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Business & Finance
The Economist

The Economist May 2, 2020

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Country:
United States
Language:
English
Publisher:
The Economist Newspaper Limited
Frequency:
Weekly
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51 Issues

in this issue

1 min.
coronavirus briefs

The WHO asked states not to issue immunity passports. It said there was insufficient evidence that exposure to the virus confers immunity. Singapore reported another surge in cases; it is now one of the worst-hit countries in Asia, after Iran, China, Pakistan and India. South Korea reported no new domestic infections. In Wuhan officials said no more patients with the disease were being treated in the city’s hospitals. A team that had been deployed to the city to oversee its fight against the outbreak returned to Beijing. Australia called for an international inquiry into the origins of the disease. China warned it not to. Boris Johnson returned to work, three weeks after being admitted to intensive care and a period of convalescence. The British prime minister’s fiancée gave birth to a son. For our latest…

7 min.
the world this week

Politics Spain announced a complicated four-phase, eight-week return to a “new normality”, which will vary in speed between provinces. If all goes well, Spaniards will be able to return to beaches and bars by the end of June, and in some places before then. France also outlined its own “deconfinement” strategy. Most businesses will be allowed to reopen from May 11th, except for cafés, restaurants and large public spaces such as museums; public transport will largely resume too. The French prime minister said this was necessary to avoid economic collapse. France also suffered some alarming instances of rioting. The chief executive of Heathrow called for the mandatory testing of passengers for covid-19 at airports in Britain, because travellers are currently allowed to enter the country “without visible measures in place”. Britain is…

5 min.
the 90% economy

IN MANY THINGS 90% is just fine; in an economy it is miserable, and China shows why. The country started to end its lockdown in February. Factories are busy and the streets are no longer empty. The result is the 90% economy. It is better than a severe lock-down, but it is far from normal. The missing bits include large chunks of everyday life. Rides on the metro and on domestic flights are down by a third. Discretionary consumer spending, on such things as restaurants, has fallen by 40% and hotel stays are a third of normal. People are weighed down by financial hardship and the fear of a second wave of covid-19. Bankruptcies are rising and unemployment, one broker has said, is three times the official level, at around…

5 min.
open schools first

COVID-19 HAS shut the world’s schools. Three in four children live in countries where all classrooms are closed. The disruption is unprecedented. Unless it ends soon, its effect on young minds could be devastating. During some epidemics keeping children at home is wise; they are efficient spreaders of diseases such as seasonal flu. However, they appear to be less prone to catching and passing on covid-19. Closing schools may bring some benefit in slowing the spread of the disease, but less than other measures. Against this are stacked the heavy costs to children’s development, to their parents and to the economy (see International section). A few countries, such as Denmark, are gradually reopening schools. Others, including Italy, say they will not do so until the autumn. In America, despite recent calls from…

3 min.
unsteady states

FOR MOST governments the pandemic is expensive. For America’s states, counties and cities, which provide the bulk of the country’s basic government services, it is a budgetary cataclysm. Lockdowns are depriving them of tax revenues just as they must spend more on public health, threatening budget shortfalls of more than one-quarter of annual revenues (see Finance section). Investors have been dumping their bonds, making it harder to borrow. And many states are in any case required by their constitution or by law to balance their budgets, or forbidden from borrowing at all. As a result many have been drawing up plans to slash spending and lay off workers just when their services are in high demand and the economy is shrinking. The states do have some cash stashed away for a…

3 min.
west-coast shuffle

THE TECHNOLOGY industry has never been more economically important. The biggest five Silicon Valley firms now make up about 20% of the value of the S&P 500 stockmarket index of big American companies. Yet until recently no one had much idea of how these vast, essential businesses would fare in an economic downturn. When the last slump started in 2007, Facebook was only four years old, Amazon was a twentieth of its size today, and Apple made more cash from Mac computers than from iPhones. So how is big tech doing? An obvious—and frequently made—point is that the industry is thriving amid a savage recession as people spend more time on screens and work remotely. Look closer, however, and the picture is more complex. The industry is tilting away from business…