January 2020 Income & Breaking News

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Economy News

By Geoffrey Smith Investing.com — Crude oil prices have given up some of their Friday gains as a hoped-for deal on production cuts failed to materialize over the weekend. The.

PARIS (Reuters) – France will likely see its worst post-war economic downturn this year, far surpassing the -2.2% slump seen in 2009 after the global financial crisis, its finance.

By Simon Jessop and Abhinav Ramnarayan LONDON (Reuters) – World insurers told governments on Monday that making them pay out on losses suffered due to the coronavirus that were not.

The appearance of the coronavirus has had a major impact on the financial markets with all major instruments being affected. Although the Chinese economy suffered the greatest impact, other markets.

(Bloomberg) — The U.K.’s plan to grant 50 billion pounds ($61.5 billion) to companies suffering the economic effects of the coronavirus outbreak won approval from the European.

BRUSSELS (Reuters) – The European Commission said on Monday it had approved a 50 billion pound ($61.5 billion) British “umbrella” scheme to support companies affected by.

By John O’Donnell and Tom Sims FRANKFURT (Reuters) – As Germany rolls out a 750 billion-euro economic stimulus package, officials and experts are discussing whether German.

BERLIN (Reuters) – The German economy is likely to shrink by 3-6% this year, the head of the BDI industry association said on Monday, adding that this forecast was based on.

VIENNA (Reuters) – Austria is trebling the funding available for a scheme designed to prevent layoffs that enables employers to keep staff on their books while only paying for.

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TAIPEI (Reuters) – Taiwan’s exports are expected to have decreased 6.74% in March compared with a year earlier, while they had seen a sharp increase in the previous month, due to.

BUENOS AIRES (Reuters) – Argentina plans to postpone payments on up to $10 billion of dollar debt that was issued under local law until the end of the year, the government said in.

SINGAPORE (Reuters) – The Monetary Authority of Singapore (MAS) said on Monday it will begin the disclosure of its foreign exchange intervention operations in April to enhance the.

FRANKFURT (Reuters) – Europe needs debt mutualisation and a common Marshall plan to recover from the coronavirus pandemic, Spanish Prime Minister Pedro Sanchez told German.

By Michelle Price WASHINGTON (Reuters) – Hundreds of U.S. lenders are struggling to access the technology system for distributing $349 billion of government rescue loans, while the.

WASHINGTON (Reuters) – A top official at the U.S. Federal Reserve said on Sunday the $2.3 trillion economic relief bill approved by Congress was appropriately sized and that a.

Investing.com – Our Senior Analyst Jesse Cohen gives us his top five things to know in financial markets in the week ahead, including: – U.S. Coronavirus Pandemic Worsens -.

DUBAI (Reuters) – The United Arab Emirates’ central bank announced new measures to guarantee liquidity in the banking system in the face of the new coronavirus outbreak, boosting.

By Joe Bavier and Giulia Paravicini JOHANNESBURG/ADDIS ABABA (Reuters) – About 20 million jobs are at risk in Africa as the continent’s economies are projected to shrink this year.

By Noreen Burke Investing.com – With President Donald Trump warning that the U.S. now faces the toughest two weeks of the coronavirus pandemic and economic data beginning to lay.

By Tracy Rucinski (Reuters) – When Reuters photographer Carlos Barria boarded American Airlines flight 4511 from Washington Reagan National Airport to New Orleans on Friday for an.

By Kate Holton LONDON (Reuters) – Keir Starmer was elected as the leader of Britain’s main opposition Labour Party on Saturday, pledging to bring an end to years of bitter.

DUBAI (Reuters) – Transit through Bahrain International Airport is open again for international travelers, Manama-based Gulf Air said on Saturday, though entry to the country is.

KIEV (Reuters) – The International Monetary Fund welcomes the Ukraine’s initial parliament’s adoption of legislation to strengthen the bank resolution framework and looks forward.

By Lawrence Delevingne BOSTON (Reuters) – Billionaire trader Steven A. Cohen is cautioning the staff of his investment firm, Point72 Asset Management, to remain cautious amid.

