Leading market experts are now trying to figure out whether the current economic downturn will eventually turn into a full-blown global crisis. They are voicing concerns that now the odds are pretty high: weak economic indicators, a surge in unemployment, etc. Therefore, the government of many countries across the globe should go the extra mile to ease the coronavirus consequences and thus avoid a world recession.
The first wave of the pandemic caught humanity off guard. Nevertheless, the governments of developed countries and major central banks managed to come up with an effective anti-crisis plan and stop a large-scale economic disaster. Their extensive experience in the world of finance and quick reaction have helped prevent the worst-case scenario but still they have not yet been able to fully protect the world economy from negative consequences. Besides, they resorted to a large-scale injection of money to support the economy. Some economists fear that it may lead to unexpected consequences, including a labor shortage in some vital sectors. According to some experts, the authorities of countries around the world have allocated about $8 trillion for budget and tax measures (without taking into account the interventions of the central banks). This is rather a large sum of money to inject. It may improve the situation at first but it is sure to come back to bite later.
In addition, the economies of many countries are currently overloaded with debt. It may well lead to deflation. If this scenario comes true, the economy will be unable to recover in the near future. The situation is aggravated by the fact that now the Achilles' heel of the world economy is an unprecedented high level of public debt compared to gross domestic product (GDP).
