Category: Business News (Russia)

The figure represents a 38.2 percent increase from February and almost half of the total turnover for the first quarter of 2020.

“Moscow’s e-commerce market is actively developing. Since March 2019, its volume has grown by 6.8 percent to make up almost a quarter of the entire Russian internet trading market, or 24 percent,” said Moscow Deputy Mayor Vladimir Efimov.

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Traditional network retailers of grocery and non-grocery goods have launched large-scale online sales and delivery programs in the city since the beginning of April. Statistics show their average daily turnover for the week from April 20 to 26 reached 5.4 billion rubles ($74 million), up 5.6 percent from a week earlier. 

Small- and medium-sized enterprises can take advantage of a special subsidy for the promotion of goods through online trading platforms and online food delivery services.

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He noted that this would be in no small part because of the production cuts implemented by all major producers.

However, there are some 1.2 billion barrels in storage, Currie added, that would need to be drawn down before prices improve for more than a couple of hours. This, according to Currie, will happen in three stages.

The first oil in storage to go would be the millions of barrels in floating storage. It is the most expensive kind of storage, so it would make sense that traders and producers would first aim to get rid of it to save on tanker fees. Currie says this will happen sometime in the third quarter of the year. The amount of oil removed from floating storage will be around 450 million barrels. In the fourth quarter of the year, oil stockpiles in onshore storage will begin to decline, Currie said, by up to 400 million barrels.

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However, a strong rebound in prices is unlikely to take place anytime soon–and such a rebound would be undesirable. If Brent rises above $30 a barrel, Goldman’s commodity analysis head argues, it would spur a rebound in production, implying a rebound in supply, and a rebound in supply will immediately pressure prices yet again.

Demand remains the key factor for oil prices, and demand will likely remain depressed throughout the year. In mid-April, Currie noted, it fell by about 30 million from pre-crisis levels. Now, demand is about 19 million bpd below pre-crisis levels. While this demand has started to improve, it would still be down by 17 million bpd from pre-crisis demand this month and by 12 million barrels in June and July. By August, things will be looking up, with demand at 5-6 million bpd below pre-crisis levels.

This article was originally published on Oilprice.com

RT talked to economists to find out if Beijing may have foreseen the economic crash and about the Chinese government’s response to it.

“Nobody, including Beijing, could have foreseen the depth and gravity of this pandemic, specifically the cryptic transmission parameters by which the Covid-19 virus spreads. It is truly a once-in-100-year pandemic event,” said Sourabh Gupta, senior fellow at the Institute for China-America Studies.

According to him, China was better prepared because “it is in a much healthier fiscal position compared to most advanced economies and many emerging economies too.”

READ MORE: Worst three months in decades: China’s economy plunges almost 7% amid coronavirus battle

Gupta explained that the central government’s debt level as a percentage of GDP is fairly modest, which means there is ample space on the government’s balance sheet to ramp up policy support. Also, consumers’ debt levels relative to income is modest, so they are not overleveraged either and can open up their wallets.

He was echoed by Andrew Leung, international and independent China strategist, who said “China is always very long-term strategy-minded” and is better prepared for any crisis thanks to its state capitalism.

“The state can direct massive funds and mobilize businesses and people more effectively than the West. The same capability was demonstrated during the Asian financial crisis of 1997-98 and the world financial crisis of 2008-09,” said Leung.

According to Temur Umarov, an expert on China and Central Asia at Carnegie Moscow Center, every country is in a different economic situation, so their response to the coronavirus pandemic also differs. While numerous economic stimulus packages were announced by some countries, China has focused on recovery of domestic consumption, as well as on help for small- and medium-sized businesses, he said.

All the analysts agreed that neither China nor other countries could have foreseen the magnitude of the current crisis.

“There is a tsunami of negative views about China as a result of the spreading coronavirus crisis. America’s bad-mouthing has also helped. But China remains by far the second-largest economy, bigger than the rest of the BRIC countries combined,” said Leung.

He noted that many more countries have China as their largest trading partner than the United States.

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“Despite US decoupling, the complexity of modern production processes makes it virtually impossible to delink everything from China, ranging from materials like rare earths to components and parts, even logistics as most of the world’s largest container ports are in China.” The country is also rapidly upgrading its cutting-edge technologies including 5G and AI, the strategist said.

There is no need to look for some targeted actions by the Chinese government to prepare the country’s economy for the next crisis, said Sergey Lukonin from the Institute of World Economy and International Relations. The economist, who specializes in Chinese studies, pointed to the fact that China’s economy has become more stable over the past decade. “They now understand where to move further,” particularly during this crisis when everything is linked with the internet and digital services.

