CHALLENGES REMAIN MORE OR LESS THE SAME
The challenges which the global economy has been facing since the outbreak of the pandemic continues to be unchanged and unresolved to a large extent. The pandemic itself has spread to new regions and has spread havoc in the US, and has affected India too, a major contributor to global growth. That it is yet to be contained and that there is no remedy that has been discovered so far is a matter of concern and this may continue to infuse uncertainties into the global system for some more days to come. Only a firm indication of a journey out of this is likely to bring in lasting stability in economies and markets. In addition to this, the UN in its latest communication has warned about the impact of the attack of swarms of locusts on agriculture and farm output which may lead to a rise in farm produce prices if the destruction is going to be widespread. The two fundamental economic challenges at hand are combatting the almost certain contraction in economic growth, and the urgent need to explore the ways and means to arrest a severe deflation.
SMALL UPTICK IN US CONSUMER SENTIMENT
The sagging US consumer sentiment shows a small uptick after a fall in two months – March and April. Analysts believe that this may be due to the benefits that households have received from the Federal Government allowing them to spend more, discounts offered by a large number of consumer product firms to promote their products, and also the availability of funds at lower interest rates. While the uptick is quite insignificant as an indicator for a longer-term trends, the key question is whether this small rise could be sustained against the large figure of 38 million who have filed for unemployment benefits. Most Americans consider health and their personal finances as their primary concern, because those surveyed feel that the way out of the current crisis could be tortuous and longer than expected. The GDP growth, for the current quarter and for the next, by all calculations is expected to display a severe contraction which is much worse than any in the recent history.
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