IMF Expects Global Economy To Shrink 3% This Year; Warns Of More Severe Outcomes
The global economy is set to contract 3 percent this year, thanks to the lockdowns imposed by countries across the world to slow the spread of the coronavirus, or Covid-19, pandemic that has claimed thousands of human lives, the International Monetary Fund said in its latest World Economic Outlook report, released Tuesday.
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U.S. GDP Tumbles 4.8% In First Quarter
U.S. economic activity saw a substantial contraction in the first quarter of 2020, according to a report released by the Commerce Department on Wednesday.
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Oil Price Fundamental Outlook Mired by Great Lockdown
The price of oil recovers from the collapse in the May futures contract, but the economic shock from COVID-19 may continue to drag on crude as the Great Lockdown disrupts global demand, with the oil surplus raising the cost of storage.
The fundamental outlook for crude remains bearish even though the Organization of the Petroleum Exporting Countries (OPEC) plan to reduce oil production by another 10M b/d starting in May as the Great Lockdown disrupts global demand.
The International Energy Agency’s most recent monthly report warns “global oil demand is expected to fall by a record 9.3 mb/d year-on-year in 2020,” with the group going onto say that “there is no feasible agreement that could cut supply by enough to offset such near-term demand losses.”
The IEA points out that “floating storage is becoming more expensive as traders compete for ships,” and the price of oil may continue to exhibit a bearish behavior as the group emphasizes that “never before has the oil industry come this close to testing its logistics capacity to the limit.”
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Fed Minutes Highlight Uncertainty, Risks Created By Coronavirus Pandemic
In addition to the severely adverse near-term effects of the coronavirus pandemic, the minutes of the Federal Reserve's latest monetary policy meeting noted the outbreak and the measures undertaken to contain it have also created an extraordinary amount of uncertainty and considerable risks to economic activity in the medium term.
The minutes said participants at the late-April meeting discussed several alternative scenarios with regard to the behavior of economic activity in the medium term that all seemed about equally likely. "These scenarios differed in the assumed length of the pandemic and the consequent economic disruptions," the Fed said. A number of participants believed there was a substantial likelihood of additional waves of the coronavirus outbreak, which could lead to further economic disruptions. The participants warned the disruptions, including additional periods of mandatory social distancing, greater supply chain dislocations, and a substantial number of business closures and loss of income, could lead to a protracted period of severely reduced economic activity.
At the same time, the minutes noted economic activity could recover more quickly if the pandemic subsided enough for households and businesses to become sufficiently confident to relax or modify social-distancing behaviors over the next several months.
"Participants stressed that measures taken in the areas of health-care policy and fiscal policy, together with actions by the private sector, would be important in shaping the timing and speed of the U.S. economy's return to more normal conditions," the Fed said.
The central bank added, "In addition, participants agreed that recent actions taken by the Federal Reserve were essential in helping reduce downside risks to the economic outlook."
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Spain Unemployment Rises In May
Attachment 39566
Registered unemployment rises in May by 26,573 people compared to the previous month.
Besides, the data shows that employment actually grew in May: new Social Security registrations for measure of job creation estimated the growth by an average of 97,462 new contributors for a total of 18.5 million.
Mnuchin “Seriously Looking” At More Stimulus
Is more stimulus on the way?
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Powell Warns Of 'Significant Uncertainty' About Timing, Strength Of Recovery
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Federal Reserve Chair Jerome Powell acknowledged recent signs of improvement in the economy during congressional testimony on Tuesday but cautioned that "significant uncertainty remains about the timing and strength of the recovery."
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International Monetary Fund - deeper recession for this year
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The International Monetary Fund on Wednesday forecast a deeper recession for this year and a slower and uncertain recovery for next year after the coronavirus, or Covid-19, pandemic plunged the global economy into a crisis like no other. The global economy is set to shrink 4.9 percent this year, which is worse than the 3 percent contraction predicted in April, the lender said in an update to its World Economic Outlook.
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