Coronavirus crisis will leave deep scars, OECD says; France, Austria lift lockdown measures

CORONAVIRUS ALERT 06/10/2020

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In top stories today:

  • The coronavirus crisis will leave deeper scars than any peacetime recession in the past century, the Organization for Economic Cooperation and Development (OECD) said in a gloomy forecast that sees economic recovery stalling. Countries from France to Austria plan to ease lockdown measures, but Dr. Anthony Fauci, director of the US National Institute of Allergy and Infectious Diseases, urged caution.
  • A disappointing economic recovery from coronavirus pandemic will leave deeper scars than any peacetime recession in the past century, the OECD warned, the Financial Times reported. Living standards will probably fall far short of pre-pandemic levels even though the OECD expects that developed economies will show a speedy recovery from the recession initially, the newspaper added. The OECD forecasts a global slump of 6 percent this year, Bloomberg reported.
  • QUOTE: “Most people see a V-shaped recovery, but we think it’s going to stop half way,” said Laurence Boone, chief economist at the OECD, the Financial Times reported. “By the end of 2021, the loss of incomes exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments.”
  • United Nations Secretary-General Antonio Guterres urged swift action to avoid a global food emergency that the coronavirus pandemic is making worse, The Associated Press reported. More than 820 million people are hungry, and 144 million children aged less than five have stunted growth, Guterres said on June 9, the newswire reported.
  • The world’s poorest nations will default without debt relief as they contend with the coronavirus crisis, the head of the International Monetary Fund (IMF) said, repeating calls for private creditors to join the Group of Twenty’s efforts to suspend and restructure borrowing, Bloomberg reported. IMF Managing Director Kristalina Georgieva spoke in a webcast with the US Chamber of Commerce on June 9, the newswire added.
  • Will current public health measures lead to coronavirus burning itself out? There’s “no way” that’s going to happen and the outbreak is far from over, said Dr. Anthony Fauci, the Financial Times reported.
  • QUOTE: “I’ll guarantee there is going to be more than one winner in the vaccine field because we’re going to need vaccines for the entire world,” Fauci told a pharmaceutical industry conference on June 9, the Financial Times reported. “Billions and billions of doses.”
  • France will end coronavirus emergency health powers on July 10, though it will retain scope to curb gatherings and freedom of movement for four months, Reuters reported. Austria will reopen its borders to most European neighbors on June 16, except for Spain, Portugal, Sweden, and the United Kingdom, The Associated Press reported. Bulgaria, in contrast, extended coronavirus emergency measures until the end of June following an increase in cases, mainly in the south, Reuters said.
  • Indonesia, with a population of more than 260 million, posted a spike in new cases for the second day in a row, CNBC said, citing a Reuters report. Indonesia started to ease restrictions last week and resumed domestic air travel with some modifications on June 8, CNBC added.
  • The statistics say… Indonesia recorded 1,241 new infections on June 10, a record daily increase, following 1,043 new cases the day before, also a daily record spike in cases, CNBC said citing Reuters.
  • Visitors to about 80,000 bars, clubs, and other entertainment venues in South Korea will need to scan smartphone QR codes starting June 10 to help with contact tracing, The Wall Street Journal reported. South Korea recorded fifty news cases of coronavirus, mostly in Seoul, taking the total to 11,902, the Journal added.
  • As lockdowns are eased worldwide, the Financial Times publishes a guide on how best to avoid the virus.

