Massive risks to world economy as virus battle rages




  • In Business
  • 2020-03-26 04:03:41Z
  • By AFP

The coronavirus outbreak and resulting lockdown of billions of people threatens the global economy to the point where economists are predicting the most violent recession in recent history, perhaps even eclipsing the Great Depression.

The crash will almost certainly be accompanied by a surge in unemployment, especially in countries with weaker worker rights, such as the United States.

Ahead of Thursday's emergency virtual G20 meeting, here are the key concerns.

- RECESSION OR DEPRESSION? -

"The G20 economies will experience an unprecedented shock in the first half of this year and will contract in 2020 as a whole, before picking up in 2021," economists from the rating agency Moody's wrote on Wednesday.

Angel Gurria, head of the Organisation for Economic Co-operation and Development (OECD), told the BBC the world economy would suffer "for years".

The current crisis is likely to be more severe than the 2008 financial crisis crash because it affects the entire economy, with a collapse in supply due to the shuttering of factories and a similar crash in demand with billions of people in lockdown.

The transport and tourism sectors have been the first to feel the pain, although some such as pharmaceuticals, health equipment, sanitary products, food and online trade have seen a boost.

The collective GDP of the G20 countries is predicted to contract 0.5 percent, according to Moody's, with the US down 2.0 percent and the eurozone losing 2.2 percent.

China is expected to buck the trend and grow, but at a much-reduced rate of 3.3 percent, according to Moody's.

Most major banks believe the US has already fallen into recession, with Goldman Sachs forecasting a contraction of 3.8 percent this year and Deutsche Bank predicting the worst US slowdown since "at least World War II".

In Europe, where the PMI business activity studies for March were the worst ever recorded, the German economy minister warned of a contraction of "at least" 5.0 percent in 2020.

France's economy could shrink by 1.4 percent, according to Moody's.

Britain could fare worse, with KPMG predicting a fall of 2.6 percent, but that loss could double if the pandemic lasts until the end of the summer.

Capital Economics paints the darkest picture, warning of a possible 15 percent contraction in the second quarter, almost twice as bad as during the Great Depression of the 1930s.

- UNEMPLOYMENT -

Unemployment rates are expected to soar, particularly in countries where levels have recently been at historic lows, such as Britain and the US.

These economies have relied heavily on the boom in jobs in the "gig economy", such as taxi drivers and delivery workers, which offer little or no social protection.

Even employees on long contracts can be fired easily in the US, with economists predicting a dramatic increase in unemployment claims of between 1.0 and 3.0 million when data is released on Thursday, compared to 281,000 at present.

James Bullard, president of the St Louis Federal Reserve, has predicted unprecedented unemployment rates of 30 percent, while Europe can also expect to suffer.

"We think the unemployment rate in the eurozone will surge to about 12 percent by the end of June, giving up seven years' worth of gains in a matter of months," said David Oxley of the London-based Capital Economics, adding they expected some rebound by the end of the year.

- INFLATION -

The effect the crisis will have on prices is the source of great uncertainty, with deflationary pressure due to a collapse in demand on the one hand and potential inflationary pressure caused by devalued currencies and possible shortages on the other.

Inflation rates are low for the moment, and generally below central bank targets, particularly in Britain.

- DEBT -

Britain's current national debt of 90 percent of GDP is high, but reached "nearly 260 percent after the Second World War," Carl Emmerson of the Institute for Fiscal Studies (IFS), told AFP.

But leaders "really shouldn't be worried" by debt and deficits for the time being with financing rates at historical lows, Jonathan Portes, professor of economics at King's College London, told AFP.

They appear to be heeding the advice, with leaders from Washington to Berlin consigning fiscal orthodoxy to the dustbin and announcing budget-busting rescue plans for the economy.

COMMENTS

More Related News

Virus deaths, unemployment accelerating across Europe, US
Virus deaths, unemployment accelerating across Europe, US

Coronavirus deaths mounted with alarming speed in Spain, Italy and New York, the most lethal hot spot in the United States, while the outbreak has thrown 10 million Americans out of work in just two weeks and by Friday had sickened more than a million people around the globe. The public health crisis deepened in New York City, where one funeral home in a hard-hit neighborhood had 185 bodies stacked up - more than triple normal capacity. "It's surreal," owner Pat Marmo said, adding that he's been begging families to insist hospitals hold their dead loved ones as long as possible.

Coronavirus: US jobless claims hit 6.6 million as virus spreads
Coronavirus: US jobless claims hit 6.6 million as virus spreads

More than 6.6 million Americans filed for unemployment last week as the coronavirus spreads.

