Here’s what you need to know:
- I.M.F. predicts deeper global downturn even as economies reopen.
- Stocks slip as infections rise and some states backtrack on reopening.
- After criticism, India may allow some international flights.
- A family member is asking for money. What do you do?
- ‘The future looks bleak’: The pandemic ravages medical tourism.
I.M.F. predicts deeper global downturn even as economies reopen.
The International Monetary Fund said Wednesday that the global economy faces an even deeper downturn than it previously projected as the coronavirus pandemic continues to sow uncertainty and businesses around the world struggle to shake off the virus.
In an update to its World Economic Outlook, the I.M.F. said it expected the global economy to shrink 4.9 percent this year, a sharper contraction than the 3 percent it predicted in April.
The fund noted that, even as businesses began to reopen, voluntary social distancing and enhanced workplace safety standards were weighing on economic activity. Moreover, the “scarring” of the labor force from mass job cuts and business closures means that the world economy will recover much more slowly, with the I.M.F. projecting 5.4 percent global growth in 2021, far below its pre-pandemic projections.
The I.M.F. now projects that the U.S. economy will shrink 8 percent this year before expanding 4.5 percent next year. Economies in the eurozone are projected to shrink 10.2 percent this year and expand 6 percent next year. The economy of China, where the virus originated and which imposed draconian containment measures, is expected to expand 1 percent this year and 8.2 percent in 2021.
Stocks slip as infections rise and some states backtrack on reopening.
Stocks on Wall Street fell amid further signs that the coronavirus outbreak is proving difficult to stop.
The S&P 500 fell less than 1 percent, while major benchmarks in Europe were down closer to 2 percent.
The drop in Europe was exacerbated partly by a notice from the United States Trade Representative that it was considering adding tariffs on other exports from Europe as part of its long-running complaint over subsidies for aircraft maker Airbus. The U.S.T.R. requested comments from U.S. companies on a $3.1 billion of list of goods it may tax.
Nervousness about the economic outlook was evident in other financial markets too. Oil prices fell, and U.S. Treasury bonds and gold futures, both proxies for investor anxiety, were higher.
German officials this week reimposed local lockdowns after an outbreak at a slaughterhouse infected more than 1,500 people. In the United States, a surge in new cases in states including Florida, Texas and Arizona have prompted new warnings about the dangers of the pandemic.
Dr. Anthony S. Fauci, the U.S. government’s top infectious disease expert, told American lawmakers on Tuesday that he was seeing a “disturbing surge” in some places. He urged the government to stock up on masks and other supplies.
Across the U.S., states are discouraging people from gathering in public and even reimposing some limits on activity. The governor of Texas on Tuesday told local officials they could restrict outdoor gatherings to 100 people and urged residents to stay home. In parts of central Idaho, where coronavirus cases have exploded in recent weeks, bars are shutting down and gatherings of more than 50 people are again outlawed.
Underscoring worry over the effectiveness of the American response, The New York Times reported that European Union countries are prepared to block Americans from entering as they reopen their borders because the United States has failed to control the outbreak.
Wednesday’s decline followed back-to-back gains on Wall Street that had lifted the Nasdaq composite to a record high. Led by large technology stocks like Apple and Amazon, the Nasdaq has outpaced the broader market in recent days.
After criticism, India may allow some international flights.
India is coming under increased pressure to open its airspace to international carriers after the United States and some European nations accused it of discriminatory practices under the garb of “repatriations” flights.
The U.S. Department of Transportation said on Monday that the Indian charter flights — organized by the government to bring Indian nationals home amid global travel restrictions — go beyond “true repatriations.” It accused India’s national carrier, Air India, of selling tickets in the open market, even while New Delhi officials keep U.S. airlines from flying to India. Future chartered flights, U.S. officials said, would require Washington’s approval.
The Indian government suspended international air travel operations on March 22 after imposing a nationwide lockdown to curb the spread of the coronavirus. On many occasions, it failed to greenlight chartered flights operated by U.S. carriers.
India’s ministry of civil aviation said in a tweet on Tuesday that it was considering easing those restrictions to allow flights from U.S., French, British and German carriers.
U.S. transportation officials have taken tougher stances on flight restrictions imposed by other countries like China. But India’s limits were also criticized by Indian passengers, with the local news media running articles quoting some who spent thousands of dollars on a handful of tickets.
A family member is asking for money. What do you do?
As the coronavirus continues to dismantle livelihoods across the country, advisers can expect family financial dramas to keep surfacing, according to a new survey from Commonwealth, a nonprofit group that researches financial opportunities and security for the financially vulnerable.
The survey, conducted in late April, collected responses from 944 people throughout the United States with household incomes under $75,000. Among them, 16 percent of those who had been permanently laid off reported receiving more financial support from family members or friends than they had before Feb. 1.
The rules for how much to lend and when, if ever, to expect repayment are being written in real time, like so much of life during the pandemic. Worries that relatives will be more generous than they can afford to be may not be misplaced.
