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Embattled businesses and households could suffer a meltdown after racking up “unmanageable” debts during the severe recessions triggered by Covid-19, the International Monetary Fund has warned.

“Corporate debt piles – already at historically high levels when the disaster struck – could trigger a lethal cascade of insolvencies, the IMF said, derailing any recovery before it picks up steam.

“Households saddled with high borrowing since the 2008 financial crisis are also under threat, it said.

“The IMF said: “In advanced and emerging market economies alike, corporate and household debt burdens could become unmanageable for some borrowers in a severe economic contraction.”

“Its latest warning comes after the international body forecast the biggest slump since the Great Depression – saying global growth could fall almost 5pc in 2020. It also took a more pessimistic view on the pace of the recovery in the second half of this year.”

https://www.telegraph.co.uk/business/2020/06/25/global-debt-surging-unmanageable-levels-imf-warns/


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More than three months into the coronavirus crisis, millions more Americans are still filing for unemployment benefits each week. According to the US labour department, 1.48m people filed claims last week…

“…the number of unemployed workers has remained at nearly 20m.”

https://www.cityam.com/us-jobless-claims-1-48m-more-file-for-benefits-as-total-hits-47m/


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There are increasingly urgent signs that an unprecedented wave of student loan defaults could be arriving within a matter of months.

“A cratering economy and expanding pandemic are about to collide with the expiration of critical temporary student loan relief programs, and the end result could be catastrophic.”

https://www.forbes.com/sites/adamminsky/2020/06/25/a-massive-wave-of-student-loan-defaults-is-coming/#4506562041dd


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The back-to-back shocks of a deadly virus, lockdowns and civil unrest have a growing number of Americans reevaluating not just their life priorities, but also how — or even, if — they’ll spend their money

“Early data and consumer polling also show that more Americans are less inclined to part with their dollars.”

https://www.bloombergquint.com/global-economics/events-of-2020-are-reshaping-the-american-consumer


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Corporate America is in trouble. Latest figures from the Federal Reserve show that non-financial companies’ pre-tax profit rate in the first quarter fell to its lowest level since the financial crisis.

“This isn’t merely due to the lockdown depressing demand. Even before the pandemic began the profit rate was trending down.”

https://www.investorschronicle.co.uk/comment/2020/06/25/the-us-profits-crisis/


The Federal Reserve imposed new restrictions on the US banking system Thursday after its annual stress test showed that some banks would approach minimum capital levels under certain coronavirus pandemic scenarios.”

https://markets.businessinsider.com/news/stocks/fed-stress-test-banks-limits-dividends-suspends-share-buybacks-results-2020-6-1029344110?fbclid=iwar3z-ewztkg0mpwwgkvg-nreec7oq9nwvfiq1phftcpb_seugquutod-nke


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“Canada became the latest country to be stripped of a prized ‘triple A’ sovereign credit rating after Fitch downgraded it on Wednesday.

Fitch now has the fewest ‘AAAs’ since 2003. After Wednesday’s downgrade of Canada, it now rates 11 sovereigns ‘AAA’, the fewest since 2003 and, at less than 10% of rated sovereigns, the smallest ever share of the sovereign portfolio.”

https://uk.reuters.com/article/us-ratings-aaa/falling-aaangels-the-shrinking-triple-a-world-idUKKBN23W3KF


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However much Prime Minister Boris Johnson says he will be able to arrange a trade deal with the European Union by the year-end, firms in Britain are already bracing themselves for the possibility he won’t… For manufacturers, this includes rebuilding stockpiles…

“[There would be] a 10% tariff on the export of cars to the EU from Britain under a no-deal scenario.”

https://www.bnnbloomberg.ca/u-k-firms-get-ready-for-a-no-deal-brexit-with-time-running-out-1.1456618


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The UK’s car manufacturers produced a mere 5,314 vehicles in May as output stalled for the second consecutive month due to coronavirus.

“New data from the Society of Motor Manufacturers and Traders showed that although two-thirds of the country’s car plants restarted work last month, output was severely curtailed due to social distancing requirements and a lack of demand.”

https://www.cityam.com/car-production-slump-continues-in-may-despite-factories-restarting/


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German payments giant Wirecard has filed for insolvency in the midst of a major accounting scandal linked to a €1.9bn (£1.7bn) hole in its finances.

