How Does the Quarantine Affect the Global Economy?

The global economy is plunging into a crisis. The coronavirus first paralyzed a part of the Chinese production, then stopped hundreds of companies in Europe and Asia, and now, the United States. According to the forecast of the International Labor Organization, due to the coronavirus pandemic, about 25 million people may be left without work. Many countries are already looking for ways to support their economies and businesses.

European governments have quickly responded to the crisis. They are continuously developing national support programs. 

In France, the government is trying to save the small business. French government measures include deferring all tax and social payments during this period. In addition, the authorities intend to provide state guarantees for loans to small and medium firms in the amount of € 300 billion.

Germany mobilizes at least 500 billion euros in the form of loan guarantees and pledges to provide unlimited liquidity to companies affected by the pandemic. The country will also make it easier for companies to access loans from the state development bank and defer tax payments.

The Austrian government has announced an economic assistance package of € 4.4 billion to guarantee the operation of companies and the provision of jobs. Austria promises business guarantees like credits, interim loans, deferred tax payments, reduction of advance tax payments, strengthening and accelerating export promotion.

In Italy, which suffered the most from the coronavirus, the government approved a decree providing for the allocation of € 25 billion to cover losses from coronavirus and special measures to save the economy.

In Estonia, 2 billion euros will be allocated to support the economy, which is 8% of the country's GDP. According to Estonian Prime Minister, this money will help mitigate the most difficult initial phases of the crisis, support the work of enterprises and reduce the number of bankruptcies. Another 250 million euros will be used to combat unemployment: for the state account the first three days of sick leave for employees in March, April and May will be paid.

In the US, the Presidential Administration instructed the Small Business Administration to lend to businesses affected by the coronavirus. The Congress will increase funding for the lending program by an additional $ 50 billion. He also instructed the Treasury Department to defer tax payments for individuals and businesses that are negatively affected by the outbreak of the virus - this will provide more than $ 200 million of additional liquidity for the economy.

In Turkey, a stimulus package for the business affected by the coronavirus for $ 15.5 billion is provided. The Turkish program “Shield of Economic Stability” is designed to protect small enterprises, exporters, workers and retirees. The Turkish government will increase the minimum pension to $ 231 and redirect an additional $ 308 million to needy households. For pensioners, a home health care program is being introduced.

In Japan, about $ 4 billion has been allocated to support small and medium-sized businesses. Some of the funds will be used to compensate parents who, due to the quarantine, were forced to take vacations.

China began supporting its economy back in February. Then, the government allocated more than $ 10 billion. Chinese companies were offered tax breaks, soft loans, and delivery services were exempt from VAT. In early March, the People’s Bank of China offered the country's banks about $ 79 billion, while also reducing the reserve requirements for those banks.

The Russian government has also announced that it will support the businesses affected by the coronavirus. For this, 300 billion rubles were allocated from the state budget to form an anti-crisis fund. The country has already announced tax holidays for the affected industries, and introduced a moratorium on business inspections. The authorities of the Russian Federation promise to compensate losses to transport and travel companies, as well as support sports facilities. Leasing companies are promised additional capitalization.