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The world economy is entering the second half of 2020 still deeply weighed down by the COVID-19 pandemic, with a full recovery now ruled out for this year and even a 2021 comeback dependent on a lot going right

“…the pandemic forced swathes of the global population into what the International Monetary Fund dubs “The Great Lockdown.” Central banks and governments responded with trillions of dollars in unprecedented support to prevent markets from melting down and to keep furloughed workers and struggling companies afloat until the virus passed.​

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“Even with those rescue efforts, the world is still suffering its worst economic crisis since the Great Depression. While some gauges of manufacturing and retail sales in major economies are showing improvement, hopes for a V-shaped rebound have been shattered as the reopening of businesses looks shaky at best and job losses risk turning from temporary to permanent…

““There is a real danger of confusing rebound with recovery,” Carmen Reinhart, the World Bank’s chief economist, said at the Bloomberg Invest Global conference on June 23. “True recovery means you are at least as well off as you were before the crisis started, and I think we are a long way off that.””

https://www.latimes.com/business/story/2020-07-05/economic-impact-of-coronavirus


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Ongoing social distancing will mean that many firms will be smaller or not viable until a vaccine turns up.

But the economic impact of this crisis will last even once a vaccine prevents Covid-19 doing fresh damage…. while no one started 2020 expecting a global pandemic, we’ll all now think another one is around the corner, just as everyone kept predicting another banking crisis after the financial crash.

“…a more cautious world is not a good one economically… Covid-19, and its effects, are here to stay.”

https://www.theguardian.com/commentisfree/2020/jul/05/we-might-never-get-over-the-fear-that-the-pandemic-induced


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As the U.S. reopens, Americans aren’t much interested in going out and spending.

A survey of 2,200 U.S. adults shows how Covid-19 has dramatically changed behavior in the world’s biggest economy, potentially for the long haul. The data flashes warning signs for the recovery…”

https://www.bloombergquint.com/onweb/is-it-safe-to-shop-americans-wary-of-stores-during-covid-crisis


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This Fourth of July, amid the coronavirus pandemic and nationwide Black Lives Matter protests, American patriotism has fallen to its lowest point in nearly 20 years. According to a new poll, less than half of Americans are “extremely proud” to be American.

According to Gallup, pride in the U.S. is the lowest it’s been since the analytics company first measured it in 2001.”

https://www.cbsnews.com/news/american-pride-falls-to-record-low/


“…unemployment is becoming a more permanent fixture for millions of [US] workers, just as the financial lifelines that Congress created early in the pandemic are expiring without the president or Senate Republicans showing any urgency to act.”

https://www.forbes.com/sites/christianweller/2020/07/04/as-longer-term-unemployment-becomes-reality-government-help-end-could-end-soon/#af64a2018a03


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The U.S. trade deficit widened in May as the COVID-19 pandemic pushed exports to their lowest level since 2009, strengthening expectations the economy will contract in the second quarter at its steepest pace since the Great Depression

Exports tumbled 4.4% to $144.5 billion, the lowest since November 2009. Goods exports plunged 5.8% to $90.0 billion, the lowest since August 2009.”

https://uk.reuters.com/article/usa-economy-tradefigures/us-trade-deficit-widens-as-exports-fall-to-lowest-level-since-2009-idUKL1N2E82Q4


An astonishing 14 of the top 50 U.S. trade partners saw their total trade fall more than 40% in the most recent month, according to Census Bureau data released Thursday.”

https://www.forbes.com/sites/kenroberts/2020/07/03/14-of-top-50-countries-saw-us-trade-fall-more-than-40-new-data-shows/#2018853c2af3


Radical plans to give all adults £500 and children £250 in vouchers to spend in sectors of the [UK] economy worst hit by the Covid-19 crisis are being considered by the Treasury.”

https://www.theguardian.com/politics/2020/jul/05/sunak-considers-500-vouchers-for-all-uk-adults-to-spend-in-covid-hit-firms


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Thirteen British universities face bankruptcy without a Government bailout, an analysis by the Institute of Fiscal Studies has found.

“Institutions at the greatest risk of financial collapse would need with a £140 million cash injection or debt restructuring to keep them “afloat” in the future.”

https://www.telegraph.co.uk/news/2020/07/05/thirteen-universities-face-bankruptcy-without-government-bailout/


More than a quarter of the UK’s biggest listed companies and a third of large US public businesses spent more on dividends and buybacks in 2019 than they generated in net income, a move that has left many groups at greater risk of collapse.”

https://www.ft.com/content/b3acb829-be35-47aa-8642-fbbb171ca076


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The giants of Wall Street and European banking are giving up their stronghold on London. In the coming months alone, Barclays Plc may ditch its investment bank’s headquarters in the capital; Credit Suisse Group AG is offloading nine floors of office space; and Morgan Stanley is reviewing its entire London footprint.

