“With some governments saying they’re unable to offer direct support, the fate of Africa’s large informal sector could be a powerful example of what experts predict will be unprecedented damage to economies in the developing world. Among the millions made jobless are casual laborers, petty traders, street vendors, mechanics, taxi operators and conductors, housekeepers and waitresses, and dealers in everything from used clothes to construction hardware.
“Unless the virus’ spread can be controlled, up to 50% of all projected job growth in Africa will be lost as aviation, services, exports, mining, agriculture and the informal sector all take a hit, Eziakonwa said.
“”We will see a complete collapse of economies and livelihoods. Livelihoods will be wiped out in a way we have never seen before,” she warned…
“Noting that “the rich countries are unlocking staggering sums” to stimulate their economies, Benin’s President Patrice Talon said that his West African country, “like most African countries, does not have these means.””
“As the coronavirus crisis deepens in emerging economies around the world, collapsing currencies, commodity prices, export earnings and tourism revenues threaten to shred the finances of many governments, leaving them scrambling to avoid default….
“The plunge in most emerging market currencies against the dollar has sharply increased the cost of servicing hard-currency debts, creating a serious threat to financially weaker states.”
https://www.ft.com/content/e3634816-66bd-4355-bc71-156016761dab
“Fourteen Latin American and Caribbean countries have requested urgent help from the IMF as the region braces for its worst recession in 50 years, according to a senior Fund official.
“Alejandro Werner, head of the western hemisphere department, told the FT that Latin America was particularly exposed to the impact of the coronavirus crisis because many of its economies were struggling even before they were hit with multiple shocks from weaker commodity values, the oil price crash and capital flight.”
https://www.ft.com/content/dfd1aeed-6d56-466a-be6c-7bb73fc8da23
“More than ever, the global community needs leadership to address the immediate effects of the coronavirus pandemic and its economic fallout.
“In addition to coordinated fiscal spending across countries, we urgently need to tackle the debt crisis that will soon unfold. It is time to start thinking about debt resolution and restructuring.”
https://www.bangkokpost.com/business/1894005/the-covid-19-debt-deluge
“The question that regulators and central bankers are asking themselves now is whether the measures they took in recent years to crisis-proof the [EU’s] banking system will be enough to prevent a credit crunch, bank failures and a financial meltdown with global ramifications.”
“The so-called Frugal Four, the Netherlands, Germany, Austria and Finland (or the Frugal Six, if also Denmark and Sweden are included), will claim that every EU member state is responsible for its own borrowing and that prudent “Northerners” should not have to pay for profligate “Southerners”.”
“[Spain’s] Prime Minister Pedro Sanchez has urged the EU 27 to issue so-called “corona bonds,” which would share the financial burden caused by COVID-19 across all member states.
“But the more frugal northern countries, including the Netherlands and Germany, argue against the move.”
“Something else is spreading virally across Europe. Anti-EU sentiment is surging in Italy, and Prime Minister Giuseppe Conte warned Brussels that if it mismanages this crisis, the EU will lose its entire reason for existing…
“The eurozone, and perhaps the EU itself, could be one of COVID-19’s victims.”
https://www.washingtonexaminer.com/opinion/will-coronavirus-take-down-the-eurozone-and-eu
“Japanese Prime Minister Shinzo Abe’s government is to pledge to take “all steps” encompassing fiscal, monetary and tax policies to battle the deepening fallout from the coronavirus in a stimulus package to be approved on Tuesday, a draft document reviewed by Reuters showed.
“Abe has pledged to craft an “unprecedented” stimulus package…”
“…the private corporate debt market is likely to completely implode, which risks pushing a substantial number of businesses over the edge.”
https://qrius.com/corporate-debt-is-in-serious-trouble/
“The global spread of COVID-19 has had a widespread and devastating impact on the aviation industry.
“The aviation industry supports $2.7 trillion of the world’s GDP. This represents 3.6% of global gross domestic product, and if aviation were a country, it would rank 20th in size by GDP.”
“Truckers hauling food are facing delays across the globe in the latest disruption to supply chains snarled by the coronavirus pandemic.
“They’re enduring lengthy wait times in Europe because of restrictions that have been imposed to control the virus’s spread.
“In South America, local laws have at times conflicted with country-wide ordinances that deem hauling food an essential service, leaving supplies sometimes stuck in storage.
“In parts of Africa, the shuttering of public transportation means drivers aren’t even able to make it into work. And huge spikes in demand have caused lags for loading at some U.S. warehouses.”
“Last week, we made the case that tech manufacturing was uniquely vulnerable to pandemic problems, from a combination of just-in-time manufacturing practices and a far-flung network of suppliers. But just a week later, the news is even worse.”
https://www.theverge.com/2020/4/4/21207276/tech-manufacturing-china-supply-chain-lithium-benchmark
“The United Nations is facing a “dire” liquidity crisis as it deals with added expenses related to the need to “respond to the global health crisis” of coronavirus, according to an email from Movses Abelian, the U.N. undersecretary general for General Assembly and conference management.”
“The global economy is already contracting, and is losing steam faster than in the early days of the financial crisis: That’s the main takeaway from Bloomberg Economics’ new global GDP tracker. The tracker reading for March shows the global economy contracting at an annualized rate of 0.5%, down from 0.1% in February.”
[The global economy as a totality needs to be growing at at least 2.5%, 3% really to not be in recession]
“The sinking global economy is suffering through a colossal disinflationary shock that could briefly push it into dangerous deflation territory for the first time in decades.
““A powerful disinflationary tide is now rising,” said Joseph Lupton, global economist at JPMorgan Chase & Co.”
Read the previous ‘Economic’ thread here and visit my Patreon page here.
