COVID-19 Chronicles: Will The Corona Virus Bring Our Next Global Recession?

With almost the whole world affected by the novel Corona virus (COVID-19), we are seeing a huge drop in the financial market. The ferocious pandemic was declared by the WHO is causing country-wide lockdowns that have already begun taking their toll on the stock market and the economies of the affected countries. And the question of whether the global economy will tip into recession stands strong.

Notable Economist has stated that a global recession is “unfortunately very, very likely.” As malls, shops, restaurants, factories, and airlines are shutting shut down around the world while various countries are closing their borders, many economists have also warned that the global recession is a not threat anymore, it is already happening.

Here’s an overview of the world-wide effects that the Corona pandemic is having:

1. Rise in Spread: Since its outbreak, the novel Corona virus reached more than 140 countries with a total of more than 200,000 confirmed cases and more than 8000 deaths. While China was the primarily affected country with more than 8000 confirmed cases, it is slowly recovering while the rest of the world is deteriorating, especially the United States and Europe. At the moment, the most affected country is Italy that has more than 30,000 cases. Spain has at least 11,000, and the United States has reported more than 5,500 cases. Other European countries like Spain, France and, Germany have also seen a recent spike from 5000 to 9500 cases.
   
   
2. Drop in economy: The rise in the spread of the Corona virus has naturally had an immensely negative effect on the economy of the countries. What seems now is a chain of events that is taking the shape of a potential economic downfall. Shutting down of businesses means no production. No production means no selling. No selling means no income. And no income means no payment for the workers. And no payment, in turn, means no production.

As far as figures are concerned, while retail sales in China dropped down 20.5% during January and February compared to 2019, their industrial output is down by 13.5%, the sharpest contraction recorded. According to the National Bureau of Statistics,fixed asset investment fell by almost25%.

Goldman Sachs has ascertained a downgraded outlook on America’s economy,saying that it will shrink 5% between April and June, after seeing 0% growth between January and March. Growth for the whole year’s forecast brings the economydown at a mere 0.4%, down from 1.2%.Economists at ING said that the US economy isexpected to shrink 8% in the second quarter of the year, getting on par with the drop experienced during the 2008 financial crisis. 

3. Stock market affected: Figures state that US stocks are presently down 27% from their record reaches less than a month ago. The US Federal Reserve has cut its benchmark-interest to almost zero. It has announced that it will make borrowing US dollars much cheaper for banks all over the globe. The New York Fed announced injecting up to $500 billion over its earlier operations into the financial market. Former top economist (Trump’s administration), Kevin Hassett, said,"The odds of a global recession are close to 100% right now.”

These 3 fundamental points show the immense effect that the Corona virus has had on not just the health of people but the health of the country as well. Only time will tell what the future holds. Until then, the only way is to protect ourselves is to take the precautionary measures as only a healthy population will lead to a healthy economy.