Home > Business > Pandemic Caused ‘Unprecedented’ Hit to World Economic Growth, O.E.C.D. Says: Live Updates

Pandemic Caused ‘Unprecedented’ Hit to World Economic Growth, O.E.C.D. Says: Live Updates

30 Views
Pandemic Caused ‘Unprecedented’ Hit to World Economic Growth, O.E.C.D. Says: Live Updates 2

Credit…Saumya Khandelwal for The New York Times

The damage to the world’s major economies from coronavirus lockdowns has been more than four times more severe than the 2009 global financial crisis, and created an “unprecedented” blow to growth in the second quarter in almost every country except China, where the virus was first detected, the Organization for Economic Cooperation and Development said Monday.

Growth in the nations represented by the Group of 20 — an organization of 19 countries and the European Union, representing 80 percent of the world’s economic production — fell by a record 6.9 percent between April and June from the previous three months, as governments kept people indoors and froze business activity. The drop eclipsed a 1.9 percent contraction recorded in the same period in 2009, when the financial crisis was at a peak, the organization said.

China, where lockdowns ended earlier than in the rest of the world, was the only economy to bounce back, expanding at an 11.5 percent rate.

While growth figures have been published by national governments, the organization’s tally puts the magnitude of the damage into a global perspective. The biggest growth declines were in India (minus 25.2 percent) and Britain (minus 20.4 percent).

Growth in the United States shrank by more than 9 percent, and by nearly 15 percent in the euro area. By contrast, China, South Korea and Russia appeared to be the least negatively impacted.

The global economy will fare far worse should a second wave of infections lead governments to renew wide-scale quarantines, the organization has warned. Without new shutdowns, global growth could shrink by around 6 percent this year, wiping out five years of income growth.

A second wave of infections leading to new lockdowns could cause unemployment around the world — already badly hit by this year’s lockdowns — to double and not recover for at least another year, according to the organization’s forecasts.

Credit…Hayoung Jeon/EPA, via Shutterstock

After insisting that TikTok’s U.S. operations be sold over national security concerns, the Trump administration now appears to be amenable to a watered-down deal where Oracle would become the video app’s technology partner. This raises several questions, notes today’s DealBook newsletter.

How would it work? TikTok’s parent company, ByteDance, would apparently maintain control of the app’s algorithms and underlying computer code. Microsoft, whose takeover bid was rejected, said that it would have taken over the algorithm and let the U.S. government review any code changes, an approach favored by the Pentagon and the National Security Agency. But Oracle’s bid resembles Microsoft’s original proposal of serving as a technology partner and minority owner — something that President Trump rejected, saying that TikTok’s U.S. arm had to be sold altogether.

How much did politics play a role? Oracle’s ties to Mr. Trump are deep. Its co-founder, Larry Ellison, has raised money for Mr. Trump, while its chief executive, Safra Catz, was the only major tech executive to serve on the president’s transition team.

Will China support a deal? Technology export restrictions that Beijing introduced last month made TikTok’s U.S. business a less attractive asset. Chinese state news media, citing unnamed sources, said that ByteDance wouldn’t sell TikTok to Oracle, either — but that could refer to a complete takeover instead of a less comprehensive partnership. It’s hard to imagine ByteDance doing anything with Oracle without Beijing’s tacit approval.

What’s next for Microsoft? While its bid for TikTok was opportunistic, the tech giant has demonstrated an openness to a big, consumer-facing deal — so will it consider turning its M.&A. attention elsewhere?

What’s next for Walmart? Would Microsoft’s former partner in its TikTok bid team up with it on a different deal? Walmart has also said that it is still interested in TikTok, which implies that it may be open to partnering with Oracle.

Treasury Secretary Steven Mnuchin said on Monday that the Committee on Foreign Investment in the United States will review a proposal for Oracle to become the American technology partner for TikTok and said the panel will make a recommendation about the potential tie-up to President Trump this week.

Mr. Mnuchin, in an interview on CNBC, said that the Chinese owner of TikTok, ByteDance, had chosen Oracle instead of Microsoft as its preferred partner over the weekend. He confirmed that the companies have until Sept. 20 to reach an agreement that satisfies the Trump administration’s concerns that TikTok, a popular social media app, poses a national security threat.

