supply-demand mismatches, price pressures, faster-than-anticipated monetary policy normalization, financial market volatility, smaller US fiscal package, greater social unrest, and more adverse climate shocks are among key downside risks to its growth forecast.

On the other hand, faster vaccine production and distribution, and a spurt in productivity growth would impart upside risks to the growth forecast.

IMF retained India’s growth outlook for both the current and the next fiscal. It pegs India’s real GDP growth at 9.5 percent for FY22, at 8.5 percent for FY23 and at 6.1 percent by FY27. It sees India’s consumer prices rising by 5.6 percent in FY22 and 4.9 percent in FY23. ​

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global growth hopes keep shares near record high

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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World stocks took a well-earned rest near record highs on Wednesday, as an International Monetary Fund forecast of the strongest global growth since the 1970’s this year and steady bond and FX markets kept risk appetite buoyant. While rising global COVID case numbers and geopolitical tensions between China and Taiwan and between Russia and Ukraine ensured it was by no means a fairytale, markets certainly had a Goldilocks feel again.

Europe’s STOXX 600 perched just below the first record high it had hit in over a year on Tuesday. MSCI’s 50-country world index was grinding out the sixth day of gains and Wall Street futures were pointing higher too.

In the bond markets, there was little sign that the benchmark government yields that drive global borrowing costs were gearing up to shoot higher again. The dollar was sitting quietly at a two-week low.

The IMF raised its global growth forecast to 6 percent this year from 5.5 percent on Tuesday, reflecting a rapidly brightening outlook for the US economy.

If realized, that would be the fastest the world economy has grown since 1976, albeit after the steepest annual downturn of the post-war era last year when the COVID pandemic brought commerce to a near standstill at times.

”Even with high uncertainty about the path of this pandemic, a way out of this health economic crisis is increasingly visible,” IMF Chief Economist Gita Gopinath said.

Overnight, MSCI’s broadest index of Asia-Pacific shares had started on a firm footing, going as high as 208.46 points, a level last seen on March 18. However, it succumbed to selling pressure and ended flat as China’s blue-chip CSI300 index dipped 1 percent and Hong Kong eased 0.9percent.

Geopolitical tensions in the region added to the jitters. Taiwan’s foreign minister said on Wednesday it will fight to the end if China attacks, adding that the United States saw a danger that this could happen amid mounting Chinese military pressure, including aircraft carrier drills, near the island.

Other Asian markets managed to stay positive. Japan’s Nikkei closed higher; Australian shares rose 0.6 percent and South Korea’s KOSPI added 0.3 percent.

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Wall Street futures pointed to a 0.1 percent rises for the S&P 500, Dow Jones Industrial and Nasdaq. The S&P 500 and the Dow had hit record levels on Monday, driven by a stronger-than-expected jobs report last Friday and data showing a dramatic rebound in US services industry figures.

The upcoming earnings season is expected to show S&P profit growth of 24.2 percent from a year earlier, according to Refinitiv data, and investors will be watching to see whether corporate results further confirm recent positive economic data.

All eyes will also be on minutes of the US Federal Reserve’s March policy meeting when they are published later.

Ten-year and five-year Treasury yields were down at 1.6455 percent and 0.874 percent respective in Europe from as high as 1.776 percent on the 10-year on March 30.

The five-year Treasury yield especially is seen as a major barometer of the faith investors have in the Fed’s message that it doesn’t expect to raise U.S. interest rates until 2024.

Europe’s bond yields also eased, with southern European debt markets stabilising after a selloff the previous session as traded braced for a 50-year bond from Italy.

The European Central Bank meanwhile will release monthly data on its conventional asset purchases and a bi-monthly breakdown of its PEPP pandemic emergency bond purchases which it has vowed to increase to keep borrowing costs low.

The dollar circled a two-week low of 92.246 against a basket of world currencies. The euro was flat at USD 1.1871, sterling was weaker at USD 1.3795. The Japanese yen was a touch lower at 109.92.

In commodities, Brent crude futures were nudging lower at USD 62.67 a barrel. US crude was up at USD 59.51 and both gold and copper were off at USD 1,736.4 an ounce and 8,980 a tonne respectively.

”A large share of the hopes of a US growth boom supported by state aid and rapid vaccination progress has already been priced in,” Commerzbank FX and EM analyst Esther Reichelt wrote in a note to clients.

