Global Economic Effects of COVID-19

Changes from May 7, 2021 to June 15, 2021

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Global Economic Effects of COVID-19
~~May 7, 2021~~
~~In the year since the COVID-19 outbreak was first diagnosed, it has spread to over 200 countries~~
~~and all U.S. states. The pandemic has~~June 15, 2021 The COVID-19 viral pandemic has been individually experienced, but globally shared. It disrupted lives across all countries and communities and negatively affected global economic negatively affected global economic ~~growth beyond~~
James K. Jackson,
growth in 2020 beyond anything experienced in nearly a century. Estimates so far indicate the anything experienced in nearly a century. Estimates so far indicate the ~~virus reduced global~~
Coordinator
virus reduced global economic growth to an annualized rate of -4.5% to -6.0% in 2020, with a economic growth to an annualized rate of -4.5% to -6.0% in 2020, with a ~~partial recovery of~~
Specialist in International Specialist in International
partial recovery of 2.5% to 5.2% projected for 2021. Global trade is estimated to have fallen by 2.5% to 5.2% projected for 2021. Global trade is estimated to have fallen by Trade and Finance 5.3% in 2020,5.3% in 2020, but is ~~but is~~
~~Trade and Finance~~
projected to grow by 8.0% in 2021. According to a consensus of forecasts, projected to grow by 8.0% in 2021. According to a consensus of forecasts, ~~the economic~~

the economic downturn in 2020 was not as negative as initially estimated, due, at least in part, to downturn in 2020 was not as negative as initially estimated, due, at least in part, to ~~the fiscal and~~
Martin A. Weiss
the fiscal and monetary policies governments adopted in 2020. Major advanced economies, monetary policies governments adopted in 2020. Major advanced economies, ~~which comprise~~
Specialist in International Specialist in International
which comprise 60% of global economic activity, are projected to operate below their potential 60% of global economic activity, are projected to operate below their potential ~~output level~~
Trade and Finance Trade and Finance
output level through at least 2024, which will negatively affect national and individual economic welfare~~through at least 2024~~. Compared with the synchronized nature of the global economic slowdown . Compared with the synchronized nature of the global economic slowdown

in the first half of 2020, the global economy in the first half of 2020, the global economy ~~has shown~~showed signs of a two-track recovery that began signs of a two-track recovery that began
in the third in the third Andres B. Schwarzenberg quarter of 2020 with developed economies experiencing a nascent recoveryquarter of 2020 with developed economies experiencing a nascent recovery ~~and~~
~~Andres B. Schwarzenberg~~
~~economic~~ , but economic Analyst in International growth in developing economies lagging behind. A resurgence in infectious cases in growth in developing economies lagging behind. A resurgence in infectious cases in
~~Analyst in International~~
~~Europe~~Europe, Trade and Finance Russia, the United States, Japan, Brazil, India, and various developing economies, the United States, Japan, Brazil, India, and various developing economies renewed calls renewed calls
~~Trade and Finance~~
for lockdowns and curfews and threatened to weaken or delay a potential sustained economic for lockdowns and curfews and threatened to weaken or delay a potential sustained economic

Rebecca M. Nelson recovery into mid to late 2021. recovery into mid to late 2021.
~~Rebecca M. Nelson~~
~~Specialist in International~~
~~Developed economies are making~~Specialist in International Trade and Finance Since the beginning of 2021, developed economies have made strides in vaccinating growing strides in vaccinating growing shares of their populations, shares of their populations,
~~Trade and Finance~~
raising prospects of a recovery in those economies and, in turn, the raising prospects of a recovery in those economies and, in turn, the Karen M. Sutter broader global economy. broader global economy.

However, a surge in diagnosed cases in large developing economies and However, a surge in diagnosed cases in large developing economies and ~~resistance among some~~
~~Karen M. Sutter~~
Specialist in Asian Trade resistance to vaccinations among some populations in developed economies populations in developed economies ~~to get vaccinated~~ raise questions about raise questions about ~~the speed~~ and and ~~the~~
~~Specialist in Asian Trade~~
Finance the speed and the strength of an economic recovery over the near term. The economic fallout strength of an economic recovery over the near term. The economic fallout from the pandemic from the pandemic
~~and Finance~~
could risk continued labor dislocations as a could risk continued labor dislocations as a ~~res ult~~result of lingering high levels of unemployment not of lingering high levels of unemployment not

experienced since the Great Depression of the 1930sexperienced since the Great Depression of the 1930s and high levels of debt and high levels of debt Michael D. Sutherland among developing among developing
economies. Job losses have been concentrated more intensively in the services economies. Job losses have been concentrated more intensively in the services ~~sector where~~
~~Michael D. Sutherland~~
Analyst in International sector where workers have been unable to work offsite.workers have been unable to work offsite. Trade and Finance The human costs in terms of lives lost will The human costs in terms of lives lost will
~~Analyst in International~~
permanently affect global economic growth in permanently affect global economic growth in addition to the cost of addition to the cost of ~~rising~~elevated levels of poverty, levels of poverty,
~~Trade and Finance~~
lives upended, careers derailed, and increased social unrest. Some estimates indicate that 95 lives upended, careers derailed, and increased social unrest. Some estimates indicate that 95

million people may have entered into extreme poverty in 2020 with 80 million more million people may have entered into extreme poverty in 2020 with 80 million more
undernourished compared to pre-pandemic levels. In addition, some estimates indicate that global undernourished compared to pre-pandemic levels. In addition, some estimates indicate that global

trade could fall by an annual amount of 9.0% or slightly less in 2020 as a result of the global trade could fall by an annual amount of 9.0% or slightly less in 2020 as a result of the global
economic downturn, exacting an especially heavy economic toll on trade-dependent developing and emerging economieseconomic downturn, exacting an especially heavy economic toll on trade-dependent developing and emerging economies .
~~The~~. While the full economic impact of the pandemic full economic impact of the pandemic ~~likely will remain unclear until the negative health effects peak~~is coming more into focus in developed economies where vaccinations are facilitating a return to pre-pandemic levels of economic activity, the global impact remains less certain as new viral outbreaks have worsened the economic impact in some developing economies. This report . This report
provides an overview of the global economic costs to date and the response by governments and international institutions to provides an overview of the global economic costs to date and the response by governments and international institutions to
address these effects. address these effects.
Congressional Research Service Congressional Research Service

~~Global Economic Effects of COVID-19~~

~~Overview~~
~~The World Health Organization (WHO) first declared COVID-19 a world health emergency in~~
~~January 2020; on March 11 it announced the viral outbreak was official y a pandemic, the highest~~
~~level of health emergency.1 Since then, the emergency evolved into a global public health and~~
~~economic crisis that affected the $90 tril ion global economy beyond anything experienced in~~
~~nearly a century. In a variance of John Donne’s poem, “No Man is an Island,” the viral infection~~
~~spread between and across countries and affected nearly every community, demonstrating the~~
~~highly interconnected nature of the global economy: the virus was~~ detected in over 200 countries detected in over 200 countries
and and al all U.S. states.2 By early March 2020, the focal point of infections shifted from China to U.S. states.2 By early March 2020, the focal point of infections shifted from China to
Europe, Europe, ~~especial y~~especially Italy, but by April, the focus had shifted to the United States, where the Italy, but by April, the focus had shifted to the United States, where the
number of infections had been accelerating. By April 2021, India and Brazilnumber of infections had been accelerating. By April 2021, India and Brazil emerged as viral hot emerged as viral hot
spots with the number of infections spots with the number of infections ~~cases~~ and deaths reaching and deaths reaching daily record levels in those countries. record levels in those countries.
Through various phases of the health crisis, governments adopted Through various phases of the health crisis, governments adopted ~~unprecedented economic~~
policies to lock down social activities to contain the spread of the pandemic, inadvertently policies to lock down social activities to contain the spread of the pandemic, inadvertently
creating a global economic recession. In response to the unprecedented drop in economic activity, creating a global economic recession. In response to the unprecedented drop in economic activity,
governments adopted a series of actions governments adopted a series of actions ~~initial y~~ initially comprised of monetary policies aimed at comprised of monetary policies aimed at
~~stabilizing~~ stabilizing financial markets and ensuring the flow of credit. In the second phase, policy actions financial markets and ensuring the flow of credit. In the second phase, policy actions
shifted to fiscal measures aimed at sustaining economic growth as governments adopted shifted to fiscal measures aimed at sustaining economic growth as governments adopted
quarantines and social distancing measures. In the third phase, government policies shifted to quarantines and social distancing measures. In the third phase, government policies shifted to
developing, purchasing and distributing vaccines.developing, purchasing and distributing vaccines.
The infection has sickened over The infection has sickened over ~~142 mil ion people global y~~174 million people globally with over 3. with over 3.~~0 mil ion~~ 7 million fatalities. The fatalities. The
United States reported that by mid-United States reported that by mid-~~April 2021, nearly 32 mil ion~~ June 2021, over 33 million Americans had been diagnosed Americans had been diagnosed
~~and over 567~~and nearly 600,000 had died from the virus. At one point, more than 80 countries had closed their ,000 had died from the virus. At one point, more than 80 countries had closed their
borders to arrivals from countries with infections, ordered businesses to close, instructed their borders to arrivals from countries with infections, ordered businesses to close, instructed their
populations to self-quarantine, and closed schools to an estimated 1.5 populations to self-quarantine, and closed schools to an estimated 1.5 ~~bil ion~~billion children.3 On May 5, children.3 On May 5,
2021, the Biden administration announced it would support international discussions to waive 2021, the Biden administration announced it would support international discussions to waive
~~intel ectual~~ intellectual property restrictions on COVID-19 vaccine production for developing economies.4 property restrictions on COVID-19 vaccine production for developing economies.4
Prior to this announcement, developed economies, including Britain, Switzerland, the EU, and the Prior to this announcement, developed economies, including Britain, Switzerland, the EU, and the
United States, had blocked a proposal by over 80 developing countries at the World Trade United States, had blocked a proposal by over 80 developing countries at the World Trade
Organization to suspend Organization to suspend ~~intel ectual~~intellectual property rights restrictions on production of COVID-19 property rights restrictions on production of COVID-19
~~vaccines.5~~
~~Governments have attempted to balance often-competing policy objectives between addressing~~
~~the public health crisis and economic considerations that include, but are not limited to these:~~