Mr. Mnuchin said that the administration has “a lot of confidence” in both Oracle and Microsoft in terms of their ability to mitigate national security concerns. Officials will be reviewing the proposal that American data and phones are secure and Mr. Mnuchin said that technical experts within the government will be speaking with Oracle’s technology team this week.

“We’ll need to make sure that the code is secure, that Americans’ data is secure, that the phones are secure,” Mr. Mnuchin said.

The Treasury secretary also said that as part of the proposal, the American division of TikTok would create 20,000 new jobs.

Credit…Ruth Fremson/The New York Times

Amazon said on Monday that it would hire 100,000 new workers in the United States and Canada for its warehouses and logistics network, another sign that the pandemic has resulted in a huge growth in demand for the e-commerce giant.

Amazon has been one of the biggest winners of the crisis as people turn to online shopping rather than visit traditional brick-and-mortar retailers; those businesses have been decimated. As the broader economy suffered from the economic fallout of Covid-19, Amazon reported record sales and profit last quarter.

Dave Clark, senior vice president of worldwide operations for Amazon, said in a news release that the company was opening 100 buildings this month for sorting products, delivery and other purposes. The new jobs will pay a starting wage of $15 per hour and will include a $1,000 starting bonus in some cities.

The hiring announcement is on top of the 33,000 salaried job openings that Amazon said last week it had available in areas such as cloud computing and warehouse management. In 2020, Amazon said, it has opened 75 new fulfillment and sorting centers, regional air hubs and delivery stations in the United States and Canada.

Amazon previously said that it hired 175,000 additional people to meet the huge surge in demand related to Covid-19.

Credit…Mike Blake/Reuters

Two mega deals that were just announced — Gilead’s $21 billion purchase of Immunomedics and Nvidia’s $40 billion acquisition of Arm — reflect what Wall Street advisers have been saying: the mergers and acquisitions market is heating up.

Deal makers cite three reasons to expect a flood of mergers in the near future, today’s DealBook newsletter explains:

  • A backlog built up during lockdowns

  • Soaring stock prices — in certain industries

  • A potential change in capital gains taxes

Appetite for deal making in the health care and tech industries is “as strong as at any point in the last decade,” said Colin Ryan, co-head of Americas M.&A. at Goldman Sachs.

For pharmaceutical companies, there are more likely to be deals that add specific capabilities — like Gilead’s purchase of Immunomedics — than agreements that completely transform a company. That’s because some big acquisitions have struggled to get regulatory approval without divestitures, and any such deal now could be reviewed after the election, when a potential Biden administration might be more skeptical of concentrated corporate power.

For technology companies, most of the action is expected among software companies that have benefited from the work-at-home shift — a bunch of them are taking advantage of rising markets to go public this week.

Executives and investors are also eyeing the implications of a change in the capital gains tax that might happen if Joe Biden wins the presidency and Democrats take control of Congress. Private equity firms are considering selling assets sooner rather than later, founders are mulling stake sales and conglomerates are accelerating plans to slim down.

And then there’s the election. “I haven’t seen a situation in which people are so focused on getting deals done before the election,” said Marc-Anthony Hourihan, co-head of M.&A. for the Americas at UBS. Not all advisers share that view, but the prospect of volatility from a contested election is enough for some to rush to seal deals. “Clients don’t want to be in the market in November and have the volatility and uncertainty of trying to figure out who won the election,” Mr. Hourihan added.

Credit…Vincenzo Pinto/Agence France-Presse — Getty Images
  • U.S. stock futures rose on Monday, showing that the S&P 500 was poised to jump more than 1 percent when trading starts. Stocks in Europe opened higher on Monday, but then slipped lower through the morning, unable to keep the momentum from some positive news in the search for a coronavirus vaccine.

  • In Europe, the Euro Stoxx 600 index and Britain’s FTSE 100 were flat. Asian markets closed higher, with China’s Shanghai Composite gaining 0.6 percent, South Korea’s Kospi adding 1.3 percent and the Nikkei in Japan closing 0.7 percent higher.

  • Oil was slumping after reports of a coming glut in supplies. Brent crude was down 1.1. percent, to about $39.40 a barrel, and West Texas Intermediate, the U.S. benchmark, lost 1.2 percent, to $36.80 a barrel. Gold was flat.

