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Tuesday, September 22, 2020

UK economy posts weak May rebound; China trade picks up: How global economies are faring amid Covid

Global economies continue to contract due to the pandemic, with economies like the UK, Singapore, US witnessing a sharp downward trend. 

By: Express Web Desk | New Delhi | Updated: July 14, 2020 9:05:13 pm
Coronavirus Global Cases Updates, 28 June: Cases surpass 10 million mark Workers wearing protective suits register people for coronavirus tests at a community health clinic in Beijing. (AP Photo/Mark Schiefelbein)

As global cases of the novel coronavirus crossed the 13 million mark Tuesday, the World Health Organization (WHO) warned the pandemic would get “worse and worse and worse” if the basics weren’t followed. Over 572,000 people have died from the virus worldwide. Global economies continue to suffer losses due to the pandemic, with economies like the UK, Singapore, US witness a downward trend.

At a press briefing Monday, WHO chief Tedros Adhanom Ghebreyesus said that “there will be no return to the old normal for the foreseeable future.” Tedros called for countries to adopt a comprehensive strategy to curb the soaring caseloads in many countries, noting that about half of all the new cases are now coming from the Americas. Without applying basic outbreak-control methods, “there is only one way this pandemic is going to go,” WHO chief Tedros cautioned. “It’s going to get worse and worse and worse,” he said.

China’s global imports rose 3 per cent to USD 167.2 billion, rebounding from May’s 3.3 per cent decline, imports of American goods increased to USD 10.4 billion despite higher tariffs. Exports to the United States have also gained 1 per cent to USD 39.8 billion, AP reported.

Official figures show that the British economy managed to eke out some growth in May as lockdown restrictions started to be eased, but that it remains around a quarter smaller than before the coronavirus pandemic.

Here’s a look at how economies around the world are faring amid Covid-19

UK economic bounceback falls short of V-shaped recovery hope

The British economy grew by far less than anticipated during May, dampening hopes that the recovery from what is set to be one of the country’s deepest recessions in centuries will be rapid.

The Office for National Statistics said Tuesday that the economy grew by 1.8% in May from the previous month after some easing of the lockdown, such as encouraging those in construction or manufacturing to return to work. The crucial retail sector was also buoyed by record online sales.

UK coronavirus cases, coronavirus cases UK, UK home quarantine coronavirus, UK coronavirus home quarantine, World news, Indian Express Two women sit outside a take away only coffee shop in London. (AP Photo/Frank Augstein)

However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines, said Jonathan Athow, Deputy National Statistician for Economic Statistics.

The increase recorded during May was far lower than the 5% anticipated in financial markets and means the economy remains 24.5% smaller than it was in February, before the full impact of the coronavirus. In April alone, the economy shrank by a staggering 20.3%.

“The chances of a quick return to normal, of the famed V-shaped recovery, are falling,” said Ian Stewart, chief economist at Deloitte. It is likely to take years, not months, to repair the damage to the economy done by COVID-19.

Most economists think the recovery will gather pace during the summer when more lockdown restrictions have been eased. In June, shops selling items considered nonessential such as books and shoes reopened, followed in early July by the reopening of much of the hospitality sector, including pubs and restaurants. But with people still fearful of contracting COVID-19, social distancing rules remaining in place, and many workers worried about losing their jobs, the economy is not anticipated to make up the ground lost due to the coronavirus any time over the coming months.

China’s trade rises as economy recovers from virus slump

China’s imports of US goods rose 10.6 per cent in June over a year ago and its global trade also increased in a fresh sign the world’s second-largest economy is gradually recovering from the coronavirus pandemic.

China’s global imports rose 3 per cent to USD 167.2 billion, rebounding from May’s 3.3 per cent decline, customs data showed Tuesday. Exports edged up 0.4 per cent to USD 213.6 billion, an improvement over the previous month’s 16.7 per cent contraction. The country’s global trade surplus was USD 46.4 billion.

china coronavirus cases, beijing fresh covid cases, coronavirus cases china, beijing covid emergency response, coronavirus case beijing People wearing face masks to protect against the new coronavirus stop at a checkpoint outside the Xinfadi wholesale food market district in Beijing. (AP)

Imports of American goods increased to USD 10.4 billion despite higher tariffs that were imposed in a fight with Washington over trade and technology. Exports to the United States gained 1 per cent to USD 39.8 billion. China, where the pandemic began in December, was the first major economy to shut down to fight the virus and the first to begin the struggle to restore normal business activity after the ruling Communist Party declared victory over the outbreak in March.

