Covid-19 Recession

Business • Economy
France: Expectation of 11% economy shrinkage
Bruno Le Maire, Ministry of Economy and Finance
Bruno Le Maire, Ministry of Economy and Finance Credit: EU2017EE Estonian Presidency (Creative Commons Attribution 2.0)

The government of France forecasts an 11% shrinkage of its GDP. The economic expectation announcement came from from France's Finance Minister Bruno Le Maire on the radio on Tuesday. "The hardest part is still ahead of us in social and economic terms", so Le Maire.

Business • Economy
1 in 4 U.S. workers now unemployed
The Frances Perkins Building of the U.S. Department of Labor headquarters in Washington, D.C.
The Frances Perkins Building of the U.S. Department of Labor headquarters in Washington, D.C. Credit: Ed Brown / Public domain

With another 2.1 million unemployment claims filed in the last week, the total number of jobless claims in the U.S. has passed 40 million. Though these numbers may not indicate only new layoffs as, according to chief economist at the accounting firm Grant Thornton Diane Swonk, states have been working through a backlog of claims.

Politics • Asian • China
China abandons GDP goal for the first time since 1990

The Chinese premier Li Keqiang has announced in his opening speech of the National People's Congress (NPC) that the country would not set a goal for the gross domestic product (GDP) of the country. According to him the decision was made based on the uncertainties due to the "Covid-19 pandemic and the world economic and trade environment".

Politics • European • European Union
Germany backs France in new EU recovery fund proposal

The Franco-German agreement supports a €500 billion recovery fund to be distributed as grants, not requiring direct repayment from the countries receiving the funds. Recognizing the exceptional nature of the challenges posed by the pandemic, this is the first time Berlin has agreed to a plan based on grants instead of loans. The proposal is now in the hands of the European Commission and would require approval from all EU member states.

Business • Economy
Uber lays off another 3,000 employees, shuts down 45 offices
Uber mobile application
Uber mobile application Credit: Uber

Uber's CEO Dara Khosrowshahi announced to employees today that the company will lay off other 3,000 employees and close 45 offices globally.
“I knew that I had to make a hard decision, not because we are a public company, or to protect our stock price, or to please our Board or investors,” Khosrowshahi wrote in a memo to employees.
The announcement comes just days after the company stated it would cut 3,700 jobs in its customer service and recruiting departments.

Business • Economy
New Zealand’s Finance Minister Announces Plan to Reduce Unemployment Numbers
NZ Finance Minister Grant Robertson in Wellington, New Zealand
NZ Finance Minister Grant Robertson in Wellington, New Zealand Credit: David Tong / CC BY-SA (Creative Commons Attribution ShareAlike 4.0)

Grant Robertson, New Zealand’s finance minister, announced a NZ$50 billion dollar plan to reduce unemployment numbers and save around 140,000 jobs within a two-year period. Robertson called the fund “the most significant financial commitment in modern history”. Of the budget, $3 billion are planned for government’s wage subsidy, $1.6 billion for apprenticeships training and trades, $3 billion for infrastructure including job creation and $400 million for supporting the tourism industry.

Business • Economy
Air Canada to Lay off Half of its Workers

After grounding more than 200 planes and slashing 95% of its flight capacity due to the decrease in demand as a result of the COVID-19 outbreak, the Canadian flag carrier is about to fire roughly 20,000 of its 39,000 employees. The layoffs, which will take place on the 7th of June, will affect a minimum of 19,000 staff and could go as high as 22,800.

Business • Economy
JC Penney files for bankruptcy
JC Penney logo on Buckland Hills Mall in Manchester, Connecticut.
JC Penney logo on Buckland Hills Mall in Manchester, Connecticut. Credit: JJBers / CC BY-SA (Creative Commons Attribution ShareAlike 4.0)

JC Penney, American department store chain, has filed for bankruptcy protection and is said to close some of its stores. The company currently has over 800 stores and around 85,000 employees. JC Penney is the third big retailer, after Neiman Marcus and J.Crew, to declare bankruptcy amid the Covid-19 pandemic.

Business • Economy
ADB Projects Coronavirus Pandemic Could Cost Global Economy $5.8 to $8.8tn

The Asian Development Bank (ADB) new analysis "presents a broad picture of the very significant potential economic impact of Covid-19," so Yasuyuki Sawada, ADB chief economist. It estimates that the coronavirus pandemic could cost the global economy anywhere from $5.8 to $8.8 trillion dollars, depending on the length of movement restrictions.

Business • Economy
U.S. retail sales fall 16.4% in April
Oculus World Trade Center Mall pre-Covid-19
Oculus World Trade Center Mall pre-Covid-19 Credit: Papp

According to the U.S. Commerce Department, retail sales fell by 16.4 percent in April. Retail sales dropped 8.3 percent in March but didn't show such a significantly drastic drop due to panic buying. The economic crisis has already shown a dramatic impact on the retail sector, with big retailers like Neiman Marcus and J.Crew filing for bankruptcy protection.

