World economy infected by corona virus

Worldwide economic activity disrupted by fear of COVID-19 that potentially could disrupt the global economic cycle. In research done by Morgan Stanley predicted three most likely outcomes from the corona virus pandemic:

  1. Scenario №1. COVID-19 containment by the end of March. This is most unlikable scenario because of outbreak in Italy, France, Germany, UK. Quarantine declared till end of March. After that citizens will be sceptical and scared, as result they will try to save more money & spend less. In China number of new corona virus cases dropped because of drastic measures.
  2. Scenario №2. Escalation in new regions, disruption extends into the second quarter. This is the most likely scenario. Expected peak by April/May. In this scenario economic slowdown will affect corporate profitability, capital expenditures and unemployment rate. Expected drastic changes in fiscal policy worldwide.
  3. Scenario №3. Persisting into third quarter and triggering escalation of recession risks. This scenario represent risks that number of sick people will increase when countries will restart production, reopen restaurants, etc. Slowdown in world economy might trigger recession.

Currently second scenario is the most expected scenario. But everything will depend on results of quarantine in many countries and ability to restart production.

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