~~1 Bill Chappell, “COVID-19: COVID-19 Is Now Officially a Pandemic, WHO Says,”~~ vaccines.5 The EU announced on June 4, 2021, that it would reject the U.S. proposal to drop IP protections and offered a three-point plan of its own that included: 1) maintaining export restrictions; 2) encouraging vaccine manufacturers to negotiate agreements with producers in 1 Bill Chappell, “COVID-19: COVID-19 Is Now Officially a Pandemic, WHO Says,” National Public Radio, March , March
11, 2020. https://www.npr.org/sections/goatsandsoda/2020/03/11/814474930/COVID-19-COVID-19-is-now-officially-11, 2020. https://www.npr.org/sections/goatsandsoda/2020/03/11/814474930/COVID-19-COVID-19-is-now-officially-
a-pandemic-who-says. a-pandemic-who-says.
2 “Mapping the Spread of the COVID-19 in the U.S. and Worldwide,” 2 “Mapping the Spread of the COVID-19 in the U.S. and Worldwide,” Washington Post Staff, Washington Post Staff, Washington Post, March , March
4, 2020. https://www.washingtonpost.com/world/2020/01/22/mapping-spread-new-COVID-19/?arc404=true.4, 2020. https://www.washingtonpost.com/world/2020/01/22/mapping-spread-new-COVID-19/?arc404=true.
3 “ 3 “~~T he~~The Day the World Stopped: How Governments Are Still Day the World Stopped: How Governments Are Still ~~Struggling~~ Struggling to Get Ahead of the COVID-19,” to Get Ahead of the COVID-19,” The
~~Econom ist~~Economist, March 17, 2020. https://www.economist.com/international/2020/03/17/governments-are-still-struggling-to-, March 17, 2020. https://www.economist.com/international/2020/03/17/governments-are-still-struggling-to-
get-ahead-of-the-COVID-19. get-ahead-of-the-COVID-19.
4 Diamond, Dan, 4 Diamond, Dan, ~~T yler~~Tyler Pager, and Jeff Stein, Biden Commits to Waiving Vaccine Pager, and Jeff Stein, Biden Commits to Waiving Vaccine Patents, Driving Wedge With Patents, Driving Wedge With
Pharmaceutical Companies, Pharmaceutical Companies, The Washington Post, May 5, 2021. May 5, 2021.
5 5 Rich, Developing Economies Wrangle Over ~~COVID~~ COVID Patents, Reuters, March 10, 2021. , Reuters, March 10, 2021.
https://www.reuters.com/article/us-health-coronavirus-wto/rich-developing-nations-wrangle-over-covid-vaccine-https://www.reuters.com/article/us-health-coronavirus-wto/rich-developing-nations-wrangle-over-covid-vaccine-
patents-idUSKBN2B21V9. patents-idUSKBN2B21V9.

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Global Economic Effects of COVID-19

~~ Confronting bal ooning budget deficits weighed against increasing spending to~~
~~support unemployed workers and sustain social safety nets.~~
~~ Providing financial support for national health systems that are under pressure to~~
~~develop vaccines while also funding efforts to care for and safeguard citizens.~~
~~ Implementing monetary and fiscal policies that support credit markets and~~
~~sustain economic activity broadly, while also assisting specific sectors and~~
~~businesses under financial distress.~~
~~ Implementing fiscal policies to stimulate economic activity and support the most~~
~~heavily affected households, weighed against the prospects of rising rates of~~
~~inflation, potential y rising debt servicing costs, and concerns that some~~
~~households in developed economies have at times used transfer payments to~~
~~maintain high rates of saving relative to pre-pandemic rates, instead of increasing~~
~~consumption, as households have faced limited spending opportunities, or a form~~
~~of involuntary saving, and concerns over their jobs, incomes, and the course of~~
~~their economies, or precautionary saving.~~
~~ Having central banks and monetary authorities intervene~~developing economies and increasing vaccine supplies to vulnerable countries; and 3) using existing WTO rules to grant licenses to producers without the consent of the patent-holder.6 During the G-7 summit in England on June 11, 2021, the United States and the other G-7 leaders announced they would provide a combined total of one billion doses of the COVID-19 vaccine in addition to lifesaving medical supplies, oxygen, diagnostics, therapeutics, and personal protective equipment (PPE) to low and middle income developing countries.7 Through the various stages of the pandemic-related health and economic crises pandemic, governments responded with a number of policy initiatives that often attempted to balance competing policy objectives. As the health crisis subsides and economic activity resumes, policymakers may consider evaluating the various policy approaches for lessons learned and for best practices to employ in addressing similar crises, should they arise. Such an evaluation could include:  Assessing the short and long-term costs and benefits of fiscal policies that were adopted during the crisis to address employment dislocations and support social safety nets, compared with the potential long-term impact of deficit spending on the rate of inflation and the long-term financial stability of the economy.  Evaluating the costs and benefits of economy-wide business and social lockdowns compared with the impact and effectiveness of targeted closures or other types of restrictions.  Reviewing the effectiveness of broad monetary and fiscal policies that were adopted to support credit markets and sustain economic activity broadly during the initial stages of the crisis, compared with policies targeted to assist specific sectors and businesses as they came under financial distress.  Assessing the effectiveness of transfer payments that were directed at supporting the most heavily affected households, the impact of such payments on household saving rates and consumption, the necessary conditions and timing for tapering off the support, and the impact on the rate of long-term rate of growth between public versus private debt.  Assessing the impact that central banks and monetary authorities had on financial markets and market liquidity by intervening in sovereign debt and ~~in sovereign debt and~~
corporate bond corporate bond markets during the early stages of the health and economic crisis and the impact, if any, on the ability ~~markets to stabilize markets and insure liquidity, while also~~
~~raising concerns among some analysts that this intervention compromises the~~
~~ability~~ of the markets to perform their traditional functions of pricing risk and of the markets to perform their traditional functions of pricing risk and
~~al ocating capital.~~
~~ Adopting fiscal and monetary policies to address the immediate impact of the~~
~~health crisis compared with the mix of such policies~~allocating capital.  Assessing the optimal combination and impact of fiscal policies during a national or global economic crisis between assisting between assisting
~~households, firms, or state and local governments that may be needed going~~
~~forward should the health and economic crises persist.~~
~~ Differing national approaches to providing government-funded economic support~~
~~to workers that vary between short-term unemployment insurance programs to~~
~~sustain workers incomes, although not directed at maintaining employment in~~
~~their previous jobs, and programs that delay labor market adjustments by~~
~~supporting workers in their pre-COVID-19 jobs, identified as job-retention~~
~~programs, even as those jobs could disappear once the support ends.6~~
~~Despite a rebound in some key economic indicators from the~~ households, firms, or state and local governments.  Evaluating the effectiveness of unemployment insurance systems that provide short-term unemployment insurance to sustain workers incomes, compared with European-style job retention programs that maintain pre-crisis employment, even as those jobs could disappear once the support ends.8 6 Blenkinsop, Phillip, Resisting Patent Waiver, EU Submits Vaccine Plan to WTO, Reuters, June 4, 2021. https://www.reuters.com/world/europe/eu-executive-submits-vaccine-access-proposal-wto-2021-06-04/. 7 Scott, Eugene, G-7 Leaders Commit to Making 1 Billion Coronavirus Vaccines Available Starting This Summer, The Washington Post, June 11, 2021. 8 Job Retention Schemes During the COVID-19 Lockdown and Beyond, Organization for Economic Cooperation and Development, August 3, 2020. Congressional Research Service 2 Global Economic Effects of COVID-19 Through early June 2021, various key economic and financial indicators had rebounded from the depths of the pandemic-related economic recession, although not all parts of the global economy had recovered to the levels that preceded the pre-COVID-19 pandemic.9 Although vaccination rates had increased in various countries, particularly the United States, a long list of countries struggled to get their populations vaccinated and their economies operating at or above pre-pandemic levels. By mid-~~depths of the pandemic-related~~
~~economic recession in early 2020, a growing list of economic indicators makes it clear the~~
~~COVID-19 pandemic continues to negatively affect global economic growth on a scale not~~
~~experienced since at least the global financial crisis of 2008-2009.7 By early~~ 2021, financial 2021, financial
market indices had largely recovered from the losses experienced in March and April 2020, market indices had largely recovered from the losses experienced in March and April 2020,
international oil prices had international oil prices had ~~reached~~surpassed their pre-pandemic their pre-pandemic levels~~levels by late February 2021~~, pressure on , pressure on
the dollarthe dollar had eased, and labor markets appeared to be stabilizing.had eased, and labor markets appeared to be stabilizing. Over the long run, however, Over the long run, however,
damage to labor markets could be more problematic with a large share of the labor force unable to damage to labor markets could be more problematic with a large share of the labor force unable to
return to pre-pandemic jobs. Similarly, economies could face long-term costs as a result of return to pre-pandemic jobs. Similarly, economies could face long-term costs as a result of
children who were held out of in-person education for children who were held out of in-person education for over a year that could result in lower academic a year that could result in lower academic
performance and graduation rates and delayed entry into the labor market. On March 31, 2021, performance and graduation rates and delayed entry into the labor market. On March 31, 2021,
~~Kristalina~~ Kristalina Georgieva, Managing Director of the International Georgieva, Managing Director of the International Monetary Fund (IMF), warned that ~~Monetary Fund (IMF), warned that~~

