Epidemic impacts global economy, China's resumption of work and production brings hope to the world

New crown pneumonia epidemic impacts global economy, China's resumption of work and production brings hope to the world (global hotspot)

Recently, various enterprises in Wuhan have begun to resume work and resume production. The picture shows the workers stepping up production at the assembly line of the factory assembly shop of Dongfeng Passenger Car Company.

Xinhua News Agency reporter Xiao Yijiu

Epidemics have occurred in more than 180 countries and regions, more than 400,000 confirmed cases worldwide, and more and more countries have adopted measures to "close the city" ... New crown pneumonia epidemics are raging around the world. The global manufacturing, tourism, and financial markets have all been hit hard. The downward pressure on the world economy, which once showed signs of recovery, has increased again. The outbreak has added risk factors to the already weak world economy. Several international organizations have pointed out that the world economy is in the most severe period since the financial crisis.

Forecast: "Record" Recession

UN Secretary-General Guterres said that the impact of the new crown pneumonia epidemic would "almost certainly" cause a recession and "possibly reach a record scale."

Many international organizations have once again lowered their forecasts for the world economy's annual growth. Among them, the OECD estimates that the world economy may have negative growth in the first quarter of this year, and adjusted the annual growth rate from 2.9% to 2.4%; the International Monetary Fund predicts that the world economic growth rate in 2020 will be lower than 2.9% in 2019; The International Finance Association released a report saying that the world economic growth rate this year may be close to 1%, much lower than last year's 2.6%, and the lowest value since the financial crisis.

"The chain reaction brought by this epidemic far exceeds the financial crisis in 2008." Zhang Monan, chief researcher of the Institute of American and European Studies at the China International Economic Exchange Center, analyzed this newspaper. "Different from the previous crisis, it was just a pure economic or financial crisis. The secondary crisis is a compound crisis, and its impact path mainly comes from three levels: one is the public health level; the second is the socioeconomic level; the third is the psychological expectation level. When there is uncertainty in the next 6 to 12 months, market sentiment will Extremely fragile, and a slight breeze will trigger severe market turmoil. "

Reuters recently interviewed European and American economists. When answering the question of whether the global economy has fallen into recession, 31 of 41 said that the current global economic expansion has ended. "There is no doubt that the longest-lasting global expansion in history will end this season. The key prospect now is to measure the depth and duration of the 2020 recession." Said Bruce Kasman, head of global economic research at JP Morgan Chase.

Analysts believe that the United States, Japan and the euro zone countries are likely to decline. According to CNN, Goldman Sachs warns that US GDP will fall by 24% in the second quarter, and that the number of first-time US jobless claims this week may surge to a record 2.25 million. Former White House Economic Advisory Committee Chairman Kevin Hassett said the epidemic could return the US economy to the Great Recession caused by the 2008 world financial crisis. According to Bloomberg, St. Louis Fed President Brad even warned that the US unemployment rate could hit 30% in the second quarter and GDP would drop by 50% unprecedented. In addition, the International Finance Association's report shows that in 2020, the euro area economy may decline by 2.8%, and Japan's by 1.5%.

However, according to the website of Russia Today TV station, some experts believe that the world economy may recover within a few months after the epidemic is over. The history of past economic downturns proves this. The report quoted experts as saying: "Just think about the 2008 crisis. In February 2009, many companies' stock prices began to double."

Coping: Countries in Action

"The epidemic that is raging the world has brought serious impact to the global economy and must be taken seriously." Zhang Monan said, "The epidemic is the so-called 'butterfly'. It flaps its wings to affect the entire market nerve and even causes the collapse of a vulnerable link. Unprecedented rescue measures have failed to stop U.S. stocks from plunging, and the multi-year bull market bubble has been pierced by this epidemic. "

Every country has acted.

There is a global wave of interest rate cuts. According to incomplete statistics, as of 16:00, March 20, Beijing time, since 2020, at least 35 countries or regions around the world have announced 57 interest rate cuts. Among them, the Federal Reserve announced on March 15 the emergency interest rate cut to zero again, triggering fluctuations in global financial markets. Sweden, Switzerland, Hungary, Norway, the Eurozone and Japan even have negative deposit interest rates.

