Full text
Global Economic Effects of Covid-19: In Brief
James K. Jackson, Coordinator
Specialist in International Trade and Finance
Martin A. Weiss
Specialist in International Trade and Finance
Andres B. Schwarzenberg
Analyst in International Trade and Finance
Updated March 16, 2020
Congressional Research Service
7-....
www.crs.gov
R46270
Global Economic Effects of Covid-19: In Brief
Contents
Overview ......................................................................................................................................... 1
Estimated Economic Effects............................................................................................................ 3
Policy Response .............................................................................................................................. 4
Multilateral Response ...................................................................................................................... 9
International Monetary Fund..................................................................................................... 9
World Bank and Regional Development Banks ...................................................................... 10
Estimated Effects on Developed and Major Economies ............................................................... 10
Other Affected Sectors ................................................................................................................... 11
Conclusions ................................................................................................................................... 13
Select Measures Implemented or Announced by Major Economies in Response to
COVID-19 .................................................................................................................................. 14
Tables
Table 1. OECD Economic Outlook Forecast, March 2020 ............................................................. 2
Appendixes
Appendix. ...................................................................................................................................... 14
Contacts
Author Contact Information .......................................................................................................... 18
Global Economic Effects of Covid-19: In Brief
Overview
Since the World Health Organization (WHO) first declared Covid-19 a world health emergency in
January 2020, the virus has been detected in over 100 countries and almost all U.S. states.1 The
infection has sickened more than 150,000 people, with fatalities.
On March 11, the WHO announced that the outbreak was officially a pandemic, the highest level
of health emergency.2 During that time, it has become clear that the outbreak is negatively
impacting global economic growth.3 The virus is affecting a broad swath of economic activities,
from tourism, medical supplies and other global value chains, consumer electronics, and financial
markets to energy, food, and a range of social activities, to name a few. Without a clear
understanding of when the effects may peak economic forecasts must necessarily be considered
preliminary. Efforts to reduce social interaction to contain the spread of the virus are disrupting
the daily lives of most Americans.
On March 2, 2020, the Organization for Economic Cooperation and Development (OECD)
released its revised economic outlook and suggested that global economic growth could decline
by 0.5% in 2020 to 2.4% if the economic effects of the virus peak in the first quarter of 20204 (see
Table 1).If the effects of the virus do not peak in the first quarter, which now seems unlikely, the
OECD estimates that global economic growth in 2020 could be reduced by half, or 1.5%.
Concerns over economic and financial risks have pushed investors to search out safe-haven
investments such as the benchmark U.S. Treasury 10-year security, which experienced a historic
drop in yield to below 1% on March 3, 2020 (the price and yield of a bond are inversely related).5
The yield dropped again to historic levels on March 6, 2020, and March 9, 2020, as investors
moved out of stocks and into bonds due to concerns over declines in major stock indices and
expectations that the Federal Reserve would lower interest rates for a second time in March
2020.6 In overnight trading on March 8, 2020, and again on March 11, 2020, March 13, 2002, and
March 15, 2020, U.S. stock market indices moved sharply, triggering automatic circuit breakers
designed to halt trading if the indices rise or fall by more than 5% when markets are closed.7
Financial markets from the United States to Asia and Europe are volatile as investors are
concerned that the virus is creating a global issue with few metrics to indicate how prolonged and
expansive the economic effects may be.8 The virus is also affecting global politics as world
1 “Mapping the Spread of the Coronavirus in the U.S. and Worldwide,” Washington Post Staff, The Washington Post,
March 4, 2020, https://www.washingtonpost.com/world/2020/01/22/mapping-spread-new-coronavirus/?arc404=true.
2 Bill Chappell, “Coronavirus: COVID-19 Is Now Officially A Pandemic, WHO Says,” National Public Radio, March
11, 2020, https://www.npr.org/sections/goatsandsoda/2020/03/11/814474930/coronavirus-covid-19-is-now-officially-a-
pandemic-who-says.
3 Mapping the Spread of the Coronavirus.
4 OECD Interim Economic Assessment: Coronavirus: The World Economy at Risk, Organization for Economic
Cooperation and Development. March 2, 2020, http://www.oecd.org/economic-outlook/#resources.
5 Levisohn, Ben, “The 10-Year Treasury Yield Fell Below 1% for the First Time Ever. What That Means,” Barrons,
March 3, 2020, https://www.barrons.com/articles/the-10-year-treasury-yield-fell-below-1-for-the-first-time-ever-what-
that-means-51583267310.
6 Smith, Colby, Richard Henderson, Philip Georgiadis, and Hudson Lockett, “Stocks Tumble and Government Bonds
Hit Highs on Virus Fears,” The Financial Times, March 6, 2020, https://www.ft.com/content/9f94d6f8-5f51-11ea-
b0ab-339c2307bcd4.
7 Georgiadis, Philip, Adam Samson, and Hudson Lockett, “Stocks Plummet as Oil Crash Shakes Financial Markets,”
The Financial Times, March 9, 2020, https://www.ft.com/content/8273a32a-61e4-11ea-a6cd-df28cc3c6a68.
8 Samson, Adam and Hudson Lockett, “Stocks Fall Again in Worst Week Since 2008 Crisis,” The Financial Times,
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Global Economic Effects of Covid-19: In Brief
leaders are cancelling international meetings9 and some nations reportedly are stoking conspiracy
theories that shift blame to other countries.10
The challenge for policymakers is to implement targeted policies that address what are expected
to be short-term problems without creating distortions in economies that can outlast the impact of
the virus itself. Policymakers are being overwhelmed by the quickly changing nature of the crisis
that has compounded a health issue with what could become a global trade and economic crisis
whose potential effects on the global economy are rapidly growing. In addition, many
policymakers are constrained in their response to the crisis, with little flexibility for monetary and
fiscal support, given the broad-based synchronized slowdown in global economic growth,
especially in manufacturing and trade, which had developed prior to the viral outbreak.
Table 1. OECD Economic Outlook Forecast, March 2020
Percent change in Real GDP Growth
2019 2020 2021
Difference Difference
November from November from
projections November projections November
World 2.9 2.4 -0.5 3.3 0.3
G20 3.1 2.7 -0.5 3.5 0.2
Australia 1.7 1.8 -0.5 2.6 0.3
Canada 1.6 1.3 -0.3 1.9 0.2
Euro area 1.2 0.8 -0.3 1.2 0.0
Germany 0.6 0.3 -0.1 0.9 0.0
France 1.3 0.9 -0.3 1.4 0.2
Italy 0.2 0.0 -0.4 0.5 0.0
Japan 0.7 0.2 -0.4 0.7 0.0
Korea 2.0 2.0 -0.3 2.3 0.0
Mexico -0.1 0.7 -0.5 1.4 -0.2
Turkey 0.9 2.7 -0.3 3.3 0.1
United 1.4
0.8 -0.2 0.8 -0.4
Kingdom
United States 2.3 1.9 -0.1 2.1 0.1
Argentina -2.7 -2.0 -0.3 0.7 0.0
Brazil 1.1 1.7 0.0 1.8 0.0
China 6.1 4.9 -0.8 6.4 0.9
India 4.9 5.1 -1.1 5.6 -0.8
February 28, https://www.ft.com/content/4b23a140-59d3-11ea-a528-dd0f971febbc.
