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Latest news

  • The Danish agriculture minister has resigned as the mink scandal deepens

  • German police have fired water cannon to disperse anti-lockdown protesters

  • US housing starts have recorded their strongest growth since February

G20 ‘near to agreement’ on IMF funding boost

The developed and developing world alike may be susceptible to coronavirus, but the economic impact of the pandemic is anything but equal.

The desperate plight of some poorer countries is, however, recognised by their richer counterparts, says Mohammed al-Jadaan, finance minister of Saudi Arabia, which holds the G20 presidency. He tells the FT today he is optimistic that consensus can be reached on an IMF funding boost for those poor countries most affected, crippled by high debts and falling revenues, a move that has been resisted by the US. 

Zambia is the perfect example of a coronavirus debt crisis, writes global finance correspondent Robin Wigglesworth. As well as going to the bond markets, the country has borrowed more than $3bn from Chinese lenders, but confusion around the terms of these debts has made tackling the crisis “fiendishly complicated”, he explains.

The Covid-19 shock has hammered emerging economies

The World Bank’s chief economist Carmen Reinhart told the FT’s Global Boardroom last week that much more needed to be done on debt restructuring and reduction, one of the main tools used by the G20 — which meets this weekend — to help low-income countries cope with the financial effects of the pandemic (you can read more on the crisis in the developing world in tomorrow’s Big Read).

It’s not just inequalities between countries that have been laid bare by the pandemic but also within them.

We report today on how the crisis has hit UK ethnic minorities, especially those working in the gig economy, as jobs and incomes disappear.

A global FT survey, meanwhile, highlights the plight of “Generation Covid” — the young people who have been disproportionately affected by the pandemic. It has turbocharged existing trends such as low wages, shrinking labour markets and rising student debt.

The distress of younger people is manifesting itself in resentment towards older generations — which are wealthier and have greater political influence — and increasing disenchantment with the political process. “Their confidence in public institutions and their perception of having political influence and representation in decision-making have stalled,” lamented an OECD official.

Dot plot showing youth concerns during Covid

Markets

Emerging markets are among those asset classes benefiting from hopes of a vaccine-led recovery. Value stocks have also got a huge boost from the market “reset” following the recent positive news on vaccines.

Bar chart of Cause of move and net returns (%) showing Biggest one-day value factor gains in history

Hedge funds are in the spotlight for their possible role in the US Treasury market turmoil in March, which could have spiralled into a financial crisis without aggressive Federal Reserve intervention. “The challenges posed by the ‘Covid event’ have by no means dissipated yet and we are just starting to draw the necessary lessons,” said a Fed official. 

Bank of England chief Andrew Bailey hinted he was open to loosening UK financial regulations to encourage post-pandemic investment. His comments follow government efforts to encourage asset-rich pension plans to play a bigger role in the recovery.

Business

The good news for western pharma companies enjoying the spotlight on their vaccine breakthroughs is bad news for their Chinese counterparts whose shares have taken a hit, denting the country’s ambition to lead the global fight against the pandemic. US pharma and biotech correspondent Hannah Kuchler goes inside Moderna, US developer of the latest vaccine candidate.

Line chart of Wind Vaccine index of Shanghai- and Shenzhen-listed equities showing China's vaccine makers hit by rivals' trial results

AP Moller-Maersk, the world’s biggest container shipping company, launched a share buyback after increasing its profit forecast for the third time since the pandemic began, thanks to a jump in freight rates caused by surging consumer demand.

British Airways is launching on-board coronavirus tests on some transatlantic flights as an alternative — if the government agrees — to the quarantining of incoming passengers to the UK. Malaysia’s Air Asia is reconsidering its investment in India while fellow budget airline easyJet recorded its first-ever loss as it called for more UK government support.

Global economy

Foreign investment is flooding into China as the country bounces back from the pandemic, rising in October for the seventh straight month and recording a year-on-year increase of 18 per cent. One Chinese official said investors saw the country as a “safe harbour”.

The rapid business shift online caused by the pandemic has led to a jump in regulatory probes across the world, notably on data privacy, cyber security and fraud. An industry expert blamed the “sudden pivot to managing a remote workforce, which has exacerbated companies’ struggle to navigate data protection laws of which they often have little experience”. 

Our Big Read on the eurozone economy assesses the impact of new lockdown measures, which could cause another downturn on the heels of the recent economic rebound. A potential double-dip recession could put the bloc further behind the US and Asia and have disastrous consequences for service industries.

Bar chart of Projection for annual change in GDP in 2020 (%) showing Europe will take longer to recover from the impact of Covid-19

Get in touch

How is your workplace dealing with the pandemic? How are you dealing with it as a professional or a manager? And what do you think business and markets — and our daily lives — will look like after we eventually emerge? Also — tell us what you think about this newsletter and how we can make it more useful to you. Email us at covid@ft.com. We may publish your contribution in an upcoming newsletter. Thanks.

ReturnFreeRisk comments on The kids aren’t alright: How Generation Covid is losing out

My mindset as a millennial: Life isn't fair and we are potentially hard done by. Yet, it also isn't fair that we have all the technological advantages which we understand better than almost any generation, and can exploit for monetary gain. We can use these advantages that makes our disadvantages pale in comparison and create vast sums of wealth.

We only seem to look at the negative unfairness, but I believe that we can create our own economies (through intrinsically understanding human desire, creating this desire in other people for our products and/or services, offered better than anywhere else) and then profit widely from these services — and not competing on price (a losing goal). It won't work for everyone (but neither will almost anything), but it worked for me.

The essentials

Bookmark these: Follow the latest infection data and the economic fallout from the pandemic, including today’s update on the UK labour market, at our dedicated tracker pages.

Final thought

Tiffin tins, home-delivery wine and wild swimming: “glimmers of good living” are still to be had. FT Globetrotter shares its latest London lockdown discoveries.

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