Covid-19 induced recession the worst since World War II, according to leading macroeconomic influencers

24 June 2020 (Last Updated June 24th, 2020 07:27)

Covid-19 induced recession the worst since World War II, according to leading macroeconomic influencers

The Covid-19 pandemic has pushed the global economy into a level of recession that was last witnessed during the World War II. Emerging markets and developing economies are the worst affected as five out of six economies are expected to fall into outright recession as per capita income declines drastically.

Linda Yueh

Linda Yueh, an economist at the University of Oxford, shared an article by World Bank on the global impact of the Covid-19 pandemic. The article notes that the recession caused by the pandemic will be the deepest since World War II and twice as deep as the 2008 global financial crisis.

The article further notes that emerging markets and developing economies are expected to contract for the first time in 60 years. The global unemployment rate is also expected to rise to the highest levels since 1965, the article adds.

Dany Bahar

Dany Bahar, an economist and Senior Fellow at the Brookings Institute, shared an article on the suspension of foreign work visas by the US government. The article notes that the government will suspend visas for the H-1B programme designated for high-skilled workers and other categories. The new order will prevent hundreds of people from coming to the US for work.

Bahar noted that the decision made by the government will result in a long-term, self-induced recession for the US. He added that these policies are xenophobic and lack evidence to prove their rationale.

Ian Bremmer

Ian Bremmer, a political scientist an author, shared an article on how the Covid-19 pandemic has forced developing countries to choose between paying lenders or funding hospitals.

Developing countries such as Angola, Sri Lanka, the Gambia, and the Republic of Congo were focussed more on paying off their external debt debts than investing in their healthcare facilities. As a result, the healthcare systems in these countries were underfunded posing a major hindrance in containing the spread of the virus.

Guntram Wolff

Guntram Wolff, economist and director of Bruegel, an international economics think-tank, shared an article on how India should retaliate economically for the border clashes initiated by China. The article notes that India should join a coalition of countries addressing some of the specific aspects of China’s economic behaviour.

The articles adds that India should try to reduce its interdependence on China so that its economic vulnerability does not increase.