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Europe’s “Frugal Four” issued a joint statement on Tuesday, June 16, describing their actions on COVID-19 economic response. The group collectively known for their frugality said they are willing to extend help and to do more for their citizens. Among the most recent actions taken by their members was Denmark’s cash handouts. Every Danes will be receiving a one-time payout of $1,570 to help them cope up from the pandemic. This decision by Prime Minister Mette Frederiksen was made after concerns of drying funds from its prior economic aid worried businesses and investors. The cash handouts are expected to keep the Danish economy afloat. Meanwhile, despite introducing a record-breaking stimulus in Germany, investors are still pessimistic in the country’s 6-month economic projection. As the largest economy in the European Union, worries by investors are expected to send the single currency to its previous low.
The economic turmoil in Turkey is expected to put a stain on President Recep Tayyip Erdogan’s reelection bid by 2023. It all started in 2018 when Erdogan was elected under a new governance system which allows him to further extend his leadership. In 2019, Turkey’s economic growth was merely 0.9%. The World Bank further added pessimism after it projected Istanbul to shrink by 3.8% this 2020. However, investors can see a grimmer outlook as new coronavirus cases in the country reemerged. The second wave of COVID-19 might lead to another lockdown which, in turn, will further drag Turkey’s economy. The European Union is also battling for its existence after the coronavirus pandemic shows division among its member states. The largest trading bloc will also lose a figure head in 2021 with the departure of German Chancellor Angela Merkel. Despite this, the single currency is still expected to outperform the Turkish lira.
The UK is now facing a double whammy of events from Brexit to the coronavirus pandemic. On January 31, the UK made history as the first member of the largest trading bloc to leave the European Union. Investors were optimistic at first on the future prospect of an independent United Kingdom until COVID-19 becomes pandemic. In March, most countries in Europe locked down their countries as fears of the deadly virus creeps throughout businesses. This, in turn, hits the British economy as it just divorced the EU. Figures from Q1 2020 GDP growth were bad but forecast for Q2 and in the coming years were worse. The most bearish forecast for the British economy was an economic contraction of 20% in Q2. Analysts further anticipate that the UK will not see economic recovery until 2023. Australia is also a coronavirus-hit country. But the reopening of economies of most countries are expected to keep the Australian economy afloat.
The surging US retails sales spells the success of the US government and the Federal Reserve in stirring economic activity in America. Cumulatively, the central government and the central bank injected $6 trillion economic aid in the US economy. Although this causes a short-term weakness in the value of the US dollar, it encourages economic activity that will help the greenback to surge in the long run. Meanwhile in Denmark, despite introducing several measures to lessen the impact of the coronavirus pandemic, investors were not convinced that this will help the country to get back to its feet. The Danish government unveiled a payout budget to help Danes in the short term, but investors are calling for more action from the government. Denmark was among Europe’s “Frugal Four” countries, which also includes the Netherlands, Sweden, and Austria. These countries were also the one to oppose the European Commission’s COVID-19 budget.
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