VENEZUELAN CENTER FOR STUDIES ON CHINA委内瑞拉中国问题研究中⼼

WORLD ECONOMIC

WEEKLY REPORTWEEK FROM 05 TO 09 OCTOBER 2020

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REPORTS AND ECONOMIC EVENTS

The countries of Latin America and theCaribbean will have to maintain extensivefiscal spending and stimulus policies inorder to overcome the strong impact theyhave suffered due to the coronaviruspandemic, a report from ECLAC said onTuesday.

The Economic Commission for LatinAmerica and the Caribbean (ECLAC)highlighted in a report that fiscal austerity isnot an adequate response to address thechallenges faced by the health crisis."National efforts must be accompanied by agreater mobilization of external resources,through access to accessible sources offinancing under favorable conditions, bothin international markets and by internationalfinancial institutions," he said.

"To advance towards a sustainedeconomic recovery that can support theconstruction of a welfare state and thestrengthening of the productive sector, itwill be necessary to maintainexpansionary fiscal and monetarypolicies," he added. The Covid-19outbreak deepened the weakness thatthe region had already been showing andwill take it this year to its worstcontraction since records began in 1900,with a fall of 9.1%. Nations will have toavoid the collapse of their economieswith "policies to stimulate aggregatedemand,

ECLAC: THEY WILL HAVE TO APPLY GREATER FISCALSPENDING AND STIMULI TO OVERCOME THE PANDEMIC

manage the pressures generated by theexternal shock on exchange and monetarysystems, and properly manage capital flows toenhance the effectiveness of fiscal andmonetary policies, "he added.

The labor outlook will continue with thestagnation that it already showed in 2019,when the unemployment rate was 8.0% onaverage and affected approximately 25.7million people, while 54% of those employedwork in the informal sector Remittances, animportant source of income for somenations,

The ECB is concerned about the rate ofappreciation of the euro

The Governing Council of the EuropeanCentral Bank (ECB) is more concernedabout the speed of appreciation of theeuro against the dollar than about thelevel of the exchange rate, according tothe minutes of its meeting of September10, published this Thursday At thatmeeting, the ECB maintained themonetary stimulus and recognized thatthe economic recovery from the impactof the pandemic is uneven in thecountries. The information availableindicates "a strong recovery in economicactivity in the euro area", although theThe recovery is "incomplete, uneven andsubject to considerable uncertainty,"according to the ECB. The ECB has sofar approved monetary stimulus worth1.35 trillion euros to cope with theeconomic effects of the COVIDpandemic. -19

According to Wikipedia, an annual reportis a comprehensive report on acompany's activities throughout thepreceding year. Annual reports areintended to give shareholders and otherinterested people information.

"Given the openness of the euro area economy,the members of the Governing Councilconsidered that a greater appreciation of theexchange rate constitutes a risk for growth andinflation," according to the minutes. In fact, theECB staff has considered in its macroeconomicprojections for September "a significant impactof the appreciation of the euro exchange rateon inflation" in the region. The euro hasappreciated significantly against the dollar, butalso against almost all the currencies ofadvanced economies and emerging from mid-July.

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The World Bank foresees an economic fallof 7.9% in Latin America in 2020

The World Bank (WB) forecasts that the LatinAmerican economy will contract 7.9% this yeardue to the impact of the coronavirus pandemic,while for 2021 it expects a 4% rebound. "Theimpact of COVID-19 has been felt throughmultiple channels, including external demand,increased economic uncertainty, the collapse oftourist flows, and the consequences of monthslocked in trying to contain the spread of thedisease." , detailed the WB in its semi-annualreport for Latin America and the Caribbean,published this Friday. By 2021, the multilateralinstitution forecasts that Latin Americaneconomic activity will grow by 4%, a promisingpercentage for the recovery of Latin America,which has been the region most affected by thehealth crisis. In its forecasts, the World Bankexpects that The three largest economies in theregion, Mexico, Brazil and Argentina, alsoregistered significant declines in theireconomies this year, of 10%, 5.4% and 12.3%,respectively. These three nations will lead theregional recovery next year, according toestimates, as the Mexican economy is expectedto grow by 3.7%, the Brazilian by 3% and theArgentine by 5.5%. Faced with this situation, theWorld Bank's chief economist for Latin Americaand the Caribbean, Martín Rama, pointed outthat local governments "must protect the mostvulnerable while adapting health and safetystandards in all sectors and activities, especiallythe education, so that the probability ofcontagion remains low while life continues. "

