Bleak Economic Outlook Amid COVID-19 Lockdown
By Esosa Aihie
“World GDP is now expected to fall by 3.9% in 2020, a recession of unprecedented depth in the post-war period, twice as severe as the 2009 recession”.
Decline in GDP equates to a USD2.8 trillion fall in global income levels & a loss of USD4.5 trillion relative to pre-virus expectations of 2020.
No country or region has been spared from the devastating economic impact of the global pandemic. The pandemic is creating an enormous common shock.
GDP in both the US??& the UK??where lockdowns started a little later than in the eurozone – will decline by more than 10%. This will result in annual GDP declines of around 6% (US??5.6%, UK??6.3%) in 2020. 4.4 million Americans filed for unemployment, while 16.2% of their labour force are suffering from layoffs, furloughs, & reduced hours.
So far the US??has propped up the economy with over $2 trillion rescue package including $480 billion relief package to fund small businesses hurt by COVID-19 outbreak along with other priorities for hospitals & expanded COVID-19 testing.
US??oilfield services giant Halliburton Co on Monday reported a $1 billion first-quarter loss on charges & outlined the largest budget cut yet among top energy companies.
Among larger member countries of the EU??the brunt of the disease has fallen on Italy?? & Spain??although France??has been catching up. The German??economy is in severe recession and recovery is unlikely to be quick as coronavirus-related restrictions could stay in place for an extended period, the Bundesbank said. Eurozone GDP is expected to shrink by 7% this year. Debt is set to become mountainous for several eurozone??members in the years ahead.
Japanese??exports declined the most in nearly four years in March as US??bound shipments, including cars, fell at their fastest rate since 2011.
Oil prices have been pressured for weeks with the coronavirus outbreak hammering demand while Saudi Arabia??& Russia??fought a price war & pumped more. The two sides agreed more than a week ago to cut supply by 9.7 million barrels per day, but that will not quickly reduce the global glut.
Brent oil prices have collapsed around 60% since the start of the year, while US??crude futures have fallen around 130% to levels well below break-even costs necessary for many shale drillers. This has led to drilling halts and drastic spending cuts.
Bonny Light (Nigeria’s??crude oil) is trading at about $11 – half the cost of producing the barrel. Nigeria is offering a $5 discount per barrel but no one is buying. US??shale oil sells for $2; while Canadian?? oil hit minus $3. A record 160 million barrels are sitting in tankers around the world at a daily cost of $350K each on the lookout for buyers. Imagine the daily, weekly & monthly cost of these as a liability. A mind bugling exercise??♀️
Wow watch the space???♀️