The coronavirus epidemic has infected thousands of people and inflicted a dreadful human cost on the world, but the global economy is also set to pay a price.
The viral infection has put the brakes on economic growth, which will impact the supply of goods, their cost and jobs around the world.
Few countries are unaffected and the think-tank the Organisation of Economic Co-operation and Development (OECD) has warned that world economic growth will slow to the slowest rate since 2009 – the year the global financial crisis hit.
And everyone should listen when the OECD speaks, as the group is the spokesman for the world’s 37 leading economies that account for around 80% of global trade.
The OECD laments that global trade was stabilising before the coronavirus hit.
A manufacturing decline was levelling out, while retail sales and employment figures were improving.
But dealing with the coronavirus (covid-19) epidemic has knocked business confidence, especially in travel and holidays and is likely to severely disrupt the supply chain due to the impact in China, the world’s second economy and largest exporter of goods and major importer of commodities.
The OECD predicts the coronavirus will trigger a 0.5% dip in China’s GDP in 2020 and a 1.5% slump if the illness spreads significantly throughout Asia and the northern hemisphere, which all the signs point to.
OECD Chief Economist Laurence Boone is concerned that the world economy is in its most precarious position since the global financial crisis.
He said: “The virus risks giving a further blow to a global economy that was already weakened by trade and political tensions.
Countries should act together
“Governments need to act immediately to contain the epidemic, support the health care system, protect people, shore up demand and provide a financial lifeline to households and businesses that are most affected.”
Boone is advocating governments should tell employers to resort to short-time working and that funds should be made available to tide them over from a loss of income.
“if G20 economies implement stimulus measures collectively, rather than alone, the growth effects in the median G20 economy will be a third higher after just two years.,” he said.
“Some would say it is trite to call for international cooperation. However, in this globally connected economy and society, the coronavirus and its economic and social fallout is everyone’s problem, even if firms decide in the wake of this virus shock to repatriate production and make it a bit less interdependent.”