9 Taylor, Adam, Teo Armus, and Rick Noak, “Live updates: Coronavirus Turmoil Widens as U.S. Death Toll Mounts;
Xi Cancels Japan Trip,” The Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/
coronavirus-live-updates/.
10 Shih, Gerry, “China is Subtly Stoking Coronavirus Conspiracy Theories That Blame the U.S. for Outbreak,” The
Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/coronavirus-live-updates/.
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Global Economic Effects of Covid-19: In Brief
2019 2020 2021
Indonesia 5.0 4.8 -0.2 5.1 0.0
Russia 1.0 1.2 -0.4 1.3 -0.1
Saudi Arabia 0.0 1.4 0.0 1.9 0.5
South Africa 0.3 0.6 -0.6 1.0 -0.3
Source: OECD Interim Economic Assessment: Coronavirus: The World Economy at Risk, Organization for Economic
Cooperation and Development. March 2, 2020, p. 2.
Estimated Economic Effects
The economic situation remains highly fluid. Uncertainty about the length and depth of the virus-
related economic effects are fueling perceptions of risk and volatility in financial markets and
corporate decisionmaking. In addition, uncertainties concerning the virus and the effectiveness of
public policies intended to curtail its spread are adding to market volatility.
The OECD also estimates that increased direct and indirect economic costs through global supply
chains, reduced demand for goods and services, and declines in tourism and business travel mean
that, “the adverse consequences of these developments for other countries (non-OECD) are
significant.”11 Global trade, measured by trade volumes, slowed in the last quarter of 2019 and
was expected to decline further in 2020 as a result of weaker global economic activity associated
with the viral outbreak, which is reducing economic activity in various sectors, including ports
and the shipping industry.12
In addition, the OECD argues that China’s emergence as a global economic actor marks a
significant departure from previous global health episodes. China’s growth in combination with
globalization and the interconnected nature of economies through supply chains and foreign
investment magnify the cost of containing the spread of the virus through quarantines and
restrictions on labor mobility and travel.13
Initially, the economic effects of the virus were expected to be a short-term supply issue as
factory output fell because workers were quarantined to reduce the spread of the virus through
social interaction. Concerns have grown, however, that the virus-related supply shock is creating
a more prolonged demand shock as reduced activity by consumers and businesses lead to a lower
rate of economic growth. As demand shocks unfold, businesses experience a decline in activity,
reduced profits, and potentially escalating and binding credit and liquidity constraints. If the
economic effects persist, contagion issues can spread the economic effects widely and affect a
broader group of firms and households. This potentially can lead to liquidity constraints and
credit market tightening in global financial markets, with negative fallout effects on economic
growth. Such liquidity and credit market issues present policymakers with a different set of issues
than addressing supply-side economic issues. Essentially, while businesses are attempting to
address worker and output issues at the firm level, national leaders are attempting to implement
fiscal policies to assist workers and businesses that are facing financial strains, and central
bankers are adjusting monetary policies to address mounting credit market issues.
11 Ibid., p. 2.
12 Ibid., p. 4.
13 Goldin, Ian, “Coronavirus Shows How Globalization Spreads Contagion of All Kinds,” The Financial Times, March
2, 2020, https://www.ft.com/content/70300682-5d33-11ea-ac5e-df00963c20e6.
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In many cases, national fiscal policies that might be employed to address demand issues are
already constrained by high government debt levels; similarly, recent monetary policies have
generally been accommodative, which leaves central banks little room for additional cuts in
interest rates. In addition, in the current environment, even traditional policy tools, such as
monetary accommodation, apparently are not being processed by markets in a traditional manner,
with equity market indices displaying heightened, rather than lower, levels of uncertainty
following the Federal Reserve’s cut in interest rates. Such volatility is adding to uncertainties
about what governments can do to address weaknesses in the global economy.
Before the Covid-19 outbreak, the global economy was struggling to regain a broad-based
recovery as a result of the lingering impact of growing trade protectionism, trade disputes among
major trading partners, falling commodity and energy prices, and economic uncertainties in
Europe over the impact of the UK withdrawal from the European Union. Individually, each of
these issues presented a solvable challenge for the global economy. Collectively, however, the
issues weakened the global economy and reduced the available policy flexibility of many
countries, especially among the leading developed economies. In this environment, Covid-19
could have an outsized impact. While the level of economic effects will eventually become
clearer, the response to the virus could have a significant and enduring impact on the way
businesses organize their work forces, global supply chains, and how governments respond to a
global health crisis.14
Policy Response
In response to growing concerns over the global economic impact of the virus, G-7 finance
ministers and central bankers released a statement on March 3, 2020, indicating they will “use all
appropriate policy tools” to sustain economic growth.15 The Finance Ministers also pledged fiscal
support to ensure health systems could sustain efforts to fight the outbreak.16 Following the G-7
statement, the U.S. Federal Reserve (Fed) lowered its federal funds rate by 50 basis points, or
0.5%, to a range of 1.0% to 1.25% due to concerns about the “evolving risks to economic activity
of the coronavirus.”17 At the time, the cut was the largest one-time reduction in the interest rate by
the Fed since the financial crisis of 2008.
In a sign of growing strains in financial markets, the Federal Reserve announced on March 12,
2020, that it will supply liquidity to the financial system by providing $5 trillion through a series
of funding operations that will add to current monthly funding operations that are targeted at
increasing reserves in the banking system and reducing stress in short-term funding market and in
trading U.S. Treasury securities. Corporate bond markets halted activity on March 11, 2020, as
companies drew on revolving credit facilities from banks to ensure they had enough cash on hand
14 Rowland, Christopher and Peter Whoriskey, “U.S. Health System is Showing Why it’s Not Ready for a Coronavirus
Pandemic,” The Washington Post, March 4, 2020, https://www.washingtonpost.com/business/economy/the-us-health-
system-is-showing-why-its-not-ready-for-a-coronavirus-pandemic/2020/03/04/7c307bb4-5d61-11ea-b29b-
9db42f7803a7_story.html.
15 The G-7 is comprised of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
Statement of G-7 Finance Ministers and Central Bank Governors, March 3, 2020, https://home.treasury.gov/news/
press-releases/sm927; Long, Heather, “G-7 Leaders Promise to Help Economy as Coronavirus Spreads, But They
Don’t Announce Any New Action,” The Washington Post, March 3, 2020, https://www.washingtonpost.com/business/
2020/03/03/economy-coronavirus-rate-cuts/.
