Coronavirus plunges Global Crisis Analysis
What could be the global economic crisis?
The COVID-19 pandemic threatened people's health, not only directly, but also through the deterioration of their financial situation. So far, business has suffered immediate losses. The richest people in the world have suffered, but ordinary citizens will soon feel the financial consequences of the coronavirus. According to experts, COVID-19 may cost the world economy more than the 2008 crisis.
Just a couple of weeks ago, the words about the pandemic threat were just words. And today, billions are being spent on fighting the infection. In late February, Presidential Administration Donald Trump requested Congress $ 2.5 billion to fight the coronavirus. House Democrats immediately proposed increasing the amount to 8 billion, which the White House agreed to. And so the American president himself proposes to allocate $ 50 billion to help small businesses. Trump also convinces fellow citizens that the pandemic will not lead to a full-fledged economic crisis, but will become only a temporary difficulty, which it is quite possible to overcome quickly.
Coronavirus is an ideal candidate for the trigger for a new crisis, as the global economic global crisis is ripe for this, he says. “There are already bubbles in the financial markets. The Moscow Stock Exchange index has doubled since 2015, and the S&P 500 in the USA over the past year has grown by 28.2%. Such speculative buildup cannot last forever. And when something globally negative happens, as it is now, then panic sets in and everything falls. We will soon be dealing with a recession, and it will not work out quickly. The background of this global economic global crisis is uncertain, and I think that the situation may be more serious than in 2008-2009, ”Nikolaev argues.
The expert believes that even in an optimistic scenario, if the vaccine against coronavirus is invented quickly and the COVID-19 pandemic goes into decline, people still will not want to go to Italy or China, and the situation will not return to normal soon. Nikolaev does not exclude that the crisis will last until the end of 2020 and, possibly, will seize part of 2021.
Global crisis analysis
The US is facing the sharpest ubiquitous cessation of economic activity in history. Despite the fact that Americans are sweeping essential goods from the shelves, in the country as a whole, consumer spending is declining, which directly supports 70% of the American economy, since people avoid visiting restaurants and movie theaters. The American stock market has shown a record drop since 1987.
The EU is also gearing up for big expenses. Fiscal rules, according to which the public debt should not exceed 60% of GDP, and the budget deficit should not exceed 3% of GDP, although they are not canceled, will be “flexibly interpreted," said Ursula von der Leyen, head of the European Commission. She also said that the EU will increase the amount allocated to sectors of the economy that are able to quickly rebuild in a recession. The sum of 37 billion euros is called, although only recently it was said about 25 billion. Another 1 billion euros will be provided against cheap bank loans for 100 thousand companies in a difficult situation.
Bloomberg global crisis analysis predict the strongest economic crisis in the eurozone against the backdrop of an actual stop of business activity due to the coronavirus.
One of the most important indicators reflecting the state of the economy, the business activity index (PMI), against the backdrop of the pandemic, reached a minimum in Europe since 1998 and established an anti-record for the entire time of observation. This figure was worse than during the global economic crisis of 2008-2009.