World coronavirus dispatch: US crosses 100,000 cases; jobs cuts fear global

Bankruptcies and lay-offs might be lurking now, as the International Monetary Fund (IMF) head has already called the present slowdown a recession. “It’s now a recession,” asserted IMF Managing Director Kristalina Georgieva on Saturday. Read

Meanwhile, the US Parliament has signed off on the largest economic relief package in its history – a $2.2-trillion whopper. This legislation will speed government payments of $1,200 to most Americans and increase jobless benefits for millions of people thrown out of work. Businesses big and small will get loans, grants and tax breaks. It will send unprecedented billions to states and local governments, and the nation’s all but overwhelmed health care system. Read

Also, in a first for any country, the number of coronavirus cases in the US have crossed 100,000. As at 12:30 am IST on March 29, the US had reported 116,448 Covid-19 cases, and 1,943 coronavirus-related deaths.

Let’s look at the global statistics (as at 12:30 am on March 29)

Total confirmed cases: 650,926

Change over the previous day: 54,614

Total deaths: 30,299

Total recovered: 139,555

Nations with most number of cases: US (116,448), Italy (92,472), China (81,394), Spain (72,248), and Germany (56,202).

Source: Johns Hopkins Coronavirus Research Center

* Horde to make ventilators: Globally, there’s a horde to produce ventilators, with all kinds of large machine makers being asked to chip in. In the US, President Donald Trump has asked General Motors and Ford to get cracking (GM said it will offer 80,000 of those for $1 billion). Tesla and Toyota have pledged to help, too. In India, Maruti Suzuki has said it will produce ventilators, masks and protective gear.

* Nations discuss economic relief packages: The leaders of the European Union met on Thursday in a six-hour-long video conference to iron out measure to control the coronavirus pandemic. Meanwhile, Japan (https://bre.is/aVkVoHpw) is mulling further relief after a $4-billion package announced on March 9.

* Dedicated Apple app for Covid-19 screening: Apple has launched an app and website dedicated to Covid-19 screening in collaboration with FEMA, the CDC, and the White House. The programme quizzes you on your symptoms and recent travel to let you know when (or if) you should seek medical care or Covid-19 testing.

Apple has also said it will donate 10 million face masks across the US and Europe.

* Wage cut for soccer celebs: Lionel Messi, Cristiano Ronaldo and other best-paid footballers of the world look set for wage cuts, suggests this Financial Times report.

* Wuhan breathes easy: The Chinese city of Wuhan, the epicenter of the coronavirus outbreak, has partly reopened after remaining locked down for two months. Read this BBC report. (https://bre.is/Nqd4aBzT)

* The infected: One of the latest to join the list of famous people down with coronavirus is KPMG Chairman Bill Michael.

* Condom shortage: One of the world’s largest condom makers – Malaysia’s KarexBhd – has predicted a global shortage of condoms as factories remain shut.

Business

* Fitch has downgraded (https://bre.is/yzbS2XkL) the UK’s credit rating from AA to AA-, citing the impact of the coronavirus and continued uncertainty over Brexit.

* Amazon boss Jeff Bezos sold $4.3 billion of his stock in the company just before the Covid-19 collapse. Read this report by The Guardian

Don’t miss...

* Listen to this Italian doctor’s unnerving account of the coronavirus situation in Italy. Dr Fabiano Di Marco, of the University of Milan, is at the frontline treating patients in Bergamo, the epicentre of cases in the country. “As a doctor, we are used to treating patients. And for us it’s normal. But it is difficult when the patient is your colleague,” he says. Listen on NYT’s The Daily Podcast.

Also, Italy’s frontline medical heroes — a photo series by AP.

* What we don’t know yet about coronavirus – Can a person be re-infected? Will there ever be a treatment? How long will the pandemic last? Keep in mind it's only been three months since the first case emerged from China. Read this Reuters report.

IMF, Gopinath will draw govt's ire, warns Chidambaram after growth forecast

With the IMF lowering India's economic growth estimate for the current fiscal to 4.8 per cent, senior Congress leader P Chidambaram on Tuesday claimed an attack on the world body and its chief economist Gita Gopinath by government ministers was imminent.