~~6 Job Retention Schemes During the COVID-19 Lockdown and Beyond, Organization for Economic Cooperation and~~
~~Development, August 3, 2020.~~
~~7 Mapping the Spread of the COVID-19.~~
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~~Global Economic Effects of COVID-19~~

an emerging market debt crisis could unfold as the global economy begins recovering and interest an emerging market debt crisis could unfold as the global economy begins recovering and interest
rates rise, which could cause a capital outflow from developing economies.rates rise, which could cause a capital outflow from developing economies.810
The U.S. and European economies experienced the beginnings of a recovery in the third quarter The U.S. and European economies experienced the beginnings of a recovery in the third quarter
of 2020 with the U.S. economy growing by 33.4%, of 2020 with the U.S. economy growing by 33.4%, ~~and~~or at an annual rate of 5.0%, at an annual rate of 5.0%, ~~accounting for~~
~~an equal y~~largely matching an equally sharp decline in growth in the second quarter sharp decline in growth in the second quarter~~, and the~~. The Eurozone economy Eurozone economy ~~growing~~grew by by
12.5% during the quarter and -7.4% at an annual rate. 12.5% during the quarter and -7.4% at an annual rate. ~~That recovery, however,~~During the third quarter of 2020, however, the recovery was weakened by was weakened by
renewed quarantines and business lockdowns in response to a resurgence of infectious cases and renewed quarantines and business lockdowns in response to a resurgence of infectious cases and
the emergence of more contagious variants of the virus that began in September. The annual U.S. the emergence of more contagious variants of the virus that began in September. The annual U.S.
economic growth rate slipped to -3.5% in 2020, but was estimated to have grown at an annualized economic growth rate slipped to -3.5% in 2020, but was estimated to have grown at an annualized
rate of growth of 6.4% during the first quarter of 2021.rate of growth of 6.4% during the first quarter of 2021.911
On On ~~January 4, 2021, the UK announced a spike in new viral infections and the emergence of a~~
~~new variant of the virus, spurring the government to impose a stringent lockdown that closed~~
~~schools, restricted activities, and deployed the armed forces to assist in testing and vaccinations.10~~
~~On March 3, 2021, UK Chancel or~~June 14, 2021, UK Prime Minister Boris Johnson announced a four-week extension in social restrictions and business lockdowns in response to a rise in viral infections, further delaying the return of the UK economy pre-pandemic activity.12 On March 3, 2021, UK Chancellor of the Exchequer Sunak announced a £65 of the Exchequer Sunak announced a £65 ~~bil ion~~billion stimulus stimulus
package over two years to revive the UK economy package over two years to revive the UK economy that is comprised of various business incentives and comprised of various business incentives and
worker income support measures to be followed by tax increases starting in 2023.worker income support measures to be followed by tax increases starting in 2023.1113 The U.S. The U.S.
Congress passed a $1.9 Congress passed a $1.9 ~~tril ion~~ trillion economic stimulus economic stimulus ~~bil~~ bill, designated the American Rescue Plan Act , designated the American Rescue Plan Act
(P.L. 117-2), that was signed by President Biden on March 11, 2021. (P.L. 117-2), that was signed by President Biden on March 11, 2021.
The WHO indicated in early January 2021, that 230 The WHO indicated in early January 2021, that 230 ~~mil ion~~million Europeans were living under Europeans were living under
lockdown restrictions and that 26 lockdown restrictions and that 26 ~~mil ion~~million Europeans had contracted COVID-19 in 2020. Europeans had contracted COVID-19 in 2020.1214 On On
April 13, 2021, the WHO estimated that 1 April 13, 2021, the WHO estimated that 1 ~~mil ion~~ million Europeans had died from the disease, nearly Europeans had died from the disease, nearly
twice as many as in the United States. In an attempt to stop the spread of new variant strains of twice as many as in the United States. In an attempt to stop the spread of new variant strains of
~~the virus, the UK, Ireland, Germany, Denmark, and some northern Italian regions closed schools~~
~~in January 2021 for several weeks.13 Reportedly, disputes over vaccine distribution within and~~
~~among European countries and with Britain and the spread of more virulent strains~~ 9 Mapping the Spread of the of the
~~COVID-19 virus increased public criticism of government leaders in some EU countries and~~
~~prompted renewed business lockdowns and school closures.14~~
~~On March 31, 2021, French President Macron announced a four-week country-wide business~~
~~lockdown to curb a resurgence in viral cases that were overwhelming French hospitals and~~
~~extending by one week a planned two week closure of schools.15 The EU also blocked shipments~~
~~to Britain of the AstraZeneca vaccine produced in Belgium and the Netherlands until~~
~~commitments made to supply the EU had been met, or until other countries showed reciprocity in~~

