On the 28th of March, chief of the IMF, Kristalina Georgieva, referring to the global economy announced that it was “now clear that we have entered a recession.” Alongside this, the IMF predicted the economic repercussions of the coronavirus will far outlast the virus itself.
Prospects of “waves of bankruptcies and layoffs” have already proved correct in the UK, with the likes of Virgin Atlantic asking staff to take eight weeks of unpaid leave, and FlyBe collapsing into administration, being only the first to succumb.
“economist Kenneth Rogoff suggests we could be facing the worst economic crisis in ‘over 100 years'”
In the New York Times, Peter Goodman said recently that the novel coronavirus “risks triggering a financial crisis of cataclysmic proportion,” whilst economist Kenneth Rogoff suggests we could be facing the worst economic crisis in “over 100 years”.
In terms of recovery, predictions range from a quick uptick following the end of quarantine measures to persistent reduction in GDP of up to 30% in some countries.
“As a result, countries with fewer beneficent institutions available to bail out the largest employers are in for a much longer, more damaging crash”
However, whilst apocalyptic, the industrialised West may consider itself lucky compared to many developing economies. With demand for raw materials and tourism effectively evaporating, and foreign direct investment desperately low, businesses in these countries risk going under just as much as, if not worse than in the west.
However, developing economies do not have access to the estimated 5 trillion US dollars, or 6% of global GDP, in fiscal measures already spent by G20 countries to help keep their economies afloat. As a result, countries with fewer beneficent institutions available to bail out the largest employers are in for a much longer, more damaging crash.
More information and a clearer future for the global economy will no doubt emerge but presently, with infection and death rates only rising globally, things are going to get worse before they get better.
George Sullivan
Featured image courtesy of Mike Lawrence via Flickr. No changes made to this image. Image license found here.
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