The evidence is mounting that March marked the start of a deep global recession. The breadth of the collapse is beginning to appear in the initial trickle of economic data across the world, revealing a cratering of trade, reined-in business investment, cowering consumers and surging unemployment that’s sparing few industries. After the US reported a higher-than-expected job losses, other figures for March have illustrated how the Covid-19 pandemic is extending the paralysis from producers to households, from big trading powers to more insulated economies and emerging markets.
In Germany, new-car registrations in March - usually a peak month - plunged 38% from a year earlier, and a reading in the UK tanked 44%. Three of the biggest Arab economies buckled, a services index in Brazil was the lowest since 2016 and vehicle sales in South Africa slid 30%. In Australia, which has dodged recession for three decades, job advertisements plummeted by the most since 2009.
From India to Italy, coronavirus lockdowns have closed businesses and kept billions of people homebound for weeks, provoking a simultaneous supply and demand shock that’s snarled global production and logistics networks built without sufficient capacity to absorb a jolt of this magnitude.
With investment set to slide and more people out of work, global GDP rates could dip lower depending on how long governments maintain their lockdowns - many of which are expected to last into May or June. Unless the virus is contained within several weeks, declining output and falling demand for trade may provoke a vicious cycle that only worsens the outlook for corporate investment and employment, compounding the labor market’s problems.
