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The pandemic is causing the world economy to collapse as abruptly as it did last time in the 1930s. In Austria there is a threat of a seven percent drop. At the earliest, things will go up in 2021, at least scars left.
Vienna Unfortunately, anyone who thought that the 2008/09 global financial crisis was the biggest economic recession of their life was wrong. A good decade later, countries around the world must freeze economic and social life to stop the spread of the dangerous corona virus. However, this also triggers the biggest contraction in the world economy since the Great Depression in the 1930s, says the International Monetary Fund (IMF). He predicted a three percent drop on Tuesday. Just a few weeks ago, the same economists expected a 3.3 percent increase (see chart). In the financial crisis, world economic output stagnated at minus 0.1 percent thanks to stable emerging markets.
“The crisis is like never before,” said IMF chief economist Gita Gopinath. For the first time in nearly a hundred years, industrialized nations and emerging economies will be hit by a recession of this size. “And, like in a war, we don’t know how long it will take.” However, one thing is already clear: the chances of a brief crown recession are relatively small. And even then, the crisis will leave deep scars.
No economy is immune.
Unlike most economic crises in recent decades, no country can avoid the crown crisis. According to the IMF, the drop is most strongly reflected in the industrialized nations, with less 6.1 percent. Europe is particularly affected by travel restrictions for tourists. The problem detects that Italy and Spain will simply miss out on a double-digit percentage recession.
But Germany and Austria also have to be prepared for a seven percent decline in GDP. Two weeks ago, national economists still expected less than 2.5 percent. Compared to other countries, Austria is starting its economy relatively quickly, but exporting companies in particular will continue to gnaw lack of demand in international markets for a long time. Large emerging markets like China and India may avoid the recession, but they are also far from their usual growth rates.
2021 and the beginning of hope
However, in IMF economists’ opinion, the recovery in the following year will be at least as clear as the collapse if the world economy is forecast to grow 5.8 percent. It would be the largest increase in economic output since the 1980s. Even Austria would soon return to the winning side with a plus of 4.5 percent. However, for this comforting idea to become a reality, almost everything has to go according to the plans of economic researchers: the crown crisis should slowly lose its terror in mid-2020, factories and retailers have to opening its doors again, world trade has regained its balance. Most importantly, Covid-19 will not be returning this year or next. Otherwise, today’s forecasts are already out of print by autumn at the latest.
Billions of inevitable aid
According to the IMF, policy decisions today are decisive on how deep the recession will be tomorrow. The billions in aid packages from governments and central banks are first-aid measures necessary to alleviate the consequences of the crash. And they would have to increase rapidly and decisively if the crisis continued. The United States already spends more than ten percent of its economic output on aid Corona, Germany 4.5 percent, Japan more than a fifth. A rapid increase in public debt is the logical consequence, but it is not a cause for concern for the IMF. As long as interest rates remain low and the expected recovery arrives, debt will fall again.
Deep scars will remain
The long-term consequences of the crown recession will also be visible beyond the highest debt levels. Unemployment will not decrease as fast as it has increased. Uncertainty will remain, which could reduce consumption for many people. The ideal version of the crisis is likely to cost the world $ 9 trillion. Generate more than Germany and Japan together in one year. At the end of the expected record year 2021, the world would be even worse than in 2019.
