The currencies of many countries have depreciated sharply, and the risk of collection in the South American market has become highlighted! Government debt in many countries around the world has surged, and their credit ratings have been downgraded, causing the risk of debt defaults to soar.
The currencies of many countries have depreciated sharply
According to the latest data from the Argentine National Statistics Institute, Argentina’s inflation rate in September 2020 was 2.8%, from January to September It was 22.3%, and the cumulative rate in the past 12 months was 36.6%. Some analysts pointed out that the official inflation level was lower than previously predicted by local consulting firms. Among the major consumer goods, prices of clothing, shoes and hats, alcohol, tobacco, and food and beverages increased the most.
The IMF predicts that Brazil’s economic growth will be negative by 5.8% in 2020
According to the latest “World Economic Outlook” released by the International Monetary Fund (IMF), Brazil’s GDP growth this year is expected to be by The previous negative growth of 9.1% was revised up to negative growth of 5.8%, and Pakistan’s GDP growth is forecast to be 2.8% in 2021. Pakistan’s per capita GDP will fall by 6.4% this year and grow by 2.2% in 2021.
The IMF predicts that the Bahamas economy will shrink by 14.8% in 2020
The International Monetary Fund (IMF) recently released the latest “World Economic Outlook” report, predicting that the Bahamas economy will shrink in 2020 It will shrink by 14.8% in 2021 and grow by 4.6% in 2021; consumer prices in The Bahamas are expected to increase by 1.8% in 2020 and 2.1% in 2021. The report predicts that the global economic growth rate will be -4.4% in 2020 and 5.2% in 2021; of which emerging market and developing economies will have a growth rate of -3.3% in 2020 and 6% in 2021, while the Caribbean The regional growth rate in 2020 is -5.4%, and the growth rate in 2021 is 3.9%. The report stated that compared with pre-epidemic predictions, both developed economies and emerging market economies are expected to experience significant economic losses; small countries and tourism-dependent economies and commodity-dependent economies will face particularly severe difficulties; most economies The economy will experience lasting damage to supply potential, will experience the trauma of this year’s deep recession, and will require structural changes.
Nigeria’s economy will shrink by 4.3% in 2020
Reported on October 14, the International Monetary Fund (IMF) released the October 2020 World Economic Outlook on Tuesday. “The report stated that Nigeria’s economy will shrink by 4.3% in 2020. According to the report, global growth is expected to contract by 4.4% in 2020, a smaller contraction than forecast in the June 2020 World Economic Outlook update. The revision reflected better-than-expected gross domestic product (GDP) in the second quarter, mainly as economic activity began to resume in advanced economies after lockdowns were lifted in May and June.
The IMF sharply lowered its economic growth forecast for the Philippines to minus 8.3%
The International Monetary Fund (IMF) released its latest world economic outlook on Tuesday, predicting that the Philippine GDP will decline by 8.3% in 2020. This decline is higher than the negative 3.6% predicted by the IMF in June, higher than the negative 4.4-6.6% predicted by the Philippine government, and also higher than other ASEAN countries with larger economies. According to IMF forecasts, Thailand’s GDP will decline by 7.1% this year, Malaysia’s GDP will decline by 6%, Indonesia’s GDP will decline by 1.5%, and Vietnam’s GDP will grow by 1.6%.
Vietnam’s central bank has lowered the reserve requirement ratio three times to provide corporate relief
It was reported on October 15 that since the beginning of the year, the National Bank of Vietnam (NHNN) has lowered the benchmark interest rate three times, by about 1.5- 2 percentage points. The move is expected to provide commercial banks with a source of cheap funds and help increase credit flows, thus having a positive impact on the economic situation.
The National Bank stated that since 2016, it has lowered the benchmark interest rate by 2-2.5 percentage points, the interest rate on deposits with a term of less than 6 months has dropped by 0.8-1.5 percentage points, and the interest rate on loans to priority areas has dropped by 2.5 percentage points.
Especially under the influence of the COVID-19 epidemic, in 2020 alone, the National Bank made three major RRR cuts. Therefore, compared with other countries, Vietnam currently has the largest reduction in benchmark interest rates. Specifically, prices fell by 0.3 percentage points in China, 1.25 percentage points in Malaysia, 0.75 percentage points in Thailand, 1 percentage point in Indonesia, and 1.15 percentage points in India.
The National Bank said that together with supporting solutions to support the economy, the National Bank’s sharp reduction in reserve requirements will help relieve the crisis and support economic recovery. Tao Mingxiu, executive deputy governor of the National Bank, said that by lowering the interest rates on new and old loans, it will create conditions for enterprises to obtain capital more easily. Therefore, lowering interest rates is a basic and important solution to expand credit.
In fact, commercial bank deposit interest rate cuts have been strong since the beginning of September, leading to loan interest rate cuts and the introduction of a series of preferential credit programs to support enterprises and the public. In addition, the National Bank also decided to postpone the tightening of short-term funding ratios in medium- and long-term loans for another year, so that commercial banks will not bear the burden in the context that they must support enterprises to relieve financial difficulties by lowering loan interest rates, forbearing, and restructuring debts. Pressure from restructuring capital.
The IMF predicts that Ukraine’s GDP will fall by 7.2% in 2020
The IMF raised its forecast for Ukraine’s GDP decline in 2020 to 7.2% from 8.2% in June. According to the “World Economic Outlook” released by the IMF on Tuesday, Ukraine’s economic growth forecast for next year has been raised from 1.1% to 3%, and GDP will grow by 4% in 2025.
