The Bank of England hikes interest rates as it indicates the UK is already in recession; government hints energy support for schools, hospitals, and care homes could continue beyond six months; submit your cost of living dilemma to personal finance expert Gemma Godfrey using the form below.
What is a recession?
It is a significant decline in economic activity, lasting months or even years.
Economists usually define a recession as two consecutive quarters where GDP has fallen.
Why do recessions happen?
There are a number of common causes for recession, including:
A sudden economic shock – such as the COVID pandemic or the war in Ukraine
Excessive debt
Asset bubbles – when investors become too optimistic and inflate the stock market or real estate bubbles, before the bubble bursts and panic selling ensues
Many people will also remember the Great Recession of 2008 and 2009 – the UK’s worst in modern history.
This was largely due to the mortgage crisis in the US impacting the British banking sector, and the subsequent “credit crunch”.
The UK also saw a recession between 1990 and 1991, caused by rapid economic expansion under Margaret Thatcher and Britain’s plans to maintain membership of the Exchange Rate Mechanism.
How will a recession affect you?
Unemployment levels will rise, so more people will be at risk of losing their jobs.
People who keep their jobs may see cuts to pay and benefits, or struggle to negotiate future pay rises.
Meanwhile, investments can lose money and savings can be reduced, upsetting some people’s plans for retirement or for large expenses such as buying homes or getting married.
Businesses make fewer sales during a recession, and mortgage lenders can also tighten standards for mortgages, car loans and other types of financing – meaning you may need a better credit score or larger down payment.
New Zealand‘s borders are fully open for the first time since March 2020, when they shut in an effort to keep out Covid-19.
Immigration authorities will now begin accepting visitors with visas and those on student visas again.
Prime Minister Jacinda Ardern called it an “enormous moment”, adding it was part of a “cautious process”.
Most visitors will still need to be fully vaccinated, but there are no quarantine requirements.
The country’s maritime border has also reopened, with cruise ships and foreign recreational yachts now allowed to dock.
New Zealand first announced a phased reopening plan in February. It allowed vaccinated citizens to return from Australia that month, and those coming from elsewhere to return in March.
In May, it started welcoming tourists from more than 50 countries on a visa-waiver list.
“We, alongside the rest of the world, continue to manage a very live global pandemic, while keeping our people safe,” said Ms. Ardern in a speech at the China Business Summit in Auckland on Monday.
“But keeping people safe extends to incomes and wellbeing too.”
Tourism was one of the industries hardest hit by New Zealand’s tough Covid measures.
In the year ending March 2021, the industry’s contribution to the GDP dropped to 2.9%, from 5.5% the year before.
International tourism took an especially big hit, plunging 91.5% – or NZ$16.2bn ($10.2bn; £8.4bn) – to NZ$1.5bn, according to official data.
The number of people directly employed in tourism also fell by over 72,000 during this period.
China has signaled that it may miss its annual economic growth target, as Covid restrictions weigh on the world’s second largest economy.
On Thursday, the Politburo – the ruling Communist Party’s top policy-making body – said it aims to keep growth within “a reasonable range”.
It did not mention the official growth target of 5.5% it had earlier set.
China is continuing to pursue a zero-Covid policy that has put major cities into full or partial lockdowns.
In a statement after its quarterly economic meeting, the 25-member Politburo, which is chaired by President Xi Jinping, said leaders would “strive to achieve the best results possible”.
However, it also called on stronger provinces to work to meet their growth targets.
Analysts said the lack of a GDP mention was notable, though economists had earlier predicted it would be difficult for China to reach its 5.5% target.
“The 5.5% growth target is no longer a must for China,” Iris Pang, chief China economist at ING Bank, had told news outlet the Wall Street Journal.
They also added that China was urging larger provinces to make up for those that were more affected by the lockdown.
“Beijing requested that provinces which are relatively well-positioned should strive to achieve economic and social targets for this year,” Nomura analysts Ting Lu, Jing Wang, and Harrington Zhang said in a note.
“We think Beijing is suggesting that GDP growth targets for provinces with less favorable conditions, especially for those that were hard hit by the Omicron variant and lockdowns, could be more flexible.”
Earlier this month, China said its economy had contracted sharply in the second quarter of this year.
Large Chinese cities, including the major financial and manufacturing hub of Shanghai, were put into full or partial lockdowns during this period.
China’s once-booming property market is also in a deep slump, and home sales have fallen for 11 consecutive months.
Several Chinese developers have halted the construction of homes that had already been sold, because of concerns over cash flow.
In recent weeks, some home buyers have threatened to stop paying their mortgages until the work restarts.
In 2020, China made the rare decision to scrap its GDP targets, in light of the pandemic.
GDP measures the size of an economy. Gauging its expansion or contraction is one of the most important ways of measuring how well or badly an economy is performing and is closely watched by economists and central banks.
It also helps businesses to judge when to expand and recruit more workers or invest less and cut their workforces.
The Government has announced that it will dedicate a minimum of one per cent of the country’s Gross Domestic Product (GDP) to supporting research, science, technology, and innovative activities.
To that end, the government was putting measures in place to establish a National Research Fund, which would be accessible to researchers and all potential innovators.