16 Giles et al., Finance Ministers Ready to Take Action.
17 Federal Reserve Releases FOMC Statement, March 3, 2020, https://www.federalreserve.gov/newsevents/
pressreleases/monetary20200303a.htm.
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to sustain their operations during a prolonged slump in economic activity and potential credit
tightening by banks.
In addition, banks and financial institutions that deal in trading U.S. Treasury securities had
begun to pull back from facilitating trades to protect themselves from market volatility, increasing
costs to traders who profit from the difference between buying Treasury securities and then
selling futures contracts.18 The Federal Reserve reportedly will provide $1 trillion in short-term
lending to banks to sustain lending between banks, because credit markets had begun to freeze
up. In addition, the Federal Reserve is being asked by parts of the financial system to assist with
the commercial paper (CP) market, which is used by firms to raise cash be selling short-term
debt. Banks have become reluctant to acquire the securities over concerns that markets that trade
in CP will be frozen.19 The Fed also indicated that it will provide a series of $500 billion
injections of funds into the repo (repurchase) market, where investors borrow cash in exchange
for high-quality collateral like Treasury securities.20
In an additional step, the Federal Reserve cut interest rates by 100 basis points (1.0%) on March
15, 2020, to a range of 0% to 0.25%, because it determined that “The coronavirus outbreak has
harmed communities and disrupted economic activity in many countries, including the United
States. Global financial conditions have also been significantly affected.21” The Federal Reserve
announced that it was providing an additional $700 billion in asset purchases (Treasury securities
and mortgage-backed securities), expanding repurchase operations, extending dollar swap lines
with foreign banks (Canada, the UK, Japan and Europe, including the Swiss National Bank), and
opened its discount window to commercial banks and urged banks to use their own capital and
liquidity buffers to ease household and business lending. In its statement, the Federal Reserve
announced that it was prepared to use its “full range of tools to support the flow of credit to
households and businesses….” The coordinated central bank actions were intended to calm global
financial markets after a week of greater than usual volatility.
In terms of a fiscal stimulus, the House passed H.R. 6074 on March 5, 2020, to appropriate $8.3
billion in emergency funding to support efforts to fight Covid-19; President Trump signed the
measure on March 6, 2020. Other countries have indicated they will also provide assistance.
Congress also is considering other possible measures, including contingency plans for agencies to
implement offsite telework for employees, financial assistance to the shale oil industry, paid sick
leave, a reduction in the payroll tax,22 and an extension of the tax filing deadline.23 On March 11,
2020, President Trump announced a restriction on all travel from Europe to the United States for
30 days, directed the Small Business Administration (SBA) to offer low-interest loans to small
18 Rennison, Joe, and Colby Smith, “What is Causing Such Fear in the U.S. Treasuries Market?,” The Financial Times,
March 13, 2020, https://www.ft.com/content/efa431c8-6471-11ea-b3f3-fe4680ea68b5.
19 Rennison, Joe and Colby Smith, “Investors Call for Fed Help in ‘Frozen’ Commercial Paper Market,” The Financial
Times, March 16, 2020, https://www.ft.com/content/34213560-677b-11ea-a3c9-1fe6fedcca75.
20 Smith, Colby, and Brendan Greeley, “Fed to Pump Trillions of Dollars into Financial Markets,” The Financial
Times, March 12, 2020, https://www.ft.com/content/7b231b2c-6483-11ea-a6cd-df28cc3c6a68.
21 Federal Reserve Issues FOMC Statement, March 15, 2020, https://www.federalreserve.gov/newsevents/
pressreleases/monetary20200315a.htm.
22 Armus, Theo, “Federal, State Officials Attempt to Fight Virus Through Social Distancing, Stimulus Package,” The
Washington Post, https://www.washingtonpost.com/world/2020/03/11/coronavirus-live-updates/.
23 Sevastopulo, Demetri, “US Treasury Considers Tax Filing Extension to Ease Virus Impact,” The Financial Times,
March 11, 2020, https://www.ft.com/content/c65a6e40-639f-11ea-b3f3-fe4680ea68b5.
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Global Economic Effects of Covid-19: In Brief
businesses, and directed the Treasury Department to defer tax payments penalty-free for affected
businesses.24
On March 13, President Trump declared a state of emergency, freeing up disaster relief funding to
assist state and local governments in addressing the effects of the virus. The President also
announced additional testing for the virus, a website to help individuals identify symptoms of the
virus, increased oil purchases for the Strategic Oil Reserve, and a waiver on interest payments on
student loans.25 The White House and House Democrats announced they had reached agreement
on a package of measures that is intended to provide tens of billions of dollars for paid sick leave,
unemployment insurance, food stamps, and other measures.26 For additional information about
the impact of Covid-19 on the U.S. economy see CRS Insight IN11235, COVID-19: Potential
Economic Effects.27
The International Monetary Fund (IMF) is providing funding to poor and emerging market
economies that are short on financial resources.28 If the economic effects of the virus persist,
countries may need to be proactive in coordinating fiscal and monetary policy responses, similar
to actions taken by of the G-20 following the 2008-2009 global financial crisis.
Other countries have followed the Federal Reserve:
The Bank of Canada and the Reserve Bank of Australia cut their benchmark
interest rates. Canada announced on March 11, 2020, a $750 million fund to
combat and mitigate the effects of the virus, including expanding eligibility for
employment insurance (EI) and EI sick leave benefits, relaxing workshare
requirements, increased testing, surveillance, and monitoring and assistance to
other, more vulnerable, countries.29 The Bank of Canada announced on March
13, 2020, a 0.5% cut to 0.75% in its Bank Rate interest rate.30 Canada also
announced on March 13, 2020, that it would impose travel restrictions, including
prohibiting cruise ships from docking. Australia reportedly is considering a $6.5
billion stimulus that would provide direct payments to citizens and wage
subsidies to workers and tax breaks for businesses.31 The Reserve Bank of
24 McAuley, James and Michael Birnbaum, “Europe Blindsided by Trump’s Travel Restrictions, With Many Seeing
Political Motive,” The Washington Post, March 12, 2020, https://www.washingtonpost.com/world/europe/europe-
blindsided-by-trumps-travel-restrictions-with-many-seeing-political-motive/2020/03/12/42a279d0-6412-11ea-8a8e-
5c5336b32760_story.html.
25 Fritz, Angela and Meryl Kornfield, “President Trump Declares a National Emergency, Freeing $50 Billion in
Funding,” The Washington Post, March 13, 2020, https://www.washingtonpost.com/world/2020/03/13/coronavirus-
latest-news/.
26 Werner, Erica, Mike DeBonis, Paul Kane, and Jeff Stein, “White House, House Democrats Reach Deal on
Coronavirus Economic Relief Package, Pelosi Announces,” The Washington Post, March 13, 2020,
https://www.washingtonpost.com/us-policy/2020/03/13/paid-leave-democrats-trump-deal-coronavirus/.
