I'm not gonna say we will face a collapse of 25%, but I guess a lot of people underestimate what will come...
At first we have China.
The shut down their country for 8 weeks, but it's still now over. While 70% of the people returned back to work, a large part isn't and their wont...
While we worried that we will run out of production parts made in China, we start to notice that we won't need them. Now do we shut down large part of our economies.
Chinese export won't recover and the economical crisis will continue.
In the USA and Europe more and more areas shot down the public life. Companies stop their production. Many small companies, artists and what ever experience a decline of income by 100% within days.
If we expect that it will last just as long as in China, it will last 8 weeks.
It total would it be 8 weeks for "the west" and 8 + 8(export only) weeks for China.
Consume, Restaurants, cinema, theatre you name it... even automobile and mobile companies reduce or shut down their production.
This could be around 20 - 30% of the GDP. Depending how much can be compensated by online delivery.
So, let's say 20% for 8 weeks. That's like 3.5% of our annual GDP.
For China most likely higher.
Anyway, that's not the end... a decline by 3% could be handled, if it hits the whole economy. But concentration on a small part, it could be devastating. These parts of the economy could go broke within weeks. They wouldn't recover, create mass unemployment and increase the decline of GDP.
Simple tax reduction, or helicopter money wont help.
We need something more. The state will have to provide every company with free money. Not the consumer, but the companies (the employers) have to be in focus. They have to survive the crisis and keep their people employed.
What are your thoughts?
Are we prepared, or not? Or do you think nothing will happen at all?
At first we have China.
The shut down their country for 8 weeks, but it's still now over. While 70% of the people returned back to work, a large part isn't and their wont...
While we worried that we will run out of production parts made in China, we start to notice that we won't need them. Now do we shut down large part of our economies.
Chinese export won't recover and the economical crisis will continue.
In the USA and Europe more and more areas shot down the public life. Companies stop their production. Many small companies, artists and what ever experience a decline of income by 100% within days.
If we expect that it will last just as long as in China, it will last 8 weeks.
It total would it be 8 weeks for "the west" and 8 + 8(export only) weeks for China.
Consume, Restaurants, cinema, theatre you name it... even automobile and mobile companies reduce or shut down their production.
This could be around 20 - 30% of the GDP. Depending how much can be compensated by online delivery.
So, let's say 20% for 8 weeks. That's like 3.5% of our annual GDP.
For China most likely higher.
Anyway, that's not the end... a decline by 3% could be handled, if it hits the whole economy. But concentration on a small part, it could be devastating. These parts of the economy could go broke within weeks. They wouldn't recover, create mass unemployment and increase the decline of GDP.
Simple tax reduction, or helicopter money wont help.
We need something more. The state will have to provide every company with free money. Not the consumer, but the companies (the employers) have to be in focus. They have to survive the crisis and keep their people employed.
What are your thoughts?
Are we prepared, or not? Or do you think nothing will happen at all?