~~8 Giles,~~ COVID-19. 10 Giles, Chris, Prepare for Emerging Markets Debt Crisis,Chris, Prepare for Emerging Markets Debt Crisis, Warns IMF Head, Warns IMF Head, Financial Times, March 31, 2021. , March 31, 2021.
https://www.ft.com/content/487c30f4-7f21-4787-b519-dde52264d141. https://www.ft.com/content/487c30f4-7f21-4787-b519-dde52264d141.
911 Gross Domestic Product, First Quarter 2021 (Advance Estimate), Bureau of Economic Analysis, April 29, 2021. Bureau of Economic Analysis, April 29, 2021.
~~10 Parker, George, Bethan Staton, and Sarah Neville, Boris Johnson Warns of T ougher COVID-19 Restrictions For~~
England, Financial Tim es~~, January 5~~12 Payne, Sebastian, Jim Pickard and Daniel Thomas, Four-week Extension to England’s Lockdown Dashes Business Hopes, Financial Times, June 14, 2021. https://www.ft.com/content/, 2021. https://www.ft.com/content/~~6abfd02c-e2c6-4ca1-944a-1b962af6dead.~~
112d00de1a-92d7-4b63-a151-53a6ae064368. 13 Pickard, Jim, Chris Giles, Pickard, Jim, Chris Giles, and Georgeand George Parker, Rishi SunakParker, Rishi Sunak Delivers SpendDelivers Spend Now, Now, ~~T ax~~Tax Later Budget to Kickstart UK Later Budget to Kickstart UK
Economy, Economy, Financial ~~Tim es~~Times, March 3, 2021. https://www.ft.com/content/da66ce9a-6dfc-4a3a-bde7-d4f4faed6c4a. , March 3, 2021. https://www.ft.com/content/da66ce9a-6dfc-4a3a-bde7-d4f4faed6c4a.
1214 Clarfelt, Harriet, Pandemic at ‘tipping point’, Says WHO Europe Official, Clarfelt, Harriet, Pandemic at ‘tipping point’, Says WHO Europe Official, Financial Times, January 7, 2021. , January 7, 2021.
https://www.ft.com/content/9b42e8fa-dde1-3663-a4ad-7d6605121866. https://www.ft.com/content/9b42e8fa-dde1-3663-a4ad-7d6605121866.
~~13 Hall, Ben, Bethan Staton, Joshua Chaffin, Guy Chazan, European Capitals Follow UK With School Closures as~~
~~Virus Surges, Financial Tim es, January 7, 2021. https://www.ft.com/content/8121ca0a-4d96-4cf5-b5df-a73adc16a606.~~
~~14 Chazan, Guy, We Are a Laughing Stock’: Covid-19 and Germany’s Political Malaise, Financial Times, April 1,~~
~~2021. https://www.ft.com/content/bc5a3b02-a90d-4206-a441-1bada29feba2.~~
~~15 Mallet, Victor, Macron Extends Lockdown Across France to Combat Covid Surge, Financial Times, April 1, 2021.~~
~~https://www.ft.com/content/731ec423-03dc-405c-9ff4-f8670b953f2d.~~
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~~their distribution of vaccines.16At~~ Congressional Research Service 3 Global Economic Effects of COVID-19 the virus, the UK, Ireland, Germany, Denmark, and some northern Italian regions closed schools in January 2021 for several weeks.15 Reportedly, disputes over vaccine distribution within and among European countries and with Britain and the spread of more virulent strains of the COVID-19 virus increased public criticism of government leaders in some EU countries and prompted renewed business lockdowns and school closures.16 COVID-19 infections were rising in Russia in June 2021, reportedly due to the unwillingness of the populace to receive the Russian-developed Sputnik V vaccine. On March 31, 2021, French President Macron announced a four-week country-wide business lockdown to curb a resurgence in viral cases that were overwhelming French hospitals and extending by one week a planned two week closure of schools.17 The EU also blocked shipments to Britain of the AstraZeneca vaccine produced in Belgium and the Netherlands until commitments made to supply the EU had been met, or until other countries showed reciprocity in their distribution of vaccines.18At the same time, 16 European countries, including Germany, the same time, 16 European countries, including Germany,
France, Italy, and Spain, temporarily suspended use of the AstraZeneca vaccine over concerns of France, Italy, and Spain, temporarily suspended use of the AstraZeneca vaccine over concerns of
possible negative side-effects, despite assurances by EU drug regulators that the benefits of the possible negative side-effects, despite assurances by EU drug regulators that the benefits of the
vaccine outweighed any risks.vaccine outweighed any risks.17
19 India announced on March 25, 2021, that it was temporarily halting exports of COVID-19 India announced on March 25, 2021, that it was temporarily halting exports of COVID-19
vaccines and prioritizing local vaccinations in response to a resurgence in viral cases.vaccines and prioritizing local vaccinations in response to a resurgence in viral cases.1820 In early In early
April 2021, India and BrazilApril 2021, India and Brazil were designated global viral infection hot spots due to a resurgence were designated global viral infection hot spots due to a resurgence
in cases. On May 6, India reported a single-day total of 412,000 new cases.in cases. On May 6, India reported a single-day total of 412,000 new cases.1921 Brazil reportedly Brazil reportedly
has had over 350,000 viral-related deaths: in some cities in Brazil,has had over 350,000 viral-related deaths: in some cities in Brazil, COVID-related daily deaths COVID-related daily deaths
have outnumbered daily births.have outnumbered daily births.20
22 On April On April 15, 2021, the Director-General of the WTO 15, 2021, the Director-General of the WTO ~~cal ed~~called on WTO members and vaccine on WTO members and vaccine
manufacturers to increase production, reduce export restrictions, and suspend manufacturers to increase production, reduce export restrictions, and suspend ~~intel ectual~~intellectual property property
rights on COVID-19 vaccines to increase immunizations.rights on COVID-19 vaccines to increase immunizations.2123 The WHO also reported that new The WHO also reported that new
COVID-19 cases had nearly doubled around the world over the preceding two months, COVID-19 cases had nearly doubled around the world over the preceding two months,
~~approaching the highest rates of infection since the start of the pandemic. Reportedly, new case~~
~~numbers had spiked in every region of the world, with the largest outbreaks occurring in India,~~
~~Brazil, Poland, Turkey and some other countries.22 Also on April 15, 2021, a group of 175 former~~
~~world leaders and Nobel laureates cal ed on the United States to suspend intel ectual property~~
~~rights for COVID-19 vaccines to facilitate the international production and distribution of~~
~~vaccines by al owing developing countries the ability to manufacture their own vaccines. The~~
~~group warned that, “….inequitable vaccine access would impact the global economy and prevent~~
~~it from recovering.”23~~
~~On April 16, the WHO announced that it would develop one or more COVID-19 technology hubs~~
~~to transfer a “comprehensive technology package and provide appropriate technology to~~
~~interested manufacturers” in developing economies.24 Reportedly, the initiative’s goal is to make~~