”Further and more pronounced USD gains would only be justified if this boom also caused rising inflation rates to which the Fed would have to react with higher interest rates.”

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Coronavirus Impact: World Bank predicts 3.2% contraction for India in FY21

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s output is expected to contract by 3.2 percent in the current financial year, as stringent measures to curb the spread of the COVID-19 pandemic heavily curtailed economic activities. The World Bank, in its latest Global Economic Prospects report for June, said that despite some support from fiscal and monetary stimulus, the pandemic will take a toll on the Indian economy this year.

“Spillovers from weaker global growth and balance sheet stress in the financial sector will also weigh on activity,” said World Bank in its report. However, the Indian economy is projected to recover and return to the growth path next year, albeit with lower rates of growth than earlier forecasted.

India is expected to grow by 3.1 percent in FY22 now, against an earlier 4-5 percent growth forecast by the World Bank.

In the report, World Bank has also predicted that the global economy will see its worst recession since the end of the Second World War due to the pandemic this year.

“The COVID-19 pandemic has, with alarming speed, delivered a global economic shock of enormous magnitude, leading to steep recessions in many countries. The baseline forecast envisions a 5.2 percent contraction in global GDP in 2020- the deepest global recession in eight decades, despite unprecedented policy support,” it said in the June update report.

World Bank expects the per capita incomes in the vast majority of emerging market and developing economies (EMDEs) to shrink this year, tipping many millions back into poverty.

“The global recession would be deeper if bringing the pandemic under control took longer than expected, or if financial stress triggered cascading defaults,” it warned.

In all, the pandemic is expected to plunge a majority of countries into recession this year, with per capita output contracting in the largest fraction of countries since 1870. World Bank has forecasted a 7 percent contraction for advanced economies in 2020, as “widespread social-distancing measures, a sharp tightening of financial conditions, and a collapse in external demand depress activity”.

China is forecast to register its slowest growth in over four decades, assuming that the outbreak remains under control and activity recovers later this year. China is projected to slow to 1 percent in 2020, as per World Bank.

The Emerging Market and Developing Economies (EMDEs) are expected to contract in 2020 for the first time in over six decades, contracting by 2.5 percent in 2020.

Baseline Scenario: The global economy is expected to contract by 5.2 percent. The baseline scenario envisions that the global economy will fall into a deep global recession, the report showed. The drop in global output would be roughly three times the rate of decline experienced during the 2009 global recession. Global trade would fall about 13 percent, in part due to the centrality of several of the economies with the largest outbreaks in global value chains.

The baseline scenario makes assumptions about the evolution of activity, financial and commodity markets, and policy responses. Under this scenario, outbreaks in advanced economies are expected to continue to slow, allowing most countries to continue to lift lockdown measures through the second quarter of 2020; however, some control measures will remain in place during the third quarter in order to prevent flare-ups.

Downside Scenario: The downside scenario assumes more stringent lockdown measures. In this scenario, the global output would shrink by almost 8 percent in 2020, as an additional three months of stringent lockdown measures are assumed to be required before the pandemic can be brought under control. This, the World Bank forecasts would increase the severity of the impact on global growth. It assumes that during these additional three months, measures that had previously begun to ease are quickly and aggressively re-introduced.

Despite additional fiscal policy support, vulnerable firms would exit, vulnerable households would sharply curtail consumption, and travel would remain deeply depressed. Disruptions to global value chains would exacerbate the collapse in global trade, which is envisioned to contract by about a quarter. These disruptions would also magnify the size of cross-border spillovers and lead to widespread interruptions in production.

Upside Scenario: In the upside scenario, as in the baseline, the World Bank assumes pandemic-control measures would be largely lifted by the end of the second quarter in advanced economies, and somewhat later in EMDEs. All major economies would sputter back to life in the third quarter of 2020. In contrast to baseline projections, a sharp economic rebound would promptly get underway as businesses re-open, trade and travel barriers are lifted, and confidence rebounds.

Even in this upside scenario, the global output would contract in 2020 by about 4 percent, which would be more than twice the pace registered in the 2009 global recession, and EMDE growth would also be negative. Global trade would fall by almost 10 percent, also worse than 2009. Once mitigation measures are fully lifted, global growth would rebound markedly in 2021, above 5 percent.

