www.business-review.eu Business Review | May 2020
22 MACROECONOMY
The long way back from the coronavirus slump Experts from all over the world are wondering how the global economy could recover from the current downturn, with most countries’ gross domestic product (GDP) risking catastrophic declines of 30 percent or even more in the second quarter of 2020. But uncertainties are still too high to bet on a rapid recovery – or what’s known as a V-shaped recovery – so we might end up going through a long, U-shaped depression or a W-shaped one, with multiple downturns. By Sorin Melenciuc As a result, unemployment rates exploded all over the world. Business shutdowns have led to a record 26.5 million people in the United States filing for unemployment benefits in five weeks since mid-March, and officials forecast that the joblessness rate could hit 16 percent in April. In Romania, more than a million employees filed for a state-run scheme of temporary unemployment benefits offered during the state of emergency, declared on March 16 – and supposed to last until at least May 15. In fact, like Romania, most countries in Europe – with the exception of Sweden, which chose a “herd immunity” policy – have imposed major restrictions on people’s movements or even national lockdowns for around two months, leading to a long economic and social holiday with very unclear consequences. This situation has created a two-sided economic crisis: a crash in demand associated With many economic sectors in a deep coma, most experts see a gradual recovery in the second half of this year
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with a drop in supply.
SCALE OF THE CRASH
Éramos felices y no lo sabíamos” (We
the coronavirus crisis. Most countries were
In May, countries across the world will be
were happy and we didn’t know it),
posting strong growth, middle classes were
gradually easing restrictions and putting an
Spanish newspaper El País wrote on
expanding all over the world, tourism was
end to national lockdowns, but no one really
March 19, at the beginning of the national
booming due to higher incomes, and people
knows how much of the economic activity
lockdown in one of the countries that were
were generally optimistic about their futures.
will have survived the long holiday – and how
most severely hit by the pandemic.
But all of these vanished in the blink of an
many people will still have jobs. Many busi-
eye. With billions of people around the world
nesses will certainly remain closed for much
VANISHING WAY OF LIFE – AND JOBS
forced to stay at home, airlines, tourism
longer or simply vanish – in tourism, HORECA
From an economic perspective, the newspa-
and HORECA businesses have closed down,
or entertainment areas such as music festi-
per’s headline was a perfect fit as the world
demand for most non-essential goods plum-
vals. But many others will certainly be hit by
had been experiencing one of the most
meted, while thousands of factories across
lower demand due to higher unemployment
flourishing periods in human history before
the globe took a long break.
– a vicious cycle whose true scale is difficult
