Over 1.6 million positive cases and around hundred thousand deaths have been reported world over, and the number seems to be only growing (at 2.68 percent on a daily basis), as per World Health Organisation’s (WHO) Covid-19 dashboard. With many countries already on an extended lockdown, economic activities have come to a halt. With growing unemployment rates, stretched balance sheets, lower capex, weak consumer demand and more, COVID-19 poses a serious risk of sending economies into recession.
To survive this blow, governments and central banks all over the world have enacted fiscal and monetary stimulus measures to counteract the disruption caused by the coronavirus. World Bank Group has announced up to $12 billion immediate support for covid-19 country response. Whereas, the International Monetary Fund (IMF) is making available about $50 billion through its rapid-disbursing emergency financing facilities for low income and emerging market countries that could potentially seek support. Of this, $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility.
Let’s take a look at the top five economies (as per nominal GDP) stimulus packages here. All data has been taken from IMF’s policy tracker. Below chart depicts stimulus packages provided by the top five economies.
People’s Republics of China: An estimated RMB 2.6 trillion (369 billion USD) of fiscal measures or financing plans have been announced. This forms 2.5 percent of the China’s GDP. Apart from the measures implemented for epidemic prevention and control, medical equipment, unemployment insurance and tax relief, the Chinese government has also taken multiple steps to limit tightening in financial conditions. Some of the measures to provide financial relief to affected households, corporates, and regions facing repayment difficulties include:
Japan: On April 7, the Government of Japan adopted the Emergency Economic Package Against COVID-19 of ¥108.2 trillion (999.5 billion USD). This forms 20 percent of Japan’s GDP and aims at the following five objectives:
The key measures comprise cash handouts to affected households and firms, deferral of tax payments and social security contributions, and concessional loans from public and private financial institutions.
Germany: The country adopted a supplementary budget of €156 billion (170.6 billion USD). This forms 4.9 percent of GDP, which includes:
Are these measures enough?
A relief package for the industry is awaited. Stock markets are elated expecting a package of Rs 2 trillion. How much better could the governments/federal banks balance the fiscal component with that of the monetary component of their measures? Questions do remain. And the answers could potentially help us channel our response to better contain the adverse impact from the pandemic.
Meanwhile there have been heartening displays of solidarity at grass roots levels by citizens and self-help groups who have been spontaneously organizing themselves and relentlessly working to support those in need during these times. And it’s heart-warming to see this spirit cut across class, caste, religion and region based divides. Many of us might have such inspiring stories about how – in our own small ways – we have been trying to contribute to those in need around us. Afterall as they say, charity begins at home.
Stay home, stay safe and let’s help those in need during these unprecedented times.