Tag Archives: Global Recession

Coronavirus may push 150 million people into extreme poverty: World Bank

WASHINGTON (Reuters) – The World Bank said on Wednesday that the coronavirus pandemic could push as many as 150 million people into extreme poverty by the end of 2021, wiping out more than three years of progress in poverty reduction.

Releasing its flagship biennial report on poverty and shared prosperity, the multilateral development lender said that an additional 88 million to 115 million people will fall into extreme poverty – defined as living on less than $1.90 a day -in 2020. The report said this could grow to 111 million to 150 million by the end of 2021.

That would mean that 9.1-9.4% of the world’s population would be living under extreme poverty this year, about the same as 2017’s 9.2% and representing the first rise in the extreme poverty percentage in about 20 years.

The 2019 extreme poverty rate was estimated at about 8.4% and had been expected to drop to 7.5% by 2021 before the coronavirus pandemic. The report said that without swift, substantial policy actions, a longstanding goal of cutting the rate to 3% by 2030 looked out of reach.

“The pandemic and global recession may cause over 1.4% of the world’s population to fall into extreme poverty,” World Bank President David Malpass said in a statement, calling it a “serious setback to development progress and poverty reduction.”

The report found that many of the new extreme poor are in countries that have high poverty rates already, but around 82% of these are in middle-income countries, where the poverty line is defined as income of $3.20 a day for low-middle-income countries and $5.50 a day for upper-middle-income countries.

While extreme poverty has been concentrated in rural areas in the past, the World Bank report found that increasing numbers of urban dwellers have been thrown into extreme poverty as jobs dry up from coronavirus lockdowns and reduced demand.

Sub Saharan Africa has the highest concentration of those living on less than $1.90 a day, and could see an increase of over 50 million people by 2021 compared to pre-coronavirus estimates. About 42% of the region’s population could be living under extreme poverty by 2021 versus a pre-COVID estimate of 37.8%, the study showed.

The coronavirus also has stagnated “shared prosperity,” defined as growing income for the poorest 40% of a country’s population. The World Bank said that from 2012 to 2017, income rose for this group by an average of 2.3% in 74 of 91 economies for which data was available.

The COVID-19 crisis could now reduce income for the poorest 40%, increasing income inequality and reducing social mobility, the bank said.

To get back on a track of poverty reduction, countries will need collective action to control the virus, provide support for households and build more resilient economies once the pandemic subsides, the World Bank said.

“Countries will need to prepare for a different economy post-COVID, by allowing capital, labor, skills and innovation to move into new businesses and sectors,” Malpass said.

(Reporting by David Lawder; Editing by Andrea Ricci)

Rich nations pump aid into battered economy as coronavirus deaths in Italy overtake China

By Guy Faulconbridge and James Mackenzie

LONDON/MILAN (Reuters) – The world’s richest nations poured unprecedented aid into the global economy on Thursday as coronavirus cases ballooned in the new epicenter Europe, with the number of deaths in Italy outstripping those in mainland China, where the virus originated.

With over 236,000 infections and more than 9,700 deaths, the epidemic has stunned the world and drawn comparisons with painful periods such as World War Two, the 2008 financial crisis and the 1918 Spanish flu.

U.N. chief Antonio Guterres warned that a global recession, “perhaps of record dimensions”, was a near certainty.

“This is a moment that demands coordinated, decisive, and innovative policy action from the world’s leading economies,” Guterres told reporters via a video conference. “We are in an unprecedented situation and the normal rules no longer apply.”

Tourism and airlines have been particularly battered, as the world’s citizens hunker down to minimize contact and curb the spread of the highly contagious COVID-19 respiratory illness. But few sectors have been spared by a crisis threatening a lengthy global recession.

Canadian Prime Minister Justin Trudeau said he expected closure of the United States-Canada border to come into effect overnight on Friday. The U.S. State Department is expected to urge Americans not to travel abroad at all.

Markets have suffered routs unseen since the 2008 financial debacle, with investors rushing to the U.S. dollar as a safe haven. Wall Street tried to bounce back on Thursday. The benchmark S&P 500 swung into positive territory after falling as much as 3.3% and was up about 1%. U.S. oil prices rose 20%.

Policymakers in the United States, Europe and Asia have slashed interest rates and opened liquidity taps to try to stabilize economies hit by quarantined consumers, broken supply chains, disrupted transport and paralyzed businesses.

The virus, thought to have originated from wildlife in mainland China late last year, has jumped to 172 other nations and territories with more than 20,000 new cases reported in the past 24 hours – a new daily record.

Cases in Germany, Iran and Spain rose to more than 12,000 each. An official in Tehran tweeted that the coronavirus was killing one person every 10 minutes.

LONDON LOCKDOWN?

Britain, which has reported 144 deaths, was closing dozens of underground stations in London and ordering schools shut from Friday.

