The coronavirus recession, also known as the Great Lockdown or Great Shutdown is an ongoing severe global economic recession which began affecting the world economy in early 2020. The recession is considered to be the steepest economic downturn since the Great Depression. On 14 April 2020, the International Monetary Fund (IMF) reported that all of the G7 nations had already entered or were entering into what was called a ‘deep recession’, alongside most of the western world with significant slowdown of growth across developing and emerging economies. The IMF has stated that the economic decline is ‘far worse’ than that of the Great Recession in 2009.
The recession began during the 2019–20 coronavirus pandemic. The pandemic has led to more than a third of the world’s population being placed on lockdown to stop the spread of COVID-19. This caused severe economic repercussions for economies across the world, following soon after a global economic slowdown during 2019 that saw stagnation of stock markets and consumerism worldwide. In addion to that,the recession has seen unusually high and rapid increases in unemployment in many countries, and the collapse in the United States of state-funded social security computer systems for unemployed adults. The United Nations (UN) predicted in April 2020 that global unemployment will wipe out 6.7 per cent of working hours globally in the second quarter of 2020 – equivalent to 195 million full-time workers. The UN warned in April of a famine “of biblical proportions”, which could affect over 30 developing nations.
In the world’s eighth largest economies–China, the United States, Japan, the United Kingdom, France, Spain, Italy, and Germany–total corporate debt was about $51 trillion in 2019, compared to $34 trillion in 2009. If the economic climate worsens, companies with high levels of debt run the risk of being unable to make their interest payments to lenders or refinance their debt, forcing them into restructuring. The Institute of International Finance forecast in 2019 that, in an economic downturn half as severe as the 2008 crisis, $19 trillion in debt would be owed by non-financial firms without the earnings to cover the interest payments on the debt they issued.
The outbreak was identified in Wuhan, China, in December 2019, declared to be a Public Health Emergency of International Concern on 30 January 2020, and recognized as a pandemic by the World Health Organization on 11 March 2020. The pandemic has led to severe global socioeconomic disruption, the postponement or cancellation of sporting, religious, political and cultural events, and widespread shortages of supplies exacerbated by panic buying. Schools, universities and colleges have closed either on a nationwide or local basis in 194 countries, affecting approximately 98.5 percent of the world’s student population. Many governments have restricted or advised against all non-essential travel to and from countries and areas affected by the outbreak. However, the virus is already spreading within communities in large parts of the world, with many not knowing where or how they were infected.
The 2019–20 coronavirus pandemic has had far-reaching consequences beyond the spread of the disease and efforts to quarantine it. As the pandemic has spread around the globe, concerns have shifted from supply-side manufacturing issues to decreased business in the services sector. The pandemic is considered unanimously as a major factor in causing the recession. The pandemic has affected nearly every major industry negatively, was one of the main causes of the stock market crash and has resulted in major curbings of social liberties and movement.
The reduction in the demand for travel and the lack of factory activity due to the 2019–20 coronavirus pandemic significantly impacted demand for oil, causing its price to fall. The Russian-Saudi Arabia oil price war become a cause in worsening the recession due to it crashing the price of oil. In mid-February, the International Energy Agency forecasted that oil demand growth in 2020 would be the smallest since 2011.
From 24 to 28 February, stock markets worldwide reported their largest one-week declines since the 2008 financial crisis, thus entering a correction. Global markets into early March became extremely volatile, with large swings occurring in global markets.