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Russia Halts Wheat Exports, Deepening Fears of Global Food Shortages

For the first time in a decade, the world risks being cut off from Russian wheat at a time when some key buyers are rushing to import it.

The top shipper last month limited sales through June to protect its own supply as the coronavirus crisis sparks food-security concerns around the world. Although the curbs were seen loose enough to ensure normal trade flows for this time of year, Russia has already burned through the entire quota. It will halt grain shipments to all but four former Soviet neighbors once the last cargo booked under the limits leaves the country.

While the ban will only last until farmers start harvesting in July, some other nearby nations have also restricted grain exports, threatening to reroute global trade and fueling worries about food shortages and higher prices. Countries from Egypt to Turkey are trying to load up on imports while they still can, and Russian shippers have been feeding that demand.

There has been “a flurry of activity” recently, said Andrey Sizov Jr., managing director at consultant SovEcon in Moscow. “Buyers want to stock up because they realize they may not have the chance to do it later.”

The window has closed fast. In just a few weeks, shippers booked out all of the 7 million-ton quota set through June. As well as strong demand from importers, a weak ruble is keeping Russian grain attractive. Also, sales from government stockpiles — another measure intended to safeguard domestic supplies — have helped contain local prices and keep exports competitive.

The Agriculture Ministry on Sunday didn’t specify when the last cargo booked under the quota could leave.

One reason the limit was reached so quickly was because shippers rushed to get customs paperwork for future cargoes, according to Dmitry Rylko, director general at the Institute for Agricultural Market Studies. That means about 3 million tons could still be exported in the next two months, Reuters reported him as saying.
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BREAKING: Germany’s top judges rule that some of actions taken by the country’s Bundesbank to participate in the European Central Bank’s 2.7 trillion-euro asset purchase program were unconstitutional https://t.co/5dUeLpYKV4

— Bloomberg (@business) May 5, 2020

German court has set a bomb under the EU legal order
Its ruling on the ECB’s bond-buying programme is misguided and ill-timed

MARTIN SANDBU


Ahead of the German federal constitutional court’s verdict today on the European Central Bank’s 2015 programme to buy sovereign bonds, observers were nervous that a ruling of illegality would have serious legal and financial repercussions. As it was, the judges in Karlsruhe managed to do something even more damaging.

The court did not, “for now”, deem quantitative easing illegal. Instead it set off three grenades under the European legal order. 

First, by dismissing the European Court of Justice’s legal reasoning as inadequate, it took upon itself the role of interpreting this area of EU law. 

Second, it posited an interpretation that turns EU Treaty provisions on their head, and flies in the face of both the legal text and its political understanding — including in Germany.

Third, it gave German institutions three months’ notice: if by then the ECB has not complied with the court’s new doctrine, the Bundesbank and other German entities are banned from participating in the quantitative easing programme.

It is hard to say which of these is worse. But start with the economic questions at the heart of the issue.

The Karlsruhe court’s main line of reasoning is that the ECB, like all EU institutions, is limited by the “proportionality” principle in the Treaty: it may only exercise the powers granted to it to the extent necessary to fulfil its mandated goals. 

One may have thought that this means QE is legal if necessary to achieve the ECB’s inflation target. The acceptance of that necessity was at the core of the ECJ’s 2018 ruling that QE was legal, given safeguards against breaching the Treaty limitation on “credit facilities” for governments. 

But the view from Karlsruhe is that the ECB should not do what is necessary to fulfil its own mandate, but “balance” this against side effects for policy areas reserved for other institutions. It was, says the court, “incumbent upon the ECB to weigh [the] considerable economic policy effects and balance them . . . against the expected positive contributions to achieving the monetary policy objective”.

And the “economic policy effects” that worry the court are the one-sided litany well known from the conservative fringe of German monetary politics: by lowering interest rates, QE helps governments, hurts “savers or insurance policyholders” and “allows economically unviable companies to stay on the market”.

This is economically illiterate. As the ECJ understood, but the German court seems not to, any loosening of financial conditions will have such effects; it is precisely through them that monetary policy affects inflation.

Moreover, the court says “it is not ascertainable that any such balancing was conducted” and demands the ECB “provides documentation”. Did the judges even look at the ECB’s website and the governing council meeting accounts posted there?

The court instructs the German government to ensure that the ECB undertakes the missing “proportionality assessment”, and bans the Bundesbank from continuing QE unless the ECB issues a new decision to the court’s satisfaction within three months.

