World Bank CEO - Kristalina Georgieva
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The head of the International Monetary Fund has warned that the global economy is deteriorating faster than expected and that growth could fall further in the coming months.

“Kristalina Georgieva, the organisation’s managing director, said that it was likely to cut its global growth forecasts as the pandemic was hitting countries even harder than expected.

““Incoming data from many countries is worse than our already pessimistic projections,” Ms Georgieva said at a web conference organised by the Financial Times.”

https://www.thetimes.co.uk/edition/business/worse-is-yet-to-come-imf-head-kristalina-georgieva-warns-6vdmcw6jj


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The UK economy shrank at the fastest pace since the financial crisis in the first quarter of 2020 as coronavirus forced the country into lockdown. The Office for National Statistics said the economy contracted by 2% in the three months to March, following zero growth in the final quarter of 2019 [ie the economy was not growing *at all* before the pandemic even started].

“The decline was driven by a record fall in March, and reflects just one full week of lockdown.”

https://www.bbc.co.uk/news/business-52641807


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Germany was also teetering on the brink of recession pre-pandemic.

“Berlin is in battle with Brussels after opposing the idea of a common debt instrument issued by the European Commission with the scope to raise funds and benefit mainly the countries that have been the hardest hit by the Covid-19 pandemic.”

https://www.xm.com/germany-to-shrink-the-most-since-financial-crisis-as-the-legal-battle-continues-forex-news-preview-121815


The risk of an uneven economic recovery from the coronavirus crisis poses an “existential threat” to the European Union, one of its most senior economic policymakers has said.”

https://www.theguardian.com/world/2020/may/13/eu-faces-existential-threat-if-coronavirus-recovery-uneven-paolo-gentiloni


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European banks have declined the European Central Bank’s offer to pay them to keep loans flowing to eurozone businesses.

““Cheap liquidity…does not insure against credit risk,” said Gilles Moec, chief economist at Axa in London.”

[This goes to the nub of our problem with stimulus, ie liquidity is not ultimately the same thing as solvency. You cannot print *value*].

https://www.verdict.co.uk/retail-banker-international/news/banks-turn-down-ecbs-offer-of-more-money-to-make-loans/


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Investment in the eurozone has plummeted in recent weeks, creating a drag on the continent’s economy that economists warn is likely to last even after companies and workers emerge from coronavirus lockdowns.

“Across the region, capital expenditure has contracted sharply…”

https://www.ft.com/content/4c279e4c-05af-4c59-be90-48bf3228c92f


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“…US core inflation (excluding food and energy) has recorded consecutive MoM declines for only the second time in the series’ 63-year history

“This reinforces our view that the scale of demand destruction in the economy means inflation is not going to be an issue for a long time.”

https://think.ing.com/snaps/us-deflationary-forces/


It looks as though the long-run trend of stability in the inflation rate is ending, and that we need to prepare for an inflation rate rollercoaster.”

https://www.omfif.org/2020/05/the-inflation-v-deflation-debate/


The American Petroleum Institute (API) estimated on Tuesday another large crude oil inventory build, of 7.58 million barrels for the week ending May 8 even as several U.S. states begin the slow process of reopening certain segments of their battered economies.”

https://oilprice.com/Latest-Energy-News/World-News/Oil-Inventories-Soar-Yet-Again-Despite-Demand-Rebound.html


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It’s happened again: Another commodities trader in Singapore has all but collapsed under a pile of debt and alleged fraud now under investigation.

“Last week, police raided the offices of ZenRock Commodities Trading Pte Ltd., after HSBC filed a criminal complaint of fraud. It has been reported ZenRock has debts in excess of $160 million, $49 million of which is owed to HSBC.”

https://www.complianceweek.com/risk-management/analysis-oil-collapse-leaves-singapore-traders-scrambling/28892.article


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Hong Kong is bracing for another summer of protest after renewed violence in parliament, shopping malls, and streets over the weekend.

“But after almost a year of Beijing’s escalating anger, a growing sense of impunity among police, and a still-dangerous pandemic the rules of engagement are being redrawn.”

https://www.theguardian.com/world/2020/may/13/the-stakes-are-higher-hong-kongs-battle-lines-redrawn-for-post-covid-protests


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South Korean job losses rose at their sharpest pace in two decades last month, despite the country avoiding a nationwide lockdown to combat coronavirus.

“The employment data was released as health officials raced to control an outbreak linked to the popular Itaewon nightlife district in Seoul…”

https://www.ft.com/content/d0fcecf5-7254-45dc-8a87-106aaefa4c54


The [Australian] economy will ‘snap back’ after falling off a 10% cliff no better than the front of your car would snap back after driving off a 10-metre cliff.”

https://www.theguardian.com/commentisfree/2020/may/13/australian-business-cant-lead-us-out-of-this-recession-the-government-must-step-up


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The turmoil across emerging-market assets is about to get even worse, according to the world’s biggest publicly listed hedge fund firm.

