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Bank of America to get into small dollar lending By Reuters

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© Reuters. A Bank of America building is seen in Los Angeles

By Imani Moise

(Reuters) – Bank of America Corp (N:) said on Thursday it was launching a new low-cost loan product for checking customers who may be pressed for cash.

Balance Assist, which will be available beginning in January, allows clients to borrow up to $500 for a flat $5 fee, and repay the amount over a three-month period. Customers need to have a checking account with the bank for at least one year to be eligible for the loan.

Earlier this year U.S. regulators urged banks to strongly consider extending short-term, small-dollar loans to struggling people and businesses to help them make ends meet during the coronavirus pandemic. Banks largely abandoned the practice in recent years amid regulatory scrutiny.

“Financial health has never been more challenging for the millions of consumers who experience short-term cash gaps due to income volatility or unexpected expenses,” said Jennifer Tescher, CEO of Financial Health Network. “We need more institutions to offer small-dollar credit, and so it is encouraging that Bank of America has developed an alternative to overdraft and payday loans that is safe, transparent, and affordable, with the real potential to advance financial health.”  

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Economy

China’s economic growth seen hitting 44-year low in 2020, bounce 8.4% in 2021: Reuters poll By Reuters

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© Reuters. People eat lunch at a terrace restaurant near the CCTV building in the Central Business District (CBD) following an outbreak of the coronavirus disease (COVID-19) in Beijing

By Kevin Yao

BEIJING (Reuters) – China’s economy is expected to grow at its weakest pace in over four decades even as it steadily recovers from a coronavirus-induced dive earlier this year, but overall output could rebound sharply in 2021, a Reuters poll showed.

The world’s second-biggest economy is now expected to expand by 2.1% in 2020, according to the median of 37 analysts surveyed by Reuters, down slightly from the 2.2% growth projected in the last poll in July.

That would make China the only major economy to grow in 2020, albeit at the slowest annual pace since 1976, the final year of Mao Zedong’s Cultural Revolution.

China’s economic recovery accelerated in the third quarter as consumers shook off their coronavirus caution, although the weaker-than-expected headline growth highlighted some persistent risks including from resurgent COVID-19 cases globally and ongoing tensions with the United States over a range of issues.

The poll forecast fourth-quarter GDP to rise 5.8% year-on-year, quickening from 4.9% in July-September.

Growth is projected to pick up to 8.4% in 2021, as the global economy is set to recover from the health crisis, according to the poll.

“With exports strong and domestic consumption and investment both improving, Q4 could be one of the best quarters for overall growth in a few years,” analysts at research firm Gavekal Dragonomics said in a note.

“Growth momentum should peak in the first half of 2021, though base effects will confuse the data readings.”

The economy has been recovering steadily from a steep 6.8% slump in the first quarter, when it was jolted by the pandemic.

But China faces long-term obstacles to maintain its ascent, analysts say. Its top leaders are holding a key meeting to chart the country’s economic course for 2021-2025, amid rising tensions with the United States on trade, technology and other fronts, threatening a decoupling of the world’s two largest economies.

BALANCING ACT

China will strike a balance between stabilising economic growth and preventing risks, even as debt was allowed to temporarily rise this year to support the coronavirus-hit economy, central bank chief Yi Gang said last week.

The government has rolled out a raft of measures including more fiscal spending, tax relief and cuts in lending rates and banks’ reserve requirements to revive growth and support employment.

While the central bank stepped up policy support after widespread travel restrictions choked economic activity, it has more recently held off on further easing.

Analysts expect China will keep its one-year loan prime rate (LPR) steady at 3.85% until the end of 2021. The central bank kept the LPR unchanged for the sixth straight month at its October fixing, after cutting it by a total of 46 bps since last August.

The poll also predicted no change to the benchmark deposit rate until the end of 2021. The PBOC has kept it untouched at 1.5% since October 2015.

China’s consumer price index (CPI) in 2020 will likely rise

2.7% from the previous year, slowing from a 2.9% rise in 2019,

according to the poll.

CPI is expected to rise 2.1% in 2021, according to the poll.

(Polling by Shaloo Shrivastava and MD Manzer Hussain in Bengaluru and Jing Wang in Shanghai; Reporting by Kevin Yao; Editing by Shri Navaratnam)





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What to watch at the fifth plenum of China’s Communist Party By Reuters

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6/6
© Reuters. Workers prepares an iron grid for welding at a construction site in the Central Business District (CBD) following an outbreak of the coronavirus disease (COVID-19) in Beijing

2/6

BEIJING (Reuters) – Chinese President Xi Jinping and members of the Central Committee, the biggest of the ruling Communist Party’s elite decision-making bodies, are meeting this week to formulate economic and social policy goals for the next five years.

Policy proposals will be discussed at the plenum, the fifth meeting of the Central Committee since the 2017 party congress, on Oct. 26-29. The final blueprint will be approved and released when the National People’s Congress, or parliament, meets in its annual session next year.

