Coronavirus: worldwide economic measures to avoid crisis
Countries, economic states, and national banks are pouring billions to support the global economy, paralyzed by the Covid-19 virus pandemic.
To avoid or reduce as much as possible the pandemic’s impact, they are offering fiscal stimuli, fiscal cuts, rate cuts, and targeted measures. Here is a round-up, country by country.
The European Central Bank (ECB) has chosen, contrary to its American counterpart, to act step by step. Banks first saw their capital requirements relaxed, and were encouraged to continue lending money to fragile SMEs to avoid a wave of bankruptcies.
On Tuesday, it provided over 100 billion euros in liquidity to banks. However, on Wednesday, an emergency plan of 750 billion euros to buy back public and private debt was launched.
United States of America
Over the Atlantic, the Federal Reserve Bank has set up a new facility for financing short-term receivables. This measure was last used during the 2008 financial crisis. Rate levels have also been dropped to zero.
The Government, for its part, is negotiating a gigantic 1 000 billion dollar economic recovery plan. As a flagship measure, it plans to send every American two 1 000 dollar checks, provide 300 billion for small businesses, and 150 billion to other fragile sectors such as tourism.
As of today, China is taking the most hits from the coronavirus outbreak. To fight against the crisis, the People’s Bank of China provided extensions or renewals of business loans at the end of February. It also announced a drop in the reserve ratio of banks, freeing up 550 billion yuan.
Italy and France
Italy is the country most affected by the epidemic in Europe so far. The government will provide 25 billion euros to fight the outbreak, and hopes that this measure will generate 340 billion euros in cash. Rome also plans to help the aviation sector and suspend the payment of certain mortgage and bank loans.
In France, the government announced a reduction, postponement, or cancellation of charges of up to 32 billion euros in March alone. Partial unemployment has also been facilitated, and a 2 billion euro solidarity fund has been set up. Small businesses and freelancers will see their water, gas, and electricity bills suspended.
Germany, Spain, and UK
Germany goes big and unlocks at least 550 billion euros to help companies and businesses. Help for partial unemployment and fiscal easing measures have also been taken. The same measures have been taken in Spain, and the government will guarantee up to 100 million euros in loans for companies.
The UK government announced it would support its economy “whatever happens”. To do so, the state guarantees loans to companies adding up to 330 billion pounds (360 billion euros) and the help of up to 20 billion pounds (22 billion euros).
Canada and Japan
After the first envelope of 10 billion Canadian dollars (6,5 billion euros) to help the country’s businesses, Canada’s PM, Justin Trudeau, announced a new 27 billion Canadian dollars (17,5 billion euros) help plan. The government will also provide 55 billion (35,5 billion euros) of tax deferrals.
The Bank of Japan has strengthened its asset repurchase policy while the country’s government previously released an envelope of 13,4 billion euros to grant interest-free loans to small and medium-sized businesses.
Australia and more
Both Reserve Banks of Australia and New Zealand have dropped their main policy rate to 0,25%. Afterward, the latter announced a 12,1 billion New Zealand dollar (6,4 billion euros) stimulus plan.
Other central banks have taken up actions, with an interest rate dropped to 0,75% in South Korea, a reduction in key rate in Chile while the International Monetary Fund will set aside 50 billion euros to help struggling countries.