The recovery of the British economydisappoints in August

The British economy grew 2.1% in Augustcompared to July, a much slower rate thanexpected, adding its fourth consecutivemonth of growth, as the country tries torecover from a record drop during lockdownby the coronavirus, according to showedofficial data from Friday.

The figure is linked to the fourth consecutivemonth of growth in the United Kingdom. TheBritish economy, which contracted more thanany other in the Group of Seven in the April-June period, remained 9.2% below its pre-pandemic level, the Office for NationalStatistics said. United Kingdom (ONS).

"The economy continued to recover inAugust but at a slower pace than in recentmonths," said ONS deputy nationalstatesman for economic statistics JonathanAthow. The essential services sector grew2.4% since July, at a much faster pace.slower than expected growth of 5.0%.Growth in the manufacturing andconstruction sectors also fell short offorecasts.

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IMF study concludes that tight lockdownscould accelerate economic recovery

Early application of lockdowns during anepidemic can substantially reduce thespread of infections, so political leadersmust be cautious about lifting them to revivetheir economies when infection rates remainhigh, the Monetary Fund said Thursday.International.

The COVID-19 pandemic has shown thatgovernment restrictions are successful inreducing infections, the IMF wrote in achapter in its next edition of the WorldEconomic Outlook, but they also contributedto the recession and hit population groupsparticularly hard. more vulnerable, such aswomen and youth Voluntary socialdistancing driven by fear of contracting thedisease also contributed greatly to therecession, unlikely to ease once restrictionsare lifted as long as cases remain high , theresearchers warned. "Addressing healthrisks appears to be a precondition forenabling a strong and sustained economicrecovery."

"The closures impose short-term costs butcan lead to a faster economic recovery, asthey reduce infections and, therefore, theduration of voluntary social distancing," theywrote, adding that alternatives such as theuse of masks, the realization of Testing andcontact tracing could have even lowerfinancial costs.

The IMF study did not target specificcountries, but is released at a time ofdramatic increase in cases in parts of theUnited States that ended their confinementsof In anticipation of pressure from PresidentDonald Trump, who has set out to revive thecountry's economy ahead of the November 3presidential election, India, second only tothe United States in coronavirus cases, isalso lifting most of its restrictions, eventhough the pandemic is at its peak.

The IMF researchers said lockdowns shouldbe stringent enough to curb infections,suggesting that "tight, short-term lockdownsmay be preferable to gentle, long-termmeasures," they wrote. To avoid lastingfurther inequality, the Policy makers shouldstrengthen unemployment benefits and offerpaid parental leave.

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The United States market closed withadvances this Friday; revaluations in thetechnology, consumer services, andconsumer goods sectors pushed the indiceshigher.At the end of the session in New York, theDow Jones Industrial Average advanced0.57%, to hit a new high in one month, whilethe S&P 500 advanced 0.88%, and theNASDAQ Composite rose 1.39%.The best performing stock of the sessionon the Dow Jones Industrial Average wasMicrosoft Corporation (NASDAQ: MSFT),which rose 2.48% or 5.23 points to tradeat 215.81 at the close. The worst value inthe index was International BusinessMachines (NYSE: IBM), which fell 2.81%,or 3.70 points, to finish at 127.79. Thetop-earning stocks on the S&P 500 wereXilinx Inc (NASDAQ: XLNX), whichadvanced 14.11% to 120.94. The worstcomponent of the index was Coty Inc(NYSE: COTY), which depreciated 5.08% to3.55 at the end of the session. Thehighest-earning stocks on the NASDAQComposite were Marine PetroleumTrust(NASDAQ: MARPS), which advanced110.67% to 3,750.The worst componentof the index was ShiftPixy Inc (NASDAQ:PIXY), which depreciated 22.28% to 2.79at end of session.

