This article about study of current situation of economy and pandemic impact on global economy. How long it will take to recover with the quote of GDP growth and Service PMI of key nations.
Call Girls in New Ashok Nagar, (delhi) call me [9953056974] escort service 24X7
Game change in global economy
1. 1
SELVAN ATHISHTARAJ V (Analysist)
We find that, there are some sign of recovery, it means that not in full, but partial and uneven. Many
countries have started reopening of economic activities. If we look at it March Global Economy at very
steep down trend, all have worried. For the past two months May and June response to the economic
activities are good and slowly it has turning to upward trend. Consumer spending has increased
remarkably for the past two months. In March consumer spending drops 6.6% and 12.6% in April, but
it has picked up to 8.2% in May. Despite of decline in American personal income for the past two
months, spending pattern has increased and little bit widened. Personal income was declined to 10.8%
in March and improved to 4.2% in last month. This is purely because of government stimulates to
Jobless of 30million In April government has given an aid to all the unemployed stimulus of $1200 as
onetime payment and moreover this will not count as a part of income. Federal government states
have plumbed to $600 aid per week to all the unemployed, this will expire after July. The real true
colour shadow would reflect after September. Without stimulus support or an extension of
unemployment aid, how consumer spending will behave freely in the economy setback. Spending
pattern will change, public may suffer with the huge deficit due to loss of income and unemployment
and layoffs
The current scenario of economy called as Virus Driven Ice Age by Economist Carsten Brzeski, it is an
abrupt stop of economy activities from 100 to Zero. Most likely this GFC(Global Financial Crisis) seems
to be “V” shaped , a growth plunge is followed by an equally sharp recovery. This because of monetary
and fiscal stimulus of $10 Trillion, could aid equally to swift rebound. Scenario for 2-3 quarter and
slowly start recover from Q3 and good response would expect in Q4 on recovery stage.
However, 2021 mid economy activities would return to normal and slowly climbs up.
Recovery has begun, global stock market prices, fossil fuel prices and crudes and start-up on new
projects in Infrastructure and medium sized dwellers in real estates and bond yields are gradually
picking up from mid of May 2020. This shows positive indication on economy and good sign of
recovery. But long way to go to reach the industries average and peak. Job market is second major key
indicator of reviving economy, it has improved by some of the strong action by the policy makers
Notably relaxation in lockdown and withdrawal of restriction imposed on Trades and industries
function from the beginning of May sudden increase of employment and huge drop in unemployment.
Government support for small business. reduction in interest on borrowing money from NBFC s and
banks and stimulus packages for the business and SME.
GAME CHANGE IN GLOBAL
ECONOMY
– Miracle in two months –
2. 2
Employment has declined to 20.7 million in April 2020. On May 2020 no of people hired has been
increased to 2.5 million. Both the cases are extreme and records. The increase in employment not only
because of trade, business houses and industries. But government reopen some of the service
industries like leisure’s, hospitality, healthcare beauty and SPA, Restaurants, bars, Hotels , events and
entertainment venues. Total unemployment was raised in April 2020 loss of government jobs in
federal government and states. Many of the government services are shutdown, due to loss of
revenues, schools, universities, libraries and employments on research and development. In the
reported loss of 20 million jobs, out of this 18 million are temporarily furlough. Surprisingly 1.7 million
labour forces are returned to employment by rehired and some of them hired for low-waged. Total
departed from the employment 6.4 million earlier, unemployment has fell 14.7% in April to 13.3% in
May . All the activities showing considerable improvement due to government injecting the money to
prevent the offset on economy, it remains possible that, another round of job cuts. Rather it is good
that, we have not yet seen another round of job cut in case of second wave in globally.
Economy has improved in china
Chinese industrial production was up 4.4% in May, overall activities is very closer to pre-crisis path.
Manufacturing sector was up 5.2%. Including 12.2% increases. There was also strong growth in
production and construction equipment sector. Annual retail sale contribution was 7-8% in previous
year, now retail sales fell 2.8%. However, some of the categories experienced in significant increases
from a year earlier. These includes telecom equipment 11.4%, Automobile 3.5%, furniture 3%,home
appliances 4.3%,cosmitics 12.9%, personal care products 17.3% are shown the increases. This shows
recovery of economics in china after post Covid 19.