~~16 Fleming, Sam, Michael Peel, and George Parker, EU Warns ‘zero’ Jabs Shipped to UK Until AstraZeneca Meets~~
~~Bloc’s T argets, Financial Tim es, April 1, 2021. https://www.ft.com/content/28158bed-5f07-4504-9a00-2f3d8f7519df.~~
17 15 Hall, Ben, Bethan Staton, Joshua Chaffin, Guy Chazan, European Capitals Follow UK With School Closures as Virus Surges, Financial Times, January 7, 2021. https://www.ft.com/content/8121ca0a-4d96-4cf5-b5df-a73adc16a606. 16 Chazan, Guy, We Are a Laughing Stock’: Covid-19 and Germany’s Political Malaise, Financial Times, April 1, 2021. https://www.ft.com/content/bc5a3b02-a90d-4206-a441-1bada29feba2. 17 Mallet, Victor, Macron Extends Lockdown Across France to Combat Covid Surge, Financial Times, April 1, 2021. https://www.ft.com/content/731ec423-03dc-405c-9ff4-f8670b953f2d. 18 Fleming, Sam, Michael Peel, and George Parker, EU Warns ‘zero’ Jabs Shipped to UK Until AstraZeneca Meets Bloc’s Targets, Financial Times, April 1, 2021. https://www.ft.com/content/28158bed-5f07-4504-9a00-2f3d8f7519df. 19 Paolo Mancini, Donato, Miles Johnson, Michael Peel, David Keohane, Richard Milne, and Sarah Neville, European Paolo Mancini, Donato, Miles Johnson, Michael Peel, David Keohane, Richard Milne, and Sarah Neville, European
Capitals Coordinated SuspensionCapitals Coordinated Suspension of Oxford/AstraZeneca Covid Jab,of Oxford/AstraZeneca Covid Jab, Financial ~~Tim es~~Times, April 1, 2021. , April 1, 2021.
https://www.ft.com/content/a046e340-892b-4e68-bfae-4f5c40a5506a. https://www.ft.com/content/a046e340-892b-4e68-bfae-4f5c40a5506a.
18 20 Findlay, Stephanie, Michael Peel, Donato Paolo Mancini, Andres Schipani and Jasmine Findlay, Stephanie, Michael Peel, Donato Paolo Mancini, Andres Schipani and Jasmine Cameron-Chileshe, India Cameron-Chileshe, India
Blocks VaccineBlocks Vaccine Exports in Blow to Dozens of Nations Exports in Blow to Dozens of Nations Financial ~~Tim es~~Times, March 25, 2021. , March 25, 2021.
https://www.ft.com/content/5349389c-8313-41e0-9a67-58274e24a019. https://www.ft.com/content/5349389c-8313-41e0-9a67-58274e24a019.
1921 Slater, Joanna, India Announces Record Number Slater, Joanna, India Announces Record Number of Deaths and Newof Deaths and New ~~Cases~~ Cases as Outbreak Ragesas Outbreak Rages on, on, The Washington
Post, May 6, 2021; Parker, Claire, Paul Schemm, Sean Sullivan,, May 6, 2021; Parker, Claire, Paul Schemm, Sean Sullivan, India SetsIndia Sets Another Daily Coronavirus CaseAnother Daily Coronavirus Case Record: Record:
U.S.U.S. ~~Pledges~~ Pledges Help, Help, The Washington Post, April 26, 2021. https://www.washingtonpost.com/world/asia_pacific/india- April 26, 2021. https://www.washingtonpost.com/world/asia_pacific/india-
coronavirus-deaths-pandemic/2021/04/25/ec0f208a-a51c-11eb-b314-2e993bd83e31_story.html. coronavirus-deaths-pandemic/2021/04/25/ec0f208a-a51c-11eb-b314-2e993bd83e31_story.html.
20 22 Caverni, Alexandre, Brazil Sees Caverni, Alexandre, Brazil Sees 1,803 COVID-19 Deaths; Chinese Vaccine1,803 COVID-19 Deaths; Chinese Vaccine Found 50.7% Effective Against Variant, Found 50.7% Effective Against Variant,
Reuters, April 11, 2021; Hassan, Jennifer, In Many Brazilian Cities, Deaths Have Overtaken Births, Reuters, April 11, 2021; Hassan, Jennifer, In Many Brazilian Cities, Deaths Have Overtaken Births, The Washington
Post, April 15, 2021. April 15, 2021.
2123 Cunnigham, Erin, New Cunnigham, Erin, New African African ~~WT O~~WTO Head Urges Head Urges Members to Members to ~~T ake~~Take Action on Vaccine Inequity, Action on Vaccine Inequity, The Washington
Post, April 15, 2021. , April 15, 2021.
~~22 Cunningham, Erin and Siobhan O’Grady, New Global Coronavirus Cases Nearly Double in T wo Months,~~ ~~The~~
~~Washington Post, April 16, 2021. https://www.washingtonpost.com/world/2021/04/16/global-coronavirus-cases-surge-~~
~~who/.~~
~~23 Williams, Aime, Former World Leaders Call on Biden to Suspend Covid-19 Vaccine Patents, Financial Times, April~~
~~15, 2021. https://www.ft.com/content/43fd53f5-2b82-4e41-981c-8544a6ce996b.~~
~~24 World Health Organization, Establishment of a COVID-19 mRNA Vaccine T echnology T ransfer Hub to Scale Up~~
~~Global Manufacturing, April 16, 2021.~~
~~Congressional Research Service~~

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~~Global Economic Effects of COVID-19~~

~~the technology either free of intel ectual property constraints in developing economies, or that~~
Congressional Research Service 4 Global Economic Effects of COVID-19 approaching the highest rates of infection since the start of the pandemic. Reportedly, new case numbers had spiked in every region of the world, with the largest outbreaks occurring in India, Brazil, Poland, Turkey and some other countries.24 Also on April 15, 2021, a group of 175 former world leaders and Nobel laureates called on the United States to suspend intellectual property rights for COVID-19 vaccines to facilitate the international production and distribution of vaccines by allowing developing countries the ability to manufacture their own vaccines. The group warned that, “….inequitable vaccine access would impact the global economy and prevent it from recovering.”25 On April 16, the WHO announced that it would develop one or more COVID-19 technology hubs to transfer a “comprehensive technology package and provide appropriate technology to interested manufacturers” in developing economies.26 Reportedly, the initiative’s goal is to make the technology either free of intellectual property constraints in developing economies, or that such rights are made available through non-exclusive licenses. such rights are made available through non-exclusive licenses.
Japan’s Prime Minister Suga announced on January 5, 2021, that Tokyo and three surrounding Japan’s Prime Minister Suga announced on January 5, 2021, that Tokyo and three surrounding
prefectures would initiate a voluntary “soft” state of emergency on January 8 that stressed prefectures would initiate a voluntary “soft” state of emergency on January 8 that stressed
teleworking, restricting unnecessary travel, and reducing sporting and cultural events.teleworking, restricting unnecessary travel, and reducing sporting and cultural events.2527 On April On April
23, 2021, Japan announced new two-week lockdown protocols for Tokyo, Osaka, and two other 23, 2021, Japan announced new two-week lockdown protocols for Tokyo, Osaka, and two other
large cities as Japan faced a rise in viral infections. The large cities as Japan faced a rise in viral infections. The ~~lockdown wil~~ lockdowns were intended to encourage workers to work encourage workers to work
from home, from home, al to close all venues that serve alcohol and supermarkets, but venues that serve alcohol and supermarkets, but ~~wil not include schools.26 On~~
~~March 9, 2021~~not close schools.28 In April and May, Japan again experienced a resurgence of cases, reportedly raising the total number of diagnosed case to 700,000. Foreign travel to Japan was limited and concerns increased that Japan may be required to delay again or scrap entirely the summer Olympics scheduled to begin July 23, 2021.29 On March 9, 2021, the government announced that Japan’s GDP grew by 2.8% in the fourth quarter the government announced that Japan’s GDP grew by 2.8% in the fourth quarter
of 2020, down from a third quarter rate of 5.3%. On an annualized rate, the economy is projected of 2020, down from a third quarter rate of 5.3%. On an annualized rate, the economy is projected
to have declined by 4.8% year over yearto have declined by 4.8% year over year in 2020. A decline in business investment and personal . A decline in business investment and personal
consumption in the fourth quarter led forecasters to downgrade their estimates for fourth quarter consumption in the fourth quarter led forecasters to downgrade their estimates for fourth quarter
2020 and forecasts for first quarter 2021 GDP.2020 and forecasts for first quarter 2021 GDP.27
30 Impact on Workers
In a report prepared for the January 25-29, 2021, World Economic Forum, the International Labor In a report prepared for the January 25-29, 2021, World Economic Forum, the International Labor
Organization (ILO) estimated that 93% of the world’s workers were living under some form of Organization (ILO) estimated that 93% of the world’s workers were living under some form of
workplace restrictions as a result of the global pandemic and that 8.8% of global working hours workplace restrictions as a result of the global pandemic and that 8.8% of global working hours
were lost in 2020 relative to the fourth quarter of 2019, an amount equivalent to 255 were lost in 2020 relative to the fourth quarter of 2019, an amount equivalent to 255 ~~mil ion~~million full-time jobs. The ILO estimated that the loss in working hours was comprised of (1) workers who 24 Cunningham, Erin and Siobhan O’Grady, New Global Coronavirus Cases Nearly Double in Two Months, The Washington Post, April 16, 2021. https://www.washingtonpost.com/world/2021/04/16/global-coronavirus-cases-surge-who/. 25 Williams, Aime, Former World Leaders Call on Biden to Suspend Covid-19 Vaccine Patents, Financial Times, April 15, 2021. https://www.ft.com/content/43fd53f5-2b82-4e41-981c-8544a6ce996b. 26 World Health Organization, Establishment of a COVID-19 mRNA Vaccine Technology Transfer Hub to Scale Up Global Manufacturing, April 16, 2021. 27 Harding, Robin and Kana Inagaki, Japan Declares State of Emergency in Tokyo as Coronavirus Cases Surge, Financial Times, January 5, 2021. https://www.ft.com/content/72ceb064-2231-4d17-bd8f-92bd7f99f33c. 28 Harding, Robin, Japan to Impose New State of Emergency as COVID-19 Cases Rise, Financial Times, April 23, 2021. https://www.ft.com/content/a3d3a8bc-6d0e-4b2b-9e09-3310db13222e. 29 Inside Japan, Latest Coronavirus New From Japan, June 10, 2021. 30 Obe, Mitsuru, Japan Revises Q4 GDP Growth Down to Annualized 11.7%, Nikkei Asia, March 9, 2021. Congressional Research Service 5 Global Economic Effects of COVID-19 ~~full-~~
~~time jobs. The ILO estimated that the loss in working hours was comprised of (1) workers who~~
were unemployed, but actively seeking employment, (2) workers who were employed, but had were unemployed, but actively seeking employment, (2) workers who were employed, but had
their working hours reduced, and (3) workers who were unemployed and not actively seeking their working hours reduced, and (3) workers who were unemployed and not actively seeking
employment. Based on this approach, the ILO estimated that unemployment employment. Based on this approach, the ILO estimated that unemployment ~~global y~~ globally was was
equivalent to 0.9% of total working hours lost in 2020, while inactivity and reduced hours equivalent to 0.9% of total working hours lost in 2020, while inactivity and reduced hours
accounted for 7.9% of total working hours lost, as indicated in accounted for 7.9% of total working hours lost, as indicated in Figure 1.. Total working hours lost Total working hours lost
in 2020 compared with 2019 were highest in Europe (14.6%) and the Americas (13.7%), where in 2020 compared with 2019 were highest in Europe (14.6%) and the Americas (13.7%), where
quarantines and lockdowns had been extensive, followed by lower-middle income economies. quarantines and lockdowns had been extensive, followed by lower-middle income economies.
The ILO also estimated that global job losses totaled 114 The ILO also estimated that global job losses totaled 114 ~~mil ion~~ million jobs in 2020 relative to 2019. jobs in 2020 relative to 2019.
The share of lost worker hours due to higher rates of unemployment were highest in Europe The share of lost worker hours due to higher rates of unemployment were highest in Europe
(6.0%), the Americas (2.7%), including the United States, and Arab States (1.7%).(6.0%), the Americas (2.7%), including the United States, and Arab States (1.7%).2831 The ILO also The ILO also
estimated that an increase in global economic activity through part of the fourth quarter was equal estimated that an increase in global economic activity through part of the fourth quarter was equal
~~to an increase of 130 mil ion full-time jobs.~~

