IMF warns Group of 20 that more fiscal spending is needed amid pandemic downturn

INTERNATIONAL ECONOMY

IMF warns that more stimulus is needed

The International Monetary Fund on Monday warned Group of 20 major economies that the coronavirus crisis is not over and called on the United States, Britain and other countries to increase the amount of fiscal spending planned.

Premature withdrawal of fiscal support at a time of continued high rates of unemployment would “impose further harm on livelihoods and heighten the likelihood of widespread bankruptcies, which in turn could jeopardize the recovery,” senior IMF officials warned in a blog published Monday.

The blog, titled, “The Crisis is Not Over, Keep Spending (Wisely),” said swift and unprecedented action by G-20 and emerging market economies had averted an even deeper crisis, with G-20 countries alone providing $11 trillion in support.

The IMF last month forecast a 2020 global contraction of 4.4 percent and a return to growth of 5.2 percent in 2021, but warned that the situation remained dire and governments should not withdraw stimulus prematurely.

On Monday, it said coronavirus infections were continuing to spread, but much of the fiscal support provided was now winding down, with cash transfers to households, deferred tax payments and temporary loans to businesses either having expired or being set to do so by year-end.

“Larger support than currently projected is desirable next year in some economies,” the IMF said in a longer report. It pointed to Brazil, Mexico, Britain and the United States, citing large drops in employment and projected fiscal contractions.

— Reuters

RETAIL

2 major mall owners file for bankruptcy

America’s ailing malls suffered a pair of body blows over the weekend as two major landlords followed their ever-growing list of bankrupt tenants into Chapter 11 protection.

Pennsylvania Real Estate Investment Trust and CBL & Associates Properties sought protection from creditors Sunday, citing pandemic-induced pressures on their tenants and, in turn, themselves. Together the two REITs account for some 87 million square feet of real estate across the United States, according to court papers.

The pandemic worsened an already dire situation for bricks-and-mortar retailers, with a steady stream of chains falling victim as their customers shifted to online shopping. J.C. Penney, J. Crew Group and the owner of Ann Taylor are among the dozens of chains that have sought court protection since covid-19 shutdowns throttled in-store shopping this year.

That’s an even bigger problem for the likes of PREIT and CBL, which own less productive malls than rivals such as Simon Property Group and Macerich, according to Bloomberg Intelligence analyst Lindsay Dutch.

The Chapter 11 filing doesn’t necessarily mean the malls are closing. Instead, it gives their owners time to work out a plan to turn the business around.

CBL, based in Chattanooga, Tenn., counts 107 properties in 26 states in its portfolio, including enclosed malls, outlets and open-air retail centers, according to a company statement. Philadelphia-based PREIT owns malls in Pennsylvania, New Jersey, Virginia, Maryland and Michigan, according to its website.

Many of their properties are known in the industry parlance as B-class malls, which bring in fewer sales per square foot than their better-placed peers.

— Bloomberg News

Also in Business

U.S. manufacturing activity accelerated more than expected in October, with new orders jumping to their highest level in nearly 17 years amid a shift in spending toward goods such as motor vehicles as the covid-19 pandemic drags on. The survey from the Institute for Supply Management (ISM) was the last piece of major economic data before Tuesday’s presidential election.

Friendly’s Restaurants, an iconic chain on the East Coast known for its sundaes and “fribble” milkshakes, became the latest dining institution to go bankrupt amid the pandemic. The company filed for Chapter 11 protection in Delaware late Sunday, according to court papers, and plans to sell itself for $2 million. FIC Restaurants, which operates the Friendly’s brand, will sell substantially all of its assets to Amici Partners Group, an affiliate of the owners of restaurant chains including Red Mango frozen yogurt shops.

— From news services

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