  • Oracle stock was up about 7 percent in premarket trading after being chosen to be TikTok’s technology partner. ByteDance, TikTok’s parent, rejected a bid by Microsoft. Time was running out on a deadline set by an executive order from President Trump threatening to ban TikTok unless its American operations are sold.

  • The drugmaker AstraZeneca said that an outside panel had cleared its vaccine trial in Britain to resume, after it had been halted because a person given the drug had experienced serious neurological symptoms. Still, scientists are concerned that vaccine makers are keeping information about their trials under wraps.

  • “The news over the weekend that AstraZeneca clinical trials had resumed is likely to be well received,” said Michael Hewson, chief market analyst at CMC Markets. “However it is unlikely to assuage concerns that the speed with which these trials are being done, could result in a vaccine being rushed out too hastily, with unforeseen circumstances.”

  • In other pharmaceutical news, Gilead Sciences said it would acquire biotech company Immunomedics for $21 billion. The move, which would expand Gilead’s access to cancer treatments, caused Immunomedics’s share price to more than double in premarket trading.

📌 A dozen I.P.O.s are expected to raise $6.8 billion this week, led by software companies. The cloud company Snowflake is set to raise more than $2 billion, while the video-game group Unity is targeting $950 million. Others going public include Amwell ($525 million), JFrog ($405 million) and Sumo Logic ($281 million).

⌚️At an event on Tuesday, Apple is expected to unveil new versions of its smartwatch and iPad, and possibly some sort of software subscription bundle.

🛍 Companies reporting earnings include Adobe and FedEx on Tuesday. The fast-fashion rivals H&M and Inditex (the parent company of Zara) also open their books — H&M on Tuesday and Inditex on Wednesday. BP kicks off a three-day investor event today in which the company will present a plan to reduce its reliance on fossil fuels, as it forecasts that global oil demand may have already peaked.

⚖️ The Federal Reserve and Bank of Japan announce their latest policy decisions on Wednesday, followed by the Bank of England on Thursday. The Japanese central bank is expected to be the most upbeat, while the Fed will attempt to support a fragile recovery without additional fiscal stimulus, and the Bank of England is wrestling with the Brexit tensions roiling the British economy.

Credit…Alex Welsh for The New York Times

The loss of traditional film festivals because of the pandemic means more than missing out on cocktail parties and the red carpet.

For small indie films, not having a chance to build word-of-mouth momentum at the festivals could be the difference between becoming an unlikely Oscar darling or another also-ran in the video-on-demand market.

Ricky Staub, a 37-year-old filmmaker, had ambitious plans when his directorial debut, “Concrete Cowboy,” landed coveted spots in the Telluride and Toronto film festivals. That all changed when Telluride was canceled and Toronto opted for a hybrid model with in-person screenings for Canadian audiences and a virtual version for everyone else.

“Everyone told me the best part of finishing your movie was when you started going to the festivals,” Mr. Staub said. “I don’t get to experience that at all. I have huge amounts of gratitude, but I’m sad I don’t get to go.”

At the Venice Film Festival, held in person with certain safety restrictions and concluding this week, “One Night in Miami” — the directorial debut of the Oscar-winning actress Regina King — has already generated early awards chatter. Amazon recently bought it in a bidding war.

Toronto is trying to create that enthusiasm in the virtual world. With a select number of online question-and-answer sessions with filmmakers, and both drive-in showings and 50-person theater screenings in Toronto, the event will showcase 50 films instead of the 333 it programmed in 2019.

Cameron Bailey, artistic director and co-head of the festival, acknowledges that it’s “strange,” especially without the usual throngs crowding the streets during the 10-day international event. But he said the festival was still able to propel new filmmakers and films, even in a virtual world.

“A festival’s primary currency is intangible — it’s buzz,” Mr. Bailey said.

Source link

TAGS
Hi guys, this is Kimmy, I started LicensetoBlog to help you with the latest updated news about the world with daily updates from all leading news sources. Beside, I love to write about several niches like health, business, finance, travel, automation, parenting and about other useful topics to keep you find the the original information on any particular topic. Hope you will find LicensetoBlog helpful in various ways. Keep blogging and help us grow as a community for internet lovers.