Since the outbreak of the coronavirus in late December and the resulting quarantine of Wuhan on January 23rd, COVID-19 has rapidly spread across the globe with nearly 3 million cases confirmed.
International travel was slowly restricted and has practically ground to a halt now, while social distancing measures have been implemented across the board. In more extreme cases, quarantine measures have been implemented to the level we witnessed in Asia and now mainland Europe and parts of America. These measures will undoubtedly cause a collapse in social consumption, pushing retail, leisure and travel industries into the red.
The economic toll of the virus and its corresponding containment measures is undoubtedly going to see the global economy head for a recession in the short-run.
Some preliminary GDP forecasts by investment banks place US Q2 GDP between -12% and -30% in annualized terms, with other developed economies also expected to contract at sharp rates. With a global recession approaching, markets rushed for shelter in USD liquidity. The financial strains associated with this flight to dollars led to the Federal Reserve intervening with both domestic and international lending programs to appease the strain on credit markets. Elsewhere, central banks have thrown the kitchen sink at the economy in order to protect from total collapse and mitigate the economic consequences of the lockdown measures.
Additionally, fiscal stimulus measures have blown post-financial crisis rulebooks to smithereens with many governments releasing aid packages to SME’s while the prospect of helicopter money is seemingly on the horizon. These are unprecedented times and the speed of the response has been dramatic. Many are likening the collapse in the global economy to the Great Depression of 1920 as opposed to the Financial Crisis of 2008 due to its rapid onset and far-reaching consequences.
With this in mind, we have kept a track of all of the fiscal and monetary measures put in place by governments and central banks in the G10 since the onset of the virus below:
Simon Harvey, FX Market Analyst
Olivia Alvarez Mendez, FX Market Analyst