DOUBLE SHOCK

  • Members of the European Union (EU) including Ireland and Belgium are urging the bloc to prepare for the double shock of a no-deal exit of the United Kingdom and the coronavirus pandemic, the Financial Times reported. That complicates already challenging discussions about a coordinated EU response to the economic fallout from the coronavirus pandemic, the newspaper said.
  • The European Central Bank is working on a plan to shield commercial banks from bad loans that could amount to hundreds of billions of euros, Reuters said in an exclusive report, citing two unidentified people. That’s in case rising unemployment caused by the coronavirus crisis harms borrowers’ ability to repay loans, the newswire added. The ECB declined to comment on whether it was working on a so-called bad bank program to warehouse unpaid debt, Reuters said.
  • AMC Entertainment Holdings, the world’s biggest cinema chain, posted a net loss of $2.2 billion in the first quarter as it had “virtually no revenue” in the two weeks ended March 30 when movie theaters closed because of the coronavirus outbreak, The Wall Street Journal reported. Chief Executive Adam Aron said he expects all the company’s theaters to be open by July, the newspaper added.
  • A universal basic income is key to economic recovery in the UK, reeling from the coronavirus crisis, Bloomberg said, citing a June 10 report by the RSA’s Future Work Centre. Starting with a 2,500-pound direct cash payment using existing tax infrastructure, over time that could be extended to a universal basic income of 5,000 pounds, the newswire added.

GERMAN OPTIMISM

  • Germany is optimistic about a swift agreement on an EU 750 billion-euro recovery plan despite strong opposition from what Bloomberg describes as budget hardliners. Heated negotiations are likely in coming weeks as several countries in the twenty-seven-member bloc have already voiced concerns about the blueprint, the newswire added.
  • QUOTE: “Although there remain differences between various nations that are not small, I have the impression that everyone has the will to reach an agreement within a short time,” German Finance Minister Olaf Scholz said in a statement on June 9, Bloomberg reported. “The starting positions are different, but as I said, a constructive spirit can be detected on all sides.”
  • Germany extended its travel warning for more than 160 countries outside Europe until the end of August because of the coronavirus outbreak, The Associated Press reported. Germany downgraded its warning on travel for the rest of the European Union, as well as Iceland, Liechtenstein, Norway, Switzerland, and the United Kingdom last week, the news service added.
  • The impact of the coronavirus pandemic combined with a plunge in energy prices could see the population of the United Arab Emirates, of which Dubai is part, fall by 10 percent as expats leave a precarious existence behind and move home, Bloomberg reported, citing Oxford Economics.

MEDICAL FOCUS

  • Officials in Europe plan to accelerate trials for coronavirus vaccines that contain genetically modified organisms, Reuters said in an exclusive report, citing two unidentified EU sources. That could help free up bottlenecks in the pharmaceutical industry, which relies more and more on genetic engineering, the newswire added. The European Commission, the EU’s executive arm, is expected to present the plans as soon as next week, Reuters added.
  • QUOTE: “Faced with the Covid-19 pandemic, business-as-usual R&D [research and development] is not an option,” Els Torreele, a biomedical scientist, wrote on news service Stat. “We urgently need a portfolio approach to vaccine R&D, including designing and prioritizing vaccine candidates according to our collective public health needs, including equitable access.”
  • Japanese biotech company AnGes expects its coronavirus vaccine to be ready as early as the first half of 2021 if it can clear hurdles on supply and production, Reuters reported. A vaccine candidate developed by Chinese researchers showed promise in trials in monkeys, the newswire also reported. Meanwhile a UK study said widespread use of face masks, even homemade ones, could push infection rates to manageable levels, Reuters reported.
  • The government of Brazilian President Jair Bolsonaro agreed to resume the publication of full coronavirus data including the death toll, complying with a Supreme Court order, The Associated Press reported. That comes days after the country’s health ministry removed the cumulative death toll from its website, the newswire added. “Manaus indigenous struggle for care amid pandemic” reads the headline to an Associated Press photo story. A Washington Post headline reads: “Brazil’s favelas, neglected by the government, organize their own coronavirus fight.”
  • READ MORE: Whether the arms embargo on Iran expires or is extended will have major implications for the United States’ partners, competitors, and the region. Join us for an online discussion with experts from around the world at 9:00 a.m. ET on Wednesday, June 10. Details here.

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