He also alleged that the growth figure of 4.8 per cent given by the International Monetary Fund (IMF) is after some "window dressing" and he won't be surprised if it goes even lower.

"Reality check from IMF. Growth in 2019-20 will be BELOW 5 per cent at 4.8 per cent," Chidambaram said in a series of tweets.

"Even the 4.8 per cent is after some window dressing. I will not be surprised if it goes even lower," the former finance minister said.

IMF Chief Economist Gopinath was one of the first to denounce demonetisation, he noted.

"I suppose we must prepare ourselves for an attack by government ministers on the IMF and Dr Gita Gopinath," Chidambaram said.

The IMF lowered India's economic growth estimate for the current fiscal to 4.8 per cent and listed the country's much lower-than-expected GDP numbers as the single biggest drag on its global growth forecast for two years.

In October, the IMF had pegged India economic growth at 6.1 per cent for 2019.

Listing decline in rural demand growth and an overall credit sluggishness for lowering of India forecasts, Gopinath, however, had said the growth momentum should improve next year due to factors like positive impact of corporate tax rate reduction.

India should avoid fiscal stimulus and reduce public debt, IMF says

India should avoid a fiscal stimulus to spur the economy, and focus instead on cutting public debt so that financial resources can be freed up for investment, the International Monetary Fund said.

While the government has a budget deficit target of 3.3% of gross domestic product in the year through March, a better reflection of the fiscal position is the public sector borrowing requirement, which the  IMF estimates has increased to about 8.5% of GDP.

“Economic development projects and enhanced social initiatives in India will be vital in the coming years,” the IMF said in a statement accompanying its annual Article IV report on the economy. “But to generate the revenue needed to get them off the ground, India’s debt -- among the highest in emerging markets -- must be reduced.”

The government needs a credible consolidation path to rein in debt, including reducing subsidies and boosting the tax base, the IMF said. Additional monetary policy easing may be warranted to support the economy in its downturn, it said.

IMF Chief Economist Gita Gopinath said last week the lender will likely cut India’s growth forecast of 6.1% for the fiscal year through March. The central bank is projecting growth of 5% in the period.

Last month, Moody’s Investors Service reduced the nation’s credit-assessment outlook to negative, citing issues ranging from a worsening shadow banking crunch and a prolonged slowdown in the economy to rising public debt. The ratings company is projecting a budget deficit of 3.7% of GDP in the year through March.

Other highlights

The IMF estimates that general government debt rose to a three-year high of 68.1% of GDP in fiscal 2019. Its directors recommend India adopts measures to reduce this to the officially adopted target of 60% of GDP.

Consumption-boosting steps -- such as personal tax cuts -- are likely to feature in the budget in February, Abhishek Gupta, an economist at Bloomberg Economics, wrote in a note Monday. The IMF, however, sees no scope for India to provide fiscal stimulus, given that it expects revenue from both income and general-sales taxes to decline this fiscal year.

Monetary policy should maintain an easing bias until an economic recovery takes hold, the IMF said. India’s central bank reduced its benchmark rate five times this year and introduced measures to bolster rate transmission after lenders failed to fully pass on its 135 basis points of policy easing since February

India-led South Asia moving towards center of global growth: IMF

Led by India, South Asia is moving towards becoming center of global growth and could contribute about one-third of the world's growth by 2040, according to a latest research by the International Monetary Fund.

Notably, under the IMF's geographical division of the world, South Asia does not include Afghanistan and Pakistan. For IMF, South Asia includes India, Bangladesh, Nepal, Sri Lanka, Bhutan, and Maldives.

Under a substantial liberalisation scenario, supported by stepped-up efforts to improve infrastructure and successfully harness South Asia's young and large workforce, the region could contribute about one-third of global growth by 2040, argues the IMF paper 'Is South Asia Ready for take Off? A sustainable and inclusive growth agenda,' to be released in New Delhi on Monday.

"Looking at it both from the growth trajectory that we see and the development elsewhere in Asia, we see South Asia as moving towards being much more of center of global growth," Anne-Marie Gulde-Wolf, Deputy Director, Asia and Pacific Department, IMF told PTI ahead of the release of the report.

Previewing some key aspects of the IMF research, Gulde-Wolf noted that based on demographic trends, more than 150 million people in the region are expected to enter the labour market by 2030.

