Coronavirus and the threat of a global recession
Why The Coronavirus Recession Is Unlike Any Other
Experts on the possible impact of the coronavirus pandemic on the global economy&# 160;
Against the backdrop of the coronavirus pandemic on Monday, March 23, disappointing news came from all sides about the state and prospects of the global and national economies.
Equity markets plunged across the board, according to media reports, with more plunge in China, Hong Kong, India and Australia than in Europe. The New York Stock Exchange and the London Metal Exchange have completely switched to distance trading. The price of a barrel of Brent crude oil fell to $ 26. Dollar exchange rate soaring above 81 rubles, euro – 87 rubles.
Earlier, in a review by BCS Global Markets, it was noted that net capital outflows from the Russian stock and debt markets in the period from March 12 to 18 reached an absolute record. In total, non-residents withdrew $ 1.4 billion from Russian assets. This is more than at the peak of the 2008 and 2014 crises.
Bank of America announced that the US economy has entered a recession after years of growth. Goldman Sachs and Morgan Stanley also believe that a large-scale global crisis is inevitable. The only difference is in the estimates of the scale of the slowdown in global GDP growth – Morgan Stanley believes that it will decrease by 0.9% this year, and Goldman Sachs – by 1.25%. According to updated forecasts of the Institute of International Finance (IIF), the world economy will add not 1.6%, but only 0.4%.
Added pessimism and the head of the Organization for Economic Cooperation and Development (OECD) Angel Gurria, who in an interview with the BBC said that the pandemic would undermine the world economy for a long time, and that hopes for a quick improvement in the situation are not well founded.
In this context, the US Federal Reserve on Monday announced decisive new measures designed to support the American economy, and Russian Prime Minister Mikhail Mishustin instructed the relevant ministries to prepare “anti-crisis” proposals to revise the country’s budget.
Economic Observer Semyon NovoprudskiIn his commentary for the Russian service of the Voice of America, he noted that the Russian economy is an absolute hostage to the general situation in the world. According to him, where the global pendulum will swing, it will pull Russia there too..
“In this regard, I am only pleased with one thing: articles began to appear in the world’s leading business media, dedicated to the fact that the fight against the pandemic is taking on forms that are more dangerous than the virus itself,” he stated. – It seems to me that this thesis is quite fair. Any long suppression of all economic activity, with the exception of vital industries, cannot pass without a trace. The life of the economy under total quarantine is impossible and can lead to even more serious consequences “.
If the virus does not turn out to be seasonal and there is no significant slowdown in the spread of infection by June, it will be possible to say that for the first time in a very long period, the world economy may end the year with a drop in GDP, suggested Semyon Novoprudsky.
“Everything here will depend on whether the United States and Europe will succeed in the next month or two and achieve approximately the same results in the fight against the pandemic as in China, Japan and South Korea. In addition, there are timid reasons to assume that the pandemic itself is declining due to the natural weakening of the virus. I hope this will motivate some countries to weaken quarantine measures and revive national economies, at least in the domestic market, “he summed up.
Senior Research Fellow, Gaidar Institute Sergey Zhavoronkov I agree that the crisis will hit hardest on those countries where the strongest restrictions are adopted in connection with the coronavirus.
“However, in general, the situation in the global economy should not be overly dramatized,” he clarified in a commentary for the Russian service of the Voice of America. – Yes, the US stock market has dropped 30% lately. But in 2009 it fell by 70%. At the same time, the country’s GDP decreased by 3 percent. In general, a fall in the economy and a fall in stock markets are not the same thing. “.
Experts also agreed that the prospects for the Russian economy look ambiguous and will largely be predetermined by oil prices..