Countries
Difference
from April 2020
WEO Proj
Q4 over Q4 2/
Projections Projections
2018 2019 2020 2021 2020 2021 2019 2020 2021
United States 2.9 2.3 –8.0 4.5 –2.1 –0.2 2.3 –8.2 5.4
Germany 1.5 0.6 –7.8 5.4 –0.8 0.2 0.4 –6.7 5.5
France 1.8 1.5 –12.5 7.3 –5.3 2.8 0.9 –8.9 4.2
Italy 0.8 0.3 –12.8 6.3 –3.7 1.5 0.1 –10.9 5.5
Spain 2.4 2.0 –12.8 6.3 –4.8 2.0 1.8 –11.4 6.3
Japan 0.3 0.7 –5.8 2.4 –0.6 –0.6 –0.7 –1.8 0.0
United Kingdom 1.3 1.4 –10.2 6.3 –3.7 2.3 1.1 –9.0 6.9
3. 3
Canada 2.0 1.7 –8.4 4.9 –2.2 0.7 1.5 –7.5 4.6
Brazil 1.3 1.1 –9.1 3.6 –3.8 0.7 1.9 –5.1 5.5
China 6.7 6.1 1.0 8.2 –0.2 –1.0 5.0 2.4 3.9
Michael Wolf, global economist at Deloitte, provides an update on Japan’s economy.
Japan’s recession may be deeper than analysts had anticipated. Both retail sales and industrial
production fell more than expected in April. Industrial production dropped 9.1%, with some of the
largest losses in autos and steel. Meanwhile, retail sales were down 9.6% over the month as
consumers held back spending on general merchandise, apparel, and motor vehicles. Weakness likely
persisted in May as well. The government placed the country in a state of emergency and the last of
the prefectures, which includes Tokyo, were only given the green light to reopen on May
25. Manufacturers expect their output to fall another 4.1% in May. In addition, weekly retail sales data
show that spending on discretionary items remained weak during the first three weeks of May.
Economic contraction during a state of emergency was to be expected, even if the losses are a bit
larger than previously expected.
Kenya’s Recovery:
Kenya’s worst affected economy when it comes to the impact from the coronavirus. Mainly because
of Europe export and tourism has come down to zero. According to central bank Governor Patrick
Njoroge. Exports of flowers, of which Kenya is the biggest supplier in Europe, output jumped 23% in
May as orders returned to almost normal. Tea, with most of the black variety coming from the East
African nation, Jumped 15%. The amount of money Kenyans residing outside the country send back
home increased as well. “By all indications, in May, the economy is bouncing back,” The increase in
exports and savings from lower oil prices, have helped boost Kenya’s foreign reserves, now at $9.2
billion. Tourism has not recovered yet.
Modest Outbreak:
Countries like Hungary, Romania, and Slovakia, all of which experienced a relatively modest outbreak
of Covid 19 Pandemic. If we notice that, there were interesting variations. For example, the countries
with the largest monthly declines in output in April. Evidently, their industrial sectors were hurt by
precautionary lockdowns as well as the spill over effect of weak demand in Western Europe. Of
Europe’s big economies, the biggest decline of output took place in Italy (down 42.5%, not surprisingly)
and the smallest was in Germany (down 30.2%). Jn Nordic region is also same type of reciprocal,
Sweden’s has taken a decision to avoid a lockdown altogether. Swedish industrial production fell
14.2% from a year earlier. Yet output fell much more modestly in Sweden’s neighbourhood, falling
5.5% in Norway, 9.6% in Denmark, and 3.1% in Finland.
Purchasing Managers Indices
PMI reading below 50 called as declining of activities, lower number is faster decline. The reading
above 50 represent growing and improved activities in economic scale. One of the interesting things
in the recent economics, recovery has been very sharper than anticipated. In May, many countries
PMI have come higher than expected. We could able to see furthermore improvement in June2020.
We find lot of difference in the last one month. This mainly due to relaxations and opening for
economics and countries. Notably very strong upfront stimulus and supported fiscal packages,
government has injected money for the unemployed and business door shuts to get short term relief
from the pandemic adverse effect. For the financials, a greater number of moratoriums to manage
debt low interest on loans and FCL (Flexible credit line) for long term loans and borrowing capitals.
The second big theme is public sector disinvestment. There is a lot of Street chatter that the
government will unveil disinvestment. A lot of money is needed to bridge the fiscal gaps and you will
4. 4
have to sell the crown jewels. Policy makers are taken a decision to sell the government assets and
bonds apart from the disinvestment on public sector corporation. One of the leading housing loan
lenders reported retail loan picked-up in Tier 2 and mid segment, indicates that retail loan back to
normal than expected. In the beginning of June 80% auto dealers are opened for selling the product.
35% of passenger vehicles were sold, good amount of response in two-wheeler sales. All those things
are witnessing the economy is reviving back. There are few segments are not yet started tourism,
entertainment industries and out bound Air travel.
