Dickson Igwe, Senior political contributor
With the Corona Virus outbreak, the best countries can do for now is to expect the worst, but hope for the best. Corona has wiped $2.5 trillion from the value of global stocks. This is despite central bank intervention earlier this week.
The world’s most powerful central bank, the New York based Federal Reserve, lowered rates days on Tuesday. The markets appeared to rebound. However markets have continued the downward spiral as Corona continues to spread.
Then Bond Yields, a marker for economic growth and a pointer to recession, have also fallen precipitously. The west is not yet in a recession. However a recession is expected by pundits.
And sadly for the Caribbean, the world tourism industry, the Caribbean’s ”bread and butter,” has taken a massive hit. Airlines are cancelling flights to specific countries – especially in East Asia. Some airlines have already collapsed. The cruise ship business is deeply worried. Hotel and restaurant bookings are down throughout Europe. Jobs are being lost, and businesses are going to the proverbial wall.
World leaders are in denial.
In the USA, Corona was unexpected. The virus has started to spread there. And in both the US and UK economies, the supply side economy has dis-invested in national healthcare over many years.
For the USA, the middle classes, and those uninsured, a Corona outbreak will bring real hardship, with medical bills running into the thousands and even tens of thousands of dollars.
In a country where half the population lives from paycheck to paycheck, Corona could put many families in dire straits and impact public and consumer confidence.
The great question is how long will this crisis last?
Protection against Coronavirus. Photo courtesy https://www.theatlantic.com/
Estimates vary.
The optimists expect the crisis to subside in two months. After that the world economy will begin its lift towards growth, that has temporarily been frozen.
As fear and concern disappear, business and consumer confidence will be enough to return the world economy to growth. Skeptics like this Old Boy are unsure. No one knows how Corona will pan out. So all assertions based upon speculation, and not based upon hard science are invalid.
The best one can do in the present circumstances is to simply ”batten down the hatches” and place hygiene at the top of the priorities list, and hope this virus disappears.
Pessimists see a prolonged crisis that will see hundreds of millions of people around the globe infected with a hundred million deaths.
The world economy will plunge into a long recession that could eventually become a depression, as the world economy, with broken supply chains, and whole countries shut down, plunges over the precipice.
This will be a recession without end, unlike 2008 which was man made. No one knows how this virus will behave. Already there are reports of a second strain.
With Corona, the end of the crisis will depend on a vaccine being discovered, and then made swiftly accessible to the global public.
Consequently, and as of March 2020, anyone who states the worst is over, is in delusion.
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Dickson Igwe is an education official in the Virgin Islands. He is also a national sea safety instructor. He writes a national column across media and has authored a story book on the Caribbean: ‘The Adventures of a West Indian Villager’. Dickson is focused on economics articles, and he believes economics holds the answer to the full economic and social development of the Caribbean. He is of both West African and Caribbean heritage. Dickson is married with one son.