Chinese factory activity is recovering but consumers, uneasy over possible job losses, are reluctant to commit to big purchases. Forecasters warn exports are likely to weaken as global demand for surgical masks and other medical supplies declines and U.S. and European retailers cancel orders.

Singapore economy contracts 41% on quarterly basis

Singapore’s economy entered recession in the April-June quarter, contracting 12.6% from the same period a year earlier.
Preliminary data reported on Tuesday showed the economy contracting 41.2% in quarterly terms in April-June as the city-state, heavily reliant on trade and tourism, imposed circuit breaker precautions to curb the coronavirus pandemic. An update of the data is due for release in August.

An early outbreak of the COVID-19 virus was followed later by a surge in cases among Singapore’s sizable migrant worker population. That prompted authorities to suspend nonessential services and close many offices to stem the spread of infections.

Singapore news, Singapore elections, Singapore covid-19, Singapore covid-19 polls, elections during coronavirus An election official places gloves and sanitizer on a desk at a polling center set up at Chung Cheng high school. (Singapore Ministry of Communications and Information via AP)

The economy contracted 0.3% from a year earlier in the first quarter of the year and 3.3% in quarterly terms. That means with two straight quarters of contraction it is in a technical recession. The biggest contraction during the last quarter was in construction, which plunged 55% from a year earlier, and 96% on a quarterly basis, as workers were quarantined to stem outbreaks of the virus. Manufacturing dropped 23% in quarterly terms but rose 2.5% from a year earlier.

Retail sales and food and beverage sales fell more than 50% in May, according to earlier reported figures. Grocery store sales rose as people dined at home.

US budget deficit hits all-time high of USD 864 billion in June

The federal government in the US incurred the biggest monthly budget deficit in history in June as spending on programmes to combat the coronavirus recession exploded while millions of job losses cut into tax revenues.

The Treasury Department reported on Monday that the deficit hit USD 864 billion last month, an amount of red ink that surpasses most annual deficits in the nation’s history and is above the previous monthly deficit record of USD 738 billion in April. That amount was also tied to the trillions of dollars Congress has provided to cushion the impact of the widespread shutdowns that occurred in an effort to limit the spread of the viral pandemic.

For the first nine months of this budget year, which began on October 1, the deficit totals USD 2.74 trillion, also a record for that period. That puts the country well on the way to hitting the USD 3.7 trillion deficit for the whole year that has been forecast by the Congressional Budget Office (CBO). That total would surpass the previous annual record of USD 1.4 trillion set in 2009, when the government was spending heavily to lift the country out of the recession caused by the 2008 financial crisis.

The June deficit was driven higher by spending on various government relief programmes such as an extra USD 600 per week in expanded unemployment benefits and a Paycheck Protection Program that provided support to businesses to keep workers on their payrolls.

Asia shares drop on jitters over virus, China-US friction

Shares fell in Asia on Tuesday as skepticism set in about the recent upward momentum in global markets given rising confirmed coronavirus cases and percolating tensions between the US and China.

The White House’s decision to reject nearly all Chinese maritime claims in the South China Sea added to investor jitters.
The world’s two largest economies have been sparring over everything from the pandemic to human rights.

Japan’s benchmark Nikkei 225 sank 0.8% in early trading to 22,609.57. South Korea’s Kospi lost 0.4% to 2,177.01, while Australia’s S&P/ASX 200 dropped 0.8% to 5,932.70.

Hong Kong’s Hang Seng tumbled 1.9% to 25,277.06 as reports of locally transmitted coronavirus cases prompted authorities to tighten precautions against the pandemic. The Shanghai Composite lost nearly 1.2% to 3,403.78.

One indicator of how bad the regional damage could get came from the advance estimate of Singapore’s gross domestic product, or GDP, for the second quarter.  It showed a 12.6% year-on-year contraction, confirming Singapore’s worst recession ever.

(With inputs from Agencies)

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