The Greatest Economic Risk Since The Financial Crisis

  • The Greatest Economic Risk Since The Financial Crisis

    The coronavirus epidemic can, according to the industrialized country organization OECD, put the global economy on track and is “the greatest economic risk since the financial crisis”. If the situation does not improve and more and more countries are affected, growth could fall to one and a half percent this year, the OECD said on Monday. That would be about half of the expected plus before the virus broke out. However, if the situation stabilizes soon, the global economy is expected to grow by 2.4 percent in 2020, after a comparatively weak 2.9 percent in 2019.

    Coronavirus outbreak: The economic impact explained

    China, where the virus first appeared, would be most affected. The consequences of the economic problems in the People’s Republic are likely to be felt quickly in the globally networked supply chains of companies, as well as for travel providers and raw material traders.

    Despite this rather bleak outlook, a slight recovery was announced at least on the Asian stock exchanges. After the crash last week, the Shanghai trading center closed more than three percent in positive territory. The stock exchanges in Shenzhen and Hong Kong had also increased at the start of trading.

    In Japan, too, prices recovered slightly on Monday. The leading index Nikkei, which had slumped by almost ten percent last week, climbed 0.95 percent by the close of trading. Not so with the German share index Dax. It also started the week with a plus, but then the most important German stock market barometer turned negative again.

    On the one hand, investors were encouraged by the decreasing number of new infections in China, and on the other hand, various central banks had announced measures to combat the consequences of the virus epidemic. On Monday, the Japanese central bank provided the national financial system with additional liquidity in the face of the virus crisis. The Fed said on Friday that it would respond appropriately to the coronavirus epidemic.

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