“And all of those moves were planned before the coronavirus hit. Now, with thousands of job cuts likely to follow what’s forecast to be the worst recession in three centuries, the tenants of the glass and steel towers that dominate the City of London and Canary Wharf may face an even bigger retreat.”

https://www.bloomberg.com/news/articles/2020-07-06/banks-are-ditching-london-offices-and-not-just-because-of-covid


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The risk of UK funds being frozen out of the European market at the end of the year has risen after Brexit negotiators missed a key milestone aimed at securing market access for the City of London.”

https://www.ft.com/content/4ab74408-48e8-499b-aaf1-4dcf0d661f88


A social and economic crisis “is starting” in France as the health crisis persists, new Prime Minister Jean Castex said Saturday in his first comments to the media since he was appointed a day earlier by President Emmanuel Macron.”

https://www.bloomberg.com/news/articles/2020-07-04/french-prime-minister-says-social-economic-crisis-is-starting


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Despite the first monthly double-digit increase, German industrial orders remain some 30% below their levels seen in the first quarter.”

https://think.ing.com/snaps/germany-new-orders-best-month-ever-not-yet-good-enough/


Around one fifth of German companies (21%) believe their survival is threatened by the coronavirus crisis, Germany’s Ifo institute said on Monday, with travel agents, hotels and restaurants particularly concerned.”

https://uk.reuters.com/article/us-health-coronavirus-germany-economy/one-fifth-of-german-firms-fear-for-their-survival-amid-pandemic-ifo-idUKKBN2470HF


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Federal Reserve stress tests predicted large loan losses from European banks operating in the U.S. market, the Financial Times reported

“Deutsche Bank AG is expected to burn through capital quicker than the other 32 financial institutions whose performance was modeled, the tests showed.”

https://www.bnnbloomberg.ca/fed-sees-high-loan-losses-at-european-banks-in-stress-tests-ft-1.1460852


It is hard to see how Deutsche Bank can hit its cost savings target, despite management assurances, given that restructuring efforts were paused during the pandemic lockdown.

“The bank appears to have taken a far from conservative approach to provisioning for prospective loan losses — it has set aside a fraction of the amount peers did. And its original plan and profit projection gave it little scope for setbacks, let alone a global economic crash.”

https://www.ft.com/content/9082d8ce-1a21-40dc-a1ba-f6f5b35ca0c2


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A cardinal in northern Italy said Friday that the COVID-19 health crisis has created “immense” poverty in the area, and now is the time to rebuild, to take responsibility, and to share resources.

Indications from local charities and soup kitchens show that poverty in Bologna right now is “immense,” Cardinal Matteo Zuppi, the city’s archbishop, told journalists July 3. “The economic crisis has already started.””

https://www.eurasiareview.com/05072020-italy-cardinal-says-its-time-to-rebuild-as-economic-crisis-hits-north/


Greece’s prime minister has said he will not accept strict EU conditions on the use of coronavirus emergency aid, in a sign of the difficult negotiations ahead for the bloc’s leaders on its proposed €750bn recovery fund.”

https://www.ft.com/content/d8fc01ae-5aac-4094-9b76-82ca0f90784c


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Some African leaders are nervous about taking up the debt relief recently offered by international lenders in the G20 group of countries to help poorer nations cope with the economic and fiscal devastation caused by the coronavirus crisis.

Even discussing relief could downgrade international credit ratings and trigger bond repayment clauses on the Eurobonds that African governments have been issuing at an increasing rate.”

https://africanbusinessmagazine.com/african-banker/debt-relief-africas-agonising-dilemma/


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South Africa’s central bank has issued a 3.45 billion rand ($200 million) guarantee to bail out the Corporation for Public Deposits (CPD), a government investment arm hit by surging defaults at state agricultural lender Land Bank.

The issue adds a further strain on state finances… which were already struggling before the coronavirus crisis…”

https://finance.yahoo.com/news/land-bank-default-forces-south-160320228.html


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Now is the time for Africa to grow food

“This Covid-19 crisis has also exposed the extreme fragility of the global food system. Social-distancing and lockdown measures to curb the virus’s spread have significantly reduced people’s incomes and thus global food demand.”

https://www.cnbcafrica.com/economy/2020/07/05/covid-19-now-is-the-time-for-africa-to-grow-food/


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“A lack of food security in developed countries like Israel is defined as a “lack of consistent access to enough food to allow a healthy and active life.”

“According to the National Insurance Institute, some 18 percent of families in Israel – about 440,000 families – were suffering from food insecurity.”

https://www.haaretz.com/israel-news/.premium-israel-must-take-food-insecurity-seriously-experts-warn-calling-to-increase-aid-1.8971885


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The United Arab Emirates imported 4,500 dairy cows from Uruguay as part of a drive to boost food security with the coronavirus disrupting global supply chains.

