The outbreak of pandemic Covid-19 all over the world has disturbed the political, social, economic, religious and financial structures of the whole world. World’s topmost economies such as the US, China, UK, Germany, France, Italy, Japan and many others are at the verge of collapse. Besides, Stock Markets around the world have been pounded and oil prices have fallen off a cliff. In just a week 3.3 million Americans applied for unemployment and a week later another 6.6 million people started searching for jobs. Also, many experts on economic and financial matters have warned about the worsening condition of global economic and financial structure. Such as Kristalina Georgieva, Managing Director of International Monitory Fund (IMF), explained that “a recession at least as bad as during the Global Financial Crisis or worse”. Moreover, Covid-19 is harming the global economy because the world has been experiencing the most difficult economic situation since World War-II. When it comes to the human cost of the Coronavirus pandemic it is immeasurable therefore all countries need to work together with cooperation and coordination to protect the human beings as well as limit the economic damages. For instance, the lockdown has restricted various businesses such as travelling to contain the virus consequently this business is coming to an abrupt halt globally.
The ongoing spread of the new coronavirus has become one of the biggest threats to the global economy and financial markets.
The virus, first detected in the Chinese city of Wuhan last December, has infected more than 110,000 people in at least 110 countries and territories globally, according to the World Health Organization. Of those infected, more than 4,000 people have died, according to WHO data.
China is where majority of the confirmed cases are — more than 80,000 infections have been reported in the mainland so far. To contain the COVID-19 outbreak, Chinese authorities locked down cities, restricted movements of millions and suspended business operations — moves that will slow down the world’s second-largest economy and drag down the global economy along the way.
To make things worse, the disease is spreading rapidly around the world, with countries like Italy, Iran and South Korea reporting more than 7,000 cases each. Other European countries like France, Germany and Spain have also seen a recent spike beyond 1,000 cases.
The World Health Organization (WHO) first declared COVID-19 a world health emergency in January 2020. Since the virus was first diagnosed in Wuhan, China, it has been detected in over 190 countries and all U.S. states.1 In early March, the focal point of infections shifted from China to Europe, especially Italy, but by April 2020, the focus shifted to the United States, where the number of infections was accelerating. The infection has sickened about three million people, with thousands of fatalities. More than 80 countries have closed their borders to arrivals from
countries with infections, ordered businesses to close, instructed their populations to selfquarantine, and closed schools to an estimated 1.5 billion children.2 In late January 2020, China was the first country to impose travel restrictions, followed by South Korea and Vietnam. Over the five-week period from mid-March to late-April 2020, more than 26 million Americans filed for unemployment insurance, raising the prospect of a deep economic recession and a significantincrease in the unemployment rate.3 Some estimates also indicate that 59 million people in
Europe could become unemployed. After a delayed response, central banks are engaging in an ongoing series of interventions in financial markets and national governments are announcing spending initiatives to stimulate their economies. International organizations are also taking steps to provide loans and other financial
assistance to countries in need. These and other actions have been labeled “unprecedented,” a term that has been used frequently to describe the pandemic and the policy responses. The International Monetary Fund (IMF) estimated that government spending and revenue measures to sustain economic activity adopted through mid-April 2020 amounted to $3.3 trillion and that loans, equity injections and guarantees totaled an additional $4.5 trillion.4 As a result, the IMF estimates that the increase in borrowing by governments globally will rise from 3.7% of global
gross domestic product (GDP) in 2019 to 9.9% in 2020, as indicated in Figure 1. Among developed economies, the fiscal balance to GDP ratio is projected to rise from 3.0% in 2019 to 10.7% in 2020; the ratio for the United States is projected to rise from 5.8% to 15.7%. For developing economies, the fiscal balance to GDP ratio is projected to rise from 4.8% to 9.1%.5 According to the IMF, France, Germany, Italy, Japan, and the United Kingdom have each announced public sector support measures totaling more than 10% of their annual GDP.6 Among central banks, the Federal Reserve has taken extraordinary steps not experienced since the
2008-2009 global financial crisis to address the growing economic effects of COVID-19, and the U.S. Congress has approved historic fiscal spending packages. In other countries, central banks have lowered interest rates and reserve requirements, announced new financing facilities, relaxed capital buffers and, in some cases, counter-cyclical capital buffers,7 adopted after the 2008-2009financial crisis, potentially freeing up an estimated $5 trillion in funds.8 Capital buffers were
raised after the financial crisis to assist banks in absorbing losses and staying solvent during financial crises. In some cases, governments have directed banks to freeze dividend payments and halt pay bonuses.