By David Morgan WASHINGTON (Reuters) – Americans should start receiving direct payments from the U.S. government in mid-April to help them cope with the coronavirus pandemic, but.

WASHINGTON (Reuters) – U.S. Treasury Secretary Steven Mnuchin said on Friday he expects all large U.S. banks to be participating in a newly launched, $350 billion small business.

WASHINGTON (Reuters) – Who’s watching over the U.S. government’s largest bailout in history – the $2.3 trillion in fiscal stimulus to fight the economic impact of the coronavirus.

WASHINGTON (Reuters) – World Bank Group President David Malpass on Friday said the rapidly spreading COVID-19 pandemic was expected to cause a “major global recession” that would.

WASHINGTON (Reuters) – U.S. President Donald Trump on Friday signed an order directing his administration to stop N-95 face masks and other personal protective equipment needed in.

By Hilary Russ, Imani Moise and Andrea Shalal (Reuters) – Like many small business owners, New York City restaurateur Dan Kluger spent his Friday scrambling to apply for a loan.

By Dave Graham MEXICO CITY (Reuters) – Mexico’s room for maneuver on monetary policy is restricted by recent economic shocks that have inflated local risk premia and cast a pall.

LONDON (Reuters) – Zambia has become the latest African country looking for help to tackle its hefty debt burden this week as international lenders and analysts are warning the.

By Ann Saphir and Howard Schneider (Reuters) – As the coronavirus bore down on the United States in February and President Donald Trump renewed his public call for interest rate.

January 2020 Global Economic Prospects: Slow growth, policy challenges

An empty cargo ship sails alone in the sea. © sergeisimonov/Shutterstock

STORY HIGHLIGHTS

  • The world economy is poised for a modest rebound this year, but outlook is fragile.
  • Emerging, developing economy growth to accelerate in 2020 as some emerging economies recover from periods of stress.
  • Rise in debt, slowdown in productivity pose challenges for policymakers.

Following its weakest performance since the global financial crisis, the world economy is poised for a modest rebound this year– if everything goes just right.

Hanging over this lethargic recovery are two other trends that raise questions about the course of economic growth: the unprecedented runup in debt worldwide, and the prolonged deceleration of productivity growth, which needs to pick up to bolster standards of living and poverty eradication.

, the World Bank’s semi-annual Global Economic Prospects forecasts. Advanced economies are expected to slow as a group to 1.4% from 1.6%, mainly reflecting lingering weakness in manufacturing.

Emerging market and developing economies will see growth accelerate to 4.1% from 3.5% last year. However, the pickup is anticipated to come largely from a small number of large emerging economies shaking off economic doldrums or stabilizing after recession or turbulence. For many other economies, growth is on track to decelerate as exports and investment remain weak.

A worrying aspect of the sluggish growth trend is that Income growth would in fact be slowest in Sub-Saharan Africa – the region where 56 percent of the world’s poor live.

Per capita income growth lags behind long-term averages. © World Bank Group

And even this modest rally could be disrupted by any number of threats. Trade disputes could re-escalate. A sharper-than-expected growth slowdown in major economies such as China, the United States, or the Euro Area would similarly reverberate widely. A resurgence of financial stress in large emerging markets, as was experienced in Argentina and Turkey in 2020, an escalation of geopolitical tensions, or a series of extreme weather events could all have adverse effects on economic activity around the world.

Debt Wave

One feature overshadowing the outlook is the largest, fastest, and most broad-based wave of debt accumulation among emerging and developing economies in the last 50 years. Debt has also surged among low-income countries after a sharp drop over 2000-2020.

The current wave of debt differs from previous ones in that there has been an increase in the share of non-resident holdings of EMDE government debt, foreign currency-denominated private EMDE debt, and, for low-income countries, borrowing from financial markets and non-Paris Club bilateral creditors, raising concerns about debt transparency and debt collateralization.