Some 20,000 soldiers were on standby, Queen Elizabeth headed for sanctuary in the ancient castle of Windsor, and the Tower of London was to close along with other historic buildings.

“Many of us will need to find new ways of staying in touch with each other and making sure that loved ones are safe,” the 93-year-old monarch said in an address to the nation.

“I am certain we are up to that challenge. You can be assured that my family and I stand ready to play our part.”

Italian soldiers transported corpses overnight from an overwhelmed cemetery in Europe’s worst-hit nation where 3,405 people have died, more than in mainland China. Germany’s military was also readying to help.

Supermarkets in many countries were besieged with shoppers stocking up on food staples and hygiene products. Some rationed sales and fixed special hours for the elderly, who are particularly vulnerable to severe illness.

Solidarity projects were springing up in some of the world’s poorest corners. In Kenya’s Kibera slum, for example, volunteers with plastic drums and boxes of soap on motorbikes set up handwashing stations for people without clean water.

Russia reported its first coronavirus death on Thursday.

Amid the gloom, China provided a ray of hope as it reported zero new local transmissions of the virus, a sign of success for its draconian containment policies since January. Imported cases accounted for all 34 new infections in China.

In the United States, where President Donald Trump had initially played down the coronavirus threat, infections surged with over 10,700 known cases and at least 163 deaths.

Trump has infuriated Beijing’s Communist Party rulers by rebuking it for not acting faster and drawn accusations of racism by referring to COVID-19 as the “Chinese virus”.

“We continue our relentless effort to defeat the Chinese virus,” he said in opening remarks at a briefing with his coronavirus task force on Thursday.

The head of the U.S. National Guard said tens of thousands of its troops could be activated to help U.S. states deal with the outbreak now in all 50 states.

MOTOWN SHUTS CAR PLANTS

In a bewildering raft of financial measures around the world, the European Central Bank launched new bond purchases worth 750 billion euros ($817 billion). That brought some relief to bond markets and also halted European shares’ slide.

The U.S. Federal Reserve rolled out its third emergency credit program in two days, aimed at keeping the $3.8 trillion money market mutual fund industry functioning. The Bank of England cut interest rates to 0.1%, its second emergency rate cut in just over a week.

China was to unleash trillions of yuan of fiscal stimulus and South Korea pledged 50 trillion won ($39 billion).

The desperate state of industry was writ large in Detroit, where the big three automakers – Ford Motor Co <F.N>, General Motors Co <GM.N> and Fiat Chrysler Automobiles NV <FCHA.MI> <FCAU.N> – were shutting U.S. plants, as well as factories in Canada and Mexico.

With some economists fearing prolonged pain akin to the 1930s Great Depression and others anticipating a bounceback, gloomy data and forecasts abounded.

In one of the most dire calls, J.P. Morgan economists forecast the Chinese economy to drop more than 40% this quarter and the U.S. economy to shrink 14% in the next. Ratings agency Moody’s prepared for mass downgradings.

In Britain, small gin distilleries have started producing hand sanitizer amid a national shortage, a trend mirrored across the globe from Australia to the United States.

And Monaco canceled its showcase Formula One Grand Prix, the most famous and glamorous race on the calendar, in another high-profile sporting casualty of the epidemic.

(Reporting by Reuters bureaux around the world; Writing by Marius Zaharia, Andrew Cawthorne and Nick Macfie; Editing by Mark Heinrich and Bill Berkrot)

Washington state confirms second U.S. coronavirus death; New York reports first case

By Brad Brooks and David Shepardson

(Reuters) – Health officials in Washington state said late Sunday that a nursing home resident had died after contracting coronavirus, while New York’s governor confirmed his state’s first positive case, as the virus moved out of its West Coast foothold.

The coronavirus, which emerged in China late last year, has decimated global markets as it quickly moves around the world. It appeared poised for a spike in the United States, in part because of more testing to confirm cases.

Florida late Sunday declared a public health emergency as it confirmed its first two cases.

Trump administration officials worked Sunday to soothe nerves and calm fears that a global recession was looming, arguing that the public and media were over-reacting and saying that stocks would bounce back because the American economy was fundamentally strong.

The total number of confirmed cases in the United States is more than 75 with two reported deaths, both in Washington state. Globally there have been more than 87,000 cases and nearly 3,000 deaths in 60 countries, according to the World Health Organization.

In the United States, a cluster of cases is centered on a nursing home near Seattle.

The Seattle and King County public health department confirmed late Sunday that a man in his 70s who was a resident of the LifeCare long-term care facility in Kirkland and had coronavirus had died the day before.

A sign at the entrance to Life Care Center of Kirkland, the long-term care facility linked to the two of three confirmed coronavirus cases in the state, is pictured in Kirkland, Washington, U.S. March 1, 2020. REUTERS/David Ryder

On Saturday, the department had reported the first death of a coronavirus patient in the United States, a man in his 50s who was living in Kirkland – the same city where the nursing home is located. Six of the 10 confirmed coronavirus cases in Washington state have been residents or workers at LifeCare.

