The Day at a Glance | March 27 2020

G-20 commits to a $5 trillion dollar stimulus

Leaders of the 20 largest economies in the world had a videoconference meeting yesterday and talked about strategies that could mitigate the virus`s negative effects on health and the economy. The group of countries represents 80% of the global economy and they committed to injecting more than $5 trillion dollars through financial and economic policies, offering security to citizens and other measures in order to reduce social and economic impacts. The leaders committed to do whatever is necessary to overcome the emergency, along with International bodies like the International Monetary Fund, the World Health Organization, the World Bank and the United Nations. Among the agreements, allowing the free movement of medical supplies, food and essential agricultural goods are being considered; this, after concerns increased regarding possible export restrictions in some countries that could prevent these goods from reaching the rest of the world. Despite the cooperation, sanctions and embargos carried out by some countries remain in force, particularly those imposed by the US on countries like Iran or Venezuela. The risk that other developed and non-developed countries face (especially Africa) in light of the crisis was also discussed, and the need for supporting health and social welfare systems was recognized. At the moment, the US is the pandemic`s “epicenter”, after recording a steep rise and the highest number of cases in any country (more than China and Italy); only 100 cases were recorded at the beginning of march, while today, there`s more than 82 thousand.

Pressures on oil exporting countries increase

According to recent reports, former partners of The Organization of the Petroleum Exporting Countries (OPEC+), with Iraq and Algeria standing out, have called on the organization to have a new emergency meeting to reach an agreement on putting a stop to the decrease in oil prices. Most countries that make up the organization depend greatly on oil revenues and many of them cannot withstand low oil prices for much longer. Nigeria has joined Iraq and Algeria, and publicly admitted it is unsure how long it can go with current low oil prices. Even Mexico, a participant in the organization, has already been affected with a downgrade in its credit rating on behalf of S&P, this in light of low oil prices along with an economic recession due to COVID-19, both which have deteriorated the country`s fiscal position and its national company PEMEX. However, it`s unclear if Saudi Arabia and Russia have changed their position regarding the price war. Kirill Dmitriev, head of Russia`s sovereign wealth fund, assured it would consider joining in on carrying out cuts if other countries join too, hinting at the US`s participation in the matter. The Saudi`s, for their part, have denied new approaches with Russia concerning the matter. Large oil companies have also been under pressure, with US corporations like ExxonMobil having their credit rating downgraded and other companies in the shale plays facing bankruptcy. New estimates suggest the demand for crude oil will fall around 20% this year in light of COVID-19 mitigation measures.