27 CRS Insight IN11235, COVID-19: Potential Economic Effects, by Marc Labonte.
28 Politi, James, “IMF Sets Aside $50bn for Coronavirus-hit Countries,” The Financial Times, March 4, 2020,
https://www.ft.com/content/83c07594-5e3a-11ea-b0ab-339c2307bcd4.
29 “Trudeau Announces $1 Billion Fund to Respond to COVID-19,” CBC News, https://www.cbc.ca/news/politics/
liberals-support-workers-businesses-covid-19-1.5493454.
30 “Bank of Canada Lowers Overnight Rate Target to 0.75%,” Bank of Canada, March 13, 2020,
https://www.bankofcanada.ca/2020/03/bank-of-canada-lowers-overnight-rate-target-to-%c2%be-percent/.
31 “Australian PM Considering Cash Handout as Part of Fiscal Stimulus,” Reuters, March 9, 2020,
https://www.reuters.com/article/us-health-coronavirus-australia-budget-c/australia-pm-considering-cash-handout-as-
part-of-fiscal-stimulus-sky-news-idUSKBN20W0CR.
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Australia is also engaging in additional money market operations to increase
liquidity.32
Norway’s central bank cut its key interest rate on March 13, 2020, by 0.5% to
1.0%, provided loans to the banking system, and eased its countercyclical capital
reserve requirements on financial institutions.33
Italy has imposed country-wide travel restrictions, directed that all stores except
food and pharmacies close, and was set to inject around $30 billion into its
economy; it announced plans to place a moratorium on debt payments, including
mortgages, and it closed schools and museums.34
Iran has closed schools, universities, religious seminaries, gyms, entertainment
venues, Friday prayers, most public events, and parliament. The country has
reserved hospitals only for those suspected of being infected with the virus; it is
disinfecting streets and public transport daily and checking on every household
across the country.35 On March 11, 2020, Iran requested $5 billion in funding
from the IMF to respond to the Covid-19 crisis.36
Israel announced that it would appropriate $2.8 billion to prevent the spread of
Covid-19, asked foreign nationals to leave the country, and asked anyone coming
into the country to self-quarantine for 14 days.37
South Korea has engaged in an extensive public testing campaign, including of
asymptomatic individuals, and has extended school holidays into March. The
government appropriated $10 billion to support anti-viral activities.38
The European Central Bank (ECB) announced that it was ready to take
“appropriate and targeted measures,” if needed. With interest rates already low,
however, it indicated that it could expand its program of providing loans to EU
banks, or buying debt from EU firms, and possibly lowering its deposit rate
further into negative territory in an attempt to shore up the Euro’s exchange
rate.39 ECB President-designate Christine Lagarde called on EU leaders to take
more urgent action to avoid the spread of coronavirus triggering a serious
economic slowdown. The European Commission indicated that it was creating a
32 Statement by the Council of Financial Regulators–March 2020, The Reserve Bank of Australia, March 16, 2020,
https://www.cfr.gov.au/news/2020/mr-20-01.html.
33 “Norway Central Bank Slashes Rates, Pumps Money Into Banks,” The Edge Markets,
https://www.theedgemarkets.com/article/norway-central-bank-slashes-rates-pumps-money-banks.
34 “How Countries Around the World are Battling Coronavirus,” The Financial Times, March 10, 2020,
https://www.ft.com/content/151fa92c-5ed3-11ea-8033-fa40a0d65a98; Arnold, Martin and Guy Chazan, “Christine
Lagarde Calls on EU Leaders to Ramp up Coronavirus Response,” The Financial Times, March 11, 2020,
https://www.ft.com/content/44eac1f2-6386-11ea-a6cd-df28cc3c6a68.
35 Ibid.
36 Hendrix, Steve, Iran Seeks Emergency IMF Funding for Coronavirus Crisis, The Washington Post, March 12. 2020,
https://www.washingtonpost.com/world/europe/europe-blindsided-by-trumps-travel-restrictions-with-many-seeing-
political-motive/2020/03/12/42a279d0-6412-11ea-8a8e-5c5336b32760_story.html.
37 Egash, Ruth, Netanyahu Announces $2.8 Billion Aid Package to Stabilize Economy as Virus Spreads, The
Washington Post, March 11, 2020, https://www.washingtonpost.com/world/2020/03/11/coronavirus-live-updates/.
38 Ibid.
39 US Fed’s Coronavirus Rate Cut is First Move in a Dance With Markets, The Financial Times, March 4, 2020,
https://www.ft.com/content/83c07594-5e3a-11ea-b0ab-339c2307bcd4, Giles, Chris, Martin Arnold, Sam Jones, and
Jamie Smyth, Finance Ministers ‘Ready to Take Action’ on Coronavirus, The Financial Times, March 3, 2020,
https://www.ft.com/content/b86f7d92-5d38-11ea-b0ab-339c2307bcd4.
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Global Economic Effects of Covid-19: In Brief
nearly $30 billion investment fund to address Covid-19 issues.40 On March 12,
2020, the ECB decided to (1) expand its longer-term refinance operations
(LTRO) to provide low-cost loans to Eurozone banks to increase bank liquidity;
(2) extend targeted longer-term refinance operations (TLTRO) to provide loans at
below-market rates to businesses, especially small and medium-sized businesses,
directly affected by Covid-19; (3) provide an additional €120 billion (about $130
billion) for the Bank’s asset purchase program to provide liquidity to firms.41 On
March 13, 2020, financial market regulators in the UK, Italy, and Spain
intervened in stock and bond markets to stabilize prices after historic swings in
indexes on March 12, 2020.42 In addition, the ECB announced that it would do
more to assist financial markets in distress, including altering self-imposed rules
on purchases of sovereign debt.43 Germany’s Economic Minister announced on
March 13, 2020, that Germany would provide unlimited loans to businesses
experiencing negative economic activity (initially providing $555 billion) and tax
breaks for businesses.44 Recent forecasts indicate that the economic effect of
Covid-19 could push the Eurozone into an economic recession in 2020.45
The Bank of England announced on March 11, 2020, that it would adopt a
package of four measures to deal with any economic disruptions associated with
Covid-19. The measures include an unscheduled cut in the benchmark interest
rate by 50 basis points (0.5%) to a historic low of 0.25%; reintroduce the Term
Funding scheme for Small and Medium-sized Enterprises (TFSME) that provides
banks with over $110 billion for loans at low interest rates; lower banks’
countercyclical capital buffer to zero percent, which is estimated to support over
$200 billion of bank lending to businesses; and freeze banks’ dividend
payments.46 The UK Chancellor of the Exchequer proposed a national budget on
March 11, 2020, that includes nearly $35 billion in fiscal spending to counter
adverse economic effects of the viral crisis and proposes that statutory sick leave
be boosted by about $2.5 billion in funds to small and medium businesses to
provide up to 14 days of sick leave for affected employees. Part of the fiscal
spending package includes open-ended funding for the National Health Service
(NHS), $6 billion in emergency funds to the NHS, $600 million hardship fund to
assist vulnerable people, and tax cuts and tax holidays for small businesses in
certain affected sectors.47
40 Arnold, Martin and Guy Chazan, Christine Lagarde Calls on EU Leaders to Ramp up Coronavirus Response, The
Financial Times, March 11, 2020, https://www.ft.com/content/44eac1f2-6386-11ea-a6cd-df28cc3c6a68.