According to Gupta, the Chinese economy will be in the growth column later this year and will even end the year, overall, with positive growth. “There will be no V-shaped recovery and certainly growth will be nowhere near the pre-Covid-19 six-percent target. It will be more like the one to two percent range,” he said, adding: “But even by this low standard, China will be the fastest growing economy among the major economies this year, and East Asia/Asia-Pacific, the fastest growing economic region of the world.”

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Mercedes-Benz will have to fork out over $63.4 million for fabricating emissions reports for 12 diesel models sold between 2012 and 2018, Yonhap reported.

Seoul has already issued fines totaling $734,000 and $816,000 to Nissan Korea and Porsche Korea, respectively, for also reporting fabricated emission figures for their diesel models.All three automakers were caught using software in their automobiles that manipulate the levels of exhaust gas recirculation (EGR). EGR is used to reduce nitrogen oxide emissions from diesel engines.

In some Mercedes-Benz models, nitrogen oxide output levels were 13 times higher than the required 0.08g per kilometer.

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According to Yonhap, South Korea’s environment ministry plans to press criminal charges and will demand recalls for the three carmakers. Certifications of the problematic models will also be revoked.

Trying to cheat emissions guidelines is nothing new in the auto industry. In 2015, Volkswagen admitted to exploiting loopholes in European Union regulations to cheat diesel emissions tests, meaning millions of diesel cars pumped much more nitrogen oxides into the air than the manufacturer initially claimed. The ‘dieselgate’ scandal resulted in lawsuits around the world, and has cost the company more than $30 billion in fines.

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RT’s Boom Bust spoke to Gary Leff, editor of ViewFromTheWing.com, about the current state and future of the airline industry.

“The airlines themselves will tell you that demand is effectively zero, which is to say that up until recently they had more requests for refunds than new ticket purchases,” Leff said, adding: “It’s a very difficult business to be in.”

According to him, the airline business isn’t going to recover anytime soon. The government bailouts require airlines not to furlough employees or reduce their rates of pay until September 30. However, it is clear that, once this is over, airlines are “going to be smaller than they’ve been in the past.”

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Brussels has had to abandon any hope of growth for both the EU and euro area in 2020, as the economies are set to contract by 7.5 and 7.75 percent respectively, according to this year’s Spring Economic Forecast released on Wednesday. The decline is set to be the worst ever for the eurozone. Compared to previous estimates, growth projections have been revised down by around nine percentage points.

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“Europe is experiencing an economic shock without precedent since the Great Depression,” said European Commissioner for the Economy Paolo Gentiloni.

While the EU expects that the deep recession will be followed by a growth of over six percent, the losses inflicted by the virus are unlikely to be offset till the end of 2021. The report signals that the recovery will be “uneven,” as lockdown measures to stop the spread of the Covid-19 will not be lifted simultaneously by all the members of the bloc.

“While the immediate fallout will be far more severe for the global economy than the financial crisis, the depth of the impact will depend on the evolution of the pandemic, our ability to safely restart economic activity and to rebound thereafter,” the EU’s Vice President for Economic Affairs Valdis Dombrovskis said in a statement.

The European Commission noted that the figures may change for the worse if the pandemic lasts longer, preventing the reopening of businesses and travel. The economic downturn may be “far larger” than assumed in the baseline scenario of the latest forecast.

Some members of the union, including economic heavyweights, have already made their own gloomy predictions on the aftermath of the coronavirus outbreak. EU’s biggest economy, Germany, said it could record the worst economic dive in the post war-era, as its gross domestic product (GDP) may decline over six percent. France expects almost the same downturn as Germany, while Spain expects its economy to contract by 9.2 percent this year.

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“Although 91 percent of companies and businesses reopened, only 40 percent roughly are operating at full capacity,” the professor said. He added that consumers in China have been left without sufficient funds to spur the economy.

“So I think that predictions about a rapid bounce-back are probably a little bit overdone.”

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The economic fallout from the pandemic has not stopped the US from attacking China, including tariff threats and pushing companies to remove their production from the country. However, this might not be an easy task, especially when it comes to middle-range products, which are set to become the most in demand amid the crisis. China championed its position in the segment as the ‘factory to the world’, Quelch noted, adding that the crisis has made people both in the US and Europe poorer and they would need an experienced low-cost manufacturer.

