Coronavirus is the greatest risk since the financial crisis

Worldwide Central banks and politicians fight against an impending economic crisis due to the Coronavirus. How serious the situation is, shows the warning of th

Coronavirus is the greatest risk since the financial crisis

Worldwide Central banks and politicians fight against an impending economic crisis due to the Coronavirus. How serious the situation is, shows the warning of the OECD: According to your estimation, the Virus is the biggest risk for the economy since the financial crisis. In the case of a longer lasting outbreak of the disease in Asia, Europe and North America, a recession in major economic regions are not excluded, says the chief economist of the industrial organization of States, Laurence Boone. The International monetary Fund and the world Bank reiterated the countries concerned, if necessary, to assist and to ensure all the necessary resources. In order to cope with the crisis, the international cooperation is essential, with shared IMF Chief, Kristalina Georgieva, as well as world Bank chief David Malpass.

In Switzerland, the outbreak will enable the government, in alarm mood: In the course of the week, economy Minister, Guy Parmelin with workers, employers and the cantons will meet for a crisis summit. The Virus is likely to have in this country, the economy is affected. To give a concrete forecast of the impact of publication of the state Secretariat for economic Seco on Tuesday. So far, the Seco for the current year economic growth of 1.7 percent.

Central banks are ready

in order To avert the crisis, keep ready the largest Central banks in the world. The clock indicating the US Central Bank, the Fed has already signaled support. Also, the European Central Bank to use in case of an emergency monetary policy instruments, in order to prevent an economic collapse. The Japanese Central Bank has already acted and represented the equivalent of 4.5 billion Swiss francs for the national financial system in view. According to experts, the Central banks no longer have much room for manoeuvre to support the economy. Because they have lowered interest rates in many places, already at Record lows and many billion for liquidity, spent syringes.

"In a rule is not suitable, an output program of the state, a short-term shock to iron out."Daniel kalt, chief economist UBS

The hopes, therefore, to support measures of the policy. The Finance Ministers of the seven leading industrial Nations (G-7) want to coordinate their actions in a conference call. "There will be a concerted action project", announced the French Finance Minister Bruno Le Maire. The European Union also wants to leave nothing to chance. "Today is the time to clear that the EU is ready to take advantage of all the available policy options – if and when they are needed – to protect our growth against the risks of the downturn," said EU Commissioner for economic Affairs, Paolo Gentiloni, in Brussels.

Italy promises economic assistance

the Virus has particularly affected Italy provides economic aid in the amount of up to EUR 3.6 billion. Germany can react according to the assessment of Finance Minister, Olaf Scholz, if necessary, also with a stimulus program.

long-Term investment programs, such as the construction of roads or rehabilitation of bridges according to the assessment of UBS Switzerland, chief economist Daniel kalt, however, usually little misleading. "It takes a long time, until the excavator is then really on the road," says Cold. "As a rule, an output program of the state is not suitable, a short-term shock to iron out." Fast and effective control, however, are, for example, cuts, or easier access to short-time working for companies, says Cold.

Coronavirus-halt slows Chinese industry

In China an important driving force of the world economy left behind the outbreak of the deep skid marks in the industry. There, the mood is broken as strong as never before. The official purchasing managers ' index fell in February to 35.7 points from 50.0 points in January. The reason is the strict measures against the spread of the lung disease, which had brought the Chinese economy since the end of January virtually to a standstill are. Slowly the factories and companies take up the work again.

"Nobody knows at the Moment
exactly where the death rate is, therefore, all prefer to be careful."Daniel kalt, chief economist UBS

In Germany and Switzerland, the mood in the industry is much better – still. In both countries, the purchasing managers ' index increased slightly, but remained just below the threshold of 50 points, which signals expansion. For an all-clear however, it is not too early – also, because the Indices reflect the latest development. In Switzerland the survey to a good portion took place before the escalation of the Coronavirus crisis. In Germany, expert in Phil Smith delays and declines are not excluded according to the Markit-in of production due to the interruption of the supply chain. "In this respect, the possibility that the actually positive data in February as a false glimmer of hope out there is," says the expert.

In Europe, governments are now faced with the difficult task to put adequate measures – without the economy due to production interruptions in the Bud. "Nobody knows at the Moment exactly where the death rate is, therefore, all prefer to be cautious," said UBS Economist Cold. Sometimes you'll also economic losses. "Maybe you come in the twelve months to the conclusion that you overreacted completely, and a high economic detriment," he said.

roller coaster ride in the stock markets continues

In the financial markets, announcements by the Central banks provided only short-term relief. After a price increase earlier this week, the mountain-and-valley went further, and travel. How the investors feel insecure and are outbreak because of the unpredictable consequences of the Virus, also shows the volatility index, which has risen in Switzerland recently to the highest level since the Euro crisis. During the financial crisis, the uncertainty was significantly higher.

Created: 02.03.2020, 22:10 PM

Updated Date: 03 March 2020, 09:05

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