Global Economic Disruptions

Globalization, automation, and inequality—oh my!

This report was updated on March 25 and will continue to be amended as stimulus measures are announced. The world’s governments are racing to support people and businesses until the new coronavirus is contained. The only questions are how much money to shovel into the economy, how to go about doing it, and whether it will be enough. Already, officials from Paris to Washington DC are pulling out the playbook used in Asia for slowing the spread of Covid-19: they’re restricting travel and cracking down on public gatherings. While those measures have the potential to reduce deaths and infections, they will also damage business prospects for many companies and cause a synchronized worldwide disruption. In the US alone, $750 billion or so of fiscal stimulus would be a good start for “round one,” Harvard economist Kenneth Rogoff told Quartz. Hotels, airlines, restaurants, and small businesses are going to need aid to get through the turmoil, according to the former IMF chief. He suggested targeting the money at low-income earners who would use it quickly, and said spending in the US and Europe needs to be in the order of $1 trillion each. “The policy response needs to be MASSIVE,” Rogoff wrote in an email. “Fiscal policy response in the health sector needs to treat this like a WAR, and nothing less, converting facilities to temporary hospitals, factories to making respirators and face masks.” Governments and other institutions around the world are looking to buy their countries time until the crisis is curtailed: US

  • The White House and Senate have agreed on a $2 trillion stimulus package that includes $500 billion to back loans for companies and $350 billion for small businesses. Lower- and middle-income adults will get $1,200 and $500 for each child, whileunemployment insurance is beefed up.

  • The Senate passed a House bill that expands unemployment insurance and provides paid sick leave to hourly employees.

  • The Federal Reserve pledged an unlimited amount of asset purchases to support markets, including, for the first time, buying corporate bonds and exchange traded funds.  The central bank earlier slashed interest rates to near zero. Fed officials are encouraging lenders to eat into their capital holdings to help their customers.

  • The Fed restarted a financial crisis-era lending facility on March 17 for commercial paper. The program for short-term financing is set to last for one year.


  • In China, where the Covid-19 outbreak originated, the government is reportedly planning around $394 billion of infrastructure spending, backed by local government bonds.

  • Banks reportedly have approval from the government to roll over loans, relax guidelines on overdue debt, avoid reporting delinquencies, and for borrowers to skip making payments.

  • The People’s Bank of China cut bank reserve requirements at banks to free up $79 billion for lending to crisis-hit companies and says it will reduce interest rates for borrowers.


  • The government has announced a spending package of about $4 billion that is focused on small and mid-size companies.  A government-affiliated lender will offer funds charging (effectively) no interest to small firms whose revenues have dropped because of the virus.

  • The Bank of Japan will buy more than $100 billion worth of exchange-traded funds, twice its earlier pledge, while setting aside money to keep corporate funding markets operating.


  • The government in Berlin has signed off on a €750 billion ($800 billion) package as well as plans for loans, guarantees, government stakes in companies, and credit to keep businesses afloat.

  • “We promised that we will not fail because of a lack of money and political will,” said German Economy Minister Peter Altmaier. “We will reload our weapons if necessary.”


  • Officials are prepared to make as much as $219 billion of aid available, including €100 billion of guarantees for company loans and €17 billion of direct support for enterprises.

  • Prime Minister Pedro Sanchez reportedly said private investment will provide €83 billion of support.


  • The British government said on March 20 that it’s writing a blank check for workers: Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month; no business will pay VAT until June, which is worth £30 billion.

  • Officials said on March 17 that they are assembling a bailout fund of £330 billion ($400 billion)—roughly 15% of gross domestic product—to offer state-backed loans support UK businesses. Small operators in retail, hospitality, and leisure will be eligible for cash grants of up to £25,000.

  • The March 17 package also includes a three-month mortgage holidays for homeowners in the financial difficulty because of the pandemic.

  • Officials in London pledged £30 billion of emergency spending on March 11. That includes a £5 billion emergency response fund for the National Health Service, statutory sick pay for people who have been told to self-isolate, and sick-pay refunds for companies with fewer than 250 employees.

  • The Bank of England cut its target rate to a record low 0.1% and boosted its bond-buying program by $230 billion, on March 19. The central bank had previously rolled out a cheap credit program, and gave banks more scope to lend. Its Term Funding Scheme is aimed at smaller companies.


  • Officials will spend €45 billion to help small businesses and employees.

  • President Emmanuel Macron said there will be unlimited aid for businesses.


  • The government approved €25 billion ($49 billion) of support for companies and workers, including extra money for the health system, increasing unemployment benefits, freezing tax and loan payments, and suspending mortgage payments.

  • The effort will also make use of €340 billion of financing, and more efforts are expected to follow.



  • The government is planning a package totaling C$82 billion ($56.7 billion), which includes C$27 billion of support for individuals and companies and C$55 billion in temporary tax deferrals for businesses and households.

  • The Bank of Canada cut its overnight interest rate by 50 basis points to 0.75% on March 13.


  • Officials announced A$15 billion ($8.8 billion) in lending for small and medium lenders on March 19, in addition to A$17.6 billion announced earlier in the month.

  • The Reserve Bank of Australia cut interest rates to 0.25%, the lowest ever, and started its first quantitative easing program. The RBA is providing A$90 billion in lending for banks.

International Monetary Fund

  • The international organization, which has 189 member countries, says it’s prepared to mobilize $1 trillion in lending.

  • As much as $10 billion is available for low-income countries using facilities that have zero interest rates.


  • Authorities are considering repurposing their bailout fund, originally designed to combat the euro zone’s sovereign debt crisis,  to cushion the impact of a recession. The so-called European Stability Mechanism has more than €400 billion of unused capacity.

  • The European Commission is assessing a €37 billion Coronavirus Response Investment Initiative to be used for healthcare, supporting workers, and small- and medium-size businesses.

European Central Bank

  • The eurozone’s central bank started a €750 billion Pandemic Emergency Purchase Programme on March 18. The program is planned to last through the end of 2020 is authorized to purchase Greek debt.

  • The ECB also began purchasing commercial paper, a form of short-term borrowing.

  • The central bank for the euro system kept its main interest rate steady at -0.5% on March 12 while boosting asset purchases by€120 billion.

  • Policy makers said they will offer cheap loans to the region’s banks, while ECB president Christine Lagarde said governments need to spend money to contain the economic fallout.

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