41 Monetary Policy Decisions, The European Central Bank, March 12, 2020, https://www.ecb.europa.eu/press/pr/date/
2020/html/ecb.mp200312~8d3aec3ff2.en.htm.
42 Stafford, Philip and Adam Samson, European Regulators Intervene in Bid to Stabilize Stock and Bond Prices, The
Financial Times, March 13, 2020, https://www.ft.com/content/77f57d4c-6509-11ea-a6cd-df28cc3c6a68.
43 Arnold, Martin, ECB Enters Damage-Limitation Mode With Pledge of More Action, The Financial Times, March
13, 2020, https://www.ft.com/content/f1cbd4f8-650f-11ea-b3f3-fe4680ea68b5.
44 Loveday, Morris and Louisa Beck, Germany Announces “Bazooka” Economic Plan to Mitigate Coronavirus Hit, The
Washington Post, March 13, 2020, https://www.washingtonpost.com/world/2020/03/13/coronavirus-latest-news/.
45 Lagarde to Confront Coronavirus Crisis at ECB Policy Meeting, The Financial Times, March 8, 2020,
https://www.ft.com/content/79a280c6-5fb5-11ea-b0ab-339c2307bcd4.
46 Romei, Valentina, Coronavirus fallout: Bank of England launches 4 key measures, The Financial Times.
https://www.ft.com/content/4e60c08e-6380-11ea-b3f3-fe4680ea68b5.
47 Payne, Sebastian and Chris Giles, Budget 2020: Sunak Unveils £30bn Stimulus to Counter UK Coronavirus Shock,
Congressional Research Service 8
Global Economic Effects of Covid-19: In Brief
The Bank of Japan, with already-low interest rates, interjected $4.6 billion in
liquidity into Japanese banks to provide short-term loans and twice that amount
into exchange traded funds to aid Japanese businesses. The Japanese government
also pledged to provide wage subsidies for parents forced to take time off due to
school closures.48
According to a recent CRS In Focus, 49 China’s economic growth could go
negative in the first quarter of 2020 and fall below 5% for the year, with more
serious effects if the outbreak continues. In early February, China’s central bank
pumped $57 billion into the banking system, capped banks’ interest rates on loans
for major firms, and extended deadlines for banks to curb shadow lending. The
central bank has been setting the reference rate for China’s currency stronger
than its official close rate to keep it stable. On March 13, 2020, The People’s
Bank of China announced that it would provide $78.8 billion in funding,
primarily to small businesses, by reducing bank’s reserve requirements.50
Multilateral Response
International Monetary Fund
The IMF announced that it is making available about $50 billion for the global crisis response.51
For low-income countries, the IMF is providing rapid-disbursing emergency financing of up to
$10 billion (50% of quota of eligible members) that can be accessed without a full-fledged IMF
program. Other IMF members can access emergency financing through the Fund’s Rapid
Financing Instrument (RFI). This facility could provide about $40 billion for emerging markets
facing fiscal pressures from COVID-19. Separate from these resources, the IMF has a
Catastrophe Containment and Relief Trust (CCRT), which provides eligible countries with up-
front grants for relief on IMF debt service falling due. The CCRT was used during the 2014 Ebola
outbreak, but is now underfunded, according to IMF Managing Director Kristolina Georgieva
with just over $200 million available against possible needs of over $1 billion. 52 On March 11,
2020, the United Kingdom announced that it will contribute £150 million (about $170 million) to
the CCRT. To date, the United States has not contributed to the CCRT.53
The Financial Times. https://www.ft.com/content/f7b27264-6384-11ea-a6cd-df28cc3c6a68.
48 Harding, Robin and Hudson Lockett, BoJ Spurs Asia Markets Rebound With Vow to Fight Coronavirus, The
Financial Times, March 2, 2020, https://www.ft.com/content/9fa91e06-5c3b-11ea-b0ab-339c2307bcd4.
49 For additional information about China’s response, see CRS In Focus IF11434, COVID-19: U.S.-China Economic
Considerations, by Karen M. Sutter and Michael D. Sutherland.
50 Weinland, Don, China’s Central Bank Launches $79bn Stimulus for Virus-hit Companies, The Financial Times,
March 13, 2020, https://www.ft.com/content/deb56f86-6515-11ea-b3f3-fe4680ea68b5.
51 International Monetary Fund, IMF Makes Available $50 Billion to Help Address Coronaviris, March 4, 2020.
52 International Monetary Fund, United Kingdom Boosts IMF’s Catastrophe Relief Fund with £150 million, March 11,
2020.
53 Ibid.
Congressional Research Service 9
Global Economic Effects of Covid-19: In Brief
World Bank and Regional Development Banks
The World Bank announced that it is making up to $12 billion in financing ($8 billion of which is
new) immediately available to help impacted developing countries.54 This support comprises up
to $2.7 billion in new financing from the International Bank for Reconstruction and Development
(IBRD), the World Bank’s market-rate lending facility for middle-income developing countries
and $1.3 billion from the International Development Association (IDA), the World Bank’s
concessional facility for low-income countries. In addition, the Bank is reprioritizing $2 billion of
the Bank’s existing portfolio. The International Finance Corporation (IFC), the Bank’s private-
sector lending arm is making available up to $6 billion. According to the Bank, support will cover
a wide range of activities including strengthening health services and primary health care,
bolstering disease monitoring and reporting, training front line health workers, encouraging
community engagement to maintain public trust, and improving access to treatment for the
poorest patients.
Several years ago, the World Bank introduced pandemic bonds, a novel form of catastrophe
financing.55 The Bank sold two classes of bonds worth $320 billion in a program designed to
provide financing to developing countries facing an acute epidemic crisis if certain triggers are
met. Once these conditions are met, bondholders no longer receive interest payments on their
investments, the money is no longer repaid in full, and funds are used to support the particular
crisis. In the case of Covid-19, for the bonds to be triggered, the epidemic must be continuing to
grow 12 weeks after the first day of the outbreak. Critics have raised a range of concerns about
the bonds, arguing that the terms are too restrictive and that the length of time needs to be
shortened before triggering the bonds.56 Others stress that the proposal remains valid – shifting
the cost of pandemic assistance from governments to the private sector, especially in light of the
failure of past efforts to rally donor support to establish multilateral pandemic funds.
