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This makes me realize that I never understood macroeconomy. After shutting down the economies for the developed world for multiple months the prediction for th
by glofish 7y ago
This makes me realize that I never understood macroeconomy.
After shutting down the economies for the developed world for multiple months the prediction for the global economy is ONLY 3% down? I don't get it. Makes no sense frankly.
- koheripbal 7y ago1. 3% is an annualized number. 2. The _entire_ economy is not shut down even in the hardest hit areas. In fact, most people are actually still working - from home. 3. Most countries are not in lockdown, or are only partially shut-down.
- brenden2 7y agoStock markets != economy Edit: I misread, thought the parent mentioned markets.
- frankbreetz 7y agono one mentioned the stock markets, from the article: "In its World Economic Outlook, the I.M.F. projected that the global economy would contract by 3 percent in 2020"
- glofish 7y agoI am not sure I follow, the stock market is not discussed here, it is about the global economy, the word "stock" is not even present in the cited work.
- dr-detroit 7y agoThese people are just placing bets on who will most efficiently exploit what predicted output work the proletariat might do divided by the sum total of ruthlessness of all competition.
- tantalor 7y agoWhat made-up number did you expect?
- namenotrequired 7y agoOnly some parts of some economies were shut down.
- frankbreetz 7y agoI was listen to marketplace yesterday, and they had an IMF representative on who said this prediction involved a lot more uncertainty then usual, and would most likely be revised down. You got to consider the unemployment rate, which is around 13% which is historically huge, but not that much outside the 6% swing in growth predictions by the IMF. Especially when you consider that must of the lost jobs where service industry type jobs which are generally lower paying. Also this loss is being spread across the whole year, if you only look at the second quarter things are looking much worse. If you take all these things into account these numbers are too far fetched.
- SpicyLemonZest 7y agoPeople say we're shutting down the economy for rhetorical effect. (Guilty as charged here.) In practice, a large majority of economic activity is either doable from home or considered essential, and 20% of economic output lost for 2 months does only add up to about 3% over the year.
- jansan 7y agoYour calculation is only true if the economy will jump back to normal after the two months, which will not happen. 3% is VERY optimistic IMHO.
- SpicyLemonZest 7y agoMy calculation leaves out a lot of factors. 20% was a number I pulled out of my arse, many lockdowns are lasting less than 2 months, some things won't go back to normal after lockdowns but normal economic growth won't stop either. I was just trying to say that it's within the realm of reasonability - the number's going to end up being closer to 3% than 30%.
- chvid 7y agoI read an estimate for the Danish economy that a full lockdown costs 4-5% of annual GDP pr month. Meaning that if it goes on for a full year the output of the economy would be half. Even in a full lock down some parts of the economy is still running at full "potential output", some maybe more: Hospitals, police, some business, utilities like electricity or water, basic supermarkets etc. But, yes, 3% is probably too low.
- hyko 7y agoSome of the activity lost in the months of lockdown is just deferred, and so is projected to take place when restrictions are lifted again.
- calebm 7y agoQE is pushing off the pain till later (making the future worse [more debt] for a better now).