The health crisis threatens to become an economic crisis. There is almost no way around it. Comprehensive steps are needed to avert the recession – and not a small one.
So much value has not been destroyed in a long time. So many jobs have rarely been in danger. People haven’t worried so much about their future in ages. This holds true to online businesses such as those in the entertainment and gambling industry like Online Go (온라인바둑이). After a week in a state of emergency, everyone knows this weekend what the coronavirus can do for their own health, that of the family, friends, neighbors, and colleagues. On the other hand, no one knows yet what consequences the pandemic will have on the job, private pensions, the company, the credit rate due and personal prosperity. This uncertainty will continue for a while.
Coronavirus will have a larger economic impact than financial crisis: economist
Two scenarios are conceivable, economists call them with the letters V and U.
In the V scenario, the first shock is followed by a steep crash in all economic activities. Shortly afterward, however, an equally spectacular recovery phase begins. Companies are producing again, consumers are buying again, international trade relationships are reviving, old supply relationships are being restored. What is missed is quickly made up for.
Corona will bring unemployment
The situation is different in the U scenario. There is also a steep crash here. But the recovery is not long in coming. The longer the economy has bottomed out, the more likely layoffs, corporate insolvencies, and broken supply chains will become. Getting back out of this scenario is lengthy and painful.
There will be employees who cannot find a new job – or only a much lower paid one. Entrepreneurs may lose important customers forever because they themselves disappear from the market or look for new suppliers. Companies step on the investment brake and forego important innovations. The economy as a whole is falling behind.
Coordinated Global Response
The pandemic calls for nations to come together in a coordinated global response. The coronavirus is yet another strain test for the currently seriously mired transatlantic relationship. President Trump’s call to separate the U.S. from its allies in Europe with no discussions transmits an obvious indication. The American efforts to take control of CureVac to obtain the vaccine solely for the USA, actually grown into a serious argument with Berlin. A matched crisis impulse is barely imaginable under these kinds of circumstances.
At the world level, the newest clashes involving the key forces are fueling the turmoil a lot more. The war in oil prices specifically is motivated by geo-economic reasons. So regardless if the Americans really can delight in less expensive oil prices as their president stated, it really is dependent upon who can withstand this conflict the longest.