How the Coronavirus infects the world economy
The example of EY shows how fast it can go: 1500 employees had to send the consulting company home on Friday shortly after a colleague had been diagnosed with the Coronavirus. After all, if all the jobs have been disinfected, most employees should be able to return to the Dusseldorf office this Tuesday.
Employees who are temporarily quarantined or transferred to the home office are only a consequence of the Corona outbreak on the economy.
Production is already increasing in some places because parts from Asia are not being delivered. Corporations such as Apple and Microsoft have shortened their profit forecasts as a result of Corona. Hotels and retailers feel that hardly any tourists come from China.
The OECD Industrial States Organisation therefore warns against underestimating the consequences of the Coronavirus outbreak. With further expansion, for example, the euro zone or Japan could slip into recession this year. So it is no longer a question of whether Corona is weakening the economy, but how strong.
Coronavirus: Is economic growth halving?
If the situation does not improve and more and more countries are affected by the virus, the growth of the world economy 2020 is likely to halve compared to the previous year, writes the OECD. And even if China managed the virus outbreak in the first quarter and kept the number of cases in other countries within limits, it would still cost the world 0.5 percent of growth this year.
The OECD has therefore called on world policy to act: "Governments must now act swiftly and consistently to deal with the Coronavirus and its economic consequences." Experts are deliberately putting economic programmes at risk, as some countries have already announced. The US, for example, wants to provide 2,5 billion dollars. Japan and Singapore have already promised billions of aid to the economy.
Germany could prefer tax relief
The Federal Government also reserves the right to take such a step. They had "all the strength to react quickly, decisively and strongly," said Federal Finance Minister Olaf Scholz (SPD) on Monday. He also sees room for manoeuvre in complying with the debt embargo in order to counter in doubt.
Federal Minister of Economy Peter Altmaier (CDU) said: "We must not allow Corona to ruin our economic recovery."
Instead of a classic economic programme where the state spends more money, it wants to relieve companies. In doing so, the Federal Government could prefer measures that the Coalition Committee has already agreed upon: for example, it is planned to improve the tax treatment of private companies and to facilitate corporate depreciation of digital goods such as software. Altmaier stressed: "It is not a question of cyclical programmes in the classical sense, which only trigger a bonfire."
Indeed, there is controversy as to what classic economic programmes would bring in the current situation. After the financial crisis, for example, the Federal Government boosted the economy through the scrapping premium and rewarded consumers who bought a new car.
Coronavirus failures: hotel industry hopes for emergency credits
However, if the companies suffer from the fact that they lack parts that are otherwise produced in China, this is of little use. For example, economists see emergency loans for businesses as more useful. For example, the VDMA Engineering Association is currently pressing for this. In addition to the possibility of sending workers on short-time work, companies need liquidity to overcome financial bottlenecks due to production failures. For example, such emergency loans could be made available by KfW.
The German Hotel and Restaurant Association (Dehoga) also hopes for them. The German hotels not only lack guests from China, they also suffer from the cancellation of major trade fairs such as the International Tourism Exchange (ITB) in Berlin.
Dehoga President Guido Zollick therefore calls for "effective liquidity assistance and support measures that act quickly and unbureaucratically." One could also imagine what China and now France are doing: they are extending payment deadlines for taxes and social security contributions. In this way, too, the State can grant loans to enterprises.
Are the central banks intervening?
There is also speculation in financial circles as to whether and when the central banks will intervene. Former U.S. Federal Reserve insider Bill Nelsen blogged that there could be a global reduction in central banks'interest rates by Wednesday.
For days now, central banks have been saying that they can become active in an emergency. "In any case, the Governing Council is ready to adapt all its instruments if necessary," said Luis de Guindos, Vice-President of the European Central Bank (ECB) only on Monday. However, it is debatable whether a further reduction in interest rates would do any good. Both in the US and in the euro area, the guide rates are already very low. Companies can therefore already take out loans on very favourable terms.(徳囯ASK电容器)