On the 28th of March Kristalina Georgieva, chief of the IMF, announced, ‘It is now clear that we have entered a recession’. Alongside which the IMF predicted the economic repercussions of the Virus will far outlast the virus itself. Prospects of ‘waves of bankruptcies and layoffs’ have been proved correct already in the UK with the likes of Virgin Atlantic, asking staff to take eight weeks of unpaid leave, and FlyBe, collapsing into administration, being only the first to succumb. Peter Goodman says that the Coronavirus Virus ‘risks triggering a financial crisis of cataclysmic proportions’ whilst Kenneth Rogoff suggests we could be facing the worst economic crisis in ‘over 100 years.’
In terms of recovery predictions range from a quick uptick following the end of quarantine measures to persistent reduction in GDP of up to 30% in some countries. However, whilst apocalyptic, the west may consider itself lucky in relation to developing economies. With demand for raw materials and tourism especially evaporating so has foreign investment. Businesses in these countries risk going under as much as in the west however developing economies do not have access to the estimated 5 trillion US dollars, or 6% of global GDP, in fiscal measures already spent by G20 countries to help keep their economies afloat. Countries with fewer large monetary institutions available to bail out the largest employers are in for a much longer and damaging crash.
More information and a clearer future for the global economy will no doubt emerge but presently, with infection and death rates only rising globally, things are going to get worse before they get better.