“The shock that coronavirus has wrought on markets across the world coincides with a dangerous financial backdrop marked by spiralling global debt. According to the Institute of International Finance, a trade group, the ratio of global debt to gross domestic product hit an all-time high of over 322 per cent in the third quarter of 2019, with total debt reaching close to $253tn.
“The implication, if the virus continues to spread, is that any fragilities in the financial system have the potential to trigger a new debt crisis.
“…much of the debt build-up since the global financial crisis of 2007-08 has been in the non-bank corporate sector where the current disruption to supply chains and reduced global growth imply lower earnings and greater difficulty in servicing debt. In effect, the coronavirus raises the extraordinary prospect of a credit crunch in a world of ultra-low and negative interest rates.”
https://www.ft.com/content/27cf0690-5c9d-11ea-b0ab-339c2307bcd4
“The Federal Reserve slashed interest rates Tuesday in an extraordinary attempt to contain economic fallout from the novel coronavirus, with policymakers voting unanimously for their biggest single cut — and first emergency rate move — since the depths of the 2008 financial crisis.”
https://www.seattletimes.com/business/fed-makes-emergency-rate-cut-but-markets-continue-tumbling/
“Central banks around the world, including the U.S. Federal Reserve, have lowered interest rates …But investors and economists said there’s not much monetary policy can do to save the global economy, especially when some major central banks — such as the European Central Bank and Bank of Japan — have already cut interest rates into the negative territory.”
“The Bank of England is on crisis alert, but there’s not much it can do.”
“UK banks are rolling out emergency loans to businesses that are showing signs of financial strain amid the coronavirus outbreak.
“High street lenders including Barclays, Santander UK and Royal Bank of Scotland began contacting thousands of business customers in recent days to check whether factory disruptions in China were putting their supply chains and cash flow at risk.”
“South Africa entered its second recession in two years in the final quarter of last year as agriculture, transport and construction contracted, data showed on Tuesday, highlighting the impact of power cuts on the economy.
“The recession is another setback to President Cyril Ramaphosa’s efforts to revive the economy…”
“Turkish tyrant Recep Tayyip Erdogan is only trying to blackmail the European Union with his latest let-loose-the-refugees ploy — but he could end up destroying it.
“On Friday, Ankara announced it was opening its land and sea borders with Europe, thereby letting potentially millions of refugees and asylum-seekers from Syria and beyond head for the EU via Greece.”
“Lebanon is in the throes of an unprecedented economic crisis, the result of long-entrenched corruption and bad governance that have landed the state with one of the world’s heaviest public debt burdens…
“Based mainly on previous IMF recommendations, any program from the Fund is likely to require Lebanon to agree to measures ranging from increasing taxes to fighting corruption.”
“With tourism accounting for 14 per cent of gross domestic product (GDP) and employing one in six, the Thai economy was always going to be hit hard by COVID-19…
“The Bank of Thailand is talking openly about two negative quarters, and warning about deteriorating employment.”
https://www.afr.com/world/asia/thailand-facing-recession-as-virus-kills-tourism-20200303-p546fo
“[Korea’s $9.8 billion stimulus] plan was unveiled just hours after the U.S. Federal Reserve slashed interest rates by half a percentage point in the first such emergency move since the 2008 financial crisis.
“Group of Seven finance chiefs also issued a statement saying they’re ready to act to shield their economies from the spreading virus.”
“Analysts see Japan falling into a deeper recession as data starts to show just how serious the coronavirus impact will be for the world’s third-largest economy.
“Barclays now sees Japan’s economy shrinking 3.1% this quarter, far worse than the 0.3% growth projected by the bank previously, economists led by Tetsufumi Yamakawa wrote in a note to clients Tuesday.”
https://finance.yahoo.com/news/economists-see-deeper-japan-recession-073906061.html
“Australia’s interest rates are at their lowest ever levels. After 16 interest rate cuts in a row, the Reserve Bank on Tuesday cut official interest rates to 0.5%.
“With only two more cuts of 0.25% available before interest rates hit zero, the RBA is clearly running out of ammunition… Coronavirus may well be the straw that breaks the back of 29 years of continuous economic growth, but that doesn’t make coronavirus the villain.”
“It’s looking more like the global financial crisis, where airline revenues fell 16 per cent in 2009.”
https://www.ft.com/content/afa68a66-5d74-11ea-8033-fa40a0d65a98
“Global bond yields have hit record lows across the board on fears of the effects of the coronavirus outbreak. Government bonds are generally viewed as safe-haven assets for investors…
“The novel coronavirus has the world economy in its “most precarious position” since the 2008 financial crisis.”
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