Huge downturn in global economy amid novel pandemic Coronavirus-II


Syed Tahir Rashdi

America’s biggest airlines said they had agreed to the terms of a $25bn bail-out from the government. Under the deal dividends will be suspended. American Airlines is to receive a direct grant of $4.1bn, a low-interest loan of $1.7bn, and will apply for a separate $4.8bn loan from the Treasury. In response to the surge in online shopping Amazon is employing another 75,000 staff, on top of the 100,000 additional workers it hired recently. In Seattle Amazon sacked two activist employees for continuing to post claims on Twitter that conditions at its warehouses during the pandemic are unsafe. In France Amazon closed its warehouses for cleaning after a court said it should do more to protect staff. Amazon’s share price hit new highs. It is up by a third since mid-March, giving the company a market value of $1.15trn. Closing time Forced to shut without much notice, Britain’s pub industry pondered what to do with an estimated 50m pints of beer lying undrunk in cellars. The rules have been relaxed on reclaiming tax for ullage, or wasted beer, so that the man from the brewery does not need to be present when it is disposed of, though social distancing is making it hard to lift the full kegs. With pubs closed, alcohol sales in. Thinkers and Economists around the globe gave their predictions for the economic and financial order after the pandemic. Eswar Prasad, The economic and financial carnage wrought by the pandemic could leave deep scars on the world economy. Central banks have stepped up to the challenge by tearing up their own rulebooks. The U.S. Federal Reserve has bolstered financial markets with asset purchases and provided dollar liquidity to other central banks. The European Central Bank has declared “no limits” to its support of the euro and announced massive purchases of government and corporate bonds, and other assets. The Bank of England is financing government spending directly. Even some emerging-market central banks, such as the Reserve Bank of India, are considering extraordinary measures—all risks be damned. Alistair Darling was the UK’s chancellor of the exchequer during the 2008 financial crisis and he knows how easy it is for governments to be overtaken by events. “It was happening in China and we didn’t do much about it. People thought this would be the last thing that would come and get us.” Yet it did, and the scary health numbers have been joined by some scary economic numbers. The collapse has been instantaneous, swifter than during the Great Depression. As late as mid March, around 200,000 Americans were filing jobless claims each week. In the last week of March that figure shot up to more than 3 million and the following week it doubled to 6.87 million. A further 6.6 million filed claims the week after that – taking the total to more than 16 million in three weeks. But it is not just America. More than 80 emerging market economies are now seeking help from the International Monetary Fund, which is warning of a recession “as bad or worse” than in 2008. There are fears of a new debt crisis in Africa and for the future of the European Union, where the initial response of member states has been to close borders and for each to look after their own citizens. An already underperforming Italy is seeking help from EU partners as it struggles to cope with the rising cost of its lockdown.