The Asian Development Bank (ADB) has approved a total of $4 million to help developing
countries in Asia and the Pacific.57 Of the total, $2 million is for improving the immediate
response capacity in Cambodia, China, Laos, Myanmar, Thailand, and Vietnam; $2 million will
be available to all ADB developing member countries in updating and implementing their
pandemic response plans. The ADB also provided a private sector loan of up to $18.6 million to
Wuhan-based Jointown Pharmaceutical Group Co. Ltd. to enhance the distribution and supply of
essential medicines and protective equipment.
Estimated Effects on Developed and Major
Economies
Among most developed and major developing economies, economic growth at the beginning of
2020 was tepid, but still was estimated to be positive. Countries highly dependent on trade—
Canada, Germany, Italy, Japan, Mexico, and South Korea—and commodity exporters are now
54 World Bank, World Bank Group Announces Up to $12 Billion Immediate Support for COVID-19 Country Response¸
March 3, 2019.
55 Anna Gross, “Critics take aim at ‘failure’ of bond designed to fight disease,” Financial Times, March 10, 2020,
https://www.ft.com/content/a6239e12-5ec7-11ea-b0ab-339c2307bcd4.
56 Ibid.
57 Asian Development Bank, ADB Approves Another $2 Million to Help Asia and the Pacific Tackle Coronavirus,
February 26, 2020.
Congressional Research Service 10
Global Economic Effects of Covid-19: In Brief
projected to be the most negatively affected by the slowdown in economic activity associated
with the virus.58 In addition, travel bans and quarantines are taking an especially heavy economic
toll on China, South Korea, and Italy, where viral outbreaks have so far been most prevalent. The
OECD notes that production declines in China have spillover effects around the world given
China’s role in producing computers, electronics, pharmaceuticals and transport equipment, and
as a primary source of demand for many commodities.59
In early January 2020, before the coronavirus outbreak, economic growth in developing
economies as a whole was projected by the International Monetary Fund (IMF) to be slightly
more positive than in 2019. This outlook was based on progress being made in U.S.-China trade
talks that were expected to roll back some tariffs and an increase in India’s rate of growth.
Growth rates in Latin America and the Middle East were also projected to be positive in 2020.60
These projections likely will be revised downward due to the slowdown in global trade associated
with Covid-19, lower energy and commodity prices, and other secondary effects that could curtail
growth. Commodity exporting countries, in particular, likely will experience a greater slowdown
in growth than forecasted in earlier projections as a result of a slowdown on trade with China and
lower commodity prices.
Other Affected Sectors
Public concerns over the spread of the virus have led to self-quarantines, reductions in airline and
cruise liner travel, the closing of such institutions as the Louvre, and the rescheduling of theatrical
releases of movies, including the sequel in the iconic James Bond series (titled, “No Time to
Die”).61 School closures, so far in China, Japan, South Korea, Italy, India, and some U.S, States
are affecting at least 290 million children worldwide, challenging parental leave policies.62 Other
countries are limiting the size of public gatherings.
Some businesses are considering new approaches to managing their workforces and work
methods. These techniques build on, or in some places replace, such standard techniques as self-
quarantines and travel bans. Some firms are adopting an open-leave policy to ensure employees
receive sick pay if they are, or suspect they are, sick. Other firms are adopting paid sick leave
policies to encourage sick employees to stay home and are adopting remote working policies.63
Concerns remain, however, that some U.S. workers will continue going to work when they are
sick, since not all U.S. employers provide paid sick leave. Microsoft and Amazon have instructed
all of their Seattle-based employees to work from home until the end of March 2020,64
58 OECD Interim Economic Assessment, p. 7.
59 Ibid., p. 5.
60 Tentative Stabilization, Sluggish Recovery? World Economic Outlook Update, January 20, 2020, The International
Monetary Fund, https://www.imf.org/en/Publications/WEO/Issues/2020/01/20/weo-update-january2020.
61 Rosenberg, Alyssa, “Coronavirus Shut Down Mona Lisa and James Bond. We Can’t Let it Isolate Us,” The
Washington Post, March 4, 2020, https://www.washingtonpost.com/opinions/2020/03/04/coronavirus-shut-down-
mona-lisa-james-bond-we-cant-let-it-isolate-us/.
62 Taylor, Adam, Teo Armus and Rick Noak, “Coronavirus Turmoil Widens as U.S. Death Toll Mounts; Xi Cancels
Japan Trip,” The Washington Post, March 5, 2020.
63 Hill, Andrew and Emma Jacobs, “Coronavirus May Create Lasting Workplace Change,” The Financial Times,
February 27, 2020, https://www.ft.com/content/5801a710-597c-11ea-abe5-8e03987b7b20.
64 Armus, Teo, “Live updates: Coronavirus Turmoil Widens as U.S. Death Toll Mounts; Xi Cancels Japan Trip,” The
Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/coronavirus-live-updates/.
Congressional Research Service 11
Global Economic Effects of Covid-19: In Brief
The drop in business and tourist travel is causing a sharp drop in scheduled airline flights by as
much as 10%; airlines are estimating they could lose $113 billion in 2020 (an estimate that could
prove optimistic given the Trump Administration’s announced restrictions on flights from Europe
to the United States),65 while airports in Europe estimate they could lose $4.3 billion in revenue
due to fewer flights.66 Industry experts estimate that nearly airlines will be in bankruptcy by May
2020 under current conditions as a result of travel restrictions imposed by a growing number of
countries.67 The loss of Chinese tourists is another economic blow to countries in Asia and
elsewhere that have benefitted from the growing market for Chinese tourists and the stimulus
such tourism has provided.
The decline in industrial activity has reduced demand for energy products such as crude oil,
causing prices to drop sharply, which negatively affects energy producers, renewable energy
producers, and electric vehicle manufacturers, but generally is positive for consumers and
businesses. Saudi Arabia is pushing other OPEC (Organization of the Petroleum Exporting
Countries) members collectively to reduce output by 1.5 million barrels a day to raise market
prices. U.S. shale oil producers, who are not represented by OPEC, support the move to raise
prices.68 An unwillingness by Russia to agree to output reductions added to other downward
pressures on oil prices and caused Saudi Arabia to engage in a price war with Russia that has
driven oil prices below $50 per barrel, the estimated break-even point for most oil producing
countries.69 In 2019, low energy prices combined with high debt levels reportedly caused U.S.
energy producers to reduce their spending on capital equipment, reduced their profits and, in
some cases, led to bankruptcies.70 Reportedly, in late 2019 and early 2020, bond and equity
investors, as well as banks, reduced their lending to shale oil producers and other energy
producers that typically use oil and gas reserves as collateral.71
Disruptions to industrial activity in China reportedly are causing delays in shipments of
computers, cell phones, toys, and medical equipment.72 Factory output in China, the United
States, Japan, and South Korea all declined in the first months of 2020.73 Reduced Chinese
65 Taylor, Adam, “Airlines Could Suffer up to $113 Billion in Lost Revenue Due to Coronavirus Crisis, IATA Says,”
The Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/coronavirus-live-updates/.
