World has entered recession, says IMF

News Network
March 28, 2020

Washington, Mar 28: The world is in the face of a devastating impact due to the coronavirus pandemic and has clearly entered a recession, the International Monetary Fund said on Friday, but projected a recovery next year.

"We have reassessed the prospects for growth for 2020 and 2021. It is now clear that we have entered a recession as bad or worse than in 2009. We do project recovery in 2021," IMF Managing Director Kristalina Georgieva told reporters at a news conference.

Georgieva was addressing the press after a meeting of governing body of the IMF, the International Monetary and Financial Committee. Representing 189 members, the body met virtually to discuss the unprecedented challenge posed to the world by COVID-19.

The key to recovery in 2021, she said, is only if the international community succeeds in containing the virus everywhere and prevent liquidity problems from becoming a solvency issue.

"The US is in recession, as is the rest of the advanced economies of the world. And in a big chunk of developed and emerging markets in developing economies. How severe? We are working now on our projections for 2020, Georgieva said in response to a question.

The new projections are expected in the next few weeks.

Stressing that while containment is the main reason for the economy to stand still and get into a recession, she said containment is very necessary to come out of this period and step in to recovery. "Until the virus is not contained, it would be very difficult to go to the lives we love."

"A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery. But can erode the fabric of our societies," the IMF chief said.

To avoid this from happening, many countries have taken far-reaching measures to address the health crisis and to cushion its impact on the economy, both on the monetary and on the fiscal side, she said.

The IMF chief said 81 emergency financing requests, including 50 from lower-income countries, have been received. She said current estimate for the overall financial needs of emerging markets is 2.5 trillion dollars.

"We believe this is on the lower end. We do know that their own reserves and domestic resources will not be sufficient," she added.

The G-20, a day earlier, reported fiscal measures totalling some 5 trillion dollars or over 6 per cent of the global GDP.

Responding to another question, Georgieva said the IMF is projecting recession for 2020.

"We do expect it to be quite deep and we are very much urging countries to step up containment measures aggressively so we can shorten the duration of this period of time when the economy is in standstill," she said.

"And also to apply well-targeted measures, primarily focusing on the health system to absorb that enormous stress that comes from coronavirus. And on people, businesses and the financial system, I am very pleased to say that when we went through countries' responses, that sense of targeted fiscal measures is there and are also very impressive to see the size of these measures," she added.

"Countries are doing all they can on the fiscal and on the monetary front. We have heard from our members' very impressive decisions taken over the last days," the IMF chief said.

"We also want to caution that as we are responding now, we want to make the recession as possibly short and not too deep. We also want to think about what is going to follow the recovery and make sure that we are putting forward measures that can be supportive in this regard," she said.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
June 11,2020

Beijing, Jun 11: Floods and mudslides in south China have uprooted hundreds of thousands of people and left dozens dead or missing, state media reported Thursday.

The bad weather has wreaked havoc on popular tourist areas that had already been battered by months of travel restrictions during the coronavirus outbreak.

Torrential downpours unleashed floods and mudslides that caused nearly 230,000 people to be relocated and destroyed more than 1,300 houses, official state news agency Xinhua reported, citing the Ministry of Emergency Management.

In southern Guangxi Zhuang Autonomous Region, six people were reported dead and one missing, Xinhua said.

Streets were waterlogged in popular tourist destination Yangshuo, forcing residents and visitors to evacuate on bamboo rafts.

The local government said more than 1,000 hotels had been flooded and more than 30 tourist sites damaged.

One owner of a family-run hotel told Xinhua that the guest rooms were submerged in one metre (three feet) of rainwater.

The extreme weather has dealt a hefty blow to the region's tourism sector, which is still reeling from the COVID-19 epidemic.

The emergency management ministry said there were direct economic losses of over 4 billion yuan (more than $550 million) from the flooding, Xinhua reported.

In Hunan Province, at least 13 people were killed in rain-triggered disasters, and another eight people are missing or killed in southwestern Guizhou province, according to the local emergency response departments, Xinhua said.

The heavy downpours began at the beginning of June and have led to "dangerously high water levels" in 110 rivers, Xinhua reported.

Further rainstorms are expected in the next few days across the south.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
March 16,2020

New Delhi, Mar 16: Due to the coronavirus pandemic, most airlines in the world will be bankrupt by the end of May and only a coordinated government and industry action right now can avoid the catastrophe, said global aviation consultancy firm CAPA in a note on Monday.

"As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants," it stated.