This is a breathtaking arrogation of power — against the ECB, but above all against the ECJ. Dismissing the EU court’s authority with shoddy legal argument has so far been the preserve of parts of the legal establishments in Poland and Hungary. For a German court now to do so is a source of deep concern.

What would it mean for the Karlsruhe doctrine to be adopted? The Treaties do in fact require the ECB to support the EU’s economic policies (which include growth, employment, economic cohesion), but as a secondary mandate, in strict subordination to price stability and not something to be “balanced” against it.

The logical consequence of the court’s reasoning is instead that the ECB should subject its monetary policy independence to the EU’s fiscal and economic objectives. That is not just wrong-headed, but coming from Germany, deeply ironic.

https://www.ft.com/content/79484c01-b66b-4f81-bdc6-fd4def940821

Euro Area Survival Put at Risk From Uneven Virus Shock, EU Warns
Alexander Weber  and Viktoria Dendrinou, May 6, 2020,
https://www.bloomberg.com/news/articles/2020-05-06/euro-area-survival-put-at-risk-from-uneven-virus-shock-eu-warns

The European Union is facing the deepest economic downturn in its history, which threatens the very future of the euro currency if the crisis is badly handled, the bloc’s executive arm warned.

The euro-region economy is set to shrink 7.7% this year, sending unemployment and public debt levels surging, after governments put in place drastic measures to limit the spread of the coronavirus, the European Commission said Wednesday.

Officials warned that the crisis risks widening the gulf between northern and southern euro nations and pushing the bloc to the breaking point because of differing exposures to the tourism industry and governments’ capacity to support businesses and households.

Output in Greece, Italy and Spain -- where debt levels were already higher than average before the crisis hit -- is projected to fall by more than 9% this year, while it will be less than 7% in countries including Germany and the Netherlands. Without some form of common rescue plan, distortions could put the very stability of the region at risk, the EU said.

“Such divergence poses a threat to the single market and the euro area -- yet it can be mitigated through decisive, joint European action,” Economy and Financial Affairs Commissioner Paolo Gentiloni said in a statement.
The forecast underscores how drastically officials had to revise the outlook following crippling shutdowns to limit the spread of the coronavirus. Just three months ago, the commission predicted euro-area growth of 1.2% this year, though it singled out the illness as a “key downside risk” at the time.

The latest projection -- broadly in line with recent IMF numbers -- is still subject to a high level of uncertainty and the risk of an even deeper slump is “very real,” according to Maarten Verwey, the commission’s chief economist.

Another surge of infections could reduce output by another 3 percentage points, he said. The European Central Bank previously said that the euro-area economy could shrink by as much as 12% year, depending on how the outbreak develops.
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The Vienna Institute for International Economic Studies (wiiw) has today published its new forecast report, which estimates that the economic downturn caused by the Coronavirus across 23 countries in Eastern Europe will be worse than 2009 in the aftermath of the global financial crisis. The region’s weighted average real GDP is expected to decline by 6.1% in 2020, compared with 5.6% in 2009, making this the worst year for Eastern Europe since the early 1990s. The initial recovery of the region will then be much weaker: 2.8% in 2021, compared with 4.4% in 2010.

In 2020, the GDP contractions are expected to vary significantly across the countries of the region

The biggest real GDP contractions in 2020 are expected to be in Croatia (-11%), Slovenia (-9.5%), Slovakia (-9%) and Montenegro (-8%), reflecting these countries’ particularly heavy reliance on external trade and/or tourism;

The region’s two biggest economies also face substantial recessions this year; wiiw forecasts that real GDP will drop by 6% in Turkey and 7% in Russia;

The least severe contractions in 2020 will be in economies that are less reliant on external trade and tourism such as Kosovo (-4.4%) or Moldova (-3%), and/or are likely to use significant fiscal resources to counteract the downturn such as Poland (-4%), Kazakhstan (-3%) and Serbia (-4%).

Countries that have been able to lift lockdowns more quickly, such as the Czech Republic (-4.8%), will also perform better than could otherwise have been expected.

The downside risks to wiiw’s projections are quite significant. In particular, the reliance of Ukraine, Moldova and many Western Balkan countries on large-scale capital inflows could cause substantial stresses in those countries. We expect remittances, foreign direct investment and portfolio inflows to contract sharply this year. The role of international institutions such as the IMF and the EBRD will be crucial in helping them to manage the downturn.