~~25 Harding, Robin and Kana Inagaki, Japan Declares State of Emergency in T okyo as Coronavirus Cases Surge,~~
Financial Tim es, January 5, 2021. https://www.ft.com/content/72ceb064-2231-4d17-bd8f-92bd7f99f33c.
~~26 Harding, Robin, Japan to Impose New State of Emergency as COVID-19 Cases Rise, Financial Times, April 23,~~
~~2021. https://www.ft.com/content/a3d3a8bc-6d0e-4b2b-9e09-3310db13222e.~~
~~27 Obe, Mitsuru, Japan Revises Q4 GDP Growth Down to Annualized 11.7%, Nikkei Asia, March 9, 2021.~~
~~28 ILO Monitor: COVID-19 and the World of Work, Seventh Edition, International Labor Organization, January 15,~~
~~2021, p. 2.~~
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~~Global Economic Effects of COVID-19~~
to an increase of 130 million full-time jobs.
Figure 1. Composition of Working-Hours Lost by Region, 2020

Source: ILO Monitor: COVID-19 and the World of Work, International Labor Organization, 2021 International Labor Organization, 2021
A number of economists and others A number of economists and others ~~has~~ estimated that pandemic-related disruptions to labor estimated that pandemic-related disruptions to labor
markets in developed and developing economies could have long-lasting effects. One group of markets in developed and developing economies could have long-lasting effects. One group of
economists estimated that even after the pandemic recedes and economic activity ramps up, firms economists estimated that even after the pandemic recedes and economic activity ramps up, firms
may not abandon the labor-saving lessons they learned, with fewer jobs created in retail stores, may not abandon the labor-saving lessons they learned, with fewer jobs created in retail stores,
restaurants, auto dealerships, and meat-packing facilities, among other places.restaurants, auto dealerships, and meat-packing facilities, among other places.2932 Other analysts Other analysts
estimated the pandemic could affect the structure of work in three main areas by: estimated the pandemic could affect the structure of work in three main areas by:
1. Creating a permanent presence of telework, which could account for 20% to 25% 1. Creating a permanent presence of telework, which could account for 20% to 25%
of workers in developed economies and 20% in developing economies working of workers in developed economies and 20% in developing economies working
from home three to five times per week, which could reduce demand for public from home three to five times per week, which could reduce demand for public
transportation, restaurants, and retail stores; transportation, restaurants, and retail stores;
2. Increasing the level of e-commerce that could disrupt jobs in travel and leisure, 2. Increasing the level of e-commerce that could disrupt jobs in travel and leisure,
low-wage jobs in brick-and-mortar stores and restaurants, and increase jobs in low-wage jobs in brick-and-mortar stores and restaurants, and increase jobs in
distribution centers. distribution centers.
31 ILO Monitor: COVID-19 and the World of Work, Seventh Edition, International Labor Organization, January 15, 2021, p. 2. 32 Autor, David, and Elizabeth Reynolds, The Nature of Work After the COVID Crisis: Too Few Low-Wage Jobs, The Hamilton Project, Brookings Institution, July 2020, p. 2 Congressional Research Service 6 Global Economic Effects of COVID-19 3. Accelerating the adoption of artificial intelligence ~~3. Accelerating the adoption of artificial intel igence~~ (AI) and robotics.(AI) and robotics.3033
Analysts with the Pew Research Center surveyed American workers in January 2021 who were Analysts with the Pew Research Center surveyed American workers in January 2021 who were
unemployed and looking for work. The results indicated that half of those surveyed were unemployed and looking for work. The results indicated that half of those surveyed were
pessimistic about finding another job in the near future and two-thirds had considered changing pessimistic about finding another job in the near future and two-thirds had considered changing
their occupations, a sentiment shared across income levels. The other third indicated they had their occupations, a sentiment shared across income levels. The other third indicated they had
already engaged in re-already engaged in re-~~skil ing~~skilling through job retraining programs or educational activities. through job retraining programs or educational activities.3134
In the United States, labor markets are recovering, but the In the United States, labor markets are recovering, but the ~~overal~~ overall rate of unemployment rate of unemployment ~~stil~~
~~exceeds the~~has exceeded pre-pandemic pre-pandemic ~~rate~~rates. In testimony before the Senate Banking Committee on February . In testimony before the Senate Banking Committee on February
23, 2021, Federal Reserve Chairman Jerome 23, 2021, Federal Reserve Chairman Jerome ~~Powel~~ Powell indicated that although new COVID-19 cases indicated that although new COVID-19 cases
and hospitalizations had and hospitalizations had ~~fal en~~fallen and offered hope for an economic recovery later in 2021, the and offered hope for an economic recovery later in 2021, the
recovery so far remained, “uneven and far from complete, and the path ahead is highly recovery so far remained, “uneven and far from complete, and the path ahead is highly
uncertain.”uncertain.”3235 In addition, In addition, ~~Powel~~ Powell argued that a resurgence in viral cases, hospitalizations, and argued that a resurgence in viral cases, hospitalizations, and

~~29 Autor, David, and Elizabeth Reynolds, The Nature of Work After the COVID Crisis: Too Few Low-Wage Jobs, T he~~
~~Hamilton Project, Brookings Institution, July 2020, p. 2~~
~~30 McKinsey Global Institute, The Future of Work After COVID-19, February 18, 2021.~~
~~31 Parker, Kim, Ruth Igielnik, and Rakesh Kochhar~~ ~~Unemployed Americans are Feeling the Emotional Strain of Job~~
~~Loss; Most Have Considered Changing Occupations, Pew Research Center. February 10, 2021.~~
~~32 Powell, Jerome, H., T estimony before the Senate Committee on Banking, Housing, and Urban Affairs, February 23,~~
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~~Global Economic Effects of COVID-19~~

