THE ECONOMY IN THE CORONAVIRUS

We have all experienced the effects of COVID-19, there is no area that is exempt from its effects, however each one has a version of the story that collectively builds the facts, however reality is only one when we see it portrayed in numbers and there are probably no debate versions.

On April 9 of this year, BBC News published the statements of Kristalina Georgievala, the current director of the IMF: "We anticipate the worst economic consequences since the Great Depression." What does this mean? Why does she compare the current economic situation with that of 1929? How is the economy at the present time?.

Emblematic cases of that time is the loss of 34 million US dollars in investment products by Goldman Sachs, perhaps that figure seems small seen today in 2020 but I comment that at that time the minimum hourly wage was less than 0.25USD cents an hour, according to Annalyn Kurtz Senior Editor of CNN Business, that minimum wage of yesteryear compared to the current federal minimum wage in the USA which is 7.25USD an hour allow us to better understand the magnitude of the damage at that moment in history with the losses reported by the emblematic Investment Bank in the past.

Now, what is the magnitude of the damage to the economy due to the pandemic? If we go to the figures:

1.The observatory of the International Labor Organization (ILO) reports that: 94% of workers live in countries where some type of workplace closure measure has been applied. 2.178 million young workers around the world, namely more than four out of ten young employees worldwide, worked in the sectors most affected by the crisis. 3. Almost 77% of young workers worldwide (328 million) had a job in the informal sector. 4. ILO reveal a decrease in the number of working hours of around 10.7 percent compared to the last quarter of 2019, comparable to 305 million full-time jobs. 5.The Dow and FTSE saw their biggest quarterly declines in the first three months of the year since 1987. 6.Chinese car sales, for example, fell 48% in March. 7.Brent crude fell below $ 20, to the lowest level seen in 18 years.8.Stock markets plunged in March when fear of the recession drove investors to safe havens; Most exchanges lost around a third of their values.9 China is projected to achieve low levels of growth that have not been seen since the 2008 financial crisis and may experience $ 800 billion in new bad loans.

Certainly these figures wake up alert and we are all waiting for what will happen. The great crisis of 1929 took a decade to disappear, it was another less intense and less interconnected time, however there were lessons learned that serve as a guide to activate economic policies in the current moments that allow nations to overcome this situation.

The great crisis of 1929 began to reverse as the government increased its intervention, Franklin D. Roosevelt in his first government launched an intervention plan called "New Deal" for his first 100 days of government which activated : urgent reforms that included: Relief, Recovery and Reform and materialized in laws that gave life to welfare funds for the unemployed, plans for aid to farmers, voluntary work programs for the unemployed focused on the population young, large-scale public works projects, mortgage refinancing, insurance for bank deposits as well as regulation of securities transactions, among other things.

The truth is that the lesson learned from the past is that without the intervention of the government in the social and economic areas through social plans, special laws and increased public spending, a recovery from any crisis that may arise will not be possible. be it COVID-19 or the Zombies attacking us.

In this sense, what are the governments doing economically in the face of the Coronavirus? The truth is that those who have learned from history have activated precisely formulas that resemble what Franklin D. Roosevelt did in 1933 and that is how we see The government of Canada creates an Economic Intervention Plan of CAD 82 Billion, the US approves a package of economic aid of USD 3 Billion, China for its part through the Chinese Central Bank announced a cut in the reserve amount of the banks by the order of 56 Billion USD in order to inject liquidity into the economy and for its part the European Union has launched the “Investment Initiative in response to the Coronavirus” for 37 Billion Euros.

In summary, I don't think we are at the bottom of an economic crisis like the one of 1929, but what is certain is that the economies are suffering the effects of this blackout of economic activity due to quarantine measures, now the economies of The countries are facing the challenge of activating themselves at any cost despite the fact that there is no cure for the virus, since the damage that can be generated by prolonging the quarantine for longer may lead to a real economic crisis. without precedents.