The Global Economy Slowed Down from Recovery to Recession Amid Second Waves of the COVID-19 Pandemic

On the first day of October, BNN Bloomberg posted a warning from Wall Street economists that the global economy was slowing down from recovery to recession.

Some US $ 20 trillion economic stimulus from governments and central banks has pulled most of the world’s economies back to pre-pandemic levels, but the year-end period was a difficult time. most difficult for many reasons.

The biggest concern about employee cuts turning into permanent layoffs spread to the community this week as conglomerate Walt Disney Co. and Royal Dutch Shell Plc laid off tens of thousands of workers. The next reason is that the cold winter climate may force the government to continue to isolate and blockade to prevent the epidemic from spreading further.

Investors are no longer optimistic about the first weeks of the pandemic. The S&P 500 index in September began to decline after 5 consecutive increases, Europe’s Stoxx 600 index was in a similar situation.

The good news is that the global economy is resilient to public concerns thanks to rapid response policies by governments, including income subsidies that help companies stay in the market, banks central bank cuts interest rates and ensures liquidity. The positive sign is measured by the inhibition of global GDP declined from 5.9% to 3.9%.

According to JPMorgan Chase & Co., fiscal stimulus added 3.7% growth to global GDP this year. But the bank’s economists are expecting policymakers to move into austerity soon with a fiscal score of 2.4% extending into next year.

In the United States, economists have cut their fourth-quarter growth forecasts over fears that the coronavirus chi bill is stalled by Congress despite the possibility of reaching a deal ahead of the November presidential election.

In Europe, the leaders overcame disagreement to bring the largest recovery fund in history worth 1.8 trillion euros ($ 2.1 trillion) significant for Italy and Spain. However, there is no vaccine yet and the spread of the virus is so fast that governments are reluctant to consider returning to a complete shutdown. However, many parts of Europe, including the UK, have already imposed some restrictions earlier.

Revenue is tightened, businesses can find it difficult to repay debts, leading to many bankruptcy cases, lenders hesitate to extend credit. The longer the social gap, the more likely companies are to cut back on goods and services, making them more willing to fire their employees.

According to Tom Orlik, a leading economist at Bloomberg, said that the number of cases increased, the US ran out of fiscal stimulus, there was no vaccine, making the global economic overview uncertain and the coming months will more difficult.

These forecasts have happened to several industries, such as Disney announced plans to cut 28,000 jobs, Shell cut 9,000 jobs, German Continental AG will restructure, lay off, or move those 30,000 jobs. Global.

As the unemployment wave drags on, the labour market recovery is slowing. In the US, unemployment claims increased about four times over the same period last year and the report showed that payroll growth slowed down in September.

Some countries are seeing optimistic data again, especially China – the world’s second-largest economy that has managed to control the pandemic and is making good progress on its recovery despite some indicators. still stamped in place.

However, there are still other risks, typically business confidence dependent on geopolitical stance in the time when the US is about to elect a new president and US-China trade tensions are simmering. The European side is continuously going on trade negotiations between the UK and the European Union with Brexit tensions being a great risk.

“Our shared vision is still towards improving the economy,” said Kathy Jones, leading fixed-income strategist at the Schwab Center for Financial Research.

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