COVID19 IMPACT TO GO DEEPER THAN THE GREAT DEPRESSION
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International monetary fund (IMF) has predicted the worst of times ahead due to the ongoing COVID19 pandemic that has spread tentacles in the entire world. With half of 189 member countries lined up for financial aid, IMF head Kristalina Georgieva said it’s a situation emerging as a parallel to GREAT DEPRESSION of the 1930s.
Predicting a grim picture she said the situation has deteriorated to what it was in a few weeks ago as the novel coronavirus is still active, and there’s no cure available. According to her, nations have taken fiscal measures of $8 trillion, and these measures would expand.
There is “tremendous uncertainty around the outlook” and the duration of the pandemic said Georgieva as quoted in different media. According to her, the crisis would hit emerging markets and developing countries hardest of all, which would then need hundreds of billions of dollars in aid.
The Great Depression started in the United States after a major fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash in October month the same year. Some economies started to recover by the mid-1930s. However, in many countries, the negative effects of the Great Depression lasted until the beginning of World War II.
It had devastating effects for both rich and poor countries. Personal income, tax revenue, profits, and prices dropped, while, international trade fell by more than 50%. Unemployment in the US rose to 23% and in some countries rose as high as 33%. Cities around the world were hit hard especially those dependent on heavy industry.
Construction was virtually halted in many countries. Farming communities and rural areas suffered as crop prices fell by about 60%.Facing plummeting demand with few alternative sources of jobs, areas dependent on primary sector industries such as mining and logging suffered the most.
UN Secretary-General Antonio Guterres termed ongoing the pandemic as the worst global crisis since World War II, expressing concern that it could trigger conflicts around the world. He said that the disease is threat to everybody in the world leading to economic impact that will bring a recession, probably has no parallel in the recent past. Pandemic has killed more than 45,000 people and it is a cause of worst economic devastation.
KNOW WHAT ECONOMIC POWERS SAY ABOUT COVID-19 FALL OUT The pandemic outbreak is leading to a global recession as the entire world is heading towards a sustained economic downturn impacting the economies of several countries. What is predicted is falling oil prices, declining capital flows, weakening of industrial production, unemployment on rise and slowdown in GDP per capita growth.
Here’s what other world economic forum have to say about economic fallout of the ongoing global lockdown to stop spread of COVID19:
European Union EU leaders had agreed a €500bn (£440bn; $546bn) economic support package for members of the block which are hit hardest due to the lockdown. It has already moved a proposal for a possible “roadmap” to move away from the restrictive measures. However the rise in number is holding everyone.
World Bank predicts that the pandemic might cause the first recession in African countries in 25 years.
International Labour Organization says the pandemic may lead to “the most severe crisis” since the World War II. It predicted that Coronavirus outbreak could lead to a loss 6.7% of working hours across the world during the second quarter of 2020. It equals 195 million full-time workers losing their jobs.
United Nations had said that 81% of the world’s workforce of 3.3 billion people had had their place of work fully or partly closed because of the outbreak.
Organisation for Economic Co-operation and Development warns that the global economy would take years to recover. According to its head – Secretary general Angel Gurría economies were suffering a bigger shock than after the 9/11 terror attacks of 2001 or the 2008 financial crisis.
Oxfam A UK-based charity organization, warned that the economic fallout from the spread of Covid-19 could push atleast half a billion more people into poverty. By the time the pandemic is over, it said, half of the world’s population of 7.8 billion people could be living in poverty.
Institute for International Finance Researchers at the IIF, a global banking association, expect a 2.8% plunge in global GDP, compared to a decline of 2.1% in 2009 during the global financial crisis.