Recession vaccine

What will happen to the global economy if the coronavirus does not stop right now. Pessimistic scenario

The situation in the world economy in 2019 has significantly deteriorated. World trade was reduced by more than 2%, global production - by more than 0.5%. Industrial production in the largest economy of the world - the United States - began to fall in September and to the present moment, when the data for February is still unknown, four out of five months.

Which is worse, in February 2020, ahead of the indicators - for the first time in a long time - began to indicate a reduction in the service sector. The last report on employment was not bad, but everything ruined the review “retroactively” for the calculation base - it turned out that American statistics were mistaken and the total number of places in the economy is more than half a million less than previously thought.

Broken thermometer

Ten years ago, at the height of the last crisis, like “green sprouts” like things, Obama was very indulgent. And this happens against the backdrop of “non -standard anti -crisis measures” involved in the whole coil by the Fed, which reduced the lending rate to 1.0–1.25 percent and in September last year a new round of “quantitative increase” began.

The US budget deficit in the 2020 fourth year was approved in the amount of $ 1.2 trillion - twice as much as in the last year of Obama's presidency. By the way, at the peak of the past crisis, in 2009, the budget deficit was $ 1.4 trillion. And government expenses are a powerful help to the economy.

So, on the one hand, in the United States, it seems like prosperity - although only construction is growing, and even that on the FRC of mortgage loans. And on the other hand, all three main measures from the anti -crisis arsenal are involved: super -business loan, a gigantic deficit of the state budget and direct emission. And despite this, the production and services that make up about 80% of the US GDP are reduced.

It is clear that Trump by any means tries to “drag” the acute phase of the economic crisis that has already begun through the presidential and congress elections, which should take place in early November of this year. The Americans, who, in their masses, are not at all obliged to understand the economy even at the level of a tenth grade student, habitually look at the stock market, which will storm historical maximums against the background of problems in a real economy.

It is stormed because with the advent of “non -standard” (for 2009) anti -crisis measures in the arsenal of the state in the form of a zero Fed and large -scale purchase of assets with this organization, the stock market ceased to be a thermometer showing the state of affairs in the economy and reacts only to the Fed measures.

Moreover, considering the situation from the point of view that the decline in the economy is also the reason for growth, because in this case the Fed will be forced to strengthen its measures, reduce its rate even more and increase the rate of balance growth.

Even worse than in the USA, things are in the two other largest economies in the world.

The GDP of Japan in the fourth quarter of 2019 in relation to the same period in 2018 showed a decrease by 6.3%.

In the European Union, promotion in December 2019 decreased by December 2018 by 4.1%.

In China, judging by the Hong Kong economics and a reduction in profit in China’s industry in the fourth quarter of last year, a decline also began.

And so on all this “happiness” in January-February of this year was an epidemic of coronavirus.

Chinese lifestyle

First. None of us know what in reality is happening in China, we can say only one thing: the large -scale measures taken by the Chinese government (from the moment when the outbreak of the virus in Juni has ceased to be silent), completely “not fighting” with the official statistics of infection, the number of dead and the number of recovered.

Second. In China, the official (!) Mortality from coronavirus is more than 2% of the number of sick, while the mortality from influenza is 20 times below. If, at this level of mortality, the professor of epidemiology, the director of the Center for Dynamics of Infectious Diseases Harvard Mark Lipisitch, who stated that this year with coronavirus in one form or another, will illuminate from 3 to 5 billion people, then by the number of deaths this disease will be compared with the most terrible epidemic of the last centuries - the epidemic of the Spanish 1918-1919 claimed about 100 million lives.

True, the mortality rate from Spanish influenza was 10 times higher than from coronavirus.

Already now, just a month and a half after the outbreak, the foci of the virus are recorded, in addition to China, in Iran, Japan, South Korea and Italy. The epidemic officially declined in China, stepped over its border. It remains only to hope that the forecast of the Harvard epidemiologist will not be a forecast, but a terrible fantasy.

In China, such stringent quarantine measures were introduced that economic life in the country has practically froze: it is enough to say that, according to preliminary data, the sale of cars at the beginning of the year in the world's largest car market fell 10 times. 750 million people live in the quarantine zone and is created up to 80% of China GDP. In the same province of Hubay, whose capital is Ujan, 5% of China GDP is created. It is difficult to imagine what a decline in the global economy will be if coronavirus cannot be localized.

The Trump administration at a closed briefing for senators has already stated that the coronavirus vaccine will appear after 12-18 months, and before that, quarantine and observation will be the main methods of combating this disease.

On the same day, the Center for the Control and Prevention of Diseases of the US government echoes her: “The coronavirus epidemic is developing and expanding quickly. We want to prepare American citizens that their lifestyle will be violated as coronavirus spreads to the United States. ”

If the United States is forced - even in a seriously softened form - to repeat the Chinese measures to combat the spread of coronavirus, the world economy will simply rise.

Full oil wells

But for the oil market there are enough problems in China - the world's largest importer of this product. Assessments of oil demand in China vary by an order of magnitude if Goldman Sachs estimates them at 3 million b/d, and one of the largest oil oil industry in the world, Vitol at 2.2 million b/d, then the International Energy Agency indicates a modest 435,000 b/d.

But here do not forget that the actual leader of this respected agency is Fatikh Birol, a former chief economist of OPEC.

And without any coronavirus, the general place was that in 2020 the oil market will be characterized by an exceeding the supply over demand.

But the epidemic made its adjustments, reducing demand.

Moreover, it is clear that even if the epidemic suddenly stops tomorrow, world tourism in 2020 will be significantly reduced, which will result in a decrease in oil demand by cruise shipping and air transport.

The story with the Japanese port on the quarantine with a cruise liner Diamond Princess, where out of 3711 people who were originally on board this “floating prison”, was infected with a coronavirus of more than 600, to put it mildly, does not inspire optimism for future tourists, because it turns out that the infection with prolonged swimming is 17%.

Exactly the same can be said about the plane with its closed air circulation system.

It is enough to mention that in the world there are 11% of international profits and 20% of all tourist expenses for travelers from China. In absolute figures, these are 150 million visiting by Chinese tourists other countries annually, during which they spend more than $ 270 billion. In turn, China in 2018 visited 30.54 million foreign tourists, and another 13 million foreigners entered China this year with business purposes, spent in full in China $ 71 billion.