As the coronavirus pandemic has caused the global economy to face a far deeper and more savage shock than it has ever experienced, a return to the normalcy is going to be tougher, according to experts.
The world economy has never had such a crash landing as it is witnessing now as coronavirus has brought an entire model of global economic development skidding to a halt, says Adam Tooze, a history professor and director of the European Institute at Columbia University.
“As a result of the coronavirus pandemic, America’s economy is now widely expected to shrink by a quarter. That is as much as during the Great Depression. But whereas the contraction after 1929 stretched over a four-year period, the coronavirus implosion will happen over the next three months,” he wrote recently in Foreign Policy.
Read more: Coronavirus: No return to normal life until the end of 2021, says US expert
Tooze warns that the financial hangover of coronavirus will be there for years to come, even after the production and employment restart, as the latest data prove the world economy is in its steepest freefall ever making the old playbooks irrelevant.
The latest set of forecasts from the Organization for Economic Cooperation and Development (OECD) are apocalyptic. OECD Secretary-General Angel Gurría said that the lockdown would directly affect sectors amounting to up to one-third of GDP in the major economies. For each month of containment, there will be a loss of 2 percentage points in annual GDP growth. The tourism sector alone faces an output decrease as high as 70 percent, he said.