State officials said an additional 27 residents of the nursing home and 25 staff members were reporting symptoms of the virus, which can be similar to that of the common flu.

New York Governor Andrew Cuomo confirmed on Twitter his state’s first coronavirus case, a woman in her 30s who caught the virus during a recent trip to Iran and was now in home quarantine.

Cuomo did not say where the woman lived, but the New York Times reported she was in the Manhattan borough of New York City, citing state officials.

“The patient has respiratory symptoms, but is not in serious condition and has been in a controlled situation since arriving in New York,” Cuomo said.

Stock markets plunged last week, with an index of global stocks setting its largest weekly fall since the 2008 financial crisis, and more than $5 trillion wiped off the value of stocks worldwide.

A key energy conference in Houston that brings together oil ministers and energy firms was canceled on Sunday with the organizers of CERAWeek noting that border health checks were becoming more restrictive and companies had begun barring non-essential travel to protect workers.

A world economy conference with Pope Francis due to take place in Italy later this month was also canceled.

‘WE’RE READY’

Trump said on Sunday that travelers to the United States from countries at high risk of coronavirus would be screened before boarding and on arrival, without specifying which countries.

Delta Air Lines Inc said on Sunday it was suspending until May flights to Milan in northern Italy, where most of that country’s coronavirus cases have been reported. Flights will continue to Rome. American Airlines Group Inc announced a similar move late on Saturday.

The United States has 75,000 test kits for coronavirus and will expand that number “radically” in coming weeks, U.S. Health and Human Services Secretary Alex Azar told ABC’s “This Week” on Sunday.

Vice President Mike Pence, appointed last week to run the White House’s coronavirus response, said the government had contracted 3M Co to produce an extra 35 million respiratory masks a month. He urged Americans not to buy the masks, which he said were only needed by healthcare workers. Honeywell International Inc is the other major U.S. mask producer.

He also told Fox News that clinical trials of a coronavirus vaccine would start in six weeks but that a vaccine would likely not be available this season.

Democrats, who will challenge Trump for the presidency in the Nov. 3 election, have criticized his administration for downplaying the crisis and not preparing for the disease to spread in the United States.

Pence said Americans should brace for more cases but that the “vast majority” of those who contracted the disease would recover.

“Other than in areas where there are individuals that have been infected with the coronavirus, people need to understand that for the average American, the risk does remain low. We’re ready,” Pence told NBC’s “Meet the Press.”

(Reporting by Brad Brooks in Austin, Texas; David Shepardson and Andrea Shalal in Washington; and Rich McKay in Atlanta; Editing by Lisa Shumaker, Daniel Wallis and Peter Cooney)

Dollar turns lower against euro, yen on doubts over rally’s momentum

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar lost ground against the yen and was mostly flat against the euro on Wednesday, reversing earlier gains after traders took profits on skepticism that central bank policy in the United States and elsewhere would continue to diverge.

The dollar fell to a session low of 113.23 yen after hitting a more than two-week high against the Japanese currency of 114.55 yen early in the U.S. trading session. The euro was last up slightly against the dollar at $1.0866 after hitting a more than one-month low of $1.0826 earlier.

Early in the U.S. session, data showing stronger-than-expected growth in U.S. private payrolls in February added to a recent pile of reassuring U.S. economic data and boosted expectations that the Federal Reserve would hike interest rates at least once this year.

That optimism cooled, partly on doubts that uniformly strong U.S. economic data would continue and that the European Central Bank would announce a greater stimulus package and weaken the euro at the central bank’s meeting on March 10.

“People are taking a bit of a profit after a strong ride,” said Sebastien Galy, currency strategist at Deutsche Bank in New York, in reference to the dollar’s recent gains. “Everyone knows the dollar, for good reasons, is too expensive.”

The ADP National Employment Report showed U.S. private employers added 214,000 jobs in February. That was above economists’ expectations for a gain of 190,000, according to a Reuters poll.

Uncertainty remained over the impact of low oil prices on Fed policy and China’s economic growth, leading traders to take profits in the dollar’s gains, said Sireen Harajli, currency strategist at Mizuho Bank Ltd in New York.

Harajli said uncertainty ahead of Friday’s U.S. non-farm payrolls report for February may have contributed to the reversal in the dollar’s rally. Economists polled by Reuters expect U.S. employers to have added 190,000 jobs last month.

The U.S. dollar index, which hit a roughly one-month high of 98.582 earlier, was last down 0.17 percent at 98.176 <.DXY>. The dollar was last down 0.53 percent against the yen at 113.38 yen <JPY=>.

The dollar was last down 0.07 percent against the Swiss franc at 0.9962 franc <CHF=>.

(Reporting by Sam Forgione; Editing by Lisa Von Ahn)