Many countries have introduced financial rescue measures, US President Trump signed an emergency bill of 8.3 billion US dollars, the European Union set up a 25 billion euro "crisis fund", Germany announced a package of 750 billion euros in rescue packages, Italian government response The new crown epidemic increased from 7.5 billion euros to 25 billion euros. The Japanese government plans to use a budget reserve of 270 billion yen, and the South Korean government has formulated a supplementary budget of 11.7 trillion won for epidemic prevention and control.

The Fed's measures are particularly noticeable. On March 23, local time, the Federal Reserve has unprecedentedly opened an unlimited amount of quantitative easing mode. Bank of America Global Research believes that the Fed has announced a number of unprecedented policies that have surpassed the response plan during the 2008 financial crisis, aimed at restoring credit to financial markets and thereby blocking the vicious circle between the financial system and the real economy. There is no cap on quantitative easing, which shows that the Federal Reserve is committed to reducing the lack of liquidity in the market.

"In order to cope with the economic shock caused by the epidemic, the measures taken by various countries are unprecedented." Zhang Monan said, "Now, more and more countries are taking measures to" catch the city ", but there is a" blockade paradox "here. When the virus is life-threatening, the entire economy presses the pause button, and economic activity is in a stagnation state. However, this blockade model is bound to pay a huge economic price. It is worrying that the current epidemic has a greater impact on the economy than the policies of various countries The pace of rescue is far behind the rate of market collapse. This is why the market is always full of panic. "

The future: a global look at China

"Under the impact of the new crown epidemic, whether it is a large-scale interest rate cut or financial assistance, it is not a potent medicine. The central bank cannot repair the interrupted global supply chain, nor can it eliminate people's panic caused by the uncertainty of the epidemic. Only the epidemic is real. Quitting may be the beginning of the restoration of economic activity. "Zhang Monan said.

Mark Heifer, the global chief investment officer of UBS Wealth Management, also believes that the United States is accelerating the introduction of financial measures to mitigate the impact of the epidemic, but the impact of epidemic prevention and control measures still exceeds the impact of rescue policies. Market trends will depend on how long economic activity can return to normal and how many policies can be introduced to limit corporate bankruptcy and unemployment.

"The good news is that China has temporarily controlled the epidemic situation and has begun to resume work and resume production." Zhang Monan said.

"Signs of China's economic recovery bring hope to Europe", on March 21st local time, the British "Daily Telegraph" published an article saying that the world's second largest economy-China's economic indicators showed the lowest level from last month By comparison, China ’s economy has improved significantly, and steel demand and coal consumption are returning to normal levels. In addition, domestic air travel has increased, traffic congestion has reappeared, factories, offices and shops have reopened, and the Chinese economy affected by the new crown pneumonia epidemic is starting to rebound. "The ongoing recovery in China is a very important global issue. China's economic recovery will help us infer global conditions," said Joanna Davis, an economist at Walton Consulting in the UK.

The epidemic will have a major impact on the future of the world. "Its influence is no less than that caused by the financial crisis of 2008." Zhang Monan said.

The British "Times" website article said that the new crown virus can trigger a new industrial revolution. The article points out that when the supply chain collapses and families are isolated, the Fourth Industrial Revolution looks even more attractive. When cash is spreading the virus, it seems much smarter to use electronic money. When travel and gathering of people are at risk, telecommuting may become the norm rather than an anomaly.

"The new crown virus may coexist with humans for a long time, thereby restricting the free movement of people and goods, which has led some countries and enterprises to reflect on the global supply chain. Some companies have even begun to move production activities back to China and choose to use domestically produced zero This means that after the epidemic, protectionist and anti-globalization trends may intensify. "Zhang Monan said," In addition, the epidemic once again tested the way humans organize and respond to the big crisis, forcing people to reflect on the global governance system. Reform or even reconstruction. For China, on the one hand, it must take advantage of China ’s huge market, strong manufacturing advantages, and institutional advantages to focus on major events to establish its own active position, while seizing the opportunity to ensure strategic reserves and supply chain security. On the other hand, it is also necessary to increase the supply of global public goods, carry out global collaboration and jointly respond to the crisis, and transform this crisis into an important opportunity to demonstrate the role of major countries and enhance their influence. "

Zhang Hong

Zhang Hong