COVID 19 Financial Crisis: It’s Over ?
Twitter trended last week with a term ‘Marshall Law’ (Martial Law). Many tweets mocked at this characterisation in the efforts for containing coronavirus. To contain coronavirus pandemic the western governments has called for panicked shutdown of the economy.
The measures taken to contain the coronavirus are echoing. It is almost sure that these strange techniques or exercises will not cause a large amount of carnage as the 20th century authoritarianism did. But it is also true that coronavirus, and public and governments reaction towards it had deeply caused the damage to the economy as well as the society itself. It’s also not wrong at this time to say that there will be a steep decline in the global economy in near future.
The disruption in the economy due to the orders for the containment of coronavirus is so severe that Federal Reserve has slashed the interest rates to zero last week. After that $1.5 trillion help was provided to pump the economy and will also be purchasing municipal bonds in the near future.
It is feared that the coronavirus will have a huge impact on the citizens health. But if the direct impact on public health is not that bad then it could mitigate the effect to some level. As a result there can be a rapid and seamless return to normalcy in economy. The world’s economy and people are strong and ingenious that before in 21st century. The global finances can bounce back in a quick time which can be an ideal scenario for the world. For this to happen there are two serious conditions that need to be met so that the economic crisis can start showing the signs of recovery.
Condition #1: The Coronavirus gets Under Control, New cases slow down
As per the latest reports the upcoming cases of coronavirus have already started slowing days ago in China. South Korea also has seen the slowdown in new coronavirus cases.
Condition #2: No Major Country, Bank and Company reports of Bankruptcy
Once this pandemic is contained then, it is all about the financial reports to conclude the level of financial and economic damage. According to most economy analyst, it is likely that there will be a shallow recession if no major company or banks go bankrupt, but we may avoid a wrecking recession or even a prolonged depression.
But this is not at all guaranteed, just expecting a best-case scenario. We can already see that Italy has been hit hard and is on the brink of major economic collapse. The global economy may recover quickly only if there are no more shocks, but it’s not in a secure position.