“Guillermo Osses, a money manager at Man Group Plc, said developing nations are about to pay the price for their ballooning debt loads since the 2008 financial crisis.”

https://www.bloomberg.com/news/articles/2020-05-12/new-champions-of-emerging-markets-warn-pain-is-just-beginning


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African leaders are asking what China can do for them as the coronavirus pandemic threatens to destroy economies and wipe out about 20 million jobs.

“Beijing is both the top trading partner and top lender on the continent.”

https://www.aljazeera.com/news/2020/05/african-countries-turn-china-debt-relief-200512131259670.html


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India’s factory output plummeted to record lows in March, with the Index of Industrial Production contracting 16.7%, reflecting the drastic impact of the countrywide lockdown that began on March 25.

“This comes after a positive growth of 4.5% recorded in February.”

https://www.thehindu.com/business/Economy/coronavirus-lockdown-industrial-output-shrank-167-in-march-2020/article31569384.ece


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Indonesia is backing away from plans to reopen the economy from early June, as the number of new daily cases reported of coronavirus remain in the hundreds…

“The slow down in economic activity has hit day workers in the informal economy hard, with millions of people losing their jobs.”

https://www.smh.com.au/world/asia/plague-or-famine-indonesia-grapples-with-economic-risks-and-infection-rates-20200513-p54sjj.html


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Almost half of Colombia’s senators signed off on a proposal to urgently implement a guaranteed minimum income for more than 70% of the population.

“The radical proposal would temporarily guarantee 31 million people a monthly income of $225 (COP877,000), which is equal to the current minimum wage.”

https://colombiareports.com/colombia-considering-guaranteed-minimum-income-as-famine-looms/


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“…according to the United Nations, the number of people who are classified as having acute food insecurity… could rise from more than a hundred and thirty million to nearly three hundred million, owing to the coronavirus pandemic

“And this estimate does not even begin to address the millions of people whose means of achieving a decent living have evaporated.”

https://www.newyorker.com/news/our-columnists/the-coronavirus-crisis-will-lead-to-catastrophic-hunger


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Today, in New York or London, received wisdom has it that major stock indices have recovered so smartly from the March bug panic lows because investors are somehow “seeing through” the pandemic, making wise and rational decisions about which companies will prosper once we all get through this.

“Maybe. Or is it something to do with governments in leading economies moving the decimal point a couple of figures to the right when planning their deficits?”

https://www.ft.com/content/cbae8143-a941-494b-bbc8-25775db1444e


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“After the initial onslaught in March when the coronavirus pandemic caused a crisis of confidence in credit markets, CLO securities have recovered some ground, helped by the Fed’s aggressive interventions.

“However, the worry is that further corporate downgrades and escalating defaults could start to unravel sections of the CLO market, in turn prompting a much deeper sell-off that magnifies the broader impact to the economy.”

https://www.ft.com/content/f10eaaac-0f4e-46bc-8f78-0754028da46a


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The financial horizon looks uncertain for the airline industry.

“Air travel has largely ground to a halt as people have grown wary about potentially exposing themselves to coronavirus.”

https://www.marketwatch.com/story/airlines-are-on-the-brink-of-bankruptcy-what-happens-to-your-voucher-travel-miles-and-airline-credit-card-if-they-go-belly-up-2020-05-13


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The world’s largest container line is bracing for an historic slump in demand. A.P. Moller-Maersk A/S, which controls about one-fifth of the global fleet used to transport goods by sea, has warned that the fallout from Covid-19 will drive volumes down by as much as 25% this quarter.

“The bleak signal from Maersk follows a warning from the World Trade Organization last month that the pandemic could result in the worst collapse in international trade flows since World War II.”

https://www.bloomberg.com/news/articles/2020-05-13/maersk-sees-volumes-down-as-much-as-25-in-second-quarter


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The economic impact of the coronavirus pandemic prompted governments to issue more debt than ever before in April, according to data provided by the Institute of International Finance.”

https://www.cnbc.com/2020/05/13/coronavirus-goverments-issued-more-debt-than-ever-last-month.html


Sovereign Defaults Set to Hit Record in 2020… Fitch Ratings believes further sovereign defaults are probable this year. Argentina, Ecuador and Lebanon already have defaulted on sovereign debt in 2020…”

https://www.fitchratings.com/research/sovereigns/sovereign-defaults-set-to-hit-record-in-2020-12-05-2020-1


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