The COVID-19 pandemic has wreaked havoc on the world economy and cast a staggering gloom over growth prospects far and wide, incurring a short-term collapse in global output and widening tolls on various industries and the masses.
Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said Thursday it is clear that global growth will turn "sharply negative" in 2020, as COVID-19 has disrupted the world's social and economic order "at lightning speed and on a scale that we have not seen in living memory."
"In fact, we anticipate the worst economic fallout since the Great Depression," she noted.
Yet, there is still a silver lining for the virus-stricken global economy, as world powers scramble to ameliorate acute pains by seeking more coordinated global responses, and observers worldwide point to China's promising recovery as a lighthouse across oceans.
Economies around the world have been suffering internal and external shocks on both supply and demand sides with production chains disrupted, global trade almost put on hold, as well as consumer and investor sentiment gravely dampened. Consequently, unemployment rates worldwide have reached new heights.
The World Trade Organization has recently projected that goods trade would contract much more in 2020 than in the 2008-09 global financial crisis, with a downside range of 13-32 per cent due to high uncertainty over the economic impact of the pandemic.
In the financial field, asset markets in advanced economies have cratered, and capital has been pouring out of emerging markets at a breathtaking pace.
"A deep economic slump and financial crisis are unavoidable. The key questions now are how bad the recession will be and how long it will last," Kenneth Rogoff, professor of economics and public policy at Harvard University, wrote in an article published by Project Syndicate on Thursday.
Various sectors of the global economy have remained significantly constrained on an unprecedented scale, notably those where people congregate in close proximity.
The pandemic has hit the manufacturing industry particularly hard. In both the automotive industry and mechanical engineering, production is practically at a standstill, partly because important parts are missing due to the interruption of global supply chains, thus lowering companies' sales.
"Without conclusive evidence of immunity or a vaccine, the risk of infection will be a major deterrent. This will also constrain many lower-value added manufacturing activities where workers are closely stationed," Peter Perkins, founding partner of macroeconomic research firm MRB Partners, told Xinhua.
Moreover, retail companies, especially smaller companies, see sales almost completely collapsing. Due to uncertainties over the pandemic, people spend less. Short-time work means that many people have less money at their disposal.
As a consequence, employees were laid off massively. The United States, in particular, saw nearly 17 million people losing their jobs since mid-March.
US Federal Reserve Chairman Jerome Powell warned that the US economy is moving with an alarming speed towards "very high unemployment," as a surging number of workers have filed for unemployment benefits in recent weeks, reflecting a continued meltdown of its once-robust labour market.
According to Georgieva, the IMF now projects that over 170 countries will experience negative per capita income growth this year. Yet, if the pandemic fades in the second half of this year, "our baseline assumption is for a partial recovery in 2021."
Governments, central banks and fiscal authorities have resorted to strict social distancing measures, lockdowns and emergency economic relief or rescue packages to bail out themselves, including rate cuts, quantitative easing, tax reduction, special funds and purchasing schemes.
among their latest fightback, European Union finance ministers greenlighted a rescue package of 500 billion euros (550 billion US dollars) late Thursday, in an attempt to relieve the increasingly heavy burden of its 27 members, especially Italy and Spain.
The US Federal Reserve also announced Thursday to inject an additional 2.3 trillion dollars into the economy, making such loans available to states, localities and companies to "provide as much relief and stability as we can during this period of constrained economic activity," according to Powell.
However, protectionist sentiments are rising. As of March 21, 46 export curbs on medical supplies have been introduced by 54 governments since the beginning of the year, indicating "just how quickly new trade limits are spreading across the globe," according to a recent report from Global Trade Alert, a trade policy monitoring initiative.
Aaditya Mattoo, chief economist for East Asia and the Pacific Region at the World Bank, told Xinhua that export restrictions are "almost always counterproductive."
"If each country imposes restrictions, then the global price increases even more than it would have. And it can end up being a self-defeating policy," said Mattoo.
Protectionism brings no good to the world economy and is especially detrimental to global collective action necessary for fighting the pandemic, Li Yuan, professor at Institute of East Asian Studies, University of Duisburg-Essen in Germany, told Xinhua.
Calling for "deliberated coordinated efforts to implement macroeconomic policies," Gerrishon Ikiara, senior lecturer on economics at the University of Nairobi, stressed that reducing protectionist policies in many countries would be one way to rapidly revive the overall global economy.
Economists and industry professionals have raised concerns that even if growth recovery eventually takes place, it would take a long time and might falter due to enormous uncertainty.
They urged international organisations, including the Group of 20 (G20) and the World Health Organization (WHO), to better coordinate global responses and collaboration in time.
"It is likely that recovery could take a long time, first because the pandemic looks unlikely to disappear quickly. And secondly because the collateral damage to many businesses and to governments' borrowing positions means that we will have to start from a badly damaged base," Douglas McWilliams, deputy chairman of Centre for Economics and Business Research, told Xinhua.
To stabilise the global economy, McWilliams believes the best way is to coordinate through G20, saying that all nations should share what they have done both right and wrong.
"Clearly the exact detail of policy needs a degree of flexibility but it would be worthwhile the G20 economies sharing what they think they have done right and also (if they are brave enough) what they have got wrong," he noted.
"The other requirement is to avoid the mistakes of the 1930s where countries failed to support jobs and household incomes and also became protectionist," the expert cautioned.
The deaths and economic damage caused by COVID-19 should "equally concentrate the G20's mind on significantly upgrading, resourcing and underscoring the indispensable role of the WHO," said Sourabh Gupta, a senior fellow at the Washington-based Institute for China-America Studies.
"Like the IMF's annual Article IV surveillance of country financial and economic risks, the WHO should also be tasked to conduct a review of country public health preparedness capabilities every, say, three years," Gupta told Xinhua.
The resilience of the Chinese economy has sparked hopes for growth recovery across regions, as many point to China's experience as "an encouraging harbinger of what awaits the rest of the world."
"There's no question the quarantine had an effect in China and China will not be immune to the global slowdown as other countries implement quarantine themselves. But I do think that China's strong policy response should help it navigate this," Brendan Ahern, chief investment officer of Krane Funds Advisors, told Xinhua.
"One of the things that we have been focused on is that China's evolved away from an export-dependent economy, and that new China sectors, particularly domestic consumption, are important areas of focus," according to Ahern.
"China's experience in overcoming the economic consequences of the outbreak is important ... Fast recovery in economic activities in China after a decline in production in the first months of the year will serve as an important signal of optimism for the whole world economy," said Evsey Gurvich, head of the Economic Expert Group in Russia.
Zhang Deyong, a researcher of National Academy of Economic Strategy, noted that China's domestic demand market is gradually recovering, adding the epidemic has helped boost some new consumption habits and may become new economic growth points in the future.
Stephen Roach, a senior fellow at Yale University's Jackson Institute of Global Affairs, told Xinhua that China and other major economies in the world are recommended to mull future strategies that are flexible and "adapt to the new post-COVID economic and geopolitical environment."
"I have been very positive on the Chinese economy," he noted. "The long-term opportunities for China remain very promising."