(Fighting New Crown Pneumonia) Economic War "epidemic" Record: Crisis Approaching Global Economic Defense War "Arrow On The String"
China News Agency, Beijing, March 25th: The crisis is approaching, and the global economic defense battle is "arrow on the string"
China News Agency reporter Li Xiaoyu
According to the latest WHO data, as of 10:00 on the 24th of Central European Time, more than 290,000 new cases of new coronary pneumonia have been diagnosed outside China, and nearly 13,000 have died. Under the epidemic, the global economy may be under unprecedented pressure.
Will the financial crisis repeat itself in 2008?
The president of the International Monetary Fund (IMF), Georgiyeva, said recently that due to the epidemic, the global economy will fall into negative growth in 2020, and the degree of recession will be at least the same as or even more severe than that of the 2008 financial crisis.
The International Finance Association also expects the global economy to shrink by 1.5% this year. Among them, advanced economies will shrink by 3.3%, and emerging economies can only grow by 1.1%.
The impact of the epidemic on the economy was achieved by simultaneously affecting demand and supply. To curb the spread of the epidemic, more and more countries have begun to "catch the city" or even "catch the country." Restrictions on the flow of people and logistics not only led to the suspension of production and production of many enterprises, but also caused heavy losses to consumption.
UNCTAD expects that foreign direct investment (FDI) in the outbreak countries will be hit hard, hitting aggregate demand and supply chains, and having a negative spillover impact on the global economy. If the epidemic is controlled in the first half of the year, global FDI will shrink by 5% in 2020; if the epidemic cannot be controlled during the year, the FDI shrinkage may be as high as 15%.
However, there are also institutions that believe that the world economy has not fallen to the point of negative growth.
Fitch, one of the three major rating agencies, predicts that the global economic growth rate will drop to 1.3% in 2020. The OECD is relatively optimistic and believes that the global economic growth rate may drop to 2.4% in 2020. If the epidemic lasts longer and is widely spread throughout the Asia-Pacific, Europe and North America, the economic growth rate may be further reduced to 1.5 %.
Can the economy recover from a V-shape?
This point is currently divided. Some analysts believe that the timing of the outbreak is unfavorable, and it may be difficult to achieve a V-shaped recovery in the global economy.
Yale University professor Stephen Roach wrote that the vulnerability of most major economies will increase in 2019, making the economic outlook for 2020 inherently uncertain. When the new crown pneumonia virus hit, the global economy was more fragile than when the SARS epidemic broke out in 2003. In addition, the United States, Japan, and the European Union had few “ammunitions” to stimulate the economy, and the “V-shaped” recovery trajectory of the economy after the SARS epidemic was difficult to replicate.
The research group of the Chongyang Institute of Finance of Renmin University of China also predicts that even if the global epidemic can be effectively controlled in the next 3-4 months, it will be difficult for the world economy to recover quickly, and the recovery period may take 1-3 years.
But some researchers say that the V-shaped recovery is promising.
Everbright Global Chief Economist Peng Wensheng said that the tougher the social isolation measures, the greater the impact of the epidemic on the economy, but the faster the epidemic can be controlled. In other words, the greater the impact of the epidemic on the economy, the shorter the duration of its impact.
Fitch also believes that if the relevant measures can control the spread of the epidemic in the first half of the year, the global economy is expected to achieve a V-shaped rebound in the second half of the year.
Global economic defence war will start
Although there is no consensus on the impact of the economy and the trajectory of recovery, one thing is certain: the epidemic may cause the global economy to suffer from diarrhea and cause greater trauma to the economy.
Hai Chao Securities macro analyst Jiang Chao believes that with the growing severity of the epidemic, the risk of US corporate debt, euro zone government and corporate debt, and some emerging market debt crisis will rise.
In order to save the economy, the major economies are ready to join hands again, and the curtain of the "Global Economic Defense War" will begin.
The G7 Finance Minister issued a joint statement saying that confidence and economic growth would be restored "at all costs."
The Group of Twenty (G20) will also hold a special summit of leaders in the form of video. In addition to the leaders of G20 member countries, representatives of regional organizations such as ASEAN, the African Union, the Gulf Cooperation Council, the New Partnership for Africa's Development, and international organizations such as the United Nations, World Health Organization, World Bank, International Monetary Fund Leaders will also attend the summit.
Some international organizations have also prepared "ammunition". The IMF said it will expand emergency financing on a large scale and is ready to deploy $ 1 trillion in borrowing capacity. (Finish)