Across the world, airlines have announced drastic reduction in their operations in the wake of the coronavirus outbreak. For example, Atlanta-based Delta Air Lines stated on Sunday that it would be grounding 300 aircraft in its fleet and reduce flights by 40 per cent.

The US has suspended all tourist visas for people belonging to the European Union, the UK and Ireland. Similarly, the Indian government has suspended all tourist visas and e-visas granted on or before March 11.

CAPA, in its note on Monday, said, "By the end of May-2020, most airlines in the world will be bankrupt. Coordinated government and industry action is needed - now - if catastrophe is to be avoided."

Cash reserves are running down quickly as fleets are grounded and "what flights there are operate much less than half full", it added.

"Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon," it said.

India's largest airline IndiGo -- which has around 260 planes in its fleet -- said on Thursday that it has seen a decline of 15-20 per cent in daily bookings in the last few days.

The low-cost carrier had stated that it expects its quarterly earnings to be materially impacted due to such decline.

CAPA said the failure to coordinate the future will result in protectionism and much less competition.

"The alternative does not bear thinking about. An unstructured and nationalistic outcome will not be survival of the fittest.

"It will mostly consist of airlines that are the biggest and the best-supported by their governments. The system will reek of nationalism. And it will not serve the needs of the 21st century world. That is not a prospect that any responsible government should be prepared to contemplate," the consultancy firm said.

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.
News Network
February 9,2020

Wuhan, Feb 9: President Xi Jinping strode onstage before an adoring audience in the Great Hall of the People in Beijing less than three weeks ago, trumpeting his successes in steering China through a tumultuous year and promising "landmark" progress in 2020.

"Every single Chinese person, every member of the Chinese nation, should feel proud to live in this great era," he declared to applause on the day before the Lunar New Year holiday. "Our progress will not be halted by any storms and tempests."

Xi made no mention of a dangerous new coronavirus that had already taken tenacious hold in the country. As he spoke, the government was locking down Wuhan, a city of 11 million people, in a frantic attempt to stop the virus spreading from its epicenter.

The coronavirus epidemic, which has killed more than 800 people in China as of Sunday and sickened tens of thousands, comes as Xi has struggled with a host of other challenges: a slowing economy, huge protests in Hong Kong, an election in Taiwan that rebuffed Beijing and a protracted trade war with the United States.

Now Xi faces an accelerating health crisis that is also a political one: a profound test of the authoritarian system he has built around himself over the past seven years. As the Chinese government struggles to contain the virus amid rising public discontent with its performance, the changes that Xi has ushered in could make it difficult for him to escape blame.

"It’s a big shock to the legitimacy of the ruling party. I think it could be only second to the June 4 incident of 1989. It’s that big," said Rong Jian, a writer about politics in Beijing, referring to the armed crackdown on Tiananmen Square protesters that year.

"There’s no doubt about his control over power," he added, "but the manner of control and its consequences have hurt his legitimacy and reputation."

Xi himself has recognized what is at stake, calling the outbreak "a major test of China’s system and capacity for governance."

Yet as China’s battle with the coronavirus intensified, Xi put the country’s No. 2 leader, Li Keqiang, in charge of a leadership group handling the emergency, effectively turning him into the public face of the government’s response. It was Li Keqiang who traveled to Wuhan to visit doctors.

Xi, by contrast, receded from public view for several days. That was not without precedent, though it stood out in this crisis, after previous Chinese leaders had used times of disaster to try to show a more common touch. State television and newspapers almost always lead with fawning coverage of Xi’s every move.

That retreat from the spotlight, some analysts said, signaled an effort by Xi to insulate himself from a campaign that may falter and draw public ire. Yet Xi has consolidated power, sidelining or eliminating rivals, so there are few people left to blame when something goes wrong.

"Politically, I think he is discovering that having total dictatorial power has a downside, which is that when things go wrong or have a high risk of going wrong, then you also have to bear all the responsibility," said Victor Shih, an associate professor at the University of California San Diego who studies Chinese politics.

Much of the country’s population has been told to stay at home, factories remain closed, and airlines have cut service. Experts warn that the coronavirus could slam the economy if not swiftly contained.

The government is also having trouble controlling the narrative. Xi now faces unusually sharp public discontent that even China’s rigorous censorship apparatus has been unable to stifle entirely.

The death of an ophthalmologist in Wuhan, Dr. Li Wenliang, who was censured for warning his medical school classmates of the spread of a dangerous new disease in December, has unleashed a torrent of pent-up public grief and rage over the government’s handling of the crisis. Chinese academics have launched at least two petitions in the wake of Li’s death, each calling for freedom of speech.

