pounded older prices have fallen off the cliff in just one week 3.3 million

Americans apply for unemployment almost 5 times the record a week later another

6.6 million we had to make the impossible decision to layoff 98 percent

of our workforce this morning as kovat 19 spreads the global economy is

shutting down and it's unlike anything you've ever seen

a recession at least as bad as during the global financial crisis or worse but

what makes this collapse different what will it take to recover and are we

headed for a depression

welcome to another episode of start here from quarantine in my hotel room when it

comes to the economy we've really never been here before

not like this even though we have lived through some huge economic shocks there

was the Great Depression that started in 1929 and lasted a decade back in 2001

the 9/11 attacks also badly damaged the economy and of course the airline

industry the 2007 subprime mortgage crisis in the u.s. led to a global

financial crisis and triggered the Great Recession the longest in US history some

countries still haven't recovered and now there's a pandemic the swiftness and

severity of the shock to the global economy that is absolutely unprecedented

this financial crisis is both different and worse because first and foremost

it's a health crisis so economists know we can't just fix the economy that's

like trying to fix your house while it's still on fire if we don't try to control

the spread of the virus then the suffering would be much bigger let's

take another look at the graph from our last episode it shows a steep spike in

the number of cases if we don't contain kovat 19 and the pressure that puts on

hospitals so countries right now are trying to flatten that curve by locking

down and enforcing social distancing but that has consequences the more

aggressively we try to slow the spread and save lives the deeper the recession

so the irony is that to save the economy you have to shut it down first

that's why economists expect a serious recession maybe even a depression which

goes on for longer and is more severe well matters are more than avoiding an

all-out depression is protecting people's house particularly protecting

the most vulnerable and so doing whatever we can to address the health

impacts of the crisis for a lot of people this

is going to be painful for some it already is I'm on the lookout to speak

to people who are really worried about their livelihoods because of the

lockdowns nearly every sector of the economy is

getting hit right now but service jobs are most at risk

they require face time with customers and everyone's being told to stay home

look at India where 1.3 billion people are under lockdown 80% of the workforce

are self employed or earn a daily wage 120 million of them are migrant workers

many have now lost their jobs in the cities

in South Africa soldiers are on patrol to make sure 57 million people stay home

the unemployment rate there before kovin my team was already 30% almost half of

South Africans who were poor the reality is that you know if they don't go and

work and it could mean the difference between a meal or not so how can you

even get your head around that kind of global unemployment and economic

stagnation you might be familiar with the law of supply and demand

well the coronavirus has managed to take out both first there was a supply shock

as factories businesses and borders closed that triggered a demand shock

because industries don't need raw materials if they aren't producing and

the lockdowns mean people aren't buying things or can't afford to because

they're not earning money look at China which in today's globalized economy is

the factory to the world the Kona virus outbreak virtually shut it down

it's productions dropped by 25% over the last three months that is a big shock to

the world economy China is also a massive buyer on the international

market things like raw materials all kinds of cars and agricultural products

so that's also had an effect the biggest concern in China China was already

heading for minus 1% projection on GDP this year and once the China is getting

out of it its own health crisis Europe their biggest market isn't getting into

theirs which basically means that we are seeing a huge demand contraction in the

international trade as the virus began to spread those supply and demand shocks

spread to other countries too then the markets started to panic stock indexes

in New York London Tokyo all had devastating sessions several times over

in the US the Dow lost almost 3,000 points in just one day the most ever so

how do we fix all this again economists say we need to deal with the

pandemic first but there are things that both central banks and governments are

doing to ease some of the pain the job of a central bank is to make sure

there's a steady supply of money flowing through the global financial system and

in a time of crisis they also make sure the credit markets don't freeze up so

central banks around the world have pumped trillions of dollars into the

banking system to make sure banks and businesses can bounce back when this is

all over they've also cut interest rates to make

loans even cheaper the central bank in the United States the Federal Reserve

System has done something else too it's made sure other central banks around the

world can borrow enough US dollars it's the currency the world runs on u.s.

dollars are to businesses what toilet paper is to households they don't want

to run out of US Dollars before this crisis is passed but central bank

heroics alone enough governments need to step up to

world leaders have pledged hundreds of billions of dollars to help people

businesses and the health sector battle this crisis the British government for

example put forward four hundred and thirty five billion dollars of the

United Kingdom GDP to try to get us through this crisis because it is a

method of life for this in the US the federal government came up

with a 2.2 trillion dollar relief package that's about ten percent of its

GDP the largest in American history this will deliver urgently needed relief to

our nation's families workers and businesses but not everyone has

convinced those rescue packages going to be enough dr. doom Nouriel Roubini

The Economist who called the 2008 financial crisis two years before it

happened he's definitely not convinced in fact he's warning that containment

measures had not been sufficient enough and that the fiscal stimulus package is

neither large enough nor is it been enacted swiftly enough to seriously

mitigate the risks not just of a recession everybody agrees that's going

to happen but to mitigate the risks of possibly a depression but other

countries just don't have that kind of cash especially if they're struggling

economically or dealing with conflict famine even other diseases the UN

forecasts that income losses in developing countries because of the

coronavirus could exceed two hundred and twenty billion dollars

the economies that will have the toughest time crawling out of it are

really the poorest nations because they were in the worst position going into

the crisis and they will have the hardest time shaking off the negative

effects of it economists are bracing for things to get worse in the short term

but they also see this as an opportunity to fix what was broken they have a

saying never let a good crisis go to waste we do also have to think about

sustainability about the sustainability of our planet

that's about the health and integrity of our ecosystems do we have a resilient

economy do we have a resilient health system food production systems can we be

sure that when a crisis like this happens and hits the economy we are able

to go on feeding people and keeping people healthy to stop a descent into

social instability which can very often follow from a deep and protracted

depression those are big questions for world leaders to answer for right now

many of us economists included are looking to them to make some tough

decisions to fight this pandemic and relieve the pain a lot of people are

already hurting

we don't know when we'll be back on the start here set but not to worry we're

still going to be bringing you more episodes any way we can in the meantime

our website aljazeera.com has all the latest on the corona virus pandemic I'll

see you next week