The CBOE Volatility Index, which measuresthe volatility of S&P 500 options, fell 5.16%to 25.00 marking a new low in a month.Gold futures for December delivery gained2.18%, or 41.30, to $ 1936.40 a month.troy ounce. If we look at the othercommodities, crude oil futures forNovember delivery fell 1.55%, or 0.64, tostay at $ 40.55 a barrel, while Brent oilfutures for December delivery fell 1.25%,or 0.54 , to $ 42.80 a barrel. EUR / USDrecovered 0.60% to 1.1829, while USD /JPY fell 0.37% to 105.61. The dollar indexlost 0.68% to 93.012.

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STOCK EXCHANGES AND CRYPTOCURRENCIES

The US stock markets closed higher; the Dow Jones IndustrialAverage gained 0.57%

Venezuelan state PDVSA boosts crudeoil mix as exports increase

Venezuela's state-owned Petróleos deVenezuela (PDVSA) has pushed crudeblending to the highest levels in sixmonths, according to internal companydocuments seen by Reuters, as exportssurge despite strict US sanctions.

Upgraders are crucial to converting theextra heavy crude from the Orinoco belt ineastern Venezuela into exportable grades.But in recent months they have operatedintermittently due to falling exports andtechnical problems.

On Tuesday, upgrader Petropiar, a JV inwhich ChevronCorp (NYSE: CVX)participates, produced 115,000 barrels ofHamaca synthetic crude and theSinovensa blending facility, operated withChina National Petroleum Corp, produced158,000 barrels of Merey crude, accordingto a PDVSA document. Output from thetwo upgraders has been the highest sinceMarch, after increased exports inSeptember allowed PDVSA to reduceinventories, which had risen to near-capacity levels when U.S. sanctionsspooked potential buyers.

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VENEZUELA

Iranian tanker sets sail for the Persian Gulfcarrying Venezuelan heavy oil

An Iranian-flagged oil tanker left Venezuela onFriday for Iran's Kharg Island, according to RefinitivEikon data, after the ship loaded 1.9 million barrelsof heavy crude at the Jose oil terminal, in the SouthAmerican country.

The shipment is the latest example of cooperationbetween the two OPEC nations this year, whichhave intensified their trade ties to try to rescuetheir respective oil industries, which are underintense pressure from U.S. sanctions. (VLCC),registered in shipping databases under the nameHorse, discharged 2.1 million barrels of Iraniancondensate to be used as a diluent for Venezuela'sextra-heavy oil production in September, thenloaded Merey heavy crude for its export under anagreement between state oil companies Petróleosde Venezuela and the National PetroleumCompany of Iran, according to a PDVSA source.

PDVSA referred to the ship as the "MasterHoney" in its internal export programs, seen byReuters. The ship arrived in Venezuela andloaded crude without transmitting its location,as required by international maritime transportlaw in most cases , until around 2:00 a.m. localtime (6:00 a.m. GMT) on Friday, Refinitiv Eikon'svessel tracking data indicated. Many tankershave changed their names and even theirmanagement companies after hittingVenezuelan ports this year to avoid USsanctions, according to public shipping recordsand Refinitiv Eikon data.

The recovery in China's service sectoractivity advanced for the fifthconsecutive month in September, asurvey showed on Friday, while hiringincreased for the second month in a rowThe Purchasing Managers Index (PMI)The Caixin / Markit services sector roseto 54.8 points from 54.0 in August, thehighest reading since June and wellabove the 50 mark separating growthfrom contraction.

The services sector, which accounts forabout 60% of the Chinese economy andhalf of urban jobs, had initially beenslower to return to growth than that oflarge manufacturers, but the recoveryaccelerated in recent months Asrestrictions on public gatheringsimposed by the COVID-19 pandemicwere lifted, companies hired more forthe second month in a row, signalingsome recovery in a labor market thathas been hit by sharp declines indemand and health restrictions at thebeginning of the year.

