Mon. Apr 6th, 2020

Foreign Policy Institute

Analysis of world affairs

WORLD ECONOMY IS GOING INTO A SERIOUS CRISIS

crisis

Economists very often warn people about a global crisis, however that does not always become a reality. But following the effects of Corona virus in China first signs of a global crisis clearly appeared in front of us. A giant producer stopped most of its productions with a fear of further spreading the infection to the workers. One may think that other countries shall immediately replace this lack of production  thus having more profit. But as the days are passing we see that, this is not the scenario in front of us. First of all China’s own economy shall be affected negatively and it will consume much less from all around the world, many of its companies shall be out of business and recession may start. Secondly the virus did not stop within Chinese borders and quickly spreaded all around the world.

Italy has declared a complete lock down of the country. Its results shall be very negative for Italy and for the Europe. So nobody shall be immune for the economic effects of the corona virus. To overcome the slow down of the global economy or to cut the influence of Russia around the world, Saudi Arabia decided to increase its oil supply and that decision immediately showed its effects. The oil prices are now at the lows of several decades. It dropped 30% in a single day. That may be a good thing for the end users but a disaster for the countries whose main income are from the carbon based fuels. Very quickly stock exchanges all around world reacted to this situation and they suffered heavy losses and that situation continues. NYSE had to shut down the buyings and sellings to overcome the shock.

It is clear that in the close future things shall not be better. There may be other countries who will join Italy for a lock down of the country thus stopping the production lines and lose a lot of money. If the coming summer at the northern hemisphere doesn’t miraculously help to cure the infection we may say that the world wilde economic crisis shall be deepened very soon.

 

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