66 “Airlines Slash Flights to Cut Costs as Coronavirus Hits Travel Demand,” The Financial Times. https://www.ft.com/
content/c28b5790-62c6-11ea-a6cd-df28cc3c6a68.
67 Smyth, Jamie Smyth, Andrew Edgecliffe-Johnson, Peggy Hollinger, Myles McCormick, David Keohane, and
Richard Milne, “Most Airlines Face Bankruptcy by End of May, Industry Body Warns,” The Financial Times, March
16, 2020.
68 Brower, Derek, “Cash-Strapped US Shale Producers Pray for OPEC Aid,” The Financial Times, March 3, 2020,
https://www.ft.com/content/9161e62c-5cb1-11ea-b0ab-339c2307bcd4.
69 Strauss, Delphine, “Why There Are no Winners From the Oil Price Plunge This Time,” The Financial Times, March
10, 2020, https://www.ft.com/content/da2b0700-622c-11ea-b3f3-fe4680ea68b5; Mufson, Steve and Will Englund, “Oil
Price War Threatens Widespread Collateral Damage,” The Washington Post, March 10, 2020,
https://www.washingtonpost.com/climate-environment/oil-price-war-threatens-widespread-collateral-damage/2020/03/
09/3e42c9e2-6207-11ea-acca-80c22bbee96f_story.html.
70 “Texas Oil Groups: Panhandling Ahead,” The Financial Times, January 20, 2020.
71 Ibid.
72 Hille, Kathrin, Alistair Gray, and Patrick McGee, “Coronavirus delays PC and smartphone shipments for weeks,”
The Financial Times, March 3, 2020, https://www.ft.com/content/72742872-5c31-11ea-b0ab-339c2307bcd4.
73 Newmyer, Tory, “The Finance 202: Stocks Stage Major Comeback, but Manufacturing Report Points to Continued
Coronavirus Pain,” The Washington Post, March 3, 2020, https://www.washingtonpost.com/news/powerpost/paloma/
the-finance-202/2020/03/03/the-finance-202-stocks-stage-major-comeback-but-manufacturing-report-points-to-
continued-coronavirus-pain/5e5d84a6602ff10d49ac081f/?itid=hp_hp-cards_hp-card-politics%3Ahomepage%2Fcard-
ans.
Congressional Research Service 12
Global Economic Effects of Covid-19: In Brief
agricultural exports, including to Japan, are leading to shortages in some commodities. In
addition, numerous auto producers are facing shortages in parts and other supplies that have been
sourced in China. Reductions in international trade have also affected ocean freight prices. Some
freight companies argue that they could be forced to shutter if prices do not rebound quickly.74
Disruptions in the movements of goods and people reportedly are causing some companies to
reassess how international they want their supply chains to be.75 According to some estimates,
nearly every member of the Fortune 1000 is being affected by disruptions in production in
China.76
Conclusions
The quickly evolving nature of the Covid-19 crisis creates a number of issues that make it
difficult to estimate the full cost to global economic activity. These issues include, but are not
limited to the following:
How long will the crisis last?
How many workers will be affected both temporarily and permanently?
How many countries will be infected and how much economic activity will be
reduced?
When will the economic effects peak?
How much economic activity will be lost as a result of the viral outbreak?
What are the most effective monetary and fiscal policies at the national and
global level to address the crisis?
What temporary and permanent effects will the crisis have on how businesses
organize their work forces?
Many of the public health measures taken by Italy, Taiwan, South Korea, Hong
Kong, China, etc. have sharply impacted their economies (plant closures, travel
restrictions, etc.). How are the tradeoffs between public health and the economic
impact of policies to contain the spread of the virus being weighed?
74 Lynch, David J., “Economic Fallout From China’s Coronavirus Mounts Around the World,” The Washington Post,
February 13, 2020, https://www.washingtonpost.com/business/economy/economic-fallout-from-chinas-coronavirus-
mounts-across-the-globe/2020/02/13/7bb69a12-4e8c-11ea-9b5c-eac5b16dafaa_story.html?itid=lk_inline_manual_12.
75 Ibid.
76 Ibid.
Congressional Research Service 13
Global Economic Effects of Covid-19: In Brief
Appendix.
Select Measures Implemented or Announced by
Major Economies in Response to COVID-19
United States Federal Reserve
March 3: Cut the target range for the federal funds rate by 0.5 percentage point.
March 12: Expanded reverse repo operations, adding $1.5 trillion of liquidity to the
banking system.
March 15: Cut the target range for the federal funds rate by a full percentage point to
a range of 0.00% to 0.25% and restarted quantitative easing with the purchase of at
least $500 billion in Treasury securities and $200 billion in mortgage-backed
securities.
Congress
March 5: Passed, and the President signed, a bill providing $8.3 billion in emergency
funding for federal agencies to respond to the coronavirus outbreak (H.R. 6074:
Coronavirus Preparedness and Response Supplemental Appropriations Act 2020).
March 13: The House of Representatives passed a coronavirus response package
(H.R. 6201: Families First Coronavirus Response Act). The Senate is expected to
follow this week.
Trump Administration
March 13: President Trump declared a state of emergency, allowing the Federal
Government to distribute up to $50 billion in aid to states, cities, and territories.
Australia March 12: The government announced a AU$17.6 billion ($11.4 billion) stimulus
package that includes support for business investment, cash flow assistance for small
and medium sized business and employees, and household stimulus payments.
Canada Bank of Canada
March 13: Lowered its benchmark overnight rate to 1.25% from 1.75% in response to
the epidemic.
Canadian Government
March 11: Unveiled CA$1 billion ($750 million) in funding for vaccine research and
health measures.
March 13: Announced CA$10 billion ($7.5 billion) credit package to help businesses,
particularly small and medium-sized enterprises, struggling due to the pandemic.
China People’s Bank of China (PBOC)
Congressional Research Service 14
Global Economic Effects of Covid-19: In Brief
February 3: Expanded reverse repo operations by $174 billion; added another $71
billion on February 4.
February 16: Cut the one-year medium-term lending facility rate by 10 basis points.
February 20: Cut the one-year and five-year prime rates by 10 and 5 basis points,
respectively.
March 13: Lowered bank reserve requirements, freeing up about $79 billion to be
lent out.
PRC Government
February: Asked banks to extend the terms of business loans and commercial
landlords to reduce rents.
March: Earmarked $15.9 billion to fight the epidemic.