Business • Economy
3 million more unemployment claims filed last week in the US

The Labor Department reported another three million filed for unemployment last week. So far, over 36 million jobless claims have been filed since March.

Politics • European
The new ESM's credit line for the covid-19 pandemic

As the Europe is in needing of liquid assets, many people went all-in with the ESM, unluckily the already two existing credit lines were not exactly what the states needed. The Eurogroup then decided to develop a new credit line exceptionally for the pandemic, last night it got definetly approved. This new credit line will be able to make a ten-year loan up to 2% of the state's GDP, with an interest fixed rate at 0,1%. This new credit line will be available from june 2020 until the end of 2022.

Business • Economy
3.2 million more filed for unemployment in the US last week

With 3.2 million more people filing for unemployment in the US last week, the total number of claims as a result of the coronavirus crisis has risen to 33.5 million since March. These numbers do not include people who aren't legible for unemployment benefits and Elise Gould, senior economist at the Economic Policy Institute, believes the real unemployment rate to be higher than what is reported.

Transportation • Air Transportation & Traffic, Flying
Virgin Atlantic to cut over 3,000 jobs and quit Gatwick Airport operations
Virgin Atlatnic A330neo press image
Virgin Atlatnic A330neo press image Credit: Virgin Atlantic/Press Images

The British airline Virgin Atlantic plans to cut over 3,000 jobs – one third of their workforce – as the airline suffers from Covid-19 repercussions. The airline will also cease operations at Gatwick Airport and move all of its operations to London Heathrow. Shai Weiss, chief executive of Virgin Atlantic said in a statement that "now is the time for further action to reduce our costs, preserve cash and to protect as many jobs as possible. It is crucial that we return to profitability in 2021".

Transportation • Air Transportation & Traffic, Flying
Norwegian Air bondholders reject debt plan, and company may run out of cash by mid-May.
Norwegian Air plane in Stockholm
Norwegian Air plane in Stockholm Credit: Captain Raju (Creative Commons Attribution ShareAlike 4.0)

Although talks will still continue, Norwegian Air’s bondholders have turned down a proposed debt-to-equity swap, casting doubt on a plan that is vital to help the airline survive the Covid-19 pandemic.
The company may run out of cash by mid-May unless its plan is quickly approved by creditors and shareholders.
This plan involves swapping up to $1.2 billion of debt into equity and hands over most of the ownership of the company to lessors and bondholders.

Business • Economy
US reports 30 million filings for unemployment since March

The Labor Department reported that another 3.8 million filed for unemployment benefits in the US last week. So far over 30 million people have lost their job due to repercussions of the Covid-19 pandemic, but these numbers might not be correct a study finds. The Economic Policy Institute reports that about 50 percent more people might be out of work but didn't apply for benefits.

Climate & Environment
Pakistan creates over 63,600 jobs with goal to plant billions of trees

As part of the 10 Billion Tree Tsunami program in Pakistan, the government has announced that it'll create over 63,600 "jungle workers" jobs with the goal of planting trees, setting up nurseries and protecting the planted and growing trees. Many of the jobs are specifically created in more rural areas in order to support women and unemployed daily workers that were hit by the Covid-19 recession.

Business • Economy
U.S. GDP falls by 4.8 percent in first quarter

America's GDP – gross domestic product – shrank at a 4.8 percent annual rate in the first quarter of 2020, making it the biggest contraction since the Great Recession. As the Covid-19 pandemic continues, experts believe that the decline will continue into the second quarter of 2020. Kevin Hassett, White House economic adviser, estimates GDP could go down by 20 to 30 percent, calling it "the biggest shock since the Great Depression".

Climate & Environment
The economic recovery from the Covid-19 pandemic must be a "green recovery" - Germany, UK

Spokespeople from Germany and the United Kingdom said that instead of investing "in technologies of the past" the recovery should be a "green and resilient" one that "leaves no one behind". The German Minister for the Environment, Nature Conservation and Nuclear Safety, Svenja Schulze, said that "Unlike in the fight against the coronavirus, we already know the vaccines for the climate crisis".

Business • Economy
Price for US Western Texas Intermediate oil turns negative
Pumpjack located south of Midland, Texas
Pumpjack located south of Midland, Texas Credit: Eric Kounce (Creative Commons CC0 Waiver)

Oil producers have started paying buyers to take the oil out of their hands, as storage capacity is running low. A worldwide overproduction of oil is currently recorded due to a decline in demand following the spread of the coronavirus.
The lowest recorded price for a barrel (around 159 liters) of West Texas Intermediate oil was recorded at minus $37.63.

Business • Economy
IMF predicts worst recession since the Great Depression

IMF, the International Monetary Fund, forecasts that the recession-related to the coronavirus might be the worst since the recession of the Great Depression of the 1930s. If the coronavirus related restrictions should stay longer than anticipated or even return, the IMF warns of the subsequent damage to the world economy. The IMF further estimates a 3% shrink of global gross domestic product this year.