In Eurozone France, Italy and Spain have managed and push the covid 19 cases below six per million,
thus gives positive signal in the economy recovery in May and June. France Services PMI rose to 50.3
in June 2020 from 31.1 in the previous month and beating market expectations of 44.2, a flash
estimate showed. The latest reading pointed to the first expansion in the services sector in four
months.
Italy and Spain
Italy Services PMI increased to 28.9 in May of 2020 from a record low of 10.8 in the previous month
and above market expectations of 26.5. Both activity and total new business declined further,
although the rates of decline softened from April as some parts of the economy began to reopen amid
loosening lockdown restrictions. Foreign demand also dropped Spain Services PMI increased to 27.9
in May of 2020 from a record low of 7.1 in April and above market expectations of 25. Still, the reading
pointed to a sharp decline in the services sector as activity, new business and employment continued
to decline although at a slower pace. Whilst lockdown measures designed to stem the spread of
COVID-19 were less restrictive compared to April - which led to the reopening of some business
premises - underlying economic activity and demand for services remained extremely weak.
Deflationary pressures persisted, with both input and output charges continuing to fall. Finally,
business confidence improved noticeably in May following April’s record low, but remained in
negative territory amid worries about the longer-term impact on consumption and broader economic
activity
Brazil Economy:
Brazil’s economy is expected to shrink by a record 6.3% this year, according to a Reuters poll of
economists. Paul Smith, economics director to media “Moreover, hopes of any swift recovery to the
pandemic are starting to evaporate as numerous firms reported reductions to their workforce
numbers,” he said. “This is adding to an increasingly bleak outlook, with firms remaining negative
overall about activity. The services employment index reading of 35.7 in May was the lowest since
5. 5
April 2016 and the new business index slipped to a new low of 28.9, IHS Markit said. Business
expectations fell for the third month in a row, a record-long streak below 50.0 for the index
Global services PMI for US raised from 23.7 to 35,2 in the month of May 2020.Eurozone PMI increased
from 12.0 to 30.5, this was very sharp increases from 12.0 in April. In the same continent.
UK PMI 13.4 in April and shifted to 29.0 in the month of May. China PMI has reportedly occupied in
accelerated growth zone of PMI above 50. On April China service PMI 44.0 to 55.0 in May, further
improvement we can see in June 2020. Japan services PMI has marginally improved it was 21.5 in
April and 26.5 in May. India PMI has start picking up slowly, the growth of PMI has affected in the
industrial hubs due to migrant labours and labour shortages. In India full lockdown is continuing in
many states without relaxation other than essential services and agricultures. India PMI was 5.4 in
April and 12.6 in May, however it is remarkably very low due to continuity in lockdown.
Germany Services PMI rose to 45.8 in June 2020 from 32.6 in the previous month and above market
expectations of 42, a preliminary estimate showed
Canada Economy:
The Markit Canada Manufacturing Purchasing Managers' index (PMI), a measure of manufacturing
business conditions, declined to a seasonally adjusted 54.7 last month from 55.1 in May. A reading
above 50 shows growth in the sector. The gauge of new orders slipped to 55.1 from 55.7, its lowest
level since January as firms saw less demand from markets at home. But export orders edged up to
53.4 from 53.3, the strongest level since November 2014 on greater demand from clients in the United
States.
The PMI dataset features a headline number, which indicates the overall health of an economy, and
sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports,
capacity utilization, employment, and inventories. The PMI data are used by financial and corporate
professionals to better understand where economies and markets are headed, and to uncover
opportunities.
Starting of Economy from Zero
The current scenario, after prolonged lockdown and curfew, economic activities are starting from
zero. Start up is not growth or milestone, it is cementing the broken tiles and pieces to new start of
walk .Economy damages happened in 2020 cannot be covered in the rest of the year, lot of gap to be
filled everywhere to bridge the supply and demand. Public has not fully come out from the pandemic;
the shock waves are continuing around the globe. No visibility of new orders and new projects in
industries. People walking for survival and manage the routine and regular things. The end of 2021
financial stability may happen in the world. Still unattended challenges are left out in health care
system including vaccine and immune stability. Whatever we are looking at today is not steady one
and moreover supported by stimulus and packages supported by banks, NBFC and Government.
Schools, colleges and universities are not fully opened, admission process schedules are differed. Large
gathering places, event management, Entertainment industries, tourism and international passenger
flights have not resumed till date. Expect two countries all other countries service PMI are less than
50. One of the main points, other than China all other countries GDP growth is negative.
Unemployment become major issue in worldwide. Job markets are rehiring the employees for lower
wages. Migrant and global skillset employees are gone back to home countries and hometowns. All
the cycles must restart in every domain after the permanent remedy to Coronavirus pandemic. No