India’s FY21 GDP Growth Forecasts 

Bernstein: -7 percent

SBI:  -6.8 percent

Deutsche Bank:  -5.5 percent

Nomura: -5.2 percent

Goldman Sachs:  -5 percent

CRISIL Ratings:  -5 percent

Fitch Ratings:  -5 percent

Citi:  -3.5 percent

World Bank:  -3.2 percent

Moody’s:  -4 percent

BofA:  -1.3 percent

(IMF:   1.9 percent as of April, due to be updated in June)

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

COVID-19 impact: Global economy could shrink by almost 1% in 2020 due to pandemic, says UN

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The global economy could shrink by up to one per cent in 2020 due to the coronavirus pandemic, a reversal from the previous forecast of 2.5 percent growth, the UN has said, warning that it may contract even further if restrictions on the economic activities are extended without adequate fiscal responses.

The analysis by the UN Department of Economic and Social Affairs (DESA) said the COVID-19 pandemic is disrupting global supply chains and international trade. With nearly 100 countries closing national borders during the past month, the movement of people and tourism flows have come to a screeching halt.

“Millions of workers in these countries are facing the bleak prospect of losing their jobs. Governments are considering and rolling out large stimulus packages to avert a sharp downturn of their economies which could potentially plunge the global economy into a deep recession. In the worst-case scenario, the world economy could contract by 0.9 percent in 2020,” the DESA said, adding that the world economy had contracted by 1.7 percent during the global financial crisis in 2009.

It added that the contraction could be even higher if governments fail to provide income support and help boost consumer spending.

The analysis noted that before the outbreak of the COVID-19, world output was expected to expand at a modest pace of 2.5 percent in 2020, as reported in the World Economic Situation and Prospects 2020.

Taking into account rapidly changing economic conditions, the UN DESA’s World Economic Forecasting Model has estimated best and worst-case scenarios for global growth in 2020.

In the best-case scenario with moderate declines in private consumption, investment and exports and offsetting increases in government spending in the G-7 countries and China global growth would fall to 1.2 percent in 2020.

“In the worst-case scenario, the global output would contract by 0.9 per cent instead of growing by 2.5 percent in 2020,” it said, adding that the scenario is based on demand-side shocks of different magnitudes to China, Japan, South Korea, the US and the EU, as well as an oil price decline of 50 percent against our baseline of USD 61 per barrel.

The severity of the economic impact will largely depend on two factors – the duration of restrictions on the movement of people and economic activities in major economies; and the actual size and efficacy of fiscal responses to the crisis.

A well-designed fiscal stimulus package, prioritising health spending to contain the spread of the virus and providing income support to households most affected by the pandemic would help to minimise the likelihood of a deep economic recession, it said.

According to the forecast, lockdowns in Europe and North America are hitting the service sector hard, particularly industries that involve physical interactions such as retail trade, leisure and hospitality, recreation and transportation services. Collectively, such industries account for more than a quarter of all jobs in these economies.

The DESA said as businesses lose revenue, unemployment is likely to increase sharply, transforming a supply-side shock to a wider demand-side shock for the economy.

Against this backdrop, the UN-DESA is joining a chorus of voices across the UN system calling for well-designed fiscal stimulus packages which prioritize health spending and support households most affected by the pandemic.

Urgent and bold policy measures are needed, not only to contain the pandemic and save lives, but also to protect the most vulnerable in our societies from economic ruin and to sustain economic growth and financial stability, Under-Secretary-General for Economic and Social Affairs Liu Zhenmin said.

The analysis also warns that the adverse effects of prolonged economic restrictions in developed economies will soon spill over to developing countries via trade and investment channels.

A sharp decline in consumer spending in the European Union and the United States will reduce imports of consumer goods from developing countries.

Developing countries, particularly those dependent on tourism and commodity exports, face heightened economic risks. Global manufacturing production could contract significantly, and the plummeting number of travellers is likely to hurt the tourism sector in small island developing States, which employs millions of low-skilled workers, it said.

Meanwhile, the decline in commodity-related revenues and a reversal of capital flows are increasing the likelihood of debt distress for many nations. Governments may be forced to curtail public expenditure at a time when they need to ramp up spending to contain the pandemic and support consumption and investment.

