The coronavirus COVID-19 pandemic has led to an unprecedented crisis in the global economy. To varying degrees, all regions of the world have been affected. The services sector is most affected: the tourism business is paralyzed, restaurants and hotels are closed, the mass entertainment and shopping industry suffers; air transportation decreased significantly.
There is a growing perception of the forthcoming problems size. According to the forecast of the American investment company Morgan Stanley, the US economy in the II quarter of 2020 will decline by an unprecedented 38%, and the real GDP will shrink 5,5% by the year end, the steepest drop since 1946.
Christine Lagarde, chairperson of the European Central Bank (ECB), believes that the restrictions introduced to combat the pandemic can lead to a reduction in the EU economy by 5%.
The International Monetary Fund (IMF) predicts a 5,5% drop in Russia's GDP this year. So far, this figure does not exceed the shock of the 2009 crisis, when the Russian GDP fell by 7,8%.
Existing estimates are likely to be reviewed more than once, since humanity has not yet reached the peak of the pandemic, therefore, the real damage will be understood later. Nevertheless, it may be concluded that countries with high share of services in GDP will suffer the most.
Among Top-20 countries with the largest economy, the US have the highest share of services in GDP exceeding 77%; it is 71% in the UK, and 70% in France (see Table 1).
The share of services in the GDP of Russia is less - 54%, in China - 52%, and in India - 49%.
|Rank||Country||Service in GDP, %*||National GDPs at PPP, trillion USD, 2019**||Position by GDP|
|2||United Kingdom||71,0||3 131||9|
|15||Republic of Korea||53,6||2 320||14|
|19||Saudi Arabia||48,4||1 899||17|
* Share of services in value added of GDP. Source: World Bank - World Development Indicators
** Source: INF - World Economic Outlook Database
Countries with their own industry and developed agriculture, independent of seasonal workers and foreign markets, will be less susceptible to the crisis. During the pandemic, industrial goods and food are of prime importance, and entertainment, leisure and shopping are transferred to the category of deferred demand.
Speaking at a meeting with the Government of the RF on April 15, the President of Russia offered a number of new measures to support business in conditions of the coronavirus epidemic.
The Government of the RF and the Central Bank of the RF are instructed to develop and implement of the following measures:
- Companies trading with non-food items should be included in the list of the most affected sectors (more than 600 000 operating specialized retailing companies - according toGlobas System.
- Small and medium-sized enterprises should be provided with a free assistance from the state for the payment of salaries in April-May in the amount of 12 100 rubles per employee. The condition for receiving of such support should be the retaining of at least 90% of the authorized staff size as of April 1.
- The State development corporation VEB.RF should provide guarantees of at least 75% of the volume of loans for the payment of salaries.
- Soft loans should be offered to systemically important enterprises for working capital financing. Loan rates should be subsidized by the state in the amount of the Central Bank's key rate. 50% of the loan should be secured by state guarantees of the Ministry of Finance of the RF.
- The List of systemically important enterprises should be completed. The choice of companies for inclusion in the List should be based on intelligible, clear and objective criteria, as a result of which the List should include organizations that are extremely important for the national economy as a whole.
- Aviation companies should be provided with support in the amount of more than 23 billion rubles (more than 1300 operating companies - according to Globas System.
- Separate support measures should be developed for each of the basic main sectors of the economy. To ensure the sustainability and balance of regional budgets, it should be provided the allocation of 200 billion rubles.