~~deaths was “causing great hardship for mil ions of Americans and is weighing on economic~~
~~activity and job creation.”~~
~~The Federal Reserve also indicated in an accompanying monetary policy report the pandemic -~~
~~related economic recession was disproportionately affecting certain groups in the economy:~~
~~lower-wage and less-educated workers, racial and ethnic minorities, and women.33 Powel also~~
~~indicated that published unemployment rates “dramatical y understated” the deterioration in the~~
~~U.S. labor market. Instead of the announced unemployment rate of 6.5% in January, 2021, Powel~~
~~argued that the actual rate likely was closer to 10%, reflecting discouraged workers who have~~
~~stopped looking for work and, therefore, are not counted as part of the labor force.34 He stated,~~
~~however, that, “even those grim statistics understate the decline in labor market conditions for the~~
~~most economical y vulnerable Americans.”35~~
~~During the 60-week period from mid-March 2020 to early May, 2021, 86.3 mil ion Americans~~
~~(half of the 160 mil ion civilian work force) had filed for unemployment insurance at some point~~
~~during the preceding year, as indicated in Table 1.36 On a seasonal y adjusted basis, the number of~~
~~insured unemployed individuals was 3.7 mil ion on April 24, 2021, down from a peak of 25~~
~~mil ion in mid-May, 2020. As indicated in Figure 2, weekly claims have fal en from the sharp~~
~~increases recorded in April and May, 2020. On a week-over-week basis, new claims totaled~~
~~498,000 in the week ending May 1, 2021, fal ing by 92,000 from the previous week’s total of~~
~~590,000, and representing the smal est weekly increase in unemployment filings since the start of~~
~~the pandemic. This number is stil more than twice the average number of weekly claims recorded~~
~~prior to the pandemic of about 200,000. In the week ending April 17, 2021, 16.2 mil ion people~~
~~claimed benefits in al programs, down 404,000 from the previous week’s total.~~
~~The insured unemployment rate for the week ending April 24, 2021, was 2.6%, same as rate for~~
~~the previous week. As workers have approached the traditional 26-week maximum for receiving~~
~~standard unemployment benefits they have applied for benefits under the extended Pandemic~~
~~Emergency Unemployment Compensation (PEUC) program or the Pandemic Unemployment~~
~~Assistance (PUA) program.37 Between April 10, 2021 and April 17, 2021, claims under the PEUC~~
~~program decreased by 221,600 to 4.9 mil ion~~deaths was “causing great hardship for millions of Americans and is weighing on economic activity and job creation.” The Federal Reserve also indicated in an accompanying monetary policy report the pandemic-related economic recession was disproportionately affecting certain groups in the economy: lower-wage and less-educated workers, racial and ethnic minorities, and women.36 Powell also indicated that published unemployment rates “dramatically understated” the deterioration in the U.S. labor market. Instead of the announced unemployment rate of 6.5% in January, 2021, Powell argued that the actual rate likely was closer to 10%, reflecting discouraged workers who have stopped looking for work and, therefore, are not counted as part of the labor force.37 He stated, however, that, “even those grim statistics understate the decline in labor market conditions for the most economically vulnerable Americans.”38 According to the Census Bureau, between March 2020 and February 2021, 115 million Americans experienced a loss in employment income and 37 million qualified for and received unemployment insurance. In addition, an estimated 26 million households reported receiving Supplemental Nutritional Assistance Program (SNAP) in February 2021, while nearly 12 million households with children were estimated not to have had enough to eat.39 Additional Census Bureau data indicate the stimulus checks appropriated under the COVID-19 Aid, Relief, and Economic Security Act (P.L. 116-136) were used by households to cover usual expenses such as food, housing, and gas. The Census Bureau also reported that:  By late summer 2020, 76.5 million American adults reported that it was somewhat or very difficult for them to pay usual expenses: that number rose to 89.7 million by December 2020. 33 McKinsey Global Institute, The Future of Work After COVID-19, February 18, 2021. 34 Parker, Kim, Ruth Igielnik, and Rakesh Kochhar Unemployed Americans are Feeling the Emotional Strain of Job Loss; Most Have Considered Changing Occupations, Pew Research Center. February 10, 2021. 35 Powell, Jerome, H., Testimony before the Senate Committee on Banking, Housing, and Urban Affairs, February 23, 2021, and Powell, Jerome H., Getting Back to a Strong Labor Market, Speech before The Economic Club of New York, February 10, 2021. 36 Board of Governors of the Federal Reserve System, Monetary Policy Report February 19, 2021, February 19, 2021. 37 Powell, Jerome H., Getting Back to a Strong Labor Market, p. 4. 38 Ibid, p. 4. 39 Monte M., Lindsay, Historical Look at Unemployment, Sectors Shows Magnitude of COVID-19 Impact on Economy, Census Bureau, March 15, 2021, https://www.census.gov/library/stories/2021/03/putting-economic-impact-of-pandemic-in-context.html. Congressional Research Service 7 Global Economic Effects of COVID-19  Households accumulated debt to meet their usual expenses with roughly 30% of adults using credit cards, taking out loans or borrowing from family and friends between June and December 2020 to pay for usual expenses.  In June 2020, 33.7 million adults were using debt but not income to pay their expenses. By late December, that number had increased to 43.7 million adults.  Households used the second stimulus check under the Consolidated Appropriations Act of 2021 (P.L. 116-260) to cover usual expenses and reduced the number of all adults in households struggling to cover usual costs to 80.5 million. Households also used the second stimulus check to pay down debt.40 During the 65-week period from mid-March 2020 to early June, 2021, 88 million Americans (half of the 160 million civilian work force) had filed for unemployment insurance at some point during the preceding year, as indicated in Table 1.41 On a seasonally adjusted basis, the number of insured unemployed individuals was 3.5 million on May 29, 2021, down from a peak of 25 million in mid-May, 2020. As indicated in Figure 2, weekly claims have fallen from the sharp increases recorded in April and May, 2020. On a week-over-week basis, new claims totaled 376,000 in the week ending June 5 2021, falling by 9,000 from the previous week’s total of 385,000, and representing the smallest weekly increase in unemployment filings since the start of the pandemic. This number is still nearly twice the average number of weekly claims recorded prior to the pandemic of about 200,000. In the week ending May 22, 2021, 15.3 million people claimed benefits in all programs, down 95,000 from the previous week’s total. The insured unemployment rate for the week ending May 29, 2021, was 2.5%, down 0.2% from the previous week. As workers have approached the traditional 26-week maximum for receiving standard unemployment benefits they have applied for benefits under the extended Pandemic Emergency Unemployment Compensation (PEUC) program or the Pandemic Unemployment Assistance (PUA) program.42 Between May 15, 2021, and May 22, 2021, claims under the PEUC program fell by 70,000 to 5.2 million, while claims under the PUA program decreased by 12,700 to 6.3 million~~, while claims under the PUA program decreased by~~
~~112,500 to 6.9 mil ion~~. Benefits were extended by P.L. 116-260, signed by President Trump on . Benefits were extended by P.L. 116-260, signed by President Trump on

~~2021, and Powell, Jerome H., Getting Back to a Strong Labor Market, Speech before T he Economic Club of New~~
~~York, February 10, 2021.~~
~~33 Board of Governors of the Federal Reserve System, Monetary Policy Report February 19, 2021, February 19, 2021.~~
~~34 Powell, Jerome H., Getting Back to a Strong Labor Market, p. 4.~~
~~35 Ibid, p. 4.~~
~~36 Unemployment Insurance Weekly Claims, Department of Labor, May 6, 2021. https://www.dol.gov/; Romm, T ony~~
~~and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week T otal~~December 27, 2020. Benefits were further extended through September 6, 2021, by the American Rescue Plan Act of 2021, P.L. 117-2, signed by President Biden on March 11, 2021. 40 Perez-Lopez, Daniel J. and Lindsay M. Monte, Household Pulse Survey Shows Stimulus Payments Have Eased Financial Hardship, Census Bureau, March 24, 2021. https://www.census.gov/library/stories/2021/03/many-american-households-use-stimulus-payments-to-pay-down-debt.html. 41 Unemployment Insurance Weekly Claims, Department of Labor, June 10, 2021. https://www.dol.gov/; Romm, Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, to 38.6 Million,
Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims- May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-
coronavirus/ coronavirus/
3742 Both programs were authorized under P.L. 116-136, March 27, 2020, the Coronavirus Aid, Relief, and Economic Both programs were authorized under P.L. 116-136, March 27, 2020, the Coronavirus Aid, Relief, and Economic
Security (CARES)Security (CARES) Act, with benefits ending by DecemberAct, with benefits ending by December 31, 2020. 31, 2020. ~~T he~~The PUA program provided 39 weeks of PUA program provided 39 weeks of
unemployment assistance, including $600 weekly benefits (expired in Augustunemployment assistance, including $600 weekly benefits (expired in August 2020), under certain conditions, for 2020), under certain conditions, for
workers who had exhausted regularworkers who had exhausted regular unemployment benefits, were not eligibleunemployment benefits, were not eligible for regular benefits, or were not eligible for regular benefits, or were not eligible
for benefits underfor benefits under the PEUC program. On December 27, 2020, President the PEUC program. On December 27, 2020, President ~~T rump~~Trump signed the Consolidated signed the Consolidated
Appropriations Act of 2021 (P.L. 116-260), extending PUA benefits for 11 weeks. Appropriations Act of 2021 (P.L. 116-260), extending PUA benefits for 11 weeks. ~~T he~~The PEUC program provided 13 PEUC program provided 13
weeksweeks of additional benefits to individualsof additional benefits to individuals who had exhausted standard unemployment assistance and met other who had exhausted standard unemployment assistance and met other
eligibilityeligibility requirements. Benefits wererequirements. Benefits were further extended through September 6, 2021further extended through September 6, 2021, by the American Rescue by the American Rescue Plan Act Plan Act
of 2021, P.L. 117-2, signed by President Biden on March 11, 2021of 2021, P.L. 117-2, signed by President Biden on March 11, 2021 . DOL, . DOL, ~~Unem ploym ent~~Unemployment Insurance Program Letter
No. 14-21, March 15, 2021; DOL, , March 15, 2021; DOL, ~~Unem ployment~~Unemployment Insurance Program Letter No. 16 -20, February 25, 2021. , February 25, 2021.
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~~December 27, 2020. Benefits were further extended through September 6, 2021 by the American~~
~~Rescue Plan Act of 2021, P.L. 117-2, signed by President Biden on March 11, 2021.~~
Figure 2. Initial U.S. Weekly Claims for Unemployment Insurance, 2020 and 2021
In In ~~mil ions~~millions of individual claims of individual claims

