Drago Bosnic
FRNSun, 05 Apr 2020 00:00 UTC
© "The Road"/Green ProfitScene from "The Road"
The global economy will see a much bigger hit from the coronavirus pandemic than previously expected, the Asian Development Bank (ADB) warned in its annual report. According to the gloomiest scenario presented by the bank, the impact of the "worst pandemic in a century" will be
as high as $4.1 trillion, or 4.8 percent of global gross domestic product (GDP), RT reported.
However, even
this forecast could turn out worse given the impact of the outbreak on global supply chains and how long it will take to contain the virus. Asian Development Outlook (ADO) 2020, the ADB's annual economic report predicts:
"The estimated impact could be an underestimate, as additional channels such as supply disruptions, interrupted remittances, possible social and financial crises, and long-term effects on health care and education are excluded from the analysis."
While the higher forecast reflects the spread of the infection to Europe, the US, and other major economies, on the low end the global cost could be $2 trillion if demand shocks are smaller and containment periods shorten.
Even the best-case scenario indicates a sharp rise in estimated economic fallout from the coronavirus crisis. An earlier report released by the lender on March 6 showed that the virus could cost the world around $347 billion in the worst-case scenario.
According to the latest outlook, regional economic growth in developing Asia will decline sharply this year amid the COVID-19 outbreak. The report forecasts regional growth of 2.2 percent in 2020, down more than three percent from earlier predictions. However, growth is expected to rebound to more than six percent in 2021, if the world returns to normal.
Comment: Whammy #1: the fake pandemic. Whammy #2: the real economy. Alarming forecasts serve to further increase panic for both investors and the public-at-large. To choreograph this next step requires 'a devastating financial future' guaranteeing a social and financial crisis begging for control. Economic darts are being thrown, it remains to be seen how close to the bullseye they land.
The Labor Department prediction is the economic impact from the coronavirus pandemic will be the largest ever felt in the United States. 701,000 jobs were lost in March and the unemployment rate climbed to 4.4 percent. Rick Rieder, Chief Investment Officer of global fixed income at BlackRock wrote:
"The decline in nonfarm payrolls, of 701,000 jobs, while a sharp reversal from strong January and February employment figures, is going to get much worse in the months to come, as the Bureau of Labor Statistics' surveys catch up with the reality of significant economic shutdowns across most states."
Ellen Zentner, Chief Economist at Morgan Stanley, dropped her growth predictions for the second-quarter gross domestic product to -38 percent, forecasting that the US is ready to lose up to 21 million jobs - surging the unemployment rate to 15.7 percent. Full-year GDP will drop by 5.5 percent.
France is facing a worse slowdown than in 2009 according to Finance Minister Bruno Le Maire. "We will probably be at more than the -2.2 percent [seen] in 2009. That shows the magnitude of the economic shock we are facing."
As part of its crisis measures, the government has prepared a โฌ45 billion ($50 billion) package - two percent of GDP - to pay businesses not to lay off workers while another โฌ300 billion in state-guaranteed loans are being extended to any struggling company that needs them.
And there is Merkel's take: The EU is facing the biggest trial in its history, urging impatient citizens to put aside thoughts of ending coronavirus-related restrictions and focus on survival as a bloc. "Germany can only do well if Europe is also doing well. The answer can only be: more Europe."
But while she preached closer ties, Germany was blocking a "corona-bond" aid package proposed by the EU that would help Italy, Spain, and France. To date 1,590 people have died in Germany with the virus.
Comment: Whammy #1: the fake pandemic. Whammy #2: the real economy. Alarming forecasts serve to further increase panic for both investors and the public-at-large. To choreograph this next step requires 'a devastating financial future' guaranteeing a social and financial crisis begging for control. Economic darts are being thrown, it remains to be seen how close to the bullseye they land.