Here is a summary of the most important events that unfolded this past month, and which may affect economic, financial and geopolitical issues in the months ahead: 

North America

Crude oil futures went negative for the first time in history on April 20th. The price of a barrel of West Texas Intermediate crude oil for the May contract settled at -$37.63. The combination of dropping demand, due to the coronavirus, with excess supply from the Saudi-Russian price war sent the oil markets into a tailspin. Though oil prices have recovered some, volatility in the oil markets remain very high. 

US President Donald Trump has deferred the re-opening of the US economy to state governors. The guidelines outlined by the White House Coronavirus Taskforce call for the nation to be reopened in three phases, but the group did not suggest specific reopening dates. Several states, including Alabama, Georgia, Alaska, among others, began phase one of re-opening the last week of April. Other states, such as California and Washington, have extended their stay-at-home orders through the end of May. Though most states anticipate re-openings of businesses, restaurants, etc., social distancing measures will most certainly stay in effect throughout the summer, and possibly into the fall. The foundations of the economy have experienced a structural damage, something that is not reflected in the equity markets yet. 

The US as well members of the EU, Australia and other countries are investigating China and its responsibilities regarding the spread of the virus. Demands for reparations are rising. Another version of a trade war with China may be the result of those demands. The Trump administration has temporarily halted funds to the World Health Organization (WHO). President Trump has accused the organization of covering up the crisis in the early stages and mismanaging its spread. The US is the largest funder of the WHO, giving $500 million annually which is about 10 percent of the group’s budget. Thousands of organizations, healthcare companies, and medical experts are urging the President to reverse his decision. • The total US spending fighting the Covid-19 will reach $4 trillion by the end of Q2 this year. That will put the deficit at around 18% of GDP and the debt at more than 105% of the GDP. Inflationary forces may erupt in about 16-20 months while the debt burden for all nations around the globe will have negative effects. 

Unemployment continues to soar in the US as millions more people file for unemployment week after week. As of last week, the grand total of Americans who had filed unemployment claims was 30 million. The April jobs report, announced by the Labor Department on Friday, is expected to show the highest unemployment rate on record – around 16%. 

Europe

Some European countries, including but not limited to Denmark, Spain, Austria and Germany, have begun cautiously reopening their economies. However, strict social distancing rules will be kept in place including the prohibition of major gatherings until August 31st. European Union (EU) leaders have called on countries to reopen only if they meet certain conditions including large-scale testing, a sustained decline in cases, and a confirmation of health-system capacity to treat both coronavirus patients and others. 

The European Commission is expected to announce a €500 billion stimulus package on May 6th. The plan includes loans, unemployment support, credit lines for health costs, and more. However, a large rescue fund for the hard-hit countries of Spain, Italy, and Greece has yet to be agreed upon as leaders struggle to resolve long-running political tensions between the Northern and Southern European countries. The eurozone has struggled to coordinate a fiscal response to the pandemic. 

The European Central Bank (ECB) expanded its loan program to banks at record-low rates, lending as low as -1%. This move was made to reinforce the banking system’s access to funds and avoid the drying up of credit. The ECB has warned that the eurozone economy could shrink by as much as 12% this year due to the Covid-19 pandemic. 

Spain, France, Germany, and Italy have issued a joint proposal to unlock the European Union’s asylum impasse. In a letter to the European Commission, the four countries explain that a “binding mechanism” to distribute asylum applicants should be included in the New Pact on Migration and Asylum. The letter also calls for other European countries to offer “other measures of solidarity” in order to create a continent-wide solution to the migration problem. 

Asia and the Pacific

Unsurprisingly, US intelligence has revealed that China underreported the number of Covid-19 cases and deaths in the country and purposefully concealed the extent of the outbreak. US President Donald Trump stands by his claim that China is responsible for the Covid-19 outbreak and did not take the proper precautions to prevent its spread to the rest of the globe. Chinese officials have answered President Trump’s comments by spinning a story that the US was the source of the virus. 

For the first time in decades, China’s economy contracted in the first quarter. At the beginning of April, China reported a 6.8% drop in GDP for Q1 of 2020. Many are viewing this report as a foreshadowing of the economic hardship to come for the rest of the world as many countries still struggle to contain the coronavirus. On May 22nd, China will hold the annual meeting of the National People’s Congress. Over 5,000 delegates will convene to discuss the budget which is expected to include a stimulus package to counter the economic effects of the pandemic.

In South Korea’s parliamentary elections held in mid-April, President Moon Jae-in’s Democratic Party won in a landslide. Despite the election being held during a pandemic, the country saw its highest voter turnout in 28 years. 

Hong Kong’s pro-democracy protests have started gaining traction once again. A week ago, 300 people gathered at a shopping mall to hold a singing protest, despite a ban on public gatherings of more than four people. Hong Kong riot police split up the crowd, which was the first sizeable protest since the government-imposed restrictions on gatherings in response to Covid-19. Tensions between protestors and Beijing have escalated over the last few weeks after 15 pro-democracy activists were arrested.

Several countries are calling for debt relief on the massive infrastructure projects the Chinese government has financed as part of the Belt and Road Initiative. Chinese officials have said they are considering suspending interest payments on loans among other measures but warned against any expectation of China forgiving the debts outright. Many countries participating in China’s Belt and Road Initiative were already in precarious debt situations before the Covid-19 pandemic emerged. 

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