The global economy is plunging into unchartered waters. Nations are headed into a Coronavirus-induced economic recession.
Highlights! Great Depression 2.0 — Coronavirus-Induced Recession Starts Today
- Predicting Global Financial Collapse
- The Road to Recession: Coronavirus inducing a global economic recession
- We aren’t in the Recession Yet!
- Depressed Markets
The recent global market crash stirred by the coronavirus outbreak has given the economists around the world a glimpse of the Great Depression of the 1930s. The fear now is that we are headed towards a coronavirus induced global economic recession?
As of now, Wall Street has plunged 12 per cent. The recession fear is gripping the market. According to the experts, the world is heading to a financial collapse in coming times.
Predicting Global Financial Collapse
With each passing day, the complete economic impact of the crisis becomes more and more apparent on world economies. On Wednesday, IHS Markit revised down its forecast for world real GDP growth in 2020 to 0.7%. Any growth below 2.0% is classified as a global recession. It further stated that Japan is in recession while the US and the UK will follow in the second quarter.
For the uninitiated, Recession is when the economy shrinks. Businesses see a variation cycle of boom, recession, depression and recovery. These are known as economic cycles.
Historically speaking, the depression that follows recession can go on for decades.
The Road to Recession
In the past few months, countries have shut down their economies. For starters, we all are sitting at home!
The lockdowns in Europe, US, Asia has brought about this global financial crisis. In the wake of the pandemic and public health concerns, the governments are doing their best to help the citizens releasing relief packages to cushion the economic turmoil, upping the hospital infrastructures to contain the virus—all while looking for a possible Covid-19 cure.
Travel and tourism industries have taken the hardest hit. The Covid-19 effect on China has disrupted the supply chain. Most Fortune 500 companies have reported the first quarter financial loss.
Spreading first in China, travelling to Europe now affecting the US – coronavirus in its wake has resulted in industrial shutdown, disrupted economies, businesses and daily lives.You will find more infographics at Statista
World Health Organisation has already predicted an economic Dooms Day scenario induced by Covid-19. However, with steadily rising death tolls the roads ahead are still unclear.
We aren’t in the Recession Yet!
The GDP growth is dire. For next quarter, Goldman Sachs has seen an unprecedented stop in economic activities whereas JP Morgan has predicted a shrink of 14 per cent GDP for the US. While both predicted a bounce back in the third and fourth quarter of the year.
With the growing uncertainties, recession looks like a matter of when rather than if. It is clear to the market that the 2019 growth consensus isn’t going to materialise. On 5 March, Citigroup analysts wrote about the grim signs as investors believe in the idea of a protracted recovery given the uncertain times. They said, “The V-shape recovery theory has been significantly challenged.”
Oxford Economics predicts based on 50 years of comparable data that 2020 is the second-weakest year for the global economy, with 2009 being the depths of the worst global financial crisis.You will find more infographics at Statista
Some 100 years ago, the shredding society coupled with the stock market crash gave way to the Great Depression. In the third decade of the 21st century, we again are headed the same place.You will find more infographics at Statista
So maybe, with the coronavirus-induced global economic recession at hand, we can perhaps learn some lessons from the past.