First official economic insights of the coronavirus impact

It took just a matter of a few days to shut down a great portion of world economy. Millions of people are already out of work for most of countries across the world, and losses in tax revenue is a huge challenge for governments. This pandemic outbreak has limited corporate resources, thus immediate layoffs are a gigantic social problem.

   Indeed, another 4.4 million people in the United States filed new unemployment claims, according to the Department of Labor. The claims join the roughly 22 million others filed since the pandemic of the novel coronavirus began its impact on US economy in March.

   Thus, with social distancing guidelines likely to be necessary for the foreseeable future, we must develop new methods of living and creating or adding value.

   For instance, as demand for oil is collapsing, markets went crazy on March 20, 2020, when prices fell so much that some traders paid buyers to take oil off their hands. The price of US oil fell more than 50 dollars a barrel to end the day about 40-50 dollars below zero (e.g. Giddings -47.25 dollars, Coastal Grade A -48 dollars), the first time oil prices have ever turned negative in history, and the lowest since 1946, just after World War II!

   In practice, oil corporations do not want the oil because there is no place to store it, as the production is way over the demand of the current market. International trade has slowed down significantly, while trade centers such as New York city present a dramatic situation. The city’s Independent Budget Office forecast that 475,000 people would lose their jobs over the next year, while other put this number up to 1.2 million by the end of April.

   Furthermore, the world’s second largest economy, China, officially shrank in the March quarter for the first time since it began reporting official statistics in 1992. The country’s gross domestic product (GDP) contracted 6.8% in the first three months of 2020, according to data from the National Bureau of Statistics of China, as factories shut down and widespread lockdowns were implemented to halt the spread of the coronavirus.

   In times when even the Church of the Holy Sepulcher in the Christian Quarter of the Old City of Jerusalem closed on Easter for the first time since Black Death in 1349, we can realize that we live in a historic period.

   Globalization is not over, but its conditions will be changed a lot. Worldwide production and supply chains are transforming rapidly. Mobility is not the must anymore, at least for now. In any case, coronavirus is partly the problem of our economic structure. So, reversing globalization is a serious threat for a peaceful world community, as well as the rise of nationalism, protectionism, and economic depression. Hence, we need more efficient cooperation and internationalism, with good intentions and faith for a cooperative future.