The deadly connection between Coronavirus and the global economy!
The IMF has stated that the global economy is very likely to shrink by more than 3% in the year 2020 – and this will be the steepest slowdown ever, since what was known as the Great Depression of the 1930s.
An analysis done by the UN Department of Economic and Social Affairs (DESA) said that international trade and global supply chains, have been disrupted because of the Novel Coronavirus.
“Millions of workers in these countries are facing the bleak prospect of losing their jobs. Governments are considering and rolling out large stimulus packages to avert a sharp downturn of their economies which could potentially plunge the global economy into a deep recession. In the worst-case scenario, the world economy could contract by 0.9 per cent in 2020.”
Due to the Coronavirus disease, almost all counties imposed lockdowns, in attempts to stop the Novel Coronavirus from spreading. Of course, these lockdowns meant that millions of people all over the globe, would be confined to their homes.
What this really meant was – businesses were now shut down! And almost all economic activity came to a full stop! What this meant was that the economy would start to shrink and growth would come to a standstill.
Liu Zhenmin, Under-Secretary-General for Economic and Social Affairs said:
“Urgent and bold policy measures are needed, not only to contain the pandemic and save lives, but also to protect the most vulnerable in our societies from economic ruin and to sustain economic growth and financial stability.”
Since March 21, 2020, over 36 million people have filed for unemployment benefits. This is almost 1/4th of the working-age population.
Also, according to an early analysis done by IMF, it was revealed that in many countries,
the manufacturing output had gone. This meant a decrease in external demand and it also indicated that there would be a fall in domestic demand.
The IMF has estimated that in the year 2020, the global economy is growing at -3% and this is an outcome which is considered to be much worse than the global financial crises of 2009.
A number of advanced economies have set up support packages. The World Economic Forum (WEF), states:
“There is concern that the size of packages may prove insufficient for the duration of the crisis; that disbursement may be slower than is needed; that not all firms in need would be targeted; and that such programmes may be overly reliant on debt financing.”
The worst part is, even as economic activity starts to gradually resume, it is going to take quite a bit of time for the situation to normalize. This is because there is bound to be a change in the behavior of consumers, as there is going to be a great deal of uncertainty, as to how the Coronavirus pandemic will evolve.
Such is the deadly connection between Coronavirus and the global economy!