“The company, which processes tens of billions of euros in credit and debit transactions every year, said it failed to reach a deal with its lenders that could help it stay afloat…”

https://www.theguardian.com/business/2020/jun/25/wirecard-files-for-insolvency-amid-german-accounting-scandal


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The IMF has warned Lebanon that its central bank has accumulated losses of as much as $49bn, as divisions between the government and the Banque du Liban threaten to derail vital bailout talks with the multilateral lender

“Those losses equate to 91 per cent of Lebanon’s total economic output in 2019, according to World Bank figures.”

https://www.ft.com/content/5c0b7447-d495-49d9-9317-e32755b2c0c2


Empty fridges as Lebanon economic crisis bites. With soaring prices and falling currency, Lebanon’s middle class is sliding under the poverty line.”

Photos:

https://www.aljazeera.com/indepth/inpictures/pictures-empty-fridges-lebanon-economic-crisis-bites-200625055555816.html


“Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Shaikh Sultan Rehman said, “Almost 37% of Pakistan’s population is food insecure, even though Pakistan is self-sufficient in major staples, and the main problem is access and affordability of food.””

https://www.researchsnipers.com/37-of-pakistans-population-facing-food-crisis/


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According to the International Monetary Fund, India will be the large economy worst hit by the COVID-19 pandemic

“…the loss of three months’ income would leave nearly half of the country’s population mired in poverty, reversing all the gains made since the economy was liberalized in the early 1990s.”

https://gulfnews.com/business/analysis/india-doesnt-have-much-ammo-left-to-counter-contraction-1.1593150342865


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Even seasoned bankers and real estate investors, honed by past financial markets and health crises, are no match for the calamity brought by the US-China trade war and the coronavirus pandemic.

“Phoenix Property Investors, a US$7.7 billion real estate fund, has six months to save itself from potential cascading defaults…”

https://www.scmp.com/business/companies/article/3090608/we-are-walking-towards-default-hong-kong-real-estate-fund


Thailand recorded no foreign tourists for a second month in May as borders remained closed to control the coronavirus spread, with the 6.69 million visitors from January to May a slump of 60% from a year earlier, the tourism ministry said on Friday.”

https://www.reuters.com/article/health-coroanvirus-thailand-tourism/thailand-sees-60-slump-in-jan-may-tourist-arrivals-spending-idUSL4N2E30IV


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“It should be no surprise that given the COVID-19 pandemic, lockdowns, and massive job losses, that we learned on Thursday that the number of job vacancies collapsed in the three months to May.

“And yet the data from the Australian Bureau of Statistics showing a 43% slump in vacancies – back to a low last seen in 2005 was shocking.”

https://www.sharecafe.com.au/2020/06/26/job-vacancies-collapse-a-record-43-to-2005-levels/


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Although the coronavirus has dampened the risk of unrest [in Latin America] in the short term, we think that in the coming months and years we’ll see that the economic crises brought about by the coronavirus will just heighten these pressures and create the potential for even greater instability and even more social unrest,” said Fiona Mackie, the Americas director at the Economist Intelligence Unit…”

https://foreignpolicy.com/2020/06/25/latin-america-protest-pandemic-informal-economy/


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Venezuela’s water crisis is nothing new, but it’s started driving residents to extraordinary measures — banding together to rig their own water systems and even hand dig shallow wells at home.

“Water today is even more important as a way to protect against the pandemic.”

https://www.nytimes.com/aponline/2020/06/26/world/americas/ap-lt-venezuela-water-shortage.html


Nigeria’s banking system is at risk of being destabilized as the coronavirus pandemic triggers what might be the worst recession in four decades for Africa’s largest economy, according to the World Bank.”

https://www.bloomberg.com/amp/news/articles/2020-06-25/world-bank-says-lenders-at-risk-as-nigeria-heads-to-recession


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The outlook for a global economic recovery has worsened or at best stayed about the same over the past month, according to a majority of economists in Reuters polls, with the ongoing recession expected to be deeper than predicted in May.”

https://www.aljazeera.com/ajimpact/pain-global-economic-outlook-worsens-survey-shows-200626044650947.html


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