Currently, the Fund Bill has been passed and the government is working on the regulatory framework for operationalising the fund.
Dr Eric Nkansah, Technical Advisor and Director in charge of Tertiary Education at the Ministry of Education, announced this at the opening ceremony of the maiden African Mathematical School in Mathematical Methods in Analysis and Probability in Accra.
The two-week workshop, organised by the African Institute for Mathematical Sciences, Ghana (AIMS Ghana) aimed at equipping participants with relevant skills on stochastic analysis, the analysis of partial differential equations, and related numerical methods that can be employed.
Launched on Monday, 16th August 2021, the two-week workshop brought together over 35 mathematics researchers from universities across Africa, which provides a platform for them to network and interact, to learn about cutting-edge research latest mathematical tools, and to share their ideas and experiences with world-renowned researchers and professors.
The summer school is expected to enrich multi-disciplinary research between different departments, schools in Ghana, Africa, and among Africans, as well as across research institutions worldwide.
Dr Nkansah re-affirmed the government’s unalloyed commitment towards promoting and advancing the study of Science, Technology, Engineering, and Mathematics (STEM) from the basic schools to the tertiary level.
He expressed the government’s ambition of partnering with AIMS Ghana- a Centre of excellence for post-graduate training in mathematical sciences and research- towards training between 50 and 100 PhDs in the next five years.
“The hope of Africa lies in building a solid mathematics research foundation in our education. As Ghana and Africa strive to satisfy the socio-economic needs of the people, we need to anchor our development on the pinnacles of STEM education and research, training and developing young African mathematicians who will lead Africa in scientific breakthroughs,” Dr Nkansah stated.
He reiterated the government’s vision of forming a strategic partnership with AIMS Ghana towards establishing a female STEM Senior High School soon.
He believed that the summer school would increase the stock of knowledge of participants and help unlock the research capabilities of young researchers to make Ghana and the world a better place to live in.
In an interview with the Ghana News Agency at the sidelines of the workshop, Professor Olivier Menoukeu Pamen, the German Research Chair in Mathematics and its Applications at AIMS Ghana who is also a Reader at the University of Liverpool, advocated the need for African governments to allocate more funding towards research.
He bemoaned the low level of research emanating from Africa, constituting about 2.5 per cent of global research output, with West Africa contributing less than 0.08%.
Prof. Franca Hoffmann, AIMS-Carnegie Research Chair in Data Science at Quantum Leap Africa, AIMS Rwanda, and a Professor at the University of Bonn, called for more exchange programmes between researchers in Africa and the global research community to share ideas and experiences on the latest scientific research models.
She advocated the need for brain circulation as opposed to brain drain.
Overall, with the right methodologies, focus, conducive environment, and efforts by governments and institutions, scientific talents impacting in significant ways the advancement of global human knowledge could emerge from the African continent.
France’s gross domestic product contracted 5.8 percent in the first quarter and is officially in a recession, mainly because of the coronavirus lockdown imposed since mid-March, the national statistics agency said Thursday.
The drop is the biggest since quarterly GDP evaluations began in 1949, exceeding the third quarter 1.6 percent drop in 2009 and the 5.3 percent contraction in the second quarter of 1968, the agency said.
Following the 0.1 percent French GDP fall in the last quarter of 2019, the result confirms that France is in a recession.
The drop in activity “is mainly linked to the stop in non-essential activities as part of the lockdown imposed from mid-March”, the agency said.
The evaluation falls in line with that of France’s central bank, which in early April estimated a contraction of around six percent in the first quarter.
The provisional Gross Domestic Product grew 5.7 per cent year-on-year compared to the 5.4 per cent recorded in 2018 with oil and gas a major contributor.
Non-Oil Gross Domestic Product for the second quarter of 2019 was down at 4.3 per cent compared to 5 per cent in the same period of last year.
According to the Ghana Statistical Service, the main growth drivers for the performance from April to June 2019 were Information and Communication, Mining and Quarrying, Health and Social Work and Real Estate.
The Services sector recorded the highest growth of 6.5 per cent, industry followed with 6.1 per cent, while Agric posted a 3.1 per cent growth rate.
Under the services sector, Information and Communication sub-sector increased from 14.6 per cent in quarter two of 2018 to 52 .8 per cent in the second quarter of 2019.
It was followed by Real Estate, which recorded a 14.9 per cent jump in growth, recovering from its 0.8 per cent contraction in the second quarter in 2018.
Education had 8.9 per cent and Hotel and Restaurant had 6.6 per cent.
Finance and Insurance recorded 1.4 per cent growth while Public, Administration and Defense, social sector fell by 2.8 per cent.
On the industry sector, Mining and Quarrying sub-sector slowed to 14.0 per cent in the second quarter of 2019 compared to 24.7 per cent in 2018.
The Health and Social Work sub-sector also slowed to 10.3 per cent in the first quarter of 2019 from 26.8 per cent in 2018.
Construction declined by 8.3 per cent, Water Supply, Sewerage, Waste management and remediation was down by 7.9 per cent. Electricity also went down by 7.5 per cent.
Livestock 5.7 growth pushed the overall growth of the Agric Sector, while crops increase by 4 per cent. However, Forestry was down by 6.5 per cent, while fishing also declined by 2.1 per cent.