European Union European Commission
March 11: Announced a 37 billion euro ($41 billion) “Corona Investment Fund” that
would use “spare” money from the EU budget to help businesses, health-care
systems, and sectors in need; additionally, the EU’s own investment fund will
guarantee 8 billion euros ($8.9 billion) of loans to 100,000 small- and medium-sized
enterprises and affected companies may be able to delay the payment of their existing
loans.
European Central Bank (ECB)
March 12: Announced that it would provide banks with loans at a rate as low as
minus 0.75%, below the-0.5% deposit rate, increase bond purchases by 120 billion
euros ($135.28 billion) this year (with a focus on corporate debt), and allow euro
zone banks to fall short of some key capital and cash requirements (in order to keep
credit flowing to the economy).
France March 12: The government pledged more generous guarantees on loans made to
small businesses, more cash for firms struggling to hold on to workers, and a
solidarity fund to help companies cushion the blow from the coronavirus outbreak; it
also announced that the government would be ready to increase funds available to
help companies reduce workers’ hours, instead of laying them off.
Germany March 13: Pledged to provide unlimited liquidity assistance to German companies hit
by the pandemic. (The measure envisages a massive expansion of loans provided by
KfW, the state development bank, and will allow companies to defer billions of euros
in tax payments.) The Bundestag also expanded the Kurzarbeit or short-time work
scheme, under which companies that put their workers on reduced hours can receive
state support. The government also indicated that it would boost investments by €3.1
billion per year between 2021 and 2024.
Hong Kong February 26: The government announced a HK$120 billion ($15.4 billion) relief
package as part of its 2020-2021 budget, including a payment of HK$10,000 ($1,200)
to each permanent resident of the city 18 or older, paying one month’s rent for
people living in public housing, cutting payroll, income, property, and business taxes,
low-interest, government-guaranteed loans for businesses, and an extra month’s
worth of payments to people collecting old-age or disability benefits.
Congressional Research Service 15
Global Economic Effects of Covid-19: In Brief
India Reserve Bank of India
March 12: Announced a $2 billion injection into the foreign-exchange market to
support the rupee.
March 13: Announced a plan to add liquidity through short-term repurchase
operations.
Government of India
March 15: Pledged $10 million towards South Asian Association for Regional
Cooperation (SAARC) “coronavirus emergency fund.”
Italy March 11: The government announced two packages worth 25 billion euros ($28.3
billion): A package worth 12 billion euros will provide extra funding for the health
system as well as a mix of measures to help companies and households, including
freezing tax and loan payments and boosting unemployment benefits to ensure no
jobs were lost. The remainder will be a reserve to pay for any further measures. The
government also indicated that payments on mortgages will be suspended across Italy.
ABI, Italy’s banking lobby, said lenders would offer debt moratoriums to small firms
and households grappling with the economic fallout from the virus.
Japan Bank of Japan
March 16: Announced that it would (1) double its upper limit of annual purchases of
exchange traded funds to 12 trillion yen ($112.46 billion) and of real-estate
investment trusts to 180 billion yen ($1.7 billion) per year, (2) expand its upper limit
of its corporate bond balance and commercial paper balance by 1 trillion yen ($9.5
billion) each, and (3) start a lending program for commercial banks, providing them
with one-year loans in exchange for corporate collateral worth 8 trillion yen ($75.6
billion).
Japanese Government
February 13: Unveiled a set of measures worth 15.3 billion yen ($140 million) to fight
the spread of coronavirus; secured 500 billion yen ($4.7 billion) for emergency lending
and loan guarantees at the Japan Finance Corporation and other institutions for small
businesses hit hard by the virus outbreak.
March 10: Unveiled a second package of measures totaling 430.8 billion yen ($4.1
billion) in spending to cope with the fallout of the coronavirus outbreak (focusing on
support to small and mid-sized firms) and boosted to 1.6 trillion yen ($15.1 billion) its
special financing for small- and mid-size firms hit by the virus, up from 500 billion yen.
Mexico February 13: The Bank of Mexico cut its key rate by 25 basis points to 7.0%.
Saudi Arabia March 15: The Saudi Arabian Monetary Authority announced that it had prepared a
50 billion riyal ($13.32 billion) package to help small and medium-sized enterprises
cope with the economic impacts of coronavirus.
Congressional Research Service 16
Global Economic Effects of Covid-19: In Brief
Singapore February 18: The government announced around $4.5 billion in financial packages to
help contain the coronavirus outbreak, including $575 million to fight and contain the
disease, mainly through healthcare funding, and 4 billion in economic stimulus
measures to manage its impact on businesses, jobs and households.
South Korea March 3: Announced a 11.7 trillion won ($9.8 billion) stimulus package that includes
funding for medical institutions and quarantine efforts, assistance to small- to medium-
sized businesses struggling to pay wages to their workers, and subsidies for child care.
Spain March 12: The government announced additional support for the health system and a
14 billion euro ($15.6 billion) stimulus package for the economy.
Taiwan February 25: The government approved a T$60 billion ($2 billion) package to help
cushion the impact of the coronavirus outbreak on its export-reliant economy,
including loans for small businesses, subsidies for hard-hit tour agencies, tax cuts for
tour bus drivers, and vouchers to spend on food in night markets.
March 12: The president announced that an additional T$40 billion ($1.33 billion)
from the Employment Stabilization Fund and the Tourism Development Fund would
be available to stimulate Taiwanese economy.
United Arab Emirates March 15: The Central Bank of the UAE announced a 100 billion dirham ($27 billion)
(UAE) stimulus package to deal with the economic effects of the coronavirus pandemic; it
will also ease regulatory limits on loans.
United Kingdom Bank of England
March 11: Cut its benchmark interest rate by half a percentage point, to 0.25%,
revived a program to support lending to small and midsize businesses, and reduced
bank capital requirements to further boost credit.
UK Government
March 11: Announced a stimulus package totaling 30 billion pounds ($39 billion). It
will include 7 billion pounds ($8.6 billion) available to support the labor market, 5
billion pounds ($6.1 billion) to help the health-care system, and 18 billion pounds ($22
billion) to support the UK economy, bringing the total fiscal stimulus to 30 billion
pounds ($39 billion). (Among the specific measures, there will be a tax cut for
retailers, cash grants to small businesses, a mandate to provide sick pay for people
who need to self-isolate, subsidies to cover the costs of sick pay for small businesses,
and expanded access to government benefits for the self-employed and unemployed.)
Congressional Research Service 17
Global Economic Effects of Covid-19: In Brief
Author Contact Information
James K. Jackson, Coordinator Andres B. Schwarzenberg
Specialist in International Trade and Finance Analyst in International Trade and Finance
#redacted#@crs.loc.gov , 7-.... #redacted#@crs.loc.gov , 7-....
Martin A. Weiss
Specialist in International Trade and Finance
#redacted#@crs.loc.gov, 7-....
Congressional Research Service R46270 · VERSION 4 · UPDATED 18
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