The world’s economic pain was on full display Thursday as Europe and the United States were releasing more figures showing the devastating impact on jobs and companies of lockdown measures designed to battle the coronavirus pandemic.
In Europe, where over 132,000 people with the virus have died, the fear of renewed infection spikes that could again overwhelm hospital emergency wards was tempering hopes that economies on life-support will regain their vigour as workers return to factories, shops and offices.
Figures released Thursday showed that France’s economy shrank by an eye-popping 5.8 per cent in the first quarter, the biggest quarterly drop since 1949 and mainly due to its strict stay-home measures that have been in place since March 17.
Spain says its economy shrunk five per cent in the first quarter of this year as the coronavirus pandemic hit. Italy’s government debt rating was cut to just above junk bond status, with the Fitch ratings agency expecting the Italian economy to shrink eight per cent this year. Germany is projecting a 6.3 per cent drop in GDP this year.
And a new report from the Paris-based International Energy Agency projected an unprecedented plunge this year in the global demand for energy that will be equivalent to losing the entire energy demand of India, the world’s third-largest energy consumer.
The economic pain caused by the coronavirus pandemic will further be driven home Thursday when new unemployment figures for the 19-country eurozone are released. They’re expected to show how job-protection programs are keeping millions of Europeans on payrolls, sparing them the agony of job losses that have hit millions of Americans.
Push to restart economies
As economies restart, government officials and health workers are watching infection rates and public behaviour like hawks.
California’s governor planned to close all beaches and state parks starting Friday after people flocked to the seashore during a sweltering weekend, ignoring physical distancing orders, according to a memo sent to police chiefs around the state. Nevada’s governor said he was extending his directive asking people to stay at home until May 15 but easing restrictions on some outdoor activities and businesses starting Friday.
WATCH | Retirement savings drop as oil industry suffers big losses:
In Sweden, authorities spread stinking chicken manure on the grounds of a city park to keep people away.
The promise of an effective treatment against the novel coronavirus — an experimental drug that can speed the recovery of COVID-19 patients — raised hopes Thursday for faster progress in battling the pandemic and restoring wrecked economies and livelihoods.
The U.S. government and others say they are working to make the medication available to patients as quickly as possible. News of the medical advance lifted world markets, outshining gloomy economic data showing the U.S. economy contracted nearly five per cent in January-March in the worst downturn since the Great Recession.
California-based biotech company Gilead Sciences and the U.S. government reported in a major study run by the U.S. National Institutes of Health that the drug remdesivir shortened the time it takes for COVID-19 patients to recover by four days on average — from 15 days to 11.
The study, involving 1,063 coronavirus patients around the world, also showed a trend toward fewer deaths among those on the drug, said Dr. Anthony Fauci, the U.S. government’s top infectious diseases expert.
“What it has proven is that a drug can block this virus,” he said. “This will be the standard of care.”
Even though a vaccine is perhaps a year or more away, experts say an effective treatment could have a profound effect on the outbreak. Stocks surged around the world on the news, with the Dow Jones Industrial Average gaining more than 530 points on Wednesday, or over two per cent. Asian markets rode the same wave of optimism on Thursday.
The virus has killed over 225,000 people worldwide, including more than 60,000 confirmed deaths in the U.S., according to a tally by Johns Hopkins University. Confirmed infections globally have reached about 3.2 million, including one million in the U.S., but the true numbers are likely much higher because of limited testing, differences in counting the dead and concealment by some governments.
‘No more work’
The latest figures on Americans applying for unemployment benefits come out Thursday, with economists estimating perhaps one in six workers, or nearly 30 million people, have lost their jobs over the past six weeks.
Mario Franco, who worked at a McDonald’s at a highway rest stop in Darien, Conn., for 26 years, rising to night manager, was laid off in late March. The 50-year-old said he has little savings and now relies on a food bank and union donations.
“They didn’t give us any notice,” he said. “They didn’t tell us about it. Just suddenly the night shift ended and that was it. There was no more work.”
WATCH | Dr. Theresa Tam on WHO response to COVID-19, reopening Canada:
The U.S. unemployment rate for April is due late next week, and economists have said it could range as high as 20 per cent — a level last seen during the Depression.
Worldwide, the International Labour Organization, the UN labour body, forecast that the pandemic has left 1.6 billion people depending on day labour, gig jobs and other informal work in immediate danger of losing their livelihoods. That is nearly half the global workforce of 3.3 billion.
It expects the equivalent of 305 million full-time jobs to be wiped out in April-June.
Moves toward reopening economies are progressing in fits and starts. China and South Korea, early epicentres of the pandemic, both reported only four new cases on Thursday. The tiny island of the Maldives reported its first death.
Pushing to reopen the country, U.S. President Donald Trump was allowing federal physical distancing guidelines to expire Thursday and even saying that he plans to travel to Arizona next week.
Many economists are skeptical that the U.S. economy will bounce back quickly later in the year, noting that the virus could flare up again or consumers and employees might be too worried to return to business as usual.
“The virus has done a lot of damage to the economy, and there is just so much uncertainty now,” said Mark Zandi, chief economist at Moody’s Analytics.