“The global economy is on track for a more significant contraction than the International Monetary Fund estimated in April, the institution’s chief economist said Tuesday.
“When European countries were in their first weeks of lockdown, the IMF said the global economy would suffer the worst financial crisis since the Great Depression of the 1930s. At the time, it forecast a contraction by 3% in 2020.
[For ref, the global economy as a totality needs to be growing at around +2.5% p/a – anything less is considered a recession. 2009, the worst year of the Global Financial Crisis saw a contraction of just -0.1%].
“Now, despite some economies beginning to reopen, the fund has warned that the decline could be even worse.”
https://www.cnbc.com/2020/06/16/imf-set-to-slash-economic-forecasts-amid-crisis-unlike-no-other.html
“The world is seeing a “striking divergence” between financial markets and the real economy, which may lead to greater volatility and sharp corrections if health and economic news worsen in the wake of the Covid-19 pandemic, according to the International Monetary Fund…
““This divergence may portend greater volatility in financial markets,” she said in a blog post. “Worse health and economic news can lead to sharp corrections.””
“On 8 June, the business cycle dating committee of the National Bureau of Economic Research declared that economic activity in the US had peaked in February 2020, formally marking the start of a recession…
“The committee’s relative speediness [in making the announcement] this time is a testament to the unprecedented suddenness of the pandemic-induced collapse.”
https://www.theguardian.com/business/2020/jun/16/us-recession-coronavirus-crisis
“More U.S. companies have sought bankruptcy protection during the last two days than in the prior two weeks combined…
“This week’s filings pushed the year’s bankruptcy total to 111, the most since 2009 for the first six months of a year, data compiled by Bloomberg show.”
“The Trump administration is preparing a nearly $1 trillion infrastructure proposal as part of its push to spur the world’s largest economy back to life, according to people familiar with the plan.
“A preliminary version being prepared by the Department of Transportation would reserve most of the money for traditional infrastructure work, like roads and bridges, but would also set aside funds for 5G wireless infrastructure and rural broadband, the people said.”
https://fortune.com/2020/06/16/trump-trillion-infrastructure-plan-roads-5g/
“The Institute for Employment Studies claims UK unemployment has risen more in the last two months than it did in the first year of the Great Depression…
“Before the crisis began, there were 1.5 claimants for every vacancy. Right now, IES estimates that that figure has increased to 8.5 claimants per vacancy.”
“The head of the City watchdog has told banks to prepare for a surge in business customers falling behind on their debts, but warned firms must be treated fairly to avoid a replay of 2008 when trust in lenders collapsed.
“Speaking to a virtual roundtable of bank bosses on Tuesday, the Financial Conduct Authority chairman, Charles Randall, said…
“…it was “an inescapable fact” that some UK businesses would accumulate unaffordable debt during the Covid-19 crisis but that those debts must be dealt with “quickly and fairly”.”
https://www.theguardian.com/business/2020/jun/16/banks-debt-fca-chair
“The French government has vowed to bring an end to violence in the usually placid eastern city of Dijon after it was hit by a fourth night of unrest allegedly linked to score-settling by members of the Chechen community…
“Some reports suggested Chechens had travelled to Dijon from all over France as well as neighbouring Belgium and Germany.”
“Europe faces a fresh banking crisis if the economic shock caused by coronavirus stretches into 2021, according to a new paper by a network of think tanks in the European Union…
“…it would only take a fifth of loans not being repaid across EU banks to wipe out their reserves.”
“Economists have upgraded their growth forecasts for the Australian economy, but there is little doubt among them that country is suffering its first recession in nearly 30 years, and possibly its deepest since the 1930s.
“The Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months in the future, confirms the economy is in recession.”
https://thewest.com.au/business/economy/little-doubt-australia-in-a-deep-recession-ng-s-2015843
“Weak global appetite for cars and slowing business spending could drag on Japan’s export-led economy, as China-bound trade remains weak, dashing hopes mainland demand could offset the weakness seen in other major trading partners.
“Official data out on Wednesday showed Japan’s exports fell 28.3% in the year to May, the largest slump since September 2009.”
“A prized Densuke watermelon grown in northern Japan sold at auction on Monday for about $2,000. That’s a lot for a piece of fruit, but down more than 70% from last year’s season-opening auction.
“It was another sign that Japan, the first modern advanced economy to tackle deflation more than two decades ago, is facing the return of its stubborn foe.”
“India has reacted with shock and caution to the worst loss of life on its border with China in 60 years, with senior leaders largely silent on the hand-to-hand clashes in remote, inhospitable Himalayan territory in which at least 20 Indian soldiers died.
“Beijing also offered little information about the violence, but state media appeared to acknowledge on Tuesday that it had also led to Chinese casualties.”
“The world’s two biggest economies have become less competitive due to their ongoing trade war, which seems to have no short-term resolution in sight.
“Both China and the US have slipped down the World Competitiveness Rankings for this year.”
https://www.bbc.co.uk/news/business-53060436
“China has been filling its oil storage facilities at record pace, propping up global energy prices at a time demand has plummeted due to shutdown orders designed to contain the coronavirus pandemic.
“Over the first six months of the year, Chinese oil inventories climbed by 440 million barrels a day, dwarfing the previous record of 111 million barrels a day set by the United States in late 2014 and early 2015…”
“After flooding the U.S. with crude earlier this year, Saudi Arabia has all but cut off the taps to the American oil market. The kingdom has exported just one cargo to the U.S. so far in June, equivalent to about 133,000 barrels a day, tanker-tracking data compiled by Bloomberg show.”
“Energy demand is as good a barometer of global economic conditions as any other indicator. If the International Energy Agency’s forecasts prove accurate, we can forget optimistic projections of “V-shaped” recoveries…
“It expects demand to fall by 8.1 million barrels a day this year – the biggest fall on record – before rising 5.7 million barrels a day, to 97.4 million barrels a day, in 2021. That would still leave demand 2.4 million barrels a day short of 2019 levels…”
“Brazil’s retail sales fell the most ever in April in the latest sign that the coronavirus pandemic is engulfing Latin America’s largest economy…
“The figures illustrate the devastation that the coronavirus outbreak is inflicting on consumption, which has historically been a key driver of Brazil’s economic growth. The retail sales dive also follows record plunges from industrial production to formal job creation…”
“The coronavirus crisis is pushing 40 million people into food insecurity in South and Central America and the Caribbean, the UN warned Tuesday, calling for urgent action to avert a “hunger pandemic”.
“The UN’s World Food Programme says that in the 11 countries where it operates in the region, the number of people facing severe food insecurity has increased from 3.4 million at the start of the year to 14 million.”
https://today.rtl.lu/news/world/a/1535095.html
“While the world economy was locked down by coronavirus, with the heavily indebted corporate sector at grave risk of default, PE firms were circling carcasses of bankrupt firms and markets felled by the lethal pandemic.
“According to the Financial Times the sector has raised $1.5 trillion of “dry powder” for acquisitions, while US distressed-debt funds are hoping to raise more than $67 billion – a capital-raising effort that would smash the previous $44 billion record of 2008. These trillions will be used to scavenge bargains in whole sectors of the economy. PE firms intend to profit from the current crisis much as they did after the 2008 financial meltdown.”
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