UN Chief Economist and Assistant Secretary-General for Economic Development Elliot Harris said the collective goal must be a resilient recovery which puts the planet back on a sustainable track. We must not lose sight how it is affecting the most vulnerable population and what that means for sustainable development, he said.

The alarms raised by UN-DESA echo another report, released on March 31, in which UN experts issued a broad appeal for a large-scale, coordinated, comprehensive multilateral response amounting to at least 10 per cent of global gross domestic product (GDP).

According to estimates by the Johns Hopkins University, confirmed coronavirus cases across the world now stand at over 932,600 and over 42,000 deaths.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

G20 says developing action plan to deal with global pandemic

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Finance ministers and central bankers from the world’s 20 largest economies agreed on Monday to develop an “action plan” to respond to a coronavirus pandemic that the IMF now expects to trigger a global recession, but they offered no specifics.

The G20 secretariat issued the statement after the finance officials met by video conference for nearly two hours, amid growing criticism that the world’s “fire station” has been slow to respond to the worsening crisis.

G20 leaders are due to gather for an extraordinary virtual summit in coming days as the world races to contain the virus, which has infected 370,000 globally and killed over 16,000.

The summit, called by this year’s chair, Saudi Arabia, will be complicated by an oil price war between two members, Saudi Arabia and Russia, and rising tensions between two others, the United States and China, over the origin of the virus.

US Treasury Secretary Steven Mnuchin told Fox News his counterparts agreed to act to support their own economies, and coordinate internationally as needed. But he gave no specifics.

Mnuchin will chair a conference of G7 finance ministers and central bankers early Tuesday, according to a source familiar with the plans.

He said the United States was working closely with G20 countries, the Group of Seven (G7), the International Monetary Fund (IMF) and the World Bank in responding to the crisis.

“This is a team effort to kill this virus and provide economic relief,” said Mnuchin, who is simultaneously struggling to win congressional approval for a nearly USD 2 trillion US rescue package.

G20 leaders need move beyond recent squabbles and “stop weaponizing the new coronavirus in the fight for global influence,” to help stabilize public confidence and markets, said Hung Tran, a senior fellow at the Atlantic Council.

Potential concrete actions could include sharing test results of new treatments and vaccines; rolling back tariffs that were dragging down global growth even before the crisis; and synchronized fiscal action, he said.

“Simply repeating the mantra that ‘we’ll do whatever it takes’ is not adequate anymore,” he added.

The IMF and the World Bank on Monday both forecast the pandemic would trigger a global recession in 2020.

IMF Managing Director Kristalina Georgieva welcomed fiscal and monetary steps already taken by countries, but said more would be needed, especially in the fiscal arena.

The average size of fiscal measures announced by over 20 countries amounts to around 1.8 percent domestic gross domestic product (GDP), below the 2 percent packages offered by G20 countries in 2009 during the financial crisis, Tran said.

G7 finance ministers and central bankers will hold a conference call of their own early Tuesday, according to a source familiar with the plans.

Japan, a member of the G7, expressed concern about the impact of the coronavirus, and urged G20 members to act “without hesitation in a timely manner.”

Argentina, whose debt has been deemed unsustainable by the IMF, warned fellow G20 member they must act decisively to “avoid a social meltdown” as the pandemic spreads.

Argentina’s Finance Minister Martin Guzman told fellow ministers on the G20 call that countries should use the “entire toolkit” of economic policies, including the extension of bilateral swaps to aid those nations most in need.

Monday’s G20 meeting was far from smooth, although no open disputes broke out, said one senior official from a G7 country, adding that Tuesday’s G7 statement would focus heavily on cooperation but also offered little in the way of new ideas.

“There aren’t very exciting things in there,” said the official, who was not authorized to speak publicly. “But I have the impression that we’re on the same page now.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Coronavirus scare: Global growth may shrink to 1% in 2020

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Following the coronavirus pandemic, global growth may shrink to 1 percent in 2020, down from 2.3 percent before the outbreak started, as four major economies — Japan, Italy, Germany, France — are likely to experience a full-year recession, says a report.

According to The Economist Intelligence Unit (EIU), the situation appears grim in most countries around the world.

