China is bouncing back from the effects of coronavirus and the world is watching to see what they can expect from life after lockdown. China's Times of economic is now functioning. it's around 90 percent of normal levels.
90 percent is an incredible achievement but in practice will feel very very strange a 90 percent economy may not sound too bad but for many it could be catastrophic, some of the worst unemployment numbers in this country's history 6.6 million plus people laid off in a single week it wouldn't be that surprising if we think we kind of through the worst of it we end a lockdown and then actually been finished that's it even worse as global lock downs ease the economy faces the greatest challenge in living memory.
Here's what you need to know in China factories are up and running ,classrooms are full, restaurants are open but the economy has not returned to normal in fact its operating at around 90% of usual levels and as lockdowns e's elsewhere this 90% economy could be what the rest of the world has to look forward to regardless of how countries have dealt with the pandemic.
It's becoming clear that once businesses have to operate with social distancing in place the economy can be expected to shrink by about 10 percent whether that's in South Korea, America or Sweden but the missing 10% will mean life will feel far from normal in China large chunks of everyday life are missing having collapsed in January.
Consumer footfall has recovered to about half its previous levels hotel occupancy is still down by around 50% and 75% fewer people are flying what's mainly in the missing 10% is stuff that it's hard to do if you're trying to social visit so things like restaurants at hotels theaters cinemas and crucially it's also the way in which people tend to have fun there's a world where you work and then as soon as the day is over you immediately get back to your house as fast as possible this dip in so-called fun spending will continue .
Even after lockdowns are relaxed in Sweden most people were never asked to stay at home during the pandemic but Swedish spending patterns over the past few months have mirrored those in neighboring Denmark which has been under lockdown daily restaurant turnover fell by 70 percent last month as uncertainty over the Times of economic and fear of infection meant fewer Swedes ate out and while overall Danish spending fell by 29 percent during lockdown.
Swedes cut their spending by almost as much what the evidence suggests now is that actually it's people's own voluntary decisions about how they behave with shaping economies actually more than what the government is telling people to do.
The lockdown itself is not really influencing behavior that much the true. economic impact of imposing lockdowns will take time to emerge in China it was several months after the lockdown began to be lifted before bankruptcy numbers started to rise.
it wouldn't be that surprising if we think we kind of through the worst of it we end the lockdown and then actually bail in film starts to get even worse than we had expectefor the past few months the global economy has been propped up by unprecedented levels of state aid in Europe's five largest economies one in five workers is currently in a special scheme where the state pays their wages the governor has deployed 750 billion euros to sustain companies that's unprecedented the government is going to step in and help to pay people's wages.
it's only as this su
pport is gradually withdrawn that the wider cost of covert 19 will become clear it will feel quite sort of uncertain because you know no one really knows how businesses and households are going to be able to survive weeks and months of of much lower incomes.
It will impact all levels of the economy let's take a look at one scenario a small business owner runs a chain of restaurants when the pandemic hits he takes out a loan and furloughs his staff he's not alone in March more cash was handed out to UK businesses than in any month since records began after lockdown.
He reopened but business is slow so he makes staff redundant and closes a restaurant as he can't pay the rent this has already been happening in the first quarter of the year the share of commercial tenants who paid their rent on time in Britain fell from ninety percent to 60 percent with big firms like Burger King admitting they couldn't make rent on empty restaurants without
these rent payments his landlord can no longer keep up with her mortgage and ultimately her bank is left with debt that cannot be repaid the problem with all of these losses across the Times of economic is that someone eventually has to sort of admit that they are going to bear these losses and the color consequences of that for business confidence and for investment could be very significant if you are concerned that your customers or your tenants or
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whoever is not going to actually be paying the money they owe you then making new investments is not just risky it's actually completely impossible to price because everything is so unstable and so the risk of that is that things like investment get cut back massively and that will you know that will
have very large effects key economic factors already indicate that the world is facing a prolonged recession already unemployment in America is at its highest rate since the Great Depression
where In India it worse
but these losses will not be felt equally to see how let's go back to our restaurant owner the industry's hit hardest by the covid 19 pandemic our labor intensive and rely on an army of low paid workers and it is these people who are particularly likely to lose their jobs. In America you are already twice as likely to be made redundant if you're earning less than $20,000 a year then $80,000 a year the kind of jobs that won't exist at all or in much reduced numbers will be the kind of jobs that are typically done by people who rarely paid less john started on by women and jobs that are done
by I think minorities more commonly so that's jobs and things like pleasure hospitality retail trade and that kind of thing so I think you could expect an employment to be really concentrated in certain groups. and these economic changes will shape t
he political agenda in the post lockdown world you can imagine a situation where it becomes kind of common sensical that the essential workers who've kept the economy going you can imagine a push
trying to improve their standard of living and standard of work on the other
hand you could imagine a situation where countries kind of closed it on
themselves and say you know we don't want to move boats because immigrants
bringing disease and we want to make sure that we have capacity to build
vaccines for our citizens for no one else it's too
soon to know which way the
political tide will turn and each country's response will be different but none
certainty is that the longer we all have to wait for a vaccine to be developed
and distributed or effective treatment found the more pronounced the effects of
the 90% economy will be .