Why the Global Recession Could Last a Long Time
Why the Global Recession Could Last a Long Time
  • World
  • 2020-04-01 18:57:33Z

LONDON -- The world is almost certainly ensnared in a devastating recession delivered by the coronavirus pandemic.Now, fears are growing that the downturn could be far more punishing and long lasting than initially feared -- potentially enduring into next year, and even beyond -- as governments intensify restrictions on business to halt the spread of the pandemic, and as fear of the virus reconfigures the very concept of public space, impeding consumer-led economic growth.The pandemic is above all a public health emergency. So long as human interaction remains dangerous, business cannot responsibly return to normal. And what was normal before may not be anymore. People may be less...

Great Recession showed countries can
Great Recession showed countries can't fight the coronavirus economic crisis alone

Trade represents close to 60% of world GDP, and national economies can't thrive in isolation. We needed a global response in 2008 and we need one now.

April 1, rent
April 1, rent's due: Many struggle to pay in virus outbreak
  • World
  • 2020-04-01 12:12:36Z

Many of those renters are without jobs - nearly 3.3 million people in the U.S. filed for unemployment the week of March 16, about five times the previous high in 1982. Most state and local governments are putting evictions on pause as states prepare to pay unemployment and the federal government prepares to send stimulus checks.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • ZaraPiext
    (2020-03-30 05:44:09Z)

    2 coronavirus cases in chicago
    http://chloroquine-treatmentforcoronavirus.com/# - aralen chloroquine
    coronavirus places infected
    chloroquine drug
    - coronavirus treatment
    nj coronavirus case

    REPLY
  • ZaraPiext
    (2020-03-30 08:41:42Z)

    coronavirus people collapsing
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine online
    a novel coronavirus
    buy chloroquine phosphate online
    - coronavirus korea
    coronavirus fremont

    REPLY
  • ZaraPiext
    (2020-03-31 03:11:49Z)

    coronavirus first case in china
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine 250 mg
    coronavirus 8000
    chloroquine covid-19
    - coronavirus 90k infected
    coronavirus 800

    REPLY
  • ZaraPiext
    (2020-03-31 03:18:01Z)

    coronavirus china symptoms
    http://chloroquine-treatmentforcoronavirus.com/# - anti coronavirus drugs
    coronavirus usa death
    coronavirus antiviral drugs
    - coronavirus 90000 video
    coronavirus 100 000 infected

    REPLY
  • ZaraPiext
    (2020-03-31 05:24:51Z)

    coronavirus 56 million
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine coronavirus
    coronavirus from bat soup
    chloroquine phosphate 250 mg
    - is ebola a coronavirus
    coronavirus 65

    REPLY
  • ZaraPiext
    (2020-03-31 08:24:24Z)

    coronavirus 4 continents
    http://chloroquine-treatmentforcoronavirus.com/# - remdesivir and chloroquine
    coronavirus xofluza
    chloroquine coronavirus
    - coronavirus in canada
    coronavirus 30 million

    REPLY
  • ZaraPiext
    (2020-03-31 19:15:03Z)

    coronavirus lockdown
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine 250mg
    coronavirus arizona
    chloroquine otc
    - coronavirus zpack
    coronavirus zimbabwe

    REPLY
  • ZaraPiext
    (2020-04-01 09:25:00Z)

    5 coronavirus cases in usa
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine phosphate 250mg online
    n coronavirus death
    order chloroquine
    - coronavirus jalisco
    coronavirus 3 year old

    REPLY
  • ZaraPiext
    (2020-04-01 11:43:06Z)

    2 coronavirus in california
    http://chloroquine-treatmentforcoronavirus.com/# - anti coronavirus drugs
    coronavirus real numbers
    buy chloroquine phosphate 250mg
    - coronavirus places infected
    coronavirus plague

    REPLY
  • ZaraPiext
    (2020-04-01 16:10:12Z)

    coronavirus lyme disease
    http://chloroquine-treatmentforcoronavirus.com/# - chloroquine
    coronavirus 80000
    chloroquine coronavirus
    - coronavirus ohio
    coronavirus zone

    REPLY
  • Zartodoky
    (2020-04-02 19:14:16Z)

    coronavirus victims age
    http://chloroquine-phosphate-250mg.com/# - chloroquine for coronavirus
    4 coronavirus malaysia
    order chloroquine
    - coronavirus name meaning
    n coronavirus china

    REPLY

Top News: Business