"We have a region with a massive potential for demographic dividend. (This is), a region that has been seen over the recent past significant growth spurt," she said.

This young and large workforce can be South Asia's strength, if supported by a successful high-quality and job-rich growth strategy, leveraging all sectors of the economy in a balanced way. The IMF paper says.

Although policy recommendations remain country-specific, for many South Asian economies these should include: further progress in revenue mobilisation and fiscal consolidation; greater trade and foreign direct investment (FDI) liberalisation; and investment in people, the paper notes.

What can India do to harness the potential demographic dividend and to avoid pitfalls of rapid growth that we have seen in other areas, she asked. The IMF is looking at sustainable growth, avoiding massive ecological problems that could be associated with this kind of imbalanced prose.

That's why IMF sees India needing a multipronged approach that leverages the advantages that the country already has, she said.

"The country has already an excellent tertiary education system, built a on high value-added services. So, in no way, should any strategy devalue that aspect," she said.

But it needs to be complemented with areas like manufacturing sector, wherein India is below what would one expect from a country with that level of development, she said adding that the issue is how to involve private sector to increase the manufacturing base.

India, she noted, needs to create a better environment for private sector growth which looks at a product market, labour markets, land is a particular issue and obviously some of the impetus has to come from foreign direct investment, the top IMF official said.

"It has to be supported by creating a basis of labour force that is able to use the opportunities that would be created here. While maintaining the quality of the tertiary education, more needs to be done to broaden the quality of primary and secondary education," she said.

Together with this, there is need to reduce red tape obstacles and maybe more generally the footprint of the state, including in the financial sector, Gulde-Wolf said.

Bangladesh, which has had a very impressive development history in the recent past, mainly based on the garment industry, needs to diversify its economy, she said.

Noting that Bangladesh has a very low revenues to GDP ratio, low debt, but also very low investment in infrastructure, she said it is critical for this country to increase the infrastructure that would be needed for expansion of the private sector.

Among other countries Nepal, Maldives and Bhutan each one has their own issues, but the common issue that really binds them together is the need to unleash more private sector groups.

Sri Lanka, she noted, is in many senses, slightly different because it's benefiting less from the, demographic dividend because it's already reached its maximum. The island nation does not have the same growth history as the other South Asian nations.

Responding to a question, Gulde-Wolf said subject to implementation of the IMF recommended reforms, India's income level on PPP basis would be reaching about 45 per cent of the US income level and it would one third of the global growth.

Observing that it is always difficult to make a long-term forecast, she said it is important to show what the potential is and what the payoff over time off reforms can be.

India has a significant potential, but there is need of a significant reform, she said, adding that these reforms need to be implemented to set the trajectory. If you lose time by delaying this reform, it will take more time to catch up to where you are. And the time window is not very big, the IMF official said.

"Reforms need to be implemented. We still see that the slow down at this stage is mainly cyclical, but the most recent numbers that have come in are lower than we have expected," Gulde-Wolf said.

IMF backs India's corporation tax cut, says it will help revive investment

The International Monetary Fund on Friday supported India's recent decision to reduce corporate income tax, saying it has a positive impact on investment.

It, however, said India should address continued fiscal consolidation and secure long-term stability of the fiscal conditions.

"We believe India still has limited fiscal space so they have to be careful. We support their corporate income tax cut because it has a positive impact on investment," Changyong Rhee, Director, Asia and Pacific Department, IMF, told reporters at a news conference here.

Following a marked slowdown in the last two quarters in India, the economy is expected to grow at 6.1 per cent this fiscal year, picking up to 7.0 per cent in 2020, he said.

"The monetary policy stimulus and the announced corporate income tax cut are expected to help revive investment," said the top IMF official.

Anne-Marie Gulde-Wolf, Deputy Director, Asia and Pacific Department, IMF, said India should address the non-bank financial sector issues.

"While there have been improvements that have been put in motion, including efforts to recapitalise the state banks, the issue of non-bank financial institution remains partly unresolved and regulatory equity is one of the issues that needs to be achieved," she said.

The government is aware of it, she added.

"We also had a FSAP. So there are issues working at that and this is something that is why not yet fully achieved, but is entrained. While there are problems at this stage, increased attention to lending practices of non-bank financial institutions continue to be very important," Gulde-Wolf said.