"The recovery of the service sector afterthe epidemic showed signs ofaccelerating," said Wang Zhe, chiefeconomist at Caixin Insight Group,

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CHINA

THE RECOVERY OF THE CHINESE SERVICES SECTORACCELERATES IN SEPTEMBER

China will test the issuance of 10 million yuandigital

China's central bank will issue 10 million yuan($ 1.5 million) in digital currency to 50,000randomly selected consumers, in what somesee as the first public test of the country'sdigital yuan payment system. The People'sBank of China (BPC) comes as central banksaround the world compete to issue digitalcurrencies to modernize payment systemsand avoid potential competition fromprivately issued cryptocurrencies. As ofFriday, anyone from the southern city ofShenzhen can apply to join the programthrough the country's Big Four banks. Butonly a few will be awarded a 200 yuan "redenvelope" through a lottery, according to thelocal government and lenders. Winners canuse the digital currency at 3,389 points ofsale in Shenzhen, including Sinopec gasstations (NYSE: SHI ), Walmart stores (NYSE:WMT), CR Vanguard malls and Shangri-Lahotels. "This is the first public test of thedigital yuan and it is of enormousimportance," wrote Dong Ximiao, chiefanalyst at Merchants Union ConsumerFinance Co Ltd

United States

France

Oil Inventories: An unexpected increase in oilinventories will put some downward pressureon oil prices. Commercial crude oil inventoriesrose by 500,000 barrels in the week endedOctober 2, contradicting consensusexpectations of an 881,000-barrel decline.Gasoline inventories fell by 1.4 million barrels,beating analyst expectations of a 555,000-barrel decline. Distillate inventories fell by 1million barrels, shy of analyst predictions of a1.3 million-barrel draw. Refinery capacityutilization rose to 77.1% from 75.8%. Total U.S.oil demand was 14.8% lower than a year earlier.

Jobless Claims: Initial claims forunemployment insurance benefits fell by 9,000to 840,000 in the week ended October 3. Newfilings in the previous week were revised higherand are now shown to have been 849,000(previously 837,000). New filings for PandemicUnemployment Assistance, which are countedseparately, continue to bounce around as theydropped by 44,270 to 464,437 in the weekended October 3. Meanwhile, continuing claimsfor unemployment insurance benefits signalimprovement, falling from 11.979 million to10.976 million in the week ended September26.

Industrial Production: France's headlineindustrial output continued to recover inAugust, but the pace slowed to 1.3% m/m from3.8% in July. Manufacturing, which excludesenergy and mining output from the headline,rose by 1% after a 4.5% increase previously.Despite the improvements, manufacturingoutput remained well below year-ago levels,falling 7% y/y in August.

Canada

Argentina

Germany

Spain

International Merchandise Trade:Canada's merchandise trade deficit with theworld narrowed from C$2.5 billion to C$2.4billion in August. On the import side, of the 11product sections six decreased, causingimports to fall by 1.2%. Meanwhile, exportswere down by 1% as six of the 11 productsections declined.

Industrial Production : Industrial output fell7.1% y/y in August (NSA) amid the ongoingpandemic. The government has allowed mostmanufacturing businesses to reopen, butdemand remains weak because of risingunemployment and lingering mobilityrestrictions. Autos, apparel, constructionmaterials and metals led the decline in thisperiod.

Industrial Production: Headline calendarand seasonally adjusted industrial productiondashed expectations in August, falling 0.2%m/m after a 1.4% increase in July. In yearlyterms, the headline slumped 10%, down froma 9.8% drop previously. We were hoping formore given an upbeat manufacturing PMI andthe month’s unexpected boost in retail sales,but downside risks had always predominated.

Industrial Production: Spain’s industrialproduction edged up 0.4% in August.Industrial production is returning to a morenormal rate. All subsectors posted gains thismonth except for consumer goods. Even so,industrial production remains below year-agolevels. Industrial production will strengthen in2021.

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OFFICIAL STATISTICS OF THE WEEK