LONDON—The Bank of England said it expects the U.K. economy to shrink by around 25% in the second quarter as the economy reels from the effects of the new coronavirus.

The U.K. central bank’s Monetary Policy Committee agreed at its May meeting to leave the BOE’s benchmark interest rate unchanged at 0.1% and the size of its bond-buying program at £645 billion ($796 billion), the central bank said in a statement Thursday.

The BOE cut its benchmark rate to a new low in March and revived its bond-buying program as part of a wide-ranging package of monetary and fiscal measures to shield the economy from the ravages of the virus.

Britain now has the highest death toll in Europe linked to Covid-19, the disease caused by the new pathogen, with 30,076 confirmed fatalities. Broader mortality statistics, which include deaths where Covid-19 was suspected but not confirmed by a lab test, suggest the true tally is higher still.

The BOE said the outlook for the next few quarters is highly uncertain and said its latest forecasts, published Thursday, represent an illustration of what might happen based on available data so far rather than a firm prediction. It expects the economy to shrink in the first and second quarters, unemployment to rise to 9% from its current level of around 4% and inflation to slow markedly.

Two of the rate-setting panel’s nine members, Jonathan Haskel and Michael Saunders, argued in favor of an extra £100 billion of bond purchases, saying more support would lessen the risk of lasting damage from the crisis. The majority preferred to keep policy on hold.

The predicted collapse is similar to sharp contractions expected in the eurozone and the U.S. as government efforts to stop the virus and protect public health put the brake on economic activity.

The BOE said it expects a gradual recovery in the second half of the year as businesses reopen and people return to work, though the economy won’t recover all the ground lost to Covid-19 until next year.

Prime Minister Boris Johnson is expected on Sunday to set out a gradual easing of measures to contain the virus.

Talason wrote:protesti zbog sporne nabavke respiratora

u Sloveniji

Srbiju čeka veliki pad, tvrde svi sem Vučića

Vlasti Republike Srbije izgleda da nikako naiđu na razumevanje međunarodnih institucija kada se radi o procenama privrednog rasta u 2020. godini.

Piše: M. Obradović
07. maja 2020. 13.00

Naime, poslednjih dana čuli smo od direktora Zavoda za statistiku Miladina Kovačevića da bi ovu godinu mogli završiti na nuli, dok je predsednik Srbije Aleksandar Vučić ocenio da nas očekuje ne pad, već privredni rast od jedan odsto po čemu bismo verovatno bili jedinstveni u Evropi.

Juče je Evropska komisija objavila svoje prolećne ekonomske projekcije za evropske zemlje prema kojima se Srbija nalazi među zemljama koje će najmanje biti pogođene krizom.

Međutim, to prema stručnjacima Evropske komisije znači pad od 4,1 odsto. Juče su svoje prognoze objavili i stručnjaci Bečkog instituta za međunarodne ekonomske studije koji se bave regionom Centralne i Istočne Evrope prema kojima ćemo izgubiti četiri odsto BDP-a ove godine.

Nešto ranije, u aprilskom izveštaju o Svetskim ekonomskim izgledima MMF je procenio naš pad na tri odsto.

Ričard Griveson, saradnik Bečkog instituta za međunarodne ekonomske studije, kaže da je veoma malo verovatno da će bilo koja evropska ekonomija izbeći recesiju ove godine.

„U ovim tmurnim ekonomskim izgledima ipak šanse Srbije izgledaju mnogo bolje od većine njenih suseda“, kaže Griveson za Danas.

Vladimir Gligorov, saradnik ovog instituta, to objašnjava činjenicom da neke od regionalnih ekonomija imaju veliki turistički izvoz, a poseta će biti desetkovana ove godine.

„Neke imaju industriju koja je integrisana u EU, a pad industrijske proizvodnje je značajan. U Srbiji je za to primer Fijat. Konačno, udeo poljoprivrede u ukupnoj proizvodnji je u Srbiji veći nego u susedstvu, a ona bi trebalo da trpi manje posledice. Uz to, manji izvoz bi trebalo da ide zajedno sa manjim uvozom, tako da neto izvoz ne bi trebalo da ima negativan uticaj na BDP, što opet nije slučaj u turističkim zemljama. Manje je jasno kako stoji stvar sa uslugama, koje imaju značajan udeo u ukupnoj proizvodnji i u Srbiji. I sa građevinarstvom koje je uticalo značajno na rast u prošloj godini. Verujem da se tu računa sa bržim izlaskom iz karantina“, ističe Gligorov uz napomenu da je ovo razlog što se ne predviđa pad proizvodnje u drugom kvartalu, što bi bio izuzetak u odnosu na druge zemlje.

