IMF Meets With Global Economy in Historic Recession: Eco Week
(Bloomberg) - The global economy guardians will gather under the cloud this week of the worst recession since the Great Depression and a rebound that depends on scientists finding a coronavirus vaccine.
The International Monetary Fund and the World Bank will hold their annual meetings. Both call on the group of the 20 largest economies to freeze the debt payments of the world's poorest countries, which are due to expire by the end of the year.
While the fund announced a “small upward revision” of its growth forecast for 2020 from the June outlook last week, it warned of a long and uneven recovery.
The IMF has encouraged governments to spend whatever they need to weather the crisis, while warning that debt as a percentage of GDP will rise to around 100% for the first time.
Earlier this month, fund officials proposed debt restructuring reforms for countries struggling to meet their commitments. That burden is likely to increase as the pandemic battles economies. Debt vulnerabilities will be a central theme of the meetings, according to Geoffrey Okamoto, the first assistant manager.
The G-20 agreed in April to forego repayments of billions of dollars by poorer nations through the Debt Service Suspension Initiative by the end of the year. The World Bank says this is not enough and wants borrowing to be reduced to avoid bigger impact.
The IMF has also worked to move existing reserves, known as Special Drawing Rights, from rich countries that don't need them to poorer nations that do. A proposal to create USD 500 billion of SDRs was blocked in April by the US, the fund's largest shareholder, who criticized the plan as inefficient.
What Bloomberg's Economists Are Saying ...
“As the number of viruses in Europe rises again and the economic negotiations in the US stall, a better than expected third quarter is turning into a worse than expected fourth. Looking to 2021, hopes for a strong rebound depend on the second wave of infections, a stimulus breakthrough in Washington DC, and widespread vaccine delivery being contained by mid-year. "
- Tom Orlik, chief economist
The Nobel Prize in Economics will be awarded in Stockholm on Monday, and central banks in Indonesia, Singapore, South Korea, Sri Lanka, Chile and Uganda will hold monetary policy meetings.
Click here to see what happened last week. Below you will find an overview of the developments in the world economy.
USA and Canada
Federal Reserve Board Vice Chairs Richard Clarida and Randal Quarles will speak at an Institute of International Finance event on the virtual sidelines of IMF meetings on Wednesday and Thursday.
Friday will be the high point for US economic indicators, with retail sales and industrial production releases for September and the Michigan consumer sentiment survey for early October. This is the day after the weekly unemployment claims data.
For more information, see the full week leading up to Bloomberg Economics for the US.
China returns from the Golden Week holidays. Tuesday's trade data should show a continuation of the export rebound and Thursday's inflation data should show moderate price growth.
Monetary policy meetings are planned for Indonesia, Singapore, South Korea and Sri Lanka later this week. On Thursday, a speech by the Reserve Bank of Australia Governor will be closely monitored for any signals he prepares to provide momentum as September employment data comes out.
For more information, see Bloomberg Economics' full Week Ahead for Asia
Europe, Middle East, Africa
Any surprisingly poor reading of UK job data this week is likely to convince a minority of skeptics that further stimulus from the Bank of England is all but inevitable.
In contrast, data in Sweden, which has put in place much lower virus restrictions than the rest of Europe, will show whether the trend towards reducing unemployment will continue. In Eastern Europe, Poland, the Czech Republic, Romania and Serbia publish inflation data.
Central Bank officials from across Europe attend IMF and World Bank meetings. But important political decision-makers will also appear virtually elsewhere: The chief economist of the European Central Bank, Philip Lane, and the members of the ECB Council, Francois Villeroy de Galhau, Robert Holzmann and Pablo Hernandez de Cos, will speak at an event about rising national debt and how to do it deals with it.
Turkey's data on Monday should show the nation recorded a current account deficit for the ninth consecutive year as households hoard imported gold and foreign currencies to protect themselves from Lira depreciation and inflation.
In Ghana, Wednesday inflation data could show that price growth slowed for a second month in September but remained above the central bank's target range of 6% to 10%. Nigeria is expected to report inflation accelerating to 13.3% on Thursday, while the Ugandan central bank is likely to hold its key rate for a second meeting.
For more information, see the full week leading up to BloomEA Economics for EMEA
The IMF last week urged Mexico to step up government incentives to accelerate a weak recovery, and production and production figures released on Monday should underscore that point.
In Brazil, on the other hand, a lighter lockdown and massive government income support has fueled demand, suggesting that August economic activity read on Thursday will be compatible with a gradual recovery.
While inflation is picking up again in the region, it has never gone away in Argentina: analysts expect monthly rates of just under 3% and annual rates of almost 40%.
Chile's economy is struggling, but the central bank's key interest rate is at a record low of 0.5%. Look for policy makers to keep it there for a seventh month when they meet on Thursday.
For more information, see Bloomberg Economics' full week for Latin America
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