The Covid-19 novel coronavirus has caused an unprecedented crisis for the world’s economy and markets globally.
More than 272,000 people have already contracted the virus and at least 11,310 have died, according to a tally by Johns Hopkins University.
The World Health Organisation (WHO) has declared the virus to be a pandemic, meaning that it will have a sustained global impact.
The coronavirus infects stealthily: It’s too late to stop it at the border or to seal off hot spots within a nation.
It has spread so widely, the only way to halt it now is to operate on the assumption that anyone could be a silent carrier, according to Bloomberg.
When sickness can come from anywhere, the agreed-upon solution is extreme social distancing — for a long time.
With many countries’ economies already slowing before the pandemic, Covid-19 poses a serious risk of sending many countries into recession and has turned major stock markets bearish.
The spread of Covid-19 has sent financial markets into a tailspin despite some of the biggest emergency stimulus measures since the global financial crisis announced by dozens of central banks across Europe, the Americas, Asia and Australia.
The panic was clear in stocks, bonds, and gold and commodity prices, underlining expectations of severe economic damage from the outbreak.
In response to this crisis, governments and central banks all over the world have enacted fiscal and monetary stimulus measures to counteract the disruption caused by the coronavirus.
Nations across the world have come up with a combination of tax incentives, loan guarantees, wage subsidies in order to shield their citizens as well as its enterprises from the devastating effects of the pandemic.
As Covid-19 pandemic is now growing exponentially, its economic impact is already more severe than other contagious diseases such as Sars or Mers, according to the World Economic Forum.
Therefore, the political consequences are harder to predict, but could be significant and long-lasting.
The global economy is already in a recession as the hit to economic activity from the coronavirus pandemic has become more widespread, according to economists polled by Reuters amid a raft of central bank stimulus actions this week.
Economists have repeatedly cut their growth outlook over the past month and have increased their forecast probabilities for recession in most major economies.
The worst-case views on growth taken just weeks ago in some cases have already into the central scenario for private sector economists in Reuters polls.
The global economy was forecast to expand 1.6% this year, about half the 3.1% predicted in the January poll, and the weakest since the global financial crisis of 2007-09.
Forecasts for 2020 global GDP ranged from -2.0% to +2.7%. Undoubtedly, governments worldwide are getting more serious about fighting not only Covid-19 but also its economic effects.
What the market is telling us is that things look pretty bad.
For this reason, policymakers should make greater efforts, come out with robust fiscal response to tackle the coronavirus outbreak and avoid a major global economic catastrophe.