In emerging and developing economies over the last decade, growth has slowed while debt has increased. © World Bank Group

Debt accumulation can also be appropriate in economic downturns as a way to stabilize economic activity.

However, the three previous waves of debt accumulation have ended badly – sovereign defaults in the early 1980s; financial crises in the late 1990s; the need for major debt relief in the 2000s; and the global financial crisis in 2008-2009. And while currently low interest rates mitigate some of the risks, high debt carries significant risks. It can leave countries to vulnerable to external shocks; it can limit the ability of governments to counter downturns with fiscal stimulus; and it can dampen longer-term growth by crowding out productivity-enhancing private investment.

This means that governments need to take steps to minimize risks associated with debt buildups. Strong regulatory and supervisory regimes, good corporate governance, and common international standards can help contain risks, ensure that debt is used productively, and identify vulnerabilities early.

Productivity Slowdown

Yet another aspect of the disappointing pace of global growth is the broad-based slowdown in productivity growth over the last ten years. Growth in productivity – output per worker – is essential to raising living standards and achieving development goals.

An extensive look at productivity trends in this edition of Global Economic Prospects focuses on how the productivity slowdown has affected emerging and developing economies. Average output per worker in emerging and developing economies is less than one-fifth that of a worker in an advanced economy, and in low-income economies that figure drops to 2%.

Since the global financial crisis, there has been a broad-based slowdown in productivity in emerging and developing economies. © World Bank Group

Among emerging and developing economies, which have a history of productivity growth surges and setbacks, the slowdown from 6.6% in 2007 to a trough of 3.2% in 2020 has been the steepest, longest, and broadest on record. The slowdown is due to weaker investment and efficiency gains, dwindling gains from the reallocation of resources to more productive sectors, and slowing improvements in the key drivers of productivity, such as education and institutional quality.

How to rekindle productivity growth? The outlook for productivity remains challenging. Therefore, efforts are needed to stimulate private and public investment; upgrade workforce skills to boost firm productivity; help resources find the most productive sectors; reinvigorate technology adoption and innovation; and promote a growth-friendly macroeconomic and institutional environment.

Two other issues merit consideration in this edition of the outlook: adverse consequences of price controls and inflation prospects in LICs.

While price controls are sometimes considered a useful tool to smooth price fluctuations for good and services such as energy and food, they can also dampen investment and growth, worsen poverty outcomes, and lead to heavier fiscal burdens. Replacing them with expanded and targeted social safety nets alongside the encouragement of competition and an effective regulatory environment, can be beneficial both to poverty eradication and to growth.

And Low inflation is associated with more stable output and employment, higher investment, and falling poverty rates. However, Strengthening central bank independence, making the monetary authority’s objectives clear, and cementing central bank credibility are essential to keep prices anchored.

If policy-makers manage to mitigate tensions and clarify unsettled issues in a number of areas – they could prove the forecast wrong by sending growth higher than anticipated.

Germany Breaks Korea’s Six-Year Streak as Most Innovative Nation

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Germany took first place in the 2020 Bloomberg Innovation Index, breaking South Korea’s six-year winning streak, while the U.S. fell one notch to No. 9.

Singapore’s leap into the third-place ranking returns it to its post from two years ago.

The annual Bloomberg Innovation Index, in its eighth year, analyzes dozens of criteria using seven metrics, including research and development spending, manufacturing capability and concentration of high-tech public companies.

The ranking shed light on the ability of economies to innovate, a key theme at the annual World Economic Forum in Davos, Switzerland taking place Jan. 21-24.

In the Bloomberg Index, Germany scored three top-five rankings in value-added manufacturing, high-tech density, and patent activity. South Korea lost its crown in part due to a relative slump in productivity, falling to No. 29 from last year’s No. 18 ranking in that category.

“The manufacturing sector is still highly competitive and a source for innovation,” Carsten Brzeski, chief economist at ING Germany, said in an email. “Germany’s performance in such indicators is still strong and much better than the recent economic weakness would suggest.”

