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Covid-19: why the economy could fare worse than you think
- Global economic activity is projected to shrink by approximately 10% in countries such as South Korea, America, and Sweden due to the necessity of social distancing and eased restrictions.
- The recovery of "fun spending" and social leisure sectors, including dining, hotels, theaters, and cinemas, is expected to remain suppressed even after lockdowns are relaxed.
- True economic impacts may emerge with a lag of several months following the imposition of lockdowns, with bankruptcy risks anticipated to rise similarly to trends observed in China.
- Economic conditions could deteriorate further than expected once state aid supporting wages is gradually withdrawn, revealing the full cost of lockdowns to businesses and households.
- A specific downturn scenario involves restaurant owners reopening with reduced business, resulting in staff redundancies and closures due to an inability to cover rent.
- Investment may be cut back massively as the inability to price owed money from customers or tenants creates significant pricing risks.
- Unemployment in America is predicted to be concentrated among specific demographics, including individuals earning less than $20,000 annually, women, and ethnic minorities employed in labor-intensive sectors like leisure, hospitality, and retail.
- Political agendas in the post-lockdown era may shift toward improving standards for essential workers or toward protectionist measures, such as rejecting immigrants and prioritizing vaccine capacity for citizens.
- The severity of economic effects is directly correlated with the duration of time required to develop and distribute a vaccine or find an effective treatment.