EXPERTS WARN OF PROBLEMS FOR THE GLOBAL ECONOMY BY THE END OF THE YEAR

Posted 08 September, 2020

Now the world economy is experiencing a peak of recovery after the crisis due to the coronavirus pandemic, but before the end of the year, countries may face new economic challenges, writes Bloomberg , citing experts interviewed.

 

“We are seeing a peak rebound. From that moment on, the momentum fades a little, ”said Joachim Fels, global economics advisor to Pacific Investment Management.

 

In the face of the pandemic, governments have already invested trillions of dollars in support measures, the agency noted. Thanks to this, in the United States in August, the unemployment rate fell sharply and the situation on the housing market improved, the economy is recovering in China, and production in Germany is growing. In addition, emerging markets received a "respite" due to the fall in the dollar, the agency said.

 

However, it will not be easy to maintain positions, experts warned. The authorities should step up efforts to stimulate the economy, while many are already ready to suspend the support measures introduced in connection with the pandemic, they said.

 

For example, 1.4 million jobs were created in the United States in August, but it will be difficult to "maintain this pace" without financial support, said Ryan Sweet, an expert at Moody's. In addition, a number of large companies have announced upcoming cuts. Among them are the car manufacturer Ford Motor Co and the airline United Airlines Holdings Inc.

 

At the same time, in China, where it was possible to localize the spread of coronavirus a few months ago, consumers are still reluctant to spend money, and the largest banks reported the maximum drop in profits in more than a decade due to the growth of bad debts, Blomberg said.

 

In general, according to the assessment of the professor at the Australian National University, Warrick McKibbin, the coronavirus pandemic by 2025 could cause damage to the global economy in the amount of about $ 35 trillion. “You have to vaccinate a fairly large portion of the population before economic losses begin to decline,” he said. However, even if a COVID-19 vaccine is developed, it will take a long time to make it available globally, McKibbin warned. Experts also fear a second wave of coronavirus, the agency said.

 

In addition, tensions between the United States and China may intensify ahead of the November 3 US presidential elections. This will undermine business confidence, Bloomberg noted.

 

The World Health Organization cited Sweden as an example of a country that has chosen the right strategy to combat coronavirus . She became one of the few states where they abandoned severe restrictions. And strict quarantine, according to WHO special envoy David Nabarro, serves as a "crude tool" that seriously affects the incomes of citizens and small businesses.

 

Thus, according to experts interviewed by Bloomberg , the Swedish economy has gained more as a result of the refusal of the authorities from tough restrictive measures in February-May 2020. According to an expert from Capital Economics David Oxley, the country's GDP is expected to decline in the region of 7%, while the economies of other European countries show a drop of up to 30%.

 

At the same time, the number of deaths from coronavirus in Sweden is several times higher than in neighboring Denmark. According to Johns Hopkins University, the first registered 84.9 thousand people infected with COVID-19 and died 5.8 thousand people. In the second, 18.3 thousand people fell ill, 627 people died.
 

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