Leading economies might face recession due to extended lockdown

Lockdown measures to combat COVID-19 have significantly impacted economies worldwide

lockdown

Leading economies might face recession due to extended lockdown. Source: pixabay.com

According to GlobalData, real GDP growth of major economies such as the US, Eurozone, Russia, South Korea, and Australia is expected to drop sharply this year.

Nevertheless, most economies are forecasted to face a V-shaped recovery of GDP growth in 2021, the report found.

The fact that all the major cities worldwide entered lockdown led to a damaging hit to sectors such as tourism, retail, manufacturing, and foodservice. As for now, governments are considering several measures to recover the economy.

The US Bureau of Labor Statistics revealed that unemployment in the country grew to 14.7% in April 2020, up from 4.4% in March. Canada is second highest with a 13% rate of unemployment, followed by Australia with a 5.2% increase in March.

Lockdown and curbs on business activity in the major economies have resulted in mounting unemployment numbers. Weaker firms in each country are observing cash flow shortages leading to more pay cuts and job losses. Job losses resulted in lower-income of the masses, resulting in a shrink in domestic demand globally. Although governments have put both fiscal and monetary measures in place to support struggling businesses and revive the economy, recovery may come at a slower pace
Shruti Upadhyay, Economic Research Analyst at GlobalData 

Besides, some European countries such as Germany, France, Ireland, Belgium, Spain, and Italy have begun partially easing the lockdown.

Austria and Denmark have reopened schools, whereas Germany has reopened shops and allowed outdoor exercise. Meanwhile, Italy has allowed domestic travel and retail and museums to open.

We’ve reported that the use of financial apps in Europe has increased by 72% in a week due to social-distancing amid the COVID-19 outbreak.

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