Below are some topics to watch for at the fifth plenum:

GDP GOALS

China dropped its annual gross domestic product (GDP) growth target in 2020 for the first time since 2002 because of the uncertainty caused by COVID-19. The world’s second-biggest economy is set to miss its 2016-2020 GDP target of more than 6.5%. Investors are watching to see whether China would set a looser growth target for the next five years, or none at all, to increase its policy options and flexibility.

DUAL CIRCULATION

Investors are expecting details on how Xi’s “dual circulation” strategy would be implemented. First proposed by Xi in May, the strategy is for China to depend mainly on “domestic circulation” for its next phase of development – an internal cycle of production, distribution and consumption, supported by domestic technological innovation. This internal cycle is to be bolstered by external resources through “international circulation”.

INNOVATION

Market watchers are looking for possible fresh measures on boosting technological innovation, key to moving China up the global value chain and improving its self-sufficiency in vital technologies and know-how, especially with the United States’ cutting supply of components to key Chinese tech firms such as Huawei Technologies Co [HWT.UL], threatening to disrupt China’s supply chains. China is expected to step up policy support for high-tech industries such as semiconductor development, telecommunications (5G), big data and artificial intelligence.

COMMODITIES & ENERGY

Markets will closely look for signs of plans to boost strategic reserves across commodities and energy to ensure self-sufficiency, to enhance food security after a deadly disease led to a rebuilding of pig herds and grain reserves, to decarbonise and accelerate green energy adoption, to push for energy independence, and to boost its pricing power in commodities markets by launching new international contracts. [L4N2HH27E]

DOMESTIC CONSUMPTION

Economists are expecting China to roll out new measures to boost domestic consumption. To greater drive GDP growth, domestic consumption needs to widen to include spending on more higher-value goods and services and go beyond cars, food and apparel. Key to boosting consumption is higher household income, which depends on supply of higher-paying jobs, particularly in the tech and financial sectors.

REFORMS

China is expected to further loosen residency rules to make it easier for people in rural areas to move to urban areas, to help bridge labour shortages in hundreds of cities in various stages of developing new industries, and boost consumption while narrowing rural-urban income disparities. Land reforms would also enable farmers to get a bigger share in land sales, spurring more urbanisation. In the financial sector, expected moves to further free up interest rates and expand the role of capital markets would address distortions in credit allocation that see huge state banks lend to state companies while the private sector is often deprived of credit.

GREYING POPULATION

Observers are watching for new measures to deal with China’s greying population. In a previous plenum in October 2015, the party announced that it would scrap the decades-long one-child policy. Back in 2013, Beijing said the official retirement age would be raised by 2020, a goal that was included in the Ministry of Human Resources and Social Security’s 2016-2020 plan. So far, no move has been made to change the retirement age, 60 for men and 55 for female civil servants and white-collar workers.

CLIMATE CHANGE

Climate watchers say any statement from the plenum is likely to contain tougher language on controlling greenhouse gas emissions, reflecting President Xi Jinping’s recent pledge to make China carbon neutral by 2060. Xi’s surprise announcement is expected to lead to significant adjustments to the draft of the next five-year plan, with government-backed researchers urging higher renewable energy targets and tougher curbs on coal use.

POLITICAL SUCCESSION

Seven plenums are typically held between party congresses, which happen once every five years, and the fourth plenum is often devoted to party governance. There was no mention in the last fourth plenum in October 2019 on any successor to Xi or Xi’s continuation of power when his presidential term ends in 2022. A small handful of investors are closely watching again during this plenum, but it is unclear whether the subject will be discussed.





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Comptroller slams Israeli government’s Covid-19 failings

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Israel’s State Comptroller Matanyahu Englman has issued a series of special reports listing the government’s main failings in handling the Covid-19 pandemic and its resulting economic crisis.

On testing the report cites the NIS 98 million spent by the Ministry of Health on serological tests but it has yet to develop a comprehensive plan on how to use them.

On tracking while the Comptroller has some positive words to say about the Shin Bet icon and its efforts to break the chain of infection, he lists low figures for those observing isolation and high figures for falsely identifying people who had come into contact with an infected person. While praising the Shin Bet’s efforts to protect privacy, the Comptroller still suggests it would be better for a civilian organization to undertake the tracking.

The Comptroller also blasts the Ministry of Health for still not having an epidemiological investigation system as well as failing, together with the Health Funds, to set up properly for distributing a Covid-19 vaccination when it becomes available next year. Another criticism is of the failure to supply adequate personal protective equipment to medical teams.

The Comptroller slams the Ministry of Education, which eight months into the crisis, and with schools still closed and lessons given remotely, still has no idea how many students do not have an available computer at home and/or an Internet infrastructure. The Ministry of Education, based on OECD figures claims that only 6% of schoolchildren need computers but the Central Bureau of Statistics puts the figure at 16% and the Ministry of Finance Chief Economist says it is 20%. To meet the shortfall the Ministry of Education has procured 150,000 computers but it remains unclear who they are going to give them to.

The Comptroller also takes the Israel Tax Authority to task for failing to send out sufficient payment to the self-employed hit by the economic crisis because of problems in calculating the correct compensation.

Published by Globes, Israel business news – en.globes.co.il – on October 26, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020




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