Covid-19 induced recession to increase inequality, unemployment and deprivation, according to leading macroeconomic influencers

GlobalData Thematic Research 24 April 2020 (Last Updated April 24th, 2020 08:28)
Covid-19 induced recession to increase inequality, unemployment and deprivation, according to leading macroeconomic influencers

The Covid-19 pandemic is expected to widen the gap between the poor and rich creating massive inequality and high unemployment rates. Although governments have announced stimulus packages, they may not be sufficient and may not be focused on the right areas of the economy.

Stephanie Kelton

Stephanie Kelton, professor of Economics and Public Policy at Stony Brook University, tweeted an article on how the Covid-19 outbreak is expected to result in massive inequality, homelessness and human suffering.

Double-digit unemployment rates, and inadequate health insurance for millions of American citizens were some of the other consequences, tweeted by Kelton.

Saifedean Ammous

Saifedean Ammous, an economist and author, tweeted results from a poll conducted by Reuters on the impact of the Covid-19 pandemic on the Indian economy. In the poll, 40% of economists predicted an outright recession in 2020 for the country although some predicted that the economy will recover in the July-September quarter.

India’ GDP is expected to fall by 5% in the second quarter and the current stimulus package announced by the government is insufficient for a quick rebound, the article added.

Daniel Lacalle

Daniel Lacalle, an author and Chief Economist at Tressis SV, tweeted about the sharp decline in private sector activity in Europe. He noted that the collapse is much greater than previously predicted.

Lacalle noted that the stimulus packages are aimed at the wrong areas of the economy, keeping taxes high and increasing regulatory burdens. He added that in such a scenario recovery post the Covid-19 pandemic will be protracted and difficult.

Noah Smith

Noah Smith, assistant professor of finance at Stony Brook University, tweeted an article detailing the plans announced by governors of states such as Georgia, Tennessee, and South Carolina to reopen their economies.

Despite warnings issued by health officials that reopening is too early, businesses are planning to open and ask employees to return to work. Those employees who do not report to work are expected to be ineligible for unemployment benefits.