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Coronavirus: An Era Of Stimulus Packages
- Governments Around The World Unveil Blockbuster Boosters
- Why Many See A Lifeline In Cryptocurrencies
- How Deep Down The Rabbit Hole Is This Recession Going To Take Us?
Coronavirus: The dawn of a new era and economic stimulus packages
The coronavirus pandemic has changed radically daily lives apart from holding the world economy hostage. Also, Life and business in the post-coronavirus era may never look the same again.
To add more, in a matter of weeks, the highly contagious disease pushed the world to the brink of a recession. Even more severe than the one experienced in 2008. Furthermore, global commerce has slowed down drastically and the world’s largest economies are almost at a complete standstill.
Governments are activating colossal fiscal stimulus packages intended to boost the economy or, at the very least, reduce damage to the bare minimum.
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Governments around the world unveil blockbuster boosters
CHINA: Keeping the Big Guns for Later
The world’s second-largest economy is slowly recuperating after several weeks of lockdown. Which led to double digit percentage declines in economic activity.
Also, more than half a trillion dollars were spent during the 2008 financial crisis. While now the mere reduction of reserve requirements for banks shies away from pulling out the big guns.
JAPAN: Sumo Sized Booster
Prime Minister Abe’s government is planning a record spending package which could include cash payments to citizens, interest-free loans, and delayed tax payments, among other things.
Japan will inject 108 trillion yen ($989 billion) – the equivalent of 20% of the GDP – to help households and businesses that are suffering from the impact of the new coronavirus outbreak.
SINGAPORE: A Budget for Resilience
On the other hand, Singapore unveiled 3 packages, the city state will devote a total of US$42 billion – equivalent to 12% of the GDP – to the virus fight, using US$14.6 billion of its reserves.
The government approved a nine-month offset of 25% of wages for most workers up to $4,600 with only some of the hard-hit firms being able to enjoy up to 50 or 75% co-funding.
INDIA: A Fight Against Hunger
India has announced a $23 bn relief package to help India’s unorganised industry. Which employs 94% of the population and generates 45% to its overall output.
Furthermore, the Ministry of Finance has announced that no one will be allowed to go hungry. Unveiling a combination of direct cash transfer benefits and food security measures.
US: Staggering Stimulus for a Staggering Toll
The U.S. Senate voted to approve a $2 trillion stimulus bill on March 26, 2020 to mitigate the negative effects of coronavirus on the economy.
In addition, the new staggering measures include direct payments of up to $1200 to individuals. Also, hundreds of billions of dollars in loans and grants to businesses, increases in unemployment benefits, support for hospitals and health-care providers.
AUSTRALIA: Keeping the Engine Running
Australia shall be subsidising wages for more than 6 million workers through its $130 bn coronavirus plan.
The Australian government earmarked $130 bn towards wage subsidies over the next six months. This, in an extraordinary bid to stave off further job losses as the economy faces a sharp downtown.
UK: Unprecedented Measures
The UK is ready to take unprecedented emergency measures to battle the impact of the coronavirus crisis. Among these, the Treasury has pledged to pay 80 percent of workers’ salaries for several months to keep companies from resorting to huge layoffs; deferred tax payments; increased unemployment benefits; and made loan guarantees.
GERMANY: The Aggressive Departure of the Black Zero
Berlin is taking bold actions to counter the economic fallout by abandoning its steadfast commitment to balanced budgets. It is allocating at least 350 billion euros to prop up the Eurozone’s largest economy. Funds will be spent to bail out struggling businesses by making unlimited loans and potentially taking equity stakes.
Germany is pledging to do whatever is necessary to overcome this crisis and the government is poised to spend aggressively.
SPAIN: No Man Left Behind
Spanish Prime Minister Pedro Sanchez announced the largest financial aid package in the country’s history. Up to €200 billion ($220 billion) to fight the spread and impact of coronavirus. This package is approximately equivalent to one-fifth of the country’s GDP.
Why many see a lifeline in Cryptocurrencies
Could the coronavirus-induced financial crash be the ultimate test for cryptocurrencies? It is likely that this crisis may become the golden opportunity for crypto to prove their potential.
Some analysts believe that having an alternative financial system during and after a global crisis will be the starting point for recovery.
However, the increased awareness among the public on the importance of using cash-less transactions first and digitize their assets second is evident. A trend which will increase if the situation persists. Adding to that, it can be supported through regulation and we see many countries that recently introduced laws to regulate cryptocurrencies
How deep down the rabbit hole is this recession going to take us?
Leading economists gave a grim forecast of the scale of the crisis. Also, the IMF is seeing this recession on the same lines as the global financial crisis or potentially much worse. As global growth could be split in half or more, governments around the world are coming up with never-before-seen stimulus packages to give it their all.
Furthermore, governments are trying their best to power through without irreversible disruptions. Hoping to get economies back on their feet once the outbreak is controlled or a cure becomes widely available. However, this exit strategy remains without a clear timeframe and pharmaceutical efforts are still in the trial and error phase.
As we face the unknown, it is the length of lockdowns and closures that will determine the negative impact on the economy. Also, Experts are warning us to brace ourselves for a bumpy ride down the rabbit hole and do everything we can to mitigate its effects.