South Africa’s central bank slashed its growth forecasts on Monday, predicting the economy could shrink by as much as 4% in 2020 due to the novel coronavirus, which has forced a national lockdown and triggered two credit ratings downgrades, Reuters reported. The bank also said growth was unlikely to exceed 1% in 2021, job losses this year could reach 370,000, and business insolvencies would likely increase by 1,600. While painting a grim outlook, it dampened expectations of the kind of radical stimulus measures Western countries have adopted to tackle it.
Finnish department store owner Stockmann has decided to file for a corporate restructuring after the drop in customer volumes caused by the coronavirus outbreak, it said on Monday, sending shares in the company down 32%, Reuters reported. Stockmann said its main creditors had given a positive initial response to the move, which is a form of administration in which a court appointee is charged with restructuring the company to avoid bankruptcy.
Europe’s construction industry has suffered its biggest drop in activity since the financial crisis after many building sites closed and the supply of workers, materials and safety equipment was heavily disrupted by the coronavirus pandemic, the Financial Times reported. The IHS Markit purchasing managers’ survey for construction fell from 52.5 in February to 33.5 in March, figures published on Monday showed.
The European Commission is considering proposals that would allow EU member states to help companies through the injection of equity, the latest move aimed at relaxing state aid rules to tackle the coronavirus crisis, the Financial Times reported. The new proposal calls on member states to “provide further support in equity or hybrid capital instruments” to those businesses directly affected by the pandemic, people with direct knowledge of the plan said.
As the coronavirus crisis deepens in emerging economies around the world, collapsing currencies, commodity prices, export earnings and tourism revenues threaten to shred the finances of many governments, leaving them scrambling to avoid default, the Financial Times reported. Zambia has already called in advisers to restructure its debt while Ecuador has asked for more time to make coupon payments on three dollar bonds. Few analysts believe they will be the last.
Italy’s government expanded its powers to block foreign takeovers and prepared a massive injection of liquidity into companies that risk bankruptcy amid the world’s deadliest coronavirus outbreak, Bloomberg News reported. Prime Minister Giuseppe Conte announced new economic measures as the country enters its fifth week of lockdown, with all non-essential businesses shuttered and still no plan to relax restrictions. Italy reported 3,599 new infections on Monday, the lowest in nearly three weeks.
Lebanon’s foreign-exchange crisis is intensifying, prompting another appeal by the government for financial aid after its debt default last month, Bloomberg News reported. Local banks have reduced the amount of dollars customers can withdraw from their accounts and even forced them to accept conversions into the local currency in some instances. Two of the largest have almost stopped dispensing foreign exchange entirely, while the central bank has greatly cut its supply, said senior bankers, who didn’t want to be named.
Argentina unilaterally postponed until next year the payment on $10bn of dollar-denominated debt governed by local law on Monday in what some analysts have called a technical default, the Financial Times reported. The move has raised new concerns about Argentina’s approach to debt restructuring as it negotiates the fate of $83bn in debt issued under foreign law. Private sector investors holding that debt expect an offer to be made by the centre-left government of President Alberto Fernández as soon as this week.
Sweden-based airline BRA said on Monday it had applied for court-administered reorganisation as it sought to avoid bankruptcy after the rapidly spreading new coronavirus caused a collapse in demand, Reuters reported. The small privately held airline had said only days ago it was temporarily discontinuing all traffic between April 6 and May 31 due to the COVID-19 pandemic, of which there have been more than 6,000 confirmed cases in Sweden.
British department store chain Debenhams is preparing to enter administration for the second time in a year to protect the business from legal action from creditors during the coronavirus emergency that could have pushed it into liquidation, Reuters reported. The retailer said on Monday it had filed a notice of intent (NOI) to appoint an administrator. With Britain in lockdown during the pandemic, Debenhams’ 142 UK stores are currently closed, while the majority of its 22,000 workers are being paid under the government’s furlough scheme. It continues to trade online.