"The Great Lockdown"
The Great Lockdown. That's what the International Monetary Fund is now calling the current economic downturn as a result of the coronavirus.
Saying that the "magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes," the IMF believes it will end up being the worst economic downturn since the Great Depression and far worse than the Global Financial Crisis.
The IMF now projects global growth to contract by 3% in 2020. That's a significant change from the 3.3% increase in global growth the IMF was projecting in January.
"It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago," Gita Gopinath, the IMF’s chief economist, said.
The IMF appears to be in the "V-shaped recovery" camp as it raised its 2021 growth forecast to 5.8%. Despite predicting 2021 growth of 3.4% in January, the revised forecast now comes from a lower base.
The IMF's 2021 forecast is dependent on a lot of assumptions, such as the coronavirus outbreak fading in the second half of 2020 and policy actions protecting against bankruptcies, financial strains and job losses being effective.
"A partial recovery is projected for 2021, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound," Gopinath said.
The IMF believes the combined loss to global GDP in 2020 and 2021 as a result of the coronavirus could be about $9 trillion, which is greater than the economies of Germany and Japan combined.
The effects of the coronavirus on the economy will be felt globally. According to the IMF, income per capita will decline in more than 170 countries. The IMF is forecasting growth to contract by 6.1% in developed economies, while emerging markets and developing economies are projected to contract by 1%.
In an interesting comparison, the IMF says "courageous actions of doctors and nurses need to be matched by policymakers all over the world." The IMF calls on the fiscal, monetary, and financial policies undertaken by policymakers to continue through the "containment phase."
Only after that point should policymakers undertake actions for the "recovery." Some actions suggested by the IMF include repairing balance sheets in the private and public sector, fiscal stimulus, moratoria on debt repayments and debt restructuring.
We now wait for the IMF's next World Economic Outlook report for when they likely slash all of these estimates again and call for policymakers to undertake "courageous actions" to save the global economy.
Zoom accounts hit the dark web. Security researchers at Cyble have discovered the accounts of more than 500,000 Zoom Video Communications users are for sale on the dark web. The credentials include email address, password, personal meeting URL and HostKey. Cyble tested the accounts of its clients and was able to validate their authenticity. Some of the accounts for sale have addresses linked to JPMorgan Chase Bank and Citigroup.
Amazon fires a couple more. Amazon has fired two more employees who criticized working conditions at its warehouses for "repeatedly violating internal policies." The two employees were user-experience designers in Seattle and follow the termination a few weeks ago of the employee who criticized working conditions and organized a walkout. Amazon said it supports "every employee’s right to criticize their employer’s working conditions, but that does not come with blanket immunity against any and all internal policies."
Boeing can't sell planes. Boeing reported its March sales figures, and the numbers were quite bad. The company reported 150 cancellations of its troubled 737 Max airplane. Thanks to 31 orders for its wide-body passenger planes, Boeing reported net cancellations of 119 for the month. Through the first three months of the year, Boeing has now logged a total of negative 307 net orders.
XFL files for bankruptcy. Despite bailouts being handed out left and right, the XFL wasn't as fortunate and filed for Chapter 11 bankruptcy after suspending operations and laying off almost all of its employees. "The XFL quickly captured the hearts and imaginations of millions of people who love football. Unfortunately, as a new enterprise, we were not insulated from the harsh economic impacts and uncertainties caused by the COVID-19 crisis," the XFL said.
Cisco wants your business. Cisco Systems has launched a $2.5 billion financing program that allows customers to defer 95% of payments until 2021. Cisco is hoping to take advantage of customers who need video conferencing software and networking equipment as people continue to work from home. As part of the offer, no payments are due for the first three months, with 1% of the total due each of the last five months of 2020.