„Ukoliko bi u drugom kvartalu rast bio negativan, što mislim da bi bilo u skladu sa činjenicama koje su nam poznate, onda bi prognoze o nultoj ili pozitivnoj stopi rasta za celu godinu bile nerealne. Očekivanja, zvanična, za drugu polovinu godine su da će rast biti blago negativan zato što je prošle godine rast u drugoj polovini bio ubrzan. Ovo je dosta neizvesno, kako zato što se ne zna ponašanje epidemije, ne zna se ni kakve će biti vremenske prilike, a konačno nije jasno ni do koje će se mere oporaviti izvoz“, smatra Gligorov i dodaje da se mogu očekivati tri tromesečja sa padom BDP-a, a među njima može biti i prvi kvartal 2021. godine.

Prema njegovim rečima, da bi procene o nultoj stopi rasta bile ostvarene, bilo bi potrebno da vremenske prilike budu pogodne, da se obnovi izvoz i da se oporavi sektor usluga.

„Onda uz dobar prvi kvartal, to bi moglo da kompenzuje relativno nepovoljniju drugu polovinu godine. I, a to je najvažnije, bilo bi potrebno da ovih nekoliko nedelja karantina ne utiče suviše negativno na stopu rasta u drugom kvartalu. I naravno, potrebno je da se ne obnovi epidemija“, zaključuje on dodajući da treba imati u vidu da one zemlje koje će imati ove godine najdublji, pad sledeće godine mogu očekivati najveći rast i obrnuto.

Malo ekonomista želi da komentariše prognoze predstavnika vlasti, uz objašnjenje da se ne raspolaže ni blizu dovoljnim podacima da bi se donosile procene za celu godinu. Čak se i MMF u svojim projekcijama ogradio da su ovo najneizvesnije procene do sada.

Ekonomista Goran Nikolić sa Instituta za evropske studije podseća da je jedini zvanični podatak srpskih vlasti projekcija koja je korišćena prilikom izrade rebalansa budžeta.

„Kada je pre desetak dana pravljen rebalans budžeta, Ministarstvo finansija je koristilo procenu da će BDP pasti 1,8 odsto. I to je donekle optimistična ocena, ali na budžetu rade najbolji ljudi u Ministarstvu finansija i ta procena im je važna kako bi se planirali budžetski prihodi u ovoj godini. Sve ostalo što se govori, ko god da govori je nezvanično“, napominje Nikolić dodajući da prema izveštaju Evropske komisije najbolju prognozu za ovu godinu ima Severna Makedonija sa -3,9 odsto, a zatim Srbija sa padom od 4,1 odsto, mada bi i neke zemlje Zajednice nezavisnih država mogle proći nešto bolje od nas.

Bečki institut ističe u svojoj analizi da se očekuje značajan pad u prilivu kapitala. Prema njihovim procenama u poslednjih pet godine doznake su iznosile osam odsto BDP-a, a strane direktne investicije više od šest odsto BDP-a.

„Oba priliva će verovatno značajno pasti ove godine i moguće da se neće povratiti već sledeće. Međutim, kako kriza bude prolazila može se desiti da Srbija ima korist od želje zapadnoevropskih kompanija da proizvodnju približe matičnom tržištu“, navodi se u izveštaju.

Evropska komisija u svojim prognozama očekuje smanjenje investicija za 13,5 odsto, što će skoro potpuno izbrisati prošlogodišnji rast od 16,4 odsto.

Takođe, na nivou cele godine očekuju da će se izvoz smanjiti za 8,5 odsto, a uvoz za 9,4 odsto, što će uticati čak na smanjenje trgovinskog deficita na 10,1 odsto BDP-a. Nezaposlenost će po njihovoj proceni dostići 12,7 odsto ove godine, a javni dug 62,2 odsto BDP-a.

U sledećoj godini očekuje se značajan oporavak i privredni rast od 6,1 odsto.

паће wrote:Те је тако брегзит прошао скоро незапажено, супер им је ово одвлачење пажње.

