The prospects for a rapid recovery of the global economy from the repercussions of the Corona pandemic are almost completely nonexistent, especially as the major financial institutions and specialists predict major accumulative losses and an unequal exit from the melting pot of the most severe economic downturn in the world for nearly 80 years.
The American Stratfor website confirms - in a report - that economic models have proven unsuccessful in dealing with the uncertainty that has plagued the economies of the world during the current crisis, but despite their differences, they all unite on one conclusion, which is that development indicators globally have taken the same downward trend.
The International Monetary Fund expects a cumulative economic loss of $ 12.5 trillion due to the repercussions of the Corona pandemic in 2020 and 2021, with a decrease of 4.9% in global production this year, and recovery of 5.4% next year.
The fund also believes that the prospects for recovery remain "largely unconfirmed" due to the possibility of second waves of injury during 2021, which may cause an additional 2.5% decrease in the pace of growth.
Despite its negative expectations, the IMF remains the most optimistic forecaster, as the rate of economic contraction is expected to reach 5.2% this year, while the Organization for Economic Cooperation and Development expects a decline of 6%. The private sector paints the worst scenarios ever and expects a global decline of up to 12%.
Stratfor believes that this economic recession is aggravated by many factors, including the nature of the "concurrent" slowdown that affects 95% of the world's economies, and the absence of a country or group of countries that can play the role of "locomotive" that drags the rest of the affected.
China is an exception
China remains the only major economy that still has a chance of somewhat positive growth this year of around 1%, but this assumes that if the recent emergence of the virus in Beijing does not develop into a second outbreak, it spans the entire Chinese soil.
Stratfor expects that the pace of economic recovery in the world will remain slow and uneven, even if the Corona pandemic is contained during the coming months because the countries are exiting the procedures of quarantine and closure at a different rate.
The increase in "precautionary" savings is likely to continue to curb global demand, especially as families remain concerned about their incomes. And the decline in trade-investment, which was already on a negative path in the United States even before the outbreak of the Corona crisis, will further constrain global demand.
Cautious spending on factories and equipment, in particular, will disrupt global supply chains, which means a slowdown in future production ratios and economic growth.
It is also likely - according to the American website - that borrowing costs will remain low for a long time, especially as central banks engage in fiscal "austerity" policies to control public debt costs.
On the other hand, the repayment of debts by families and companies will mostly remain constant regardless of the size of their income and income, and this means that there is a need to control the variable costs of avoiding bankruptcies that are already increasing due to the corona's ramifications.
Incentive measures
Stratfor believes that the depth and duration of the global recession will depend not only on the path of Corona infection and its related closures but also on government stimulus measures taken to support revenue collapse and individual incomes.
These measures are still lagging behind in emerging markets that are highly dependent on foreign financing.
On the other hand, financial markets appear separate from the real economy, as the International Monetary Fund has warned that excessive risk could lead to “sudden stops” of capital flow to emerging markets if sentiment changes again.
The World Trade Organization expects a decrease in the volume of commercial transactions this year by between 13 and 32% (equivalent to a decrease of about 2.5 to 8.8% in the volume of global GDP), which will particularly affect countries whose economies depend on export traffic.
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