It is inevitable that all activities of the planet are affected by the presence of the infamous COVID-19 causing chaotic global economic conditions. The results of such a huge impact are impossible to calculate and will only reveal themselves with time. However, looking at the situation at the beginning stages, it is safe to assume that no business will be able to continue like it needs to. Thus, economic crises and social upheavals are anticipated across the globe. Countries are radicalizing and formulating extensive and drastic policies to tackle the pandemic. Some of these can be discussed here.
Global Financial Drawdown:
What started out with China and isolated all of Asia also managed to bring down the economic powers of the world. Fear started to spread all across the Americas and Europe and even with all the precautions, recessions couldn’t be avoided. As of now, the global economy is facing an all-time low recession that is bringing chaos to the stock market. Other Asian countries are still under pressure to deliver not just for the domestic safety of the massive population but also to contain the virus from spreading internationally.
America, alone, is struggling to retain its bond’s values. Falling down to a record of 116 basis points. Considering credit spreads and Equity valuations, there might be some possibility that the finances survive. Although that is highly dependent on the virality of the virus and the anticipation of a vaccine. Needless to say, in times like these, it is impossible to even rely on a GDP analysis to predict future circumstances. In a very surprising turn of events, Wilbur Ross, America’s Commerce Secretary remarked that the virus might be good for the American economy. According to him, the virus will bring back more jobs to North America.
Although to provide for the general population, tax moratoriums are in place in the EU, no coordinated plan exists to tackle the situation at large. Governments are struggling to ensure the survival of the masses while retaining their fiscal revenues. Payment extensions on social charges, loan guarantees and wage subsidies are some of the things the governments are promising to do. Sweden has led the charge with the boldest move of the year. It has decided to allow businesses to defer taxes for the duration of the whole year. However, the cost of which is more than 27.5bn Euros. The payment, of course, would go to the treasury.
On a larger regional scale, European Commission has declared that full flexibility will be given to the countries in the union. This, along with other policies are summing up the extent of the struggle the nations are facing. Controversially, some economists argue that indebted countries such as Greece and Italy shouldn’t be given such a relaxation.
Germany, France, Italy, UK and Spain are among the countries going for state loans and credit guarantees as well. The UK, however, opted out of providing income subsidies for affected workers. Similarly, Italy couldn’t agree to tax deferrals as of yet with the already indebted economical condition.
Middle East and Northern Africa:
UAE along with Saudi Arabia are some of the quickest responders to the condition of the virus. Therefore, it is safe to say that they are leading the defense against Coronavirus. Not only were they able to digitize their governmental and public systems in time, but also managed to isolate their peripheries. All in all, the largest Arab economies have pooled in a total of $40bn to fight the pandemic.
Governments and private companies were busy making preparations for accommodations, keeping in view the plans for the Expo 2020. Thousands of apartments and properties in Dubai and other states of the Arabic region are proving useful. Since all citizens and even foreign visitors have come in the region seeking refuge and safety. And the state is exercising excessive precautionary measures to calm the panic. In fact, the state has offered a 100-billion-dirham stimulus to help affected industries of tourism and travel. Similarly, to help small to medium sized enterprises, a budget of 50bn riyal has been set aside. Banks are granting payment deferrals, concessional financing and loan guarantee cost exemptions. Making Arabic discourses against the virus an exemplary maneuver.
The RBA has had a tough time processing the global circumstances and assessing the future of the Australian economy. RBA has decided to cut the cash rate to 0.25% again, after declaring that significant effects will be faced by the continent. Even after receiving a stimulus of $17.6bn, experts say that Australian economy will take at least a decade to recover from the Corona Fallout. The anticipated decrease in the economic growth amounts to be almost 0.9%.
All in all, the global pandemic is spreading at an unknown rate. Therefore, any and all research and findings are unreliable. It is impossible to predict what will happen and whether or not things are going to change for the better.