Daily Updates | Tuesday, February 23, 2020 Headlines

France has broken the record for the worst trade deficit in EU history
Update from the EU to the tax blacklist
Goldman Sachs: ‘’ Oil prices to reach $70 by summer’’

France Has Broken the Record for the Worst Trade Deficit in EU History

Last year, France ranked first among EU countries, with a foreign trade deficit of 82.5 billion euros.

According to data released by Eurostat, France had a foreign trade deficit of 82.5 billion euros in 2020. Romania followed France with 18.7 billion euros.

Nicolas Meilhan, an advisor to the France Strategie autonomous agency affiliated to the Prime Ministry in France, shared on his Twitter account that this figure (82.5 billion euros) is probably the largest foreign trade deficit recorded by a member country in EU history.

“I really have a hard time understanding why the elimination of this record deficit is not THE national priority,” Meilhan said.

Its economists warned the EU’s economic recovery was directly linked to the bloc’s ability to successfully deliver doses of Covid vaccines to member states. They reported that in their winter forecast, the downward revision was “linked to the evolution of the pandemic and the vaccination rollout pace, efficiency, and efficacy.”

The Commission said it was forced to downgrade its economic forecasts because of the continued “uncertainty and risks” surrounding the latest wave of Covid-19 infections.

“In terms of negative risks, the pandemic could prove more persistent or severe in the near-term than assumed in this forecast or there could be delays in the roll-out of vaccination programs,” its report said. “This could delay the easing of containment measures, which in turn affect the timing and strength of the expected recovery.

“There is also a risk that the crisis could leave deeper scars in the EU’s economic and social fabric, notably through widespread bankruptcies and job losses. “This would also hurt the financial sector, increase long-term unemployment, and worsen inequalities.”

In its latest quarterly forecasts, the European Commission predicted the EU’s gross domestic product would increase by 3.7 percent this year, down from its previous forecast of 4.2 percent.

Meanwhile, last year Germany had a foreign trade surplus of 182.4 billion euros, Ireland 71 billion euros, and the Netherlands 67.9 billion euros.

As a result of the contraction in France due to the Covid-19 outbreak, GDP decreased by 8.3 percent last year, while the country’s economy recorded the largest contraction since World War II.

Update from the EU to the Tax Blacklist

The European Council announced that the list of countries that do not cooperate in the tax field has been updated.

The European Union (EU) has removed Barbados from its blacklist of non-tax cooperating countries, adding Dominica. Accordingly, Barbados, which was previously on the EU tax blacklist, was removed from the last list for acting “partially compliant”.

Minister of International Business Ronald Toppin confirmed the news and said the Government was “very pleased about this”.

Dominica was added to the blacklist on the grounds that it did not solve its problems in the tax field. The EU council said Dominica was placed on the blacklist because it lacked a rating of at least “largely compliant” from the Global Forum on Transparency and Exchange of Information for Tax Purposes.

The changes leave 12 jurisdictions on the EU’s Annex I blacklist American Samoa, Anguilla, Dominica, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands, and Vanuatu.

However, the Seychelles Ministry of Finance has said it is confident that it will be removed from the EU’s list of non-cooperative jurisdictions when it is next reviewed, stating that: “The Seychelles has taken the key steps in reforming its territorial tax regime to address concerns of the European Union (EU). Together with addressing the concerns of the Global Forum on Transparency and Exchange of Information for Tax Purposes, these changes are intended to ensure that the Seychelles is removed from the EU’s list of non-cooperative jurisdictions later this year.”

According to the Code of Conduct Group, Turkey is likely to be added to Annex I in May this year. The Group said today Turkey “indicated that it needs more time to solve open problems with regards to determining the tax residency of a large number of highly mobile citizens and has therefore not fully activated exchange relations with all EU member states.”

Blacklisted jurisdictions face higher scrutiny, loss of access to EU funds, and damage to their reputations.

The “gray list” of countries that are committed to aligning tax regulations with EU rules has also been updated. Morocco, Namibia, and Saint Lucia were removed from the gray list for meeting their commitments. Jamaica was added to that list.

Gray-listed Australia and Jordan have been given an extension as the process of evaluating tax reforms continues. The Maldives was also given an additional 4 months to complete the approval process of the Organization for Economic Cooperation and Development (OECD).

Goldman Sachs: ‘’ Oil prices to reach $70 by Summer’’

While oil prices continue to rise with the estimates made by investment banks, Goldman Sachs stated that oil could reach $70 in the coming months.

Oil prices will rally faster and sharper than previously expected as demand outstrips supply increases from OPEC+, Iran, and U.S. shale, according to Goldman Sachs Group Inc.

A reopening of the global economy will help demand return to pre-Covid-19 levels, but inventories remaining tight into the summer will cause West Texas Intermediate crude oil, the U.S. standard, to reach $67.50 per barrel in the second quarter and $72 in the next three months, according to Goldman. The firm previously forecast WTI would hit $62 this summer.

“This year remains driven by fundamentals, with better than expected demand and still depressed supply once again creating a larger deficit than even we expected,” wrote Damien Courvalin, head of energy research at Goldman Sachs.

The company expects the deficit to expand this spring as demand from OPEC and its allies, including Russia, in spite of price increases, would take longer to return.

Thus, higher ESG and environmental regulation costs and investor hedging due to concerns that inflation will be triggered by more Covid-19 stimulus will help push up prices.

Oil prices rose to $63 per barrel, with investment banks’ views that prices could go up even higher.

Futures rose another 1.6 percent after rising more than 4 percent in the previous session in the New York market. According to Morgan Stanley, markets could pass one of the tightest quarters after 2000.

Socar, on the other hand, states that with the melting of crude oil stocks in the summer, the price of Brent oil may reach $80.

Oil prices gained more than 20 percent after the oil cuts implemented unilaterally by Saudi Arabia. Brent’s maturity difference indicates a structural increase.

West Texas Oil for April settlement reached $62.66 a barrel, rising 96 cents at 12:56 Singapore time in the Nymex market, after rising 4.1 percent on Monday.

Brent oil for April settlement rose 1.8 percent to $66.40 a barrel on the London ICE Futures Europe market, after gaining 3.7 percent in the previous session.