The coronavirus pandemic and lockdowns imposed by governments on both sides of the Atlantic have pushed the global economy into the sharpest downturn since the Great Depression, data released on Friday signalled. The US economy shed 710,000 jobs in early March, ending 113 months of continuous job growth, in official figures that were far worse than economists had been expecting. The shock US employment numbers came shortly after business surveys across Europe showed the services sector to be in deep trouble with the largest drop in activity and prospects for more than 20 years.
The head of the IMF has warned that the economic impact of the coronavirus pandemic would be worse than the 2008 financial crisis. “This is a crisis like no other,” said Kristalina Georgieva, managing director of the IMF, speaking at a conference organised by the World Health Organization on Friday. “Never in the history of the IMF have we witnessed the world economy coming to a standstill,” she said. “It is way worse than the global financial crisis.”
Worse data was about to come in April, economists said, with many now forecasting double digit percentage declines in output in the second quarter as vast swaths of the world’s two most advanced economic zones shut down. Indices of activity by purchasing managers in the eurozone, UK and Swedish purchasing managers’ indices all fell around 20 points, from levels indicating a majority of companies were seeing business activity improving to levels below those seen at the worst point of the 2008-09 financial crisis.
Italy, which went into lockdown first, had the weakest PMI index on record with a figure of 17 -4 , compared with a figure of 50 which represents the point at which an equal number of companies reported rising and falling activity.
“It’s clear that the economy is contracting more quickly than ever before during peacetime,” said Jack Allen-Reynolds, an economist at Capital Economics.