The economic fallout of the coronavirus crisis deepened Thursday as millions more Americans filed for unemployment benefits and experts warned of an unprecedented catastrophe in Europe, even as the world plots a tentative course out of lockdown.
Markets were down at the close across the eurozone and in London, while Wall Street also suffered losses as a spate of data confirmed fears about how the COVID-19 crisis is pulverizing global growth.
Investor gloom was unwelcome news after a glimmer of hope in Asia, where South Korea — one of the countries initially hit hard by the pandemic — reported no new cases for a full day.
The outbreak of the novel coronavirus, which erupted late last year in the Chinese city of Wuhan, has so far killed more than 230,000 people and forced more than half of humanity to live under some kind of lockdown.
Beyond the health emergency, the economics of the pandemic are grim — in the United States, the government reported another 3.84 million people filed for jobless benefits.
That put the total at more than 30 million in six weeks — or roughly nine percent of the US population.
“The unemployment rate could approach the record high set during the Great Depression,” economist Joel Naroff warned.
That bad news compounded the tough message from European Central Bank Christine Lagarde.
“The euro area is facing an economic contraction of a magnitude and speed that are unprecedented in peacetime,” she warned.
ECB economists expect output in the 19-nation currency club to shrink by “five to 12 percent” this year, she added.
Earlier, Eurostat figures showed the eurozone economy was estimated to have shrunk by 3.8 percent in the first quarter.
France confirmed it had plunged into recession, while Germany’s jobless total soared to 2.6 million in April from 2.3 million last month.
The country, Europe’s biggest economy, “will experience the worst recession in the history of the federal republic” — founded in 1949 — Economy Minister Peter Altmaier warned, predicting it would shrink by a record 6.3 percent.
– Drug trial boosts hopes –
Despite the economic gloom sparked by the virus, which has infected at least 3.2 million people so far, there was some reason for cheer.
American scientists reported positive tests for an improved treatment, and with deaths and infections starting to drop in some hotspots, countries looked at the next phase in their plans to lift crippling lockdown measures.
On Thursday, Germany accelerated plans to start lifting its anti-virus lockdown, preparing to ease curbs on public life and reopen religious institutions, museums and zoos — having restarted shopping last week.
A decision on when to reopen schools is to come next week.
“It remains absolutely important that we stay disciplined,” said Chancellor Angela Merkel.
With a relatively low death rate of four percent, Germany has been hailed for its success so far in preventing its health services from being overwhelmed.
In South Korea, where COVID-19 was detected in mid-February and for a period had the world’s second-largest outbreak, no new infections were reported for the first time, suggesting its aggressive test-and-trace strategy is working.
“This is the strength of South Korea and its people,” President Moon Jae-in said as he announced the milestone.
South Korea’s death toll is around 250 — vastly lower than that of Italy, Britain, Spain and France, which have each recorded at least 24,000 fatalities.
The United States tops the table with more than 61,000 deaths.
Italy, once the world center of the outbreak, said Thursday it was hoping to reopen two major airports next week, but also plans a cautious reopening.
“We cannot allow the efforts made to be in vain because of rashness at this delicate stage,” Prime Minister Giuseppe Conte said.
Spain may be past the worst of the crisis, however, and is among the European countries planning a staged return to normal economic and social life next month.
And British Prime Minister Boris Johnson, who himself battled COVID-19, said the country was “past the peak” of its outbreak.
But in Russia, coronavirus cases surged past 100,000 and Prime Minister Mikhail Mishustin announced that he had tested positive for coronavirus.
Russia’s death rate remains relatively low, but officials warned that infections had not yet peaked as they extended lockdown measures.
Stuck in cramped flats and struggling with health worries and fears of financial disaster, many Russians are worried about the return of an old demon.
“When I found myself alone at home, the first thought I had was ‘Ah, it’s a good time to get drunk’,” said Tatyana, a recovering alcoholic on lockdown in Moscow.
– ‘Clear-cut effect’ –
Meanwhile, in the first evidence of successful treatment, a US clinical trial of the drug remdesivir showed that patients recovered about 30 percent faster than those on a placebo.
“The data shows that remdesivir has a clear-cut, significant, positive effect in diminishing the time to recovery,” said Anthony Fauci, the top epidemiologist in the United States.
But it is a treatment, not the much-sought-after vaccine that might allow a full return to normal life.
More than 130 virus therapies are currently being investigated, the International Federation of Pharmaceutical Manufacturers and Associations said Thursday.
Most are still in the early stages of testing, but more than 25 clinical trials have begun, IFPMA director Thomas Cueni said.
AFP