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In Tuesday’s ruling, the Federal Constitutional Court said that the German government failed to challenge the QE programme, launched in 2015 and reactivated last year. The judges in Karlsruhe also ruled that the stimulus scheme, known as the Public Sector Purchase Program (PSPP), did not respect the “principle of proportionality,” signaling that the eurozone’s central bank went too far with its mandate.

“The ECB fails to conduct the necessary balancing of the monetary policy objective against the economic policy effects arising from the programme,” the ruling reads. “By unconditionally pursuing the PSPP’s monetary policy objective….while ignoring its economic policy effects, the ECB manifestly disregards the principle of proportionality.”

Spokesman for the European Commission Eric Mamer was quick to respond to the decision, saying that despite the assessment of the German court the bloc reaffirms “the primacy of EU law.” 

The ruling also challenges the decision of the highest EU court, with the judges saying that the review of the latter was “not comprehensible.” In 2018, the Court of Justice of the European Union (ECJ) ruled that the ECB’s plan was valid and within the body’s mandate. 

Asked for comment by Reuters, the EU’s top court also pointed at precedence of the bloc’s law over member states’ national ones, but did not elaborate on the specific case. 

The German court ordered the country’s central bank, the Bundesbank, to stop participating in the ECB’s stimulus scheme in three months unless the ECB proves that the bond purchases are necessary. 

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The ECB launched the controversial plan to boost the economy and keep inflation levels close to two percent back in 2015. The program was halted in 2018 and relaunched around a year later. The plan’s total holdings were €2.7 trillion at the end of March, according to Bloomberg.

On top of that the central bank has launched an additional program to battle the fallout of the coronavirus pandemic, planning to buy €750 billion of bonds this year to offset the economic consequences of the virus-related crisis. This aid was explicitly excluded from the court ruling, while some said that the decision may still create hurdles for mitigation of the crisis. 

The euro dropped 0.7 percent against the US as news of the German court’s decision emerged. The ruling has also sent key indices in the European markets lower.

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Last month, the number of Spaniards who registered as jobless rose by nearly eight percent, meaning that 282,891 people were rendered out of work as the country imposed strict restrictions to contain the Covid-19 outbreak. The figures published by the ministry on Tuesday are lower than the ones seen in March, when unemployment rose by over nine percent.

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Those working in food and beverage services have felt most of the pain of the coronavirus-induced crisis, with over 720,000 losing their jobs, while workers in the retail and wholesale trade industries were also hit hard, along with accommodation services.

April’s filings have pushed unemployment to its highest figure in nearly four years, according to AP. At the same time, the country’s Minister of Labor Yolanda Diaz said the benefits paid by the government to nearly 5.2 million people amounted to a “historical record.”

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Last week, Spain’s economy minister said that the nation’s economy is set to fall even deeper than it did amid the Great Recession of 2008-2013, partly confirming predictions made by the International Monetary Fund (IMF). The ministry expects that the country’s gross domestic product (GDP) will contract by 9.2 percent this year. According to the worst-case scenario released earlier by Spain’s central bank, the country’s economy may dive by 12.4 percent in 2020 if the Covid-19 lockdown lasts up to 12 weeks.

Spain, the worst affected country in Europe by number of coronavirus infections, started easing restrictions after nearly two months of lockdown on Sunday. Some small businesses, including shops and salons, started reopening on Monday, while still observing strict disease control protocols.

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Futures for American oil benchmark jumped more than nine percent on Tuesday, extending their earlier gains. West Texas Intermediate (WTI) for June delivery was trading at over $22 a barrel as of 07:30 GMT, more than doubling from last week’s intraday lows.

Meanwhile, international benchmark Brent for July delivery gained more than six percent to $29.02 after climbing in the previous session.

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Both WTI and Brent have been advancing for several consecutive days, with the US crude starting its winning streak on April 29 and the latter just one day earlier.

The positive sentiment in the energy market comes as the members of the Organization of the Petroleum Exporting Countries (OPEC) as well as allied oil producers started cutting oil output as a key oil agreement came into force on May 1. The accord is set to wipe out nearly 10 million barrels per day from the overflowed market, while some countries beyond the agreement have also curbed production to help oil prices rebound.

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At the same time, some countries in Europe and Asia, as well as some US states, are slowly lifting some of the coronavirus-related restrictions, giving hope that the demand-supply gap may become smaller. However, some gloomy forecasts indicate that the coronavirus crisis crushed global demand for the commodity as much as much as 30 percent last month. With no cuts in force, some countries even boosted their exports of crude in April, worsening the supply glut and fueling fears that the world is running out of space to store oil.

For more stories on economy & finance visit RT’s business section