The harsh economic effects of the lockdowns across the world are beginning to emerge in hard data.

One of the most dramatic is the weekly jobless claims in the US – since mid-March over 30 million US workers have lost their jobs, around 18% of the US labor force.

The unemployment rate will rise from under 4% as recently as February to probably well over 20% in coming months. Unemployment in Europe will rise too but less dramatically, given the more widespread use of wage subsidies and furlough schemes designed to maintain employment levels. Nevertheless, economic activity throughout Europe is collapsing: the preliminary first quarter GDP release for the euro-zone showed a 3.8% quarterly drop, the largest since records began in 1995. This fall includes just one month of the effect of containment measures, the second quarter data will show a much bigger collapse in activity across the euro-zone. Already, April’s monthly Purchasing Managers Indices (PMIs) have plunged to all-time lows both in the EU and the UK.

Both advanced and emerging economies in recession  

Meanwhile the IMF and OECD have updated economic forecasts that were last published in January when the outlook was rather different. It is now certain that this recession will be deeper than that during the global financial crisis of 2008-09. The IMF now expects global GDP to contract by 3% in 2020. For most advanced economies the fall in GDP this year is predicted to be greater; 6% for the US, 7.5% for the euro-zone and 6.5% for the UK. The IMF note that both advanced and emerging economies are in recession, the first time that this has occurred since the Great Depression of the 1930s.  Emerging market economies are likely to be particularly hard hit by this crisis: many have health care systems ill-equipped to deal with the pandemic and are unable to provide a policy response of sufficient scale.  

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