“It depends on how close the family members are, but some won’t bat an eye to lend more than they should,” said William Carrington, an adviser in Fort Lauderdale, Fla., who works with U.S. Foreign Service workers.
Repayment plans should be laid out before money leaves a bank account, financial professionals say. But even then, lenders should prepare for lapses.
“In this situation, with Covid specifically, reflecting on would you be OK if you never got this money back is probably a good idea,” said Mariel Beasley, co-founder of the Common Cents Lab, a financial behavior research lab at Duke University.
‘The future looks bleak’: The pandemic ravages medical tourism.
Over the past several years, hospitals began to play innkeeper to open the door to more elective surgery, which is the lifeblood of their revenue.
They developed hotels near their operating rooms where patients, who often came from overseas for specialized treatments, could recover comfortably. Expanding into the hospitality business also allowed health care providers to avoid the high costs of being hosts themselves.
But as with so much else, the coronavirus pandemic has devastated medical tourism. To allow doctors to focus on emergencies, hospitals have canceled hip replacements and tummy tucks, while flight bans have grounded many foreign visitors.
“Unfortunately, the future looks bleak,” said Trey Hulsey, a co-founder of Hayakoum, a three-year-old service that handles travel arrangements for patients from the Middle East bound for hospitals in Boston, Houston and Philadelphia. “It’s just been one blow after another.”
Yet hospitals, whose costs have mounted as the pandemic dragged on, may have little choice but to revive the sector, according to some developers, who are forging ahead despite the uncertainty.
“We want to be focused on the entire patient experience,” said Ana Lopez-Blázquez, an executive vice president at Baptist Health South Florida, which owns the Miami hospital.
Disney will close its language schools in China, citing changing habits caused by the pandemic.
The Walt Disney Company has decided to close Disney English, a 12-year-old chain of 25 language schools in China, ending a once-promising business that, at times, prompted questions about education as brand building.
The learning centers, in six cities and using Disney characters like Mickey Mouse and the Little Mermaid in their curriculum, have been closed since late January, when the Chinese government began to take aggressive efforts to contain the coronavirus. Traditional schools have been allowed to slowly reopen, but some supplemental education centers, including Disney English, have remained closed.
Mahesh Samat, Disney’s executive vice president of consumer products commercialization in the Asia-Pacific region, told parents in a letter on Monday that Disney English had made the “difficult decision” not to reopen. The chain was founded in 2008, when China’s fast-growing middle class had created increased demand for English-language learning. Disney developed the curriculum in partnership with Columbia University.
He added that Disney was “taking care of each and every” teacher affected by the decision but did not specify how. Advance-paid tuition will be refunded. The learning centers, aimed at children ages 2 to 12, charged roughly $2,000 annually for about 100 hours of instruction.
Pandemic shutdowns put the Trump Organization under financial strain.
Shortly after the coronavirus pandemic largely shut down the country’s hotels and golf courses, the Trump Organization asked its longtime lender, Deutsche Bank, for a break on its monthly loan payments. President Trump’s company owed the German bank a total of more than $300 million, most of which was on loans related to the Trump National Doral golf resort in Florida and the Trump International Hotel in Washington.
Deutsche Bank executives recently made an offer to the Trump Organization: The company could skip a number of payments on some of its loans, but the loans would eventually need to be repaid in full, according to people familiar with the matter. The offer was similar to what Deutsche Bank was proposing to other struggling clients.
The Trump Organization rejected the proposal, which officials concluded was not worth taking, the people said.
Deutsche Bank officials — which were wary of doing a financial favor for a president whose administration oversees the bank — were surprised that the Trump Organization did not accept the offered relief, however modest it might have been.
This is not the first time that the Trump Organization has sought to rework its debts to Deutsche Bank. In 2008, during the global financial crisis, the Trump company was due to repay a loan that had financed the construction of the Trump International Hotel & Tower in Chicago. After Deutsche Bank refused to extend the loan’s due date, the Trump Organization sued the bank, blaming Deutsche Bank for causing the financial crisis and arguing that it constituted a contract-voiding act of God.
That lawsuit was eventually settled, but Deutsche Bank stopped working with Mr. Trump for a few years. The relationship was restarted in 2012 when the bank agreed to make a number of loans to the Trump company, including $125 million to finance the Doral golf resort.
Catch up: Here’s what else is happening.
GNC, the vitamin and supplement chain with about 5,000 locations around the world, filed for bankruptcy protection on Tuesday. The company said it would speed up plans to close as many as 1,200 stores and pursue a sale.
Spirit Aerosystems, a key Boeing supplier, said in a securities filing that Boeing had slashed an order for fuselage parts because of the effect the pandemic has had on global aviation. Boeing now wants only 72 shipsets, down from 125. (The aerospace giant had already cut its order from 216 earlier this year.)
Reporting was contributed by Alan Rappeport, Mohammed Hadi, Tammy LaGorce, C.J. Hughes, Carlos Tejada, Sameer Yasir, Brooks Barnes, David Enrich and Niraj Chokshi.