As per its assumption, the virus will infect around 50 percent of the world population; 20 percent of the cases will be severe, and 1-3 percent will result in deaths.

“Global growth? will stand at 1 percent for 2020, down from 2.3 per cent before the outbreak started. This is the lowest rate in global growth since the global financial crisis,” The EIU said adding that at least four G7 countries will experience a full-year recession (Japan, Italy, Germany, France).

The EIU has revised the US growth forecast downwards to 1 percent for 2020. It has also dragged China’s growth to around 2 percent in 2020 following the release of bleak industrial output data for January and February.

It further noted that the euro zone will register a full-year recession (-0.5 per cent).

As per the report, though quarantine measures will be effective to prevent the disease from spreading, but they will have a high economic impact on both supply and demand conditions.

On global trade, The EIU said: “We have made a downward revision to global trade growth for 2020, to 0.4 per cent (from 2.3 per cent previously)”. It expects mild recovery in the second half of the year, but said the full-year picture looks “grim”.

It further noted that most countries will introduce stimulus measures to prop up economic growth.

“Monetary stimulus would only have a limited effect (at least in developed countries), given the ultra-low interest rates environment. Fiscal stimulus therefore represents the only realistic option, raising the risk of a debt crisis in the coming months,” The EIU warned.

According to The EIU, a vaccine will be available around end-2021 (at the earliest) and coronavirus will become a seasonal disease, with another outbreak in winter 2020/21.

The number of deaths around the world linked to the new coronavirus has topped 8,000.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Moody’s cuts India growth forecast to 5.3% for 2020 on dampened domestic demand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Moody’s Investors Service on Monday cut its growth forecast for India to 5.3 percent for 2020 from 5.4 percent estimated earlier, as it expects the coronavirus outbreak to dampen domestic demand globally.

In its update on Global Macro Outlook for March, Moody’s said the virus outbreak has spread rapidly outside China to a number of major economies.

“It now seems certain that even if the virus is steadily contained, the outbreak will dampen global economic activity well into Q2 of this year,” it said.

Moody’s baseline forecasts assume that the number of cases would keep increasing globally and there would be travel restrictions through the April-June period.

Apart from supply chain disruptions, it also expects consumption and investment to be affected and prices of oil and other commodities to remain around current lows until the end of June.

Accordingly, Moody’s has revised growth forecasts for G20 economies to 2.1 percent, 0.3 percentage point lower than the previous baseline. China’s 2020 growth forecast has also been reduced to 4.8 percent from the previous estimate of 5.2 percent.

For the US, growth of 1.5 percent is now expected, down from the previous estimate of 1.7 percent.

For India, Moody’s has projected growth at 5.3 percent for 2020, lower than 5.4 percent GDP expansion projected in February, taking into account the baseline scenario of significant global disruption.

Moody’s said baseline forecasts for this year are based on two assumptions– the disruption of economic activity in the first half of this year will be followed by some recovery in global factory production and consumer demand in the second half, and warmer weather in the Northern Hemisphere in the spring and summer will weaken the spread of the virus.

“Since the publication of our last Global Macro Outlook update in mid-February, the coronavirus outbreak has spread rapidly outside China to a number of major economies including Korea, Iran, Italy, Japan, Germany, France and the US.

“Previously, we assessed the effects of the virus mainly on aggregate demand in China, global travel and global factory output resulting from disruptions in supply chains through East Asia,” Moody’s noted.

It is now clear that the shock will additionally dampen domestic demand globally, which will affect a wide range of non-traded activities across countries and regions simultaneously, it said.

Further, Moody’s has also analyzed the downside scenario of ‘extensive and prolonged slump’ in case of a significant increase in coronavirus cases or increasing public fear that the virus will not be contained and oil price stays around USD 40-50 for 2020.

In such a downside scenario, Moody’s expects India’s growth to fall to 5 percent in 2020, China (3.7 percent) and the US (0.9 percent).

Stating that global recession risks have risen, it said that the longer the outbreak affects economic activity, the demand shock will dominate and lead to recessionary dynamics.

“In particular, a sustained pullback in consumption, coupled with extended closures of businesses, would hurt earnings, drive layoffs and weigh on sentiment. Such conditions could ultimately feed self-sustaining recessionary dynamics. Heightened asset price volatility would magnify the shock,” Moody’s added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow