By Stella Yifan Xie
Concerns about the financial toll of the coronavirus pandemic
continued to grow as the number of infections globally topped
600,000 Saturday, with the International Monetary Fund warning of
an economic and financial crisis exceeding that of a decade
ago.
Overlapping travel bans and lockdowns have hammered businesses
and led to millions of job losses, punctuated by a spike in U.S.
unemployment claims to more than three million this week and a
warning of a deep recession this year in trade bellwether
Singapore.
"It is now clear that we have entered a recession as bad or
worse than in 2009," Kristalina Georgieva, managing director of the
IMF, said Friday. Rising bankruptcies and layoffs could undermine
any recovery and do long-lasting damage to the world economy, she
said.
The risks have added urgency for countries around the world to
extend relief packages to ease financial distress.
U.S. President Donald Trump on Friday signed a $2 trillion
stimulus plan, the largest economic relief package in history.
With the pneumonia-causing virus swiftly spreading across the
U.S. and Europe, after it was first detected in central China three
months ago, governments around the world have ramped up efforts to
limit people's movement and began imposing wide-ranging closures on
businesses, restaurants and schools domestically in recent
weeks.
Increasingly strict travel bans set up by large countries
including the U.S. and China have put a dent in global commerce,
complicating efforts to reignite growth.
Cancellations of major events continued to pile up. The
organizer of the Shangri-La Dialogue, a high-level regional
security forum in Singapore, has canceled the gathering originally
scheduled for June.
The U.S. added more than 15,000 cases of the Covid-19 disease,
pushing the total past 104,000 on Saturday, with a surge of cases
in New York and increased testing. The growth outstripped that of
Italy and China, the countries with the second and third most
infections, where confirmed cases stayed around 86,000 and 81,000
respectively, according to data compiled by Johns Hopkins
University.
As a result, the number of confirmed infections globally has
more than doubled over the past week to more than 600,000. The
death toll from the pathogen rose to more than 27,000 on Saturday,
with roughly one-third of the fatalities in Italy, data from Johns
Hopkins showed.
The IMF warned that low-income countries will be hit
particularly hard given a combination of a health crisis, sudden
reversal of capital flows and in some cases a plunge in commodity
prices. It estimated that at least $2.5 trillion is needed to
contain economic contraction for emerging markets.
The Chinese government is also wrestling with the economic blow
from the SARS-like virus, first from a prolonged halt in domestic
business activities and now from weaker consumer sentiment and
shrinking export demand as the coronavirus engulfs Europe and the
U.S.
On Friday, the country's top decision-making body said the
government plans to boost spending by increasing its fiscal deficit
this year, as well as speed up issuance of treasury bonds and
so-called local government special-purpose bonds to support funding
of infrastructure projects, as part of the stimulus measures to
curtail economic impact from the pandemic.
"The fiscal policy needs to be more proactive, and the prudent
monetary policy needs to be more flexible," said a statement from
Friday's meeting of the Politburo Standing Committee, chaired by
President Xi Jinping. The government also called for a gradual
reopening of shopping malls and markets to boost consumer
spending.
Lu Ting, an economist with Nomura, estimated that, over the
second and possibly third quarters, China's exports could contract
by a total of 30% from a year earlier, wiping out 18 million jobs,
or about a third of those tied to trade. To counter the negative
impact from the outbreak, Beijing is likely to cut its benchmark
deposit rate as well as raise the fiscal deficit target to 3.5% of
GDP, up from 2.8% in 2019, he wrote in a research note on
Saturday.
China's National Health Commission reported 54 new infections
Friday, saying all were imported from abroad, bringing the total to
81,394.
Other countries in Asia continue to tighten rules on social
distancing.
Hong Kong banned public gatherings of four or more people
beginning midnight Sunday, with those violating the rules facing
fines of more than $3,000 and six months in jail. Singapore said it
would fine people who violate its social distancing rules up to
about $7,000.
Australia said it will quarantine citizens returning from
overseas in hotels for 14 days beginning midnight Saturday. The
effort will be overseen by the army and police, reflecting concerns
that some people returning from abroad weren't complying with
self-isolation rules. The country's total confirmed cases stood at
3,378, as of Saturday morning, Australia's health department
said.
Write to Stella Yifan Xie at stella.xie@wsj.com
(END) Dow Jones Newswires
March 28, 2020 05:14 ET (09:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.