It seems that restoring life in the global economy risks moving forward without a major component which is the consumer; it is sure to urge companies to resume operations, and factories to reopen their doors “something”, and persuade consumers to contain the spread of the Coronavirus and go out to shop, eat, travel, or watch Sports, “Another Thing.”
“There is nothing easy about reopening the economy, but restarting the business will be much clearer than resuming aggregate demand,” said Mark Zandi, chief economist at Analytics at Moody’s Analytics.
As a result, Bloomberg News reported, the result of this will be a disproportionate resumption of work in the global economy, as industrialization and countries depend on relatively fast recovery of demand, while “more community service activities” are coming late.
This will continue to pressure governments and central banks to continue providing support, as their economies seek to escape the deepest global recession since the Great Depression, the agency said.
Catherine Mann, chief economist at Citigroup, said in an interview with “Bloomberg TV,” that some countries’ recovery will take a somewhat “V” shape, given the small increase in manufacturing and more technology.
South Korea or Taiwan may grow like this, while there are other economies that rely heavily on tourism. Therefore, these economies will take L-shaped growth, and this may happen in Thailand and Singapore.
Economists at Deutsche Bank Securities said in a report released on April 24 that the American recovery may come gradually, as some US states are reopened before others.
According to a recent survey conducted by the National Association of Business Economics, approximately one-third of US economists expect operations in their companies to return to normal within 5 to 8 weeks, despite the belief by many that this may take 3 to 6 months before mitigation efforts end. The effects of “Covid-19”.
Economists believe in “Deutsche Bank”, that the United States will recover only about 40% of economic output and employment lost during the crisis by the end of the year .. which may have repercussions for the upcoming November elections, as it could expose the chances of the re-election of US President Donald Trump, at risk, if consumption declines and the economy fails to recover meaningfully.
On Friday, Trump praised the forthcoming restart of the economy and said in a tweet on Twitter: “There is a huge pent up demand … We will open the economy dramatically!”
US Treasury Secretary Stephen Mnuchin echoed this upbeat message on the Fox News Sunday talk show and said: “With the economy reopening in May and June, you will see the economy really recovering in July, August and September,” adding: “We are imposing an unprecedented amount of exemption. Finance in the economy. ”
And “Bloomberg” explained that some companies will enjoy sudden reinforcement with the start of easing orders to stay at home, and this can be seen in barbershops, as there is always an opportunity that the crazy consumers of the world surprise the economists and return to the stores.
But this carries special risks, German Chancellor Angela Merkel reported at a closed meeting of her Christian Democrat party on April 20, when she told her political colleagues that discussions about easing the closure threaten to destroy the progress made in the fight against Corona, according to one of the participants.
Singapore is a wake-up call, as it has turned from emerging as a global disease virus to the home of the largest recorded outbreak in Southeast Asia.
“The only way not to reopen the economy is to have a recovery that we cannot care about,” said Anthony Fossey, chief communicable disease expert at the White House’s Coronavirus Task Force.
Certainly, the fear of infection is not the only reason they can keep consumers away from shopping malls.
Economists say worries about job losses and diminished savings may also push them to conserve their resources and cut spending.
Meanwhile, China, the primary home of the outbreak of the Coronavirus, has begun to record an unbalanced economic recovery.
Chinese industrial production fell in March by nearly 1% from the previous year, while retail sales fell by nearly 16%, according to calculations by economists at Bank of America.
The CEO of Marriott International, Arne Sorenson, said in an interview with Bloomberg TV on April 20, that the occupancy rate of about 350 companies affiliated with the company on the Chinese mainland rose to about 25% from 6% to 8% per week The first of February; however, this percentage is still far below the normal range of between 70% and 80%.
In Germany, powerful carmakers fear buyers are scarce as the country reopens for business.
Daimler AG, in an official statement, said that measures that can boost demand in times of extreme insecurity among customers will be worth considering the coming period.
“Given the combined effects of the epidemic and its financial impact on the global economy, we believe it may take up to 3 years before recording a sustainable recovery,” Ed Bastian, CEO of Delta Airlines, said on April 22.
Given that Americans over the age of 65 have 20% of consumer spending, demand can face disruption for a period of time, given the high level of infection of this age group with the virus, according to Torsten Behavior, a chief international economist at Deutsche Bank.
Meanwhile, Stephen Roach, a lecturer at Yale University, thinks the idea of the US economy taking a V-shaped rebound is just false hope.
Referring to Trump’s call to reopen the economies of some of the selected countries, Roach said: “With all the hustle and bustle of economic liberalization, we will bring workers back to work, but there is a fear of a new virus that is hampering consumer demand and reducing it to unprecedented levels.”