Responding to a question, she said India overall has a fairly high level of debt and fiscal consolidation needs to be a priority.

"However, implementing fiscal consolidation in the context of a federal system is much more complicated. The level of fiscal structural issues and challenges are different in different states," she said.

So one of the ways in which the IMF is engaged in this question is it has a regional training institute that has started working with the individual states on strengthening fiscal management at the state level, Gulde-Wolf said.

In the context of surveillance engagement with India, she said, the IMF is increasingly placing emphasis on the need to better coordinate the fiscal state level activities and fiscal activities.

"But it is a concern that the authorities are taking serious and are working at," Gulde-Wolf said.

IMF says India's growth 'much weaker' than expected; cuts FY20 projection

International Monetary Fund (IMF) on Thursday said that India's economic growth is "much weaker" than expected due to corporate and environmental regulatory uncertainty and "lingering weakness" in some non-Bank financial companies.

"Again, we will have a fresh set of numbers coming up but the recent economic growth in India is much weaker than expected, mainly due to corporate and environmental regulatory uncertainty and lingering weakness in some non-Bank financial companies and risks to the outlook are tilted to the downside, as we like to say," IMF spokesman Gerry Rice told reporters at a news conference.

The economic growth slowed to a seven-year low to 5 per cent in April to June quarter from 8 per cent a year ago, as per the government data.

The International Monetary Fund (IMF) has cut its projection for India's economic growth by 0.3 percentage points to 7 per cent for the fiscal year 2019-20 owing to the "weaker-than-expected outlook" for the domestic demand.

The growth is expected to rise to 7.2 per cent points in FY21, down by the projected growth rate of 7.5 in the earlier report.

The slowdown was largely due to a sharp dip in the manufacturing sector and agriculture output, said the Ministry of Statistics and Programme Implementation in a statement.

The previous low was recorded at 4.9 per cent in April to June 2012-13. Consumer demand and private investment have weakened amid global trade frictions and dampening business sentiment.

IMF's Lagarde says she is honoured to head European central bank

International Monetary Fund chief Christine Lagarde on Tuesday announced she would step down "temporarily" from the global crisis lender after being nominated to lead the European Central Bank.

EU leaders announced a deal to fill the top positions in the political and economic bloc, including picking Lagarde to succeed ECB chief Mario Draghi, whose single, eight-year term ends in November.

"I am honored to have been nominated for the Presidency of the European Central Bank," Lagarde said in a statement, adding that she would "temporarily relinquish my responsibilities as Managing Director of the IMF during the nomination period."

The nomination means Lagarde will step down two years before the end of her second five-year term at the helm of the IMF, which will open a search for her replacement.

The fund's executive board met Tuesday and named American economist David Lipton, Lagarde's chief deputy, as interim leader of the institution.

"We accept Ms Lagarde's decision to relinquish her IMF responsibilities temporarily during the nomination period," the board said in a statement.

"We have full confidence in First Deputy Managing Director David Lipton as Acting Managing Director of the IMF." By tradition, since the institutions were created in the wake of World War II, a European has always led the IMF and an American has been at the helm of the World Bank, although emerging market nations in recent years have pressed for more representation.

When Lagarde was selected in 2011, it was the first time the fund had an open leadership search process, in which any board member or country representative could nominate a candidate. Lagarde was selected over Agustin Carstens, then the head of the Mexican central bank.

She has drawn praise for her role leading the IMF in the wake of the global financial crisis.

"She's been a tremendous ambassador for the fund, a great salesperson, a very good communicator," said Mark Sobel, a former US Treasury official and chairman of the Official Monetary and Financial Institutions Forum.

He told AFP that Lagarde has experience in monetary policy even if she has never led a central bank and, like US Federal Reserve Chairman Jerome Powell, is not an economist.

"She's been involved in all the monetary debate and it's not like they don't discuss monetary policy at the fund." Her second term in office coincided with the rise of US President Donald Trump and a wave of confrontations among major economies over trade, which the former French finance minister described as the major threat to the world economy.

Lagarde has at the same time acknowledged the strains caused by globalization, which has disrupted industries and marginalized some workers.