Headlines
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A would-be hub of Indo-Pacific commerce and global tourist gem, Sri Lanka was already struggling to deliver on grand visions before the coronavirus crisis struck the world economy, Bloomberg News reported. The next few months may determine its ability to avert a painful debt restructuring. The South Asian nation is locked in talks with the International Monetary Fund for emergency-financing aid, after its second longer-term program with the fund in less than a decade expired last Tuesday.
Argentine President Alberto Fernandez dipped into the play book of his deputy, Cristina Fernandez de Kirchner, with a plan to seize crop trader Vicentin SAIC in a move that’ll ring alarm bells in soy markets and among investors in the country, Bloomberg News reported. Fernandez’s government will take control of Vicentin for the next 60 days as it seeks congressional approval to expropriate the agricultural powerhouse, which filed for bankruptcy last year after being caught out in currency swings.
German industrial production plunged by a record 18 per cent month on month in April, as the coronavirus lockdown caused major disruption to factories across most manufacturing sectors of Europe’s biggest economy, the Financial Times reported. The federal statistics agency said it was the biggest fall since its records began in 1991, underlining the heavy toll the pandemic crisis has taken on Europe’s industrial heartland. The vast German car industry was hit hardest. Its output collapsed to a quarter of its level the previous month.
TheCityUK — a collection of the Square Mile’s titans — calculates the weight of unsustainable debt on UK company balance sheets is above £107bn and it could turn toxic unless neutralised, the Financial Times reported in a commentary. Almost in the same breath, Anne Richards, head of Fidelity, warns that asset managers can’t, unlike the Titan Atlas, hold up the sky and recapitalise the entire UK economy. Companies are queueing up to ease the strains on their balance sheets as a result of coronavirus and lockdown.
Emerging and developing economies will shrink this year for the first time in at least six decades, according to the World Bank, underscoring the mounting economic toll from the coronavirus pandemic as it spreads across the world, the Financial Times reported. The bank’s forecast is that as many as 100m people in the developing world will be tipped into extreme poverty by a projected 2.5 per cent contraction in emerging markets’ gross domestic product, with incomes per capita set to shrink 3.6 per cent globally. The bank defines extreme poverty as an income of less than $1.90 a day.
Creditors of South African Airways (SAA) on Monday approved another delay in the publication of a rescue plan after the cash-strapped airline’s administrators requested an extension because of an objection by trade unions, Reuters reported. The rescue plan for SAA, which has not made a profit since 2011, was due to be published on Monday. It has been repeatedly pushed back amid fierce wrangling over the airline’s future.
Swissport Belgium SA/NV, a loss-making unit of Swissport International AG which provides ground services at Brussels airport, will file for bankruptcy after attempts to turn around the business failed, Swissport said on Monday, Reuters reported. Its Belgian cleaning business will also file for bankruptcy, but the group’s separate cargo business in Brussels and Liege is unaffected, Swissport added in a statement. Swissport, owned by China’s HNA Group, is the world’s largest provider of airport ground services and air cargo handling with operations at 300 airports in 47 countries.
Intu shopping centre in Milton Keynes could begin an insolvency process by the end of the month as debts have worsened during the Covid-19 crisis, it has been revealed, the MK Citizen reported. The shopping giants, who also owns the Trafford Centre and Lakeside, have put administrators on standby, Sky News has reported. All the centres are said to be in jeopardy unless the company can strike a deal with lenders over the next couple of weeks. Intu Properties is at a critical phase in negotiations and has lined up KPMG to act as administrators if the talks fail, says Sky News.
Europeans have begun to return to work, shopping and dining out, suggesting the worst of the economic damage inflicted by coronavirus pandemic lockdowns has passed, but overall activity remains well below normal standards, pointing to the long haul back to recovery the region faces, the Financial Times reported. High-frequency data indicators such as mobility and consumer spending suggest that the sharp economic contraction that has gripped major European economies since March began to ease in May and early June.