Coronavirus

WHO Upgrades Virus Threat, Moody’s Warns of Global Recession

JM Ashby
Written by JM Ashby

While the Trump regime continues to downplay the threat of the coronavirus to the population and global economy, the World Health Organization (WHO) has raised their warnings to the highest possible level while saying the virus is definitely coming.

“We are on the highest level of alert or highest level of risk assessment in terms of spread and in terms of impact,” said Dr. Mike Ryan, executive director of WHO’s health emergencies program. The group isn’t trying to alarm or scare people, he said. “This is a reality check for every government on the planet: Wake up! Get ready! This virus may be on its way and you need to be ready. You have a duty to your citizens, you have a duty to the world to be ready.”

The world can still avoid “the worst of it,” but the increased risk assessment means the WHO’s “level of concern is at its highest,” he said at a press conference at WHO headquarters in Geneva.

Moody's Analytics now says there's a 40 percent chance that the coronavirus will spread into a global pandemic and, if it does, it will trigger a global recession.

Under Moody’s previous assumption that the virus would be contained in China and largely play out by spring, the economists had projected a contraction in the Chinese economy in the first quarter, while the U.S. and global economies will experience a slowdown in growth.

But a pandemic will result in global and U.S. recessions during the first half of this year, the economists said.

“The economy was already fragile before the outbreak and vulnerable to anything that did not stick to script. COVID-19 is way off script,” the economists said.

We can take a moment to discuss why the global economy was "already fragile" before the outbreak.

The economy was already fragile because Trump has waged trade wars with China, India, the European Union, Turkey, Mexico and Canada, among a few others. Trump took great pride in the fact that his trade war harmed China's economy, but China is the largest consumer market and largest exporter in the world and what happens in China doesn't stay there. Trump bruised the Chinese economy before the virus struck and now it's blowing back in the world's face.

Consumer demand across the world has been weak and it will be even weaker as millions of people huddle in their homes and refuse to go outside for fear of the virus. Schools and businesses will shut down. Community events like concerts and sports will be canceled. And if all of this happens, the economy may be too weak to cushion the blow. Trump has made sure of it.

I do not like to be alarmist so I'm careful to say this "may" or "might" happen, but it's not looking good. Even if we never see a major outbreak here in the United States, outbreaks in the rest of the world will spook markets and reduce consumer demand. And to Trump's chagrin, that scenario could explode our global trade deficit as Americans continue to buy lots of shit but no one else does.

The market has dropped in value by nearly 5,000 points (and briefly did fall below that level this morning) over the past six days as of this writing and that alone is going to leave a mark. The stock market isn't representative of the economy for average people, but the losses from it tend to be socialized while the gains are privatized.

  • Draxiar

    I don’t blame trump for Covid-19. I do blame him for closing down 37 out 47 centers world wide designed to respond to outbreaks. I do blame him for his response to the facts of the matter. I do blame him for downplaying the seriousness of the situation because he fears it will hurt his election chances (not realizing that responding proactively would actually help him). I do blame various outlets for focusing on how it will affect the economy rather than the lives that have been lost (this remark is not pointed at you JM). This administration has focused on the political optics of the situation rather than the humanitarian reality of it.

  • muselet

    Mike Ryan is correct. Governments need to be ready to deal with a pandemic.

    Most are not, although some are doing better than others (the Trump administration’s happy talk is not helpful).

    I tend to ignore the blatherings of market analysts, but the idea that a global pandemic would negatively affect the world economy is a sound conclusion.

    I’m not absolutely sure, but it seems to me that panicky investors—and politicians—are likely to do more damage to the world economy than Covid-19.

    –alopecia