State media still portray Xi as ultimately in control, and there’s no sign that he faces a serious challenge from within the party leadership. The crisis, though, has already tainted China’s image as an emerging superpower — efficient, stable and strong — that could eventually rival the United States.

How much the crisis might erode Xi’s political standing remains to be seen, but it could weaken his position in the long run as he prepares to take a likely third term as Communist Party general secretary in 2022.

In 2018, Xi won approval to remove the constitutional limits on his term as the country’s president, making his plan for another five-year term seem all but certain.

If Xi comes out of this crisis politically insecure, the consequences are unpredictable. He may become more open to compromise within the party elite. Or he may double down on the imperious ways that have made him China’s most powerful leader in generations.

"Xi’s grip on power is not light," said Jude Blanchette, the Freeman Chair in China Studies at the Center for Strategic and International Studies.

"While the ham-fisted response to this crisis undoubtedly adds a further blemish to Xi’s tenure in office," Blanchette added, "the logistics of organizing a leadership challenge against him remain formidable."

In recent days, despite a dearth of public appearances, state media have portrayed Xi as a tireless commander-in-chief. This week they began calling the government’s fight against the virus the "people’s war," a phrase used in the official readout of Xi’s telephone call with President Donald Trump on Friday.

There are increasing signs that the propaganda this time is proving less than persuasive.

The Lunar New Year reception in Beijing where Xi spoke became a source of popular anger, a symbol of a government slow to respond to the suffering in Wuhan. Xi and other leaders appear to have been caught off guard by the ferocity of the epidemic.

Senior officials would almost certainly have been informed of the emerging crisis by the time national health authorities told the World Health Organization on Dec. 31, but neither Xi nor other officials in Beijing informed the public.

Xi’s first acknowledgment of the epidemic came Jan. 20, when brief instructions were issued under his name. His first public appearance after the lockdown of Wuhan on Jan. 23 came two days later, when he presided over a meeting of the Communist Party’s top body, the Politburo Standing Committee, which was shown at length on Chinese television. "We’re sure to be able to win in this battle," he proclaimed.

Back then, the death toll was 106. As it rose, Xi allowed other officials to take on more visible roles. Xi’s only appearances have been meeting foreign visitors in the Great Hall of the People or presiding over Communist Party meetings.

On Jan. 28, Xi met with the executive director of the World Health Organization, Dr. Tedros Adhanom Ghebreyesus, and told Tedros that he "personally directed" the government’s response. Later reports in state media omitted the phrase, saying instead that Xi’s government was "collectively directing" the response.

Since nothing about how Xi is portrayed in state media happens by accident, the tweak suggested a deliberate effort to emphasize shared responsibility.

Xi did not appear on official broadcasts again for a week — until a highly scripted meeting Wednesday with the authoritarian leader of Cambodia, Hun Sen.

There is little evidence that Xi has given up power behind the scenes. Li Keqiang, the premier in formal charge of the leadership group for the crisis, and other officials have said that they take their orders from Xi. The group is filled with officials who work closely under Xi, and its directives emphasize his authority.

"The way the epidemic is being handled now from the top just doesn’t fit with the argument that there’s been a clear shift toward more collective, consultative leadership," said Holly Snape, a British Academy Fellow at the University of Glasgow who studies Chinese politics.

The scale of discontent and the potential challenges for Xi could be measured by repeated references online to the nuclear accident at Chernobyl. Many of them came under the guise of viewer reviews of the popular television miniseries of the same name, which is still available for streaming inside China.

"In any era, any country, it’s the same. Cover everything up," one reviewer wrote.

The Soviet Union of 1986, however, was a different country than China in 2020.

The Soviet state was foundering when Chernobyl happened, said Sergey Radchenko, a professor of international relations at Cardiff University in Wales who has written extensively on Soviet and Chinese politics.

"The Chinese authorities, by contrast, are demonstrating an ability to cope, a willingness to take unprecedented measures — logistical feats that may actually increase the regime’s legitimacy," he added.

Radchenko compared Xi’s actions to those of previous leaders in moments of crisis: Mao Zedong after the Cultural Revolution or Deng Xiaoping after the Tiananmen Square crackdown.

"He’s doing what Mao and Deng would have done in similar circumstances: stepping back into the shadows while remaining firmly in charge."

Comments

Add new comment

  • Coastaldigest.com reserves the right to delete or block any comments.
  • Coastaldigset.com is not responsible for its readers’ comments.
  • Comments that are abusive, incendiary or irrelevant are strictly prohibited.
  • Please use a genuine email ID and provide your name to avoid reject.