Sweden unlikely to feel economic benefit of no-lockdown approach
Analysts forecast that growth will contract at similar rate to rest of Europe


Mickes, unlike most record shops in Europe, is still open for business. The compact store in southern Stockholm crammed with thousands of vinyl LPs last week enjoyed a steady stream of customers taking advantage of Sweden’s no-lockdown approach to coronavirus. But owner Micke Englund said that while he was happy his shop was not closed, his business had still been hit hard by Covid-19. “When people became aware of coronavirus around March 12, we lost almost overnight 30 per cent. It’s OK. For a couple of months, it will work. But after that it will be very, very tough,” he said. Sweden refused to follow other European countries in closing its primary schools and kindergartens or banning people from leaving their homes, arguing that taking such “draconian measures” was not sustainable and could unnecessarily harm the economy. Swedish business leaders such as Jacob Wallenberg have urged authorities to take the economy into consideration when thinking of imposing restrictions or risk social unrest. Early figures for Sweden’s gross domestic product in the first quarter of 2020, released this week, suggested that at least in March it had performed better than much of the EU as it recorded a decline of just 0.3 per cent, compared with a 3.8 per cent fall for the eurozone.


But economists argue that Sweden is unlikely in the long term to escape the severe economic pain of the rest of Europe. The European Commission forecasts that Sweden’s GDP will fall by 6.1 per cent this year. The Riksbank, the country’s central bank, has an even gloomier outlook, estimating that GDP will contract by 7-10 per cent, with unemployment peaking at between 9 and 10.4 per cent. These are disastrous figures for the Scandinavian country. “It is too early to say that we would do better than others. In the end, we think Sweden will end up more or less the same,” said Christina Nyman, a former deputy head of monetary policy at the Riksbank who is now chief economist at lender Handelsbanken. One big reason is that Sweden is a small, open economy with a large manufacturing industry. Truckmaker Volvo Group and carmaker Volvo Cars were both forced to stop production for several weeks, not because of conditions in Sweden but due to lack of parts and difficulties in their supply chains elsewhere in Europe. Ms Nyman noted that despite being relatively little hit directly by the 2008 financial crisis Sweden’s economy still suffered more than many. Data on the use of public transport, credit cards and restaurants show big falls in Sweden as authorities urge people to work from home where possible and maintain social distancing. But the declines are less precipitous than other European countries under full lockdown.

“Activity in Sweden is grim, maybe not as grim as elsewhere, but it is still unprecedented declines,” said David Oxley, senior Europe economist at Capital Economics. He argued that the relatively healthy first-quarter growth figures were helped by January and February being stronger than expected. For March, he added: “It’s certainly reasonable to expect that they wouldn’t experience the same sudden stop as other economies.” Ms Nyman said she believed that without the no-lockdown policy, Sweden would have been harder hit, as in 2008. “If we didn’t have these better circumstances, we would have done worse. Usually, we are more severely hit by a global recession,” she added. Economists at Swedish bank SEB estimate Sweden’s GDP will drop 6.5 per cent this year, about the same as the US and Germany, but a little better than Norway and ahead of 9-10 per cent falls in Finland and Denmark, all of which have had lockdowns. The Riksbank has focused on keeping the supply of credit functioning rather than rate cuts. Governor Stefan Ingves told the Financial Times that much of the economy had shut down “in one way or the other” and that “if people are staying at home, it’s hard to stimulate”. Asked if Sweden’s economy would fare better than others’, he replied: “We simply don’t know. I’m not an epidemiologist. There are so many unknowns in all this. Different countries will do different things because they have different ways of deciding. Time will tell where we end up compared with other countries.” Some suggest that Sweden may reap some benefits as it continues with its current path while other countries grapple with how to reopen their economies. “Sweden’s strategy should be sustainable for a long time. When you open up, people can be more afraid, there’s more uncertainty,” said Ms Nyman. But Mr Oxley stressed that Sweden was still dependent on demand and supply chains in other countries. “There’s only a limited amount of upside to being contrary when the rest of the world is doing the opposite,” he added. Back at Mickes record shop, Mr Englund said that many had compared Sweden’s high death toll unfavourably with neighbouring Denmark, Norway and Finland, but that it came out well compared with the UK, France or Italy. “When they open up the countries again, they will start from square one. We won’t. But no one knows if our strategy was good, very good, or a disaster. Maybe we will know in a year’s time,” he added.