Health and Human Toll Grows. Economic Damage Evident. Deep Recession Expected
The COVID-19 pandemic has spread with alarming speed, infecting millions and bringing economic activity to a near stand-still as countries imposed tight movement restrictions to try to halt the spread of the virus. As health and human toll grows, the economic damage is already evident and represents the largest economic shock the world has experienced in decades. The World Bank’s June 2020 Global Economic Prospects 1 forecasts a 5.2% contraction in global GDP in 2020 – the deepest global recession in decades, despite extraordinary efforts of governments to counter the downturn with fiscal and monetary policy support.
Singapore is in technical recession, with Q2 GDP shedding 12.6% y-o-y.
HOPE, OR SAFETY?
Wall Street – Main Street Disconnect? Capital Live On Hope, Or In Search of Safety?
- U.S. unemployment rate recovered slightly to 11.1% (17.8m unemployed persons) for June after hitting a historic high of 14.7% in April (average of 5.75% since 1948).
- Seasonality adjusted unemployment rate in Singapore climbed to 2.4% for Q1, the highest level in a decade, and worsened to 2.9% in Q2.
- As at 4 August 2020, Dow Jones Index (DJI) has risen 44% after it crashed on Black Thursday 23rd March and is now only some 7% lower than it was at the beginning of 2020.
- The Straits Times Index correlated, though not as spectacularly, with the DJI, rose 13% during the same period, and is now some 23% lower than at the beginning of 2020.
- Gold prices has crossed US$2,000 per oz, it’s historical high, rising some 34% since January.