According to the World Economic Outlook, Ukraine’s average inflation rate is expected to increase from 4.5% to 3.2% in 2020, and from 7.2% to 5% next month. It will end the year at 5.2% and increase to 5.8% next year.
The report stated that Ukraine’s economy grew by 3.2% in 2019 and the inflation rate was 4.1%. The IMF also raised its unemployment forecast. The unemployment rate forecast for June this year has increased from 8.5% increased to 12.6% and will drop to 12% next year. The current unemployment rate is forecast to be 11%, rising to 9.6% next year.
The euro zone will shrink by 8.3% in 2020
In September, Estonia’s deflation rate was 1.3%, while the euro zone’s deflation rate was 0.3%, and the EU’s inflation rate is 0.3%.
In August, the deflation rate in the euro zone was 0.2% and the inflation rate in the EU was 0.4%. Data released by Eurostat show that in 2019, the inflation rate in the euro area was 0.8% and that in the European Union was 1.2%.
In September, within the euro zone, only Greece and Cyprus had higher deflation rates than Estonia, at 2.3% and 1.9% respectively. Poland has the highest inflation rate at 3.8%, Hungary at 3.4% and the Czech Republic at 3.3%. Food, alcohol and tobacco contributed the most to the Eurozone inflation rate, at 0.34 percentage points, followed by services at 0.24 percentage points, non-energy industrial products at -0.08 percentage points, and energy at -0.81 percentage points.
The main objective of the European Central Bank’s monetary policy is to maintain inflation below but close to 2% over the medium term.
The Eurozone and Lithuanian economies will shrink by 4.4% and 1.8% respectively this year, and will grow by 5.2% and 4.1% respectively next year
The International Monetary Fund predicts that the world economy will shrink by 4.4% this year, down from the June forecast 0.8 percentage points. China will become the only major economy with positive GDP growth this year, expected to grow by 1.9%. The world economy is expected to grow by 5.2% in 2021.
Euro zone economies are expected to shrink by 8.3%. The German economy will shrink by 6%, the smallest contraction in the euro zone. The south and countries more affected by the epidemic will face a greater economic recession, with France’s economy expected to shrink by 9.8%, Italy by 10.6%, and Spain by 12.8%. Eurozone economic growth is expected to reach 5.2% next year. Lithuania’s economy will shrink by 1.8% this year, the smallest decline among European countries. Next year, Lithuania’s economy will grow by 4.1%.
The Chairman of the Board of Directors of the Central Bank of Lithuania believes that long-term commitment to laying the foundation for sustainable economic growth should be the basic goal of Lithuania’s future economic DNA plan and national economic recovery plan. Resources should be focused on digitizing the national economy and public sector and accelerating the transition to a climate-neutral economic model.
Which countries have a higher risk of default?
Since the beginning of this year, countries have significantly increased fiscal expenditures to withstand the economic impact of the COVID-19 epidemic, resulting in a sharp increase in the scale of global government debt.
European Union
EU countries have been in a long-term state of low growth, high unemployment, and high welfare, and the proportion of Eurozone government debt to GDP has remained high for a long time. In response to the epidemic, the European Union launched a 750 billion euro economic stimulus plan, and government debt levels further increased.
Eurostat data shows that the current debt ratio of most European countries has exceeded the level at the beginning of the European debt crisis in late 2009. Among them, the Greek government debt ratio is close to 200%, and Italy, Portugal, Belgium, France and Spain all exceed 100%.
For many European countries, 2020 and 2021 are relatively difficult years because they will usher in the peak period of sovereign debt repayment. Among them, Italy and Spain have a large amount of debt maturing, and their sovereign debt default risks are relatively high.
United States
During the epidemic, major economies such as the United States and the European Union continued to increase their easing policies, resulting in a significant increase in the proportion of government debt to GDP in a short period of time. Data from the Peter Peterson Foundation website show that as of August 31, the U.S. federal government’s debt amounted to $26.6 trillion.
Fitch Ratings predicts that the U.S. fiscal deficit will reach 20% of gross domestic product (GDP) this year. As most economic aid measures gradually end, the fiscal deficit will fall back to 20% of GDP in 2021. 11%.
The U.S. economic outlook is full of uncertainties and depends to a large extent on whether it can successfully control the epidemic. The ongoing public health crisis will severely impact economic activity, employment and inflation in the short term and pose considerable risks to the economic outlook in the medium term.
Others
Currently, four sovereign issuers, including Argentina, Ecuador, Lebanon and Suriname, have defaulted, setting a record. These four countries were already in trouble before the outbreak, but Fitch warned that others could default, including Gabon, Mozambique, the Republic of Congo and Zambia.
Moody’s recently downgraded Turkey’s sovereign credit rating from B1 to B2 on the grounds that the country’s continued decline in foreign exchange reserves has led to risks in the balance of payments, the economy has encountered structural challenges, and financial bubbles.
The COVID-19 epidemic has led to rating downgrades
The world economic recession and the surge in government debt have led to the downgrade of the sovereign ratings of dozens of countries. In the first half of this year, the sovereign ratings of more than 30 countries and regions, including the United States, Eurozone countries, the United Kingdom, and India, were downgraded by international rating agencies.
Fitch has pushed the ratings of Italy and Mexico, the two largest borrowing countries, into the danger zone. Of the 118 sovereign ratings assigned by Fitch, more than one-third still face warnings of downgrades. </p