Still, Brzeski cited several reasons why Germany shouldn’t be complacent about its innovation standing. Its services innovation is much less impressive, and about a third of research and development spending is in the auto industry, meaning “disruption and longer weakness of this sector could weigh on Germany’s innovative strength,” he said.

Germany’s status as a manufacturing giant has been built on the car-making industry, but pollution concerns, trade conflicts and slowing economies have weighed on demand.

Education Worries

Lack of innovation around tertiary education in Germany is an “increasing worry,” Brzeski added, especially as the global economy shifts more toward services and away from manufacturing. “The German government would be well advised to use the ongoing fiscal surplus to invest and safeguard Germany’s role as innovator.”

South Korea’s narrow loss is hardly a reason to anticipate a crumbling in its innovative prowess. R&D spending “determines life or death for South Korean companies,” with tech-oriented heavyweights like Samsung Electronics Co., LG Electronics Inc., and Hyundai Motor Co. leading the economy, said Chang Suk-Gwon, a business management professor at Seoul’s Hanyang University.

“We don’t have any other natural resources — we only have our brains to turn to,” said Chang. “The expression that’s often bandied about in South Korea is the ‘super gap.’ It’s about widening whatever lead South Korea has — or else China will catch up.”

Singapore’s rise to third place overall, from sixth last year, was aided by productivity and value-added manufacturing gains, while it retains a best-in-world ranking for tertiary-education efficiency.

Less Rosy

The news is less rosy for the top advanced economies. The U.S., which was No. 1 when the Bloomberg index debuted in 2020, fell one spot to No. 9 since last year’s ranking. Japan dropped to No. 12, down three spots for the same-sized decline in last year’s index.

The world’s second-biggest economy, China, edged higher by one spot to No. 15. It held onto a second-place ranking on patent activity, and broke into the top five for tertiary efficiency.

China’s strong performance probably shows that it was “busy building up and readying for a prolonged trade war and thus urgently needed to do a lot of in-sourcing, and getting up the value chain of manufacturing,” said Francis Tan, investment strategist at UOB Private Bank CIO Office in Singapore. China has President Donald Trump “to thank for accelerating their plans.”

The U.S. and China on Wednesday signed a first-phase trade deal that eased tensions by removing tariffs on some Chinese goods in exchange for Beijing agreeing to boost purchases of American exports. However, the pact fell short of addressing key concerns by the Trump administration over China’s intellectual property practices, digital trade restrictions and cybersecurity.

The U.S. can at least celebrate holding onto world-beating performances in two categories: high-tech density and patent activity. Among the 20 exchange-traded companies with the highest research and development expenditures in their most-recent fiscal years, half were from the U.S., led by Amazon.com Inc., Alphabet Inc. and Microsoft Corp. Germany was second with four: Volkswagen AG, Daimler AG, Siemens AG and Bayer AG.

What Our Economists Say

“Innovation is a critical driver of growth and prosperity. China’s move up the rankings, and the U.S. drop, is a reminder that without investment in education and research, trade tariffs aren’t going to maintain America’s economic edge.”

–Tom Orlik, Bloomberg Economics chief economist

Big winners among 2020’s ranked economies were led by Slovenia, which gained 10 spots to No. 21 on the back of a 34-tier improvement in patent activity. Chile climbed seven spots to No. 51, not losing ground in any category and making particular strides in tertiary efficiency.

Alternatively, the biggest loser in this year’s index was New Zealand, falling five spots to No. 29 amid a slide in value-added manufacturing performance.

Four economies entered the Innovation Index for the first time: Algeria — which made an especially strong debut at No. 49 — as well as Egypt, Kazakhstan and Macao .

The 2020 ranking process began with more than 200 economies. Each was scored on a 0-100 scale based on seven equally weighted categories. Nations that didn’t report data for at least six categories were eliminated, trimming the total list to 105. Bloomberg publishes the top 60 economies.

Bloomberg terminal users can see additional data here:

January 2020 Income & Breaking News

The Monthly Economic Report for January 2020 is now available!

You can download all of the raw data used in this report here. As always, each image can be enlarged by clicking on it.

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