“The shipment of Holstein cattle is the first of many, state-run news agency WAM reported Sunday.”

https://www.arabianbusiness.com/retail/449204-uae-buys-thousands-of-uruguay-dairy-cows-to-boost-food-security


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A fire at Iran’s underground Natanz nuclear facility has caused significant damage

“Iran’s top security body said on Friday that the cause of the fire that broke out on Thursday had been determined but would be announced later.

“Some Iranian officials have said it may have been cyber sabotage and one warned that Tehran would retaliate against any country carrying out such attacks.”

https://www.reuters.com/article/us-iran-nuclear-natanz/fire-at-irans-natanz-nuclear-facility-caused-significant-damage-spokesman-idUSKBN2460PM


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The Iranian rial fell to a new low against the US dollar on the unofficial market on Saturday, as the economy comes under pressure from the coronavirus pandemic and US sanctions…

“The rial’s decline has continued despite assurances from Iranian Central Bank Governor Abdolnaser Hemmati last week that the bank had injected hundreds of millions of dollars to stabilise the currency market.”

http://www.gdnonline.com/Details/836976


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Fewer than one in five of the 80 million migrant labourers allocated food aid by the Indian Government received supplies in May and June, according to new data.

Bureaucratic issues at a local level halted food from reaching those on the ground, explains Anindita Adhikari, of the Stranded Workers Action Network (SWAN) NGO.”

https://www.telegraph.co.uk/global-health/science-and-disease/hunger-fears-millions-indias-migrant-labourers-go-without-food/


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Sanjeev Singh (39), is among over 45,000 taxi operators in Jammu and Kashmir who are virtually on the verge of starvation due to the non-operation of their vehicles since the second week of March

“”There is no work at the local level as well. We are virtually on the verge of starvation. This taxi was the only source of income for me. — Sanjeev Singh, taxi operator.”

https://www.tribuneindia.com/news/j-k/45-000-taxi-operators-on-verge-of-starvation-109174


Japan’s huge public pension fund, the world’s biggest, said Friday it had suffered its largest annual loss since the global financial crisis, as markets tumbled amid the coronavirus pandemic.”

https://asiatimes.com/2020/07/japans-pension-fund-suffers-worst-loss-since-2008/


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Cracks are appearing in China’s 21.3 trillion yuan (US$31 trillion) trust industry, a key component of the country’s shadow banking system, as fresh trouble at Sichuan Trust highlights growing risks in alternative funding for companies unable to access regular bank loans.”

https://www.scmp.com/economy/article/3091933/chinas-shadow-banking-system-under-spotlight-sichuan-trust-misses-payments


Chinese regulators are urging struggling corporate bond issuers to seek voluntary debt restructuring in talks with their bondholders as a way to avoid default, as regulators last week issued new rules that seek to enforce investors’ protection amid rising defaults.”

https://www.scmp.com/business/companies/article/3091716/chinas-central-bank-calls-struggling-companies-restructure-debt


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Refining margins are absolutely catastrophic,” Patrick Pouyanne, the head of Europe’s top oil refining group Total SA, told investors last month, echoing a widely held view among executives, traders and analysts.

What happens to the oil refining industry at this juncture will have ripple effects across the rest of the energy industry.

“The multi-billion-dollar plants employ thousands of people and a wave of closures and bankruptcies looms.”

https://economictimes.indiatimes.com/markets/commodities/news/lost-in-oils-rally-2-trillion-a-year-refining-industry-crisis/articleshow/76794487.cms


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Natural gas prices plunged to new lows this week, falling below $1.50/MMBtu, a catastrophically low price for U.S. gas drillers

“Global gas demand is expected to fall by 4 percent this year, “largest recorded demand shock” in history, according to the International Energy Agency.”

https://oilprice.com/Energy/Natural-Gas/Natural-Gas-Price-Plunge-Could-Soon-Lead-To-Shut-Ins.html


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The increase in global liquidity during the coronavirus crisis has happened at a much swifter pace that during the 2008 downturn, according to JPMorgan.

“Total money creation could exceed $15 trillion or more by the middle of next year as quantitative easing continues at a stronger-than-normal level, the strategists wrote.”

https://www.bloombergquint.com/onweb/jpmorgan-says-global-liquidity-surge-to-boost-stocks-and-bonds


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Countries that were already facing food insecurity before the pandemic began are particularly at risk for being pushed over the brink… we could see famine in multiple countries.”

https://www.washingtonpost.com/world/2020/07/03/how-has-coronavirus-pandemic-affected-global-poverty/


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