Source: Department of Labor. Created by CRS. Department of Labor. Created by CRS.
At the beginning of the pandemic-related economic recession, the Bureau of Labor Statistics At the beginning of the pandemic-related economic recession, the Bureau of Labor Statistics
(BLS) reported on May 8, 2020, that 20 (BLS) reported on May 8, 2020, that 20 ~~mil ion~~million Americans lost their jobs in April Americans lost their jobs in April 2020 as a 2020 as a
consequence of business lockdowns, pushing the total number of unemployed Americans to 23 consequence of business lockdowns, pushing the total number of unemployed Americans to 23
~~mil ion,38~~ million,43 out of a total civilianout of a total civilian labor force of 158 labor force of 158 ~~mil ion~~million. The increase pushed the national . The increase pushed the national
unemployment rate to 14.7% (with some caveats), the highest since the Great Depression of the unemployment rate to 14.7% (with some caveats), the highest since the Great Depression of the
1930s.1930s.3944 In contrast, on In contrast, on ~~April 2~~June 4, 2021, BLS reported that: nonfarm employment rose by , 2021, BLS reported that: nonfarm employment rose by ~~916~~589,000 in May to reach 151.6 million~~,000~~
~~in March~~, up from the previous month’s increase of , up from the previous month’s increase of ~~468~~278,000; the total number of unemployed ,000; the total number of unemployed
Americans was 9.Americans was 9.~~7 mil ion~~3 million, down from the previous month’s total of , down from the previous month’s total of ~~10 mil ion;40~~ 9.8 million;45 and the and the
unemployment rate dropped to unemployment rate dropped to ~~6.0~~5.8%, again with some caveats.%, again with some caveats.4146
Table 1. Seasonally Adjusted Weekly Unemployment Insurance Claims
In thousands In thousands
Insured
Change from
Insured
Unemployment
Week Ending
Initial Claims
Prior Week
Unemployment
Rate
Total Claims
21-Mar-20 21-Mar-20
3,307 3,307
3,025 3,025
3,059 3,059
2.1% 2.1%
3,307 3,307
28-Mar-20 28-Mar-20
6,867 6,867
3,560 3,560
7,446 7,446
5.1 5.1
10,174 10,174
4-Apr-20 4-Apr-20
6,615 6,615
-252 -252
11,914 11,914
8.2 8.2
16,789 16,789

~~38 T his~~ 11-Apr-20 5,237 -1,378 15,819 10.9 22,026 18-Apr-20 4,442 -795 18,011 12.4 26,468 25-Apr-20 3,867 -575 22,377 15.4 30,335 43 This total did not include 10.9 million workers who were working total did not include 10.9 million workers who were working part time not by choice and 9.9 million individuals part time not by choice and 9.9 million individuals
who werewho were seeking employment. seeking employment.
39 44 The Employment Situation-~~April~~May 2020, Bureau of Labor Statistics, , Bureau of Labor Statistics, ~~May 8~~June 10, 2020. https://www.bls.gov/. , 2020. https://www.bls.gov/.
~~40 T his~~45 This total does not include 5.8 million workers who were total does not include 5.8 million workers who were working part time not by choice and 6.working part time not by choice and 6.96 million individuals million individuals
who werewho were seeking employment. seeking employment.
4146 The Employment Situation-~~March~~May 2021, Bureau of Labor Statistics, , Bureau of Labor Statistics, ~~April 2~~June 4, 2021, https://www.bls.gov/., 2021, https://www.bls.gov/. BLS BLS
indicated that some individualsindicated that some individuals had been misclassifiedhad been misclassified in previous months. Instead of being classifiedin previous months. Instead of being classified as unemployed, as unemployed,
they were they were ~~misclassified as~~ misclassified as employed, but absent from work dueemployed, but absent from work due to coronavirus-related businessto coronavirus-related business closures. If such closures. If such
~~individuals~~ individuals had been classifiedhad been classified as unemployed, the unemployment rate would have been 5 percentage points higher in as unemployed, the unemployment rate would have been 5 percentage points higher in
AprilApril 2020. .
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Insured
Change from
Insured
Unemployment
Week Ending
Initial Claims
Prior Week
Unemployment
Rate
Total Claims
~~11-Apr-20~~
~~5,237~~
~~-1,378~~
~~15,819~~
~~10.9~~
~~22,026~~
~~18-Apr-20~~
~~4,442~~
~~-795~~
~~18,011~~
~~12.4~~
~~26,468~~
~~25-Apr-20~~
~~3,867~~
~~-575~~
~~22,377~~
~~15.4~~
~~30,335~~
2-May-20 2-May-20
3,176 3,176
-691 -691
22,548 22,548
15.5 15.5
33,511 33,511
9-May-20 9-May-20
2,687 2,687
-489 -489
24,912 24,912
17.1 17.1
36,198 36,198
16-May-20 16-May-20
2,446 2,446
-241 -241
20,841 20,841
14.3 14.3
38,644 38,644
23-May-20 23-May-20
2,123 2,123
-323 -323
21,268 21,268
14.6 14.6
40,767 40,767
30-May-20 30-May-20
1,897 1,897
-226 -226
20,606 20,606
14.1 14.1
42,664 42,664
6-Jun-20 6-Jun-20
1,566 1,566
-331 -331
20,544 20,544
14.1 14.1
44,230 44,230
13-Jun-20 13-Jun-20
1,540 1,540
-26 -26
19,231 19,231
13.2 13.2
45,770 45,770
20-Jun-20 20-Jun-20
1,482 1,482
-58 -58
19,290 19,290
13.2 13.2
47,252 47,252
27-Jun-20 27-Jun-20
1,408 1,408
-74 -74
17,760 17,760
12.2 12.2
48,660 48,660
4-Jul-20 4-Jul-20
1,310 1,310
-98 -98
17,304 17,304
11.8 11.8
49,970 49,970
11-Jul-20 11-Jul-20
1,308 1,308
-2 -2
16,151 16,151
11.1 11.1
51,278 51,278
18-Jul-20 18-Jul-20
1,422 1,422
114 114
16,951 16,951
11.6 11.6
52,700 52,700
25-Jul-20 25-Jul-20
1,435 1,435
13 13
16,090 16,090
11.0 11.0
54,135 54,135
1-Aug-20 1-Aug-20
1,191 1,191
-244 -244
15,480 15,480
10.6 10.6
55,326 55,326
8-Aug-20 8-Aug-20
971 971
-220 -220
14,759 14,759
10.1 10.1
56,297 56,297
15-Aug-20 15-Aug-20
1,104 1,104
133 133
14,492 14,492
9.9 9.9
57,401 57,401
22-Aug-20 22-Aug-20
1,011 1,011
-98 -98
13,254 13,254
9.1 9.1
58,412 58,412
29-Aug-20 29-Aug-20
884 884
-127 -127
13,544 13,544
9.3 9.3
59,296 59,296
5-Sep-20 5-Sep-20
893 893
9 9
12,747 12,747
8.7 8.7
60,189 60,189
12-Sep-20 12-Sep-20
866 866
-27 -27
12,747 12,747
8.7 8.7
61,055 61,055
19-Sep-20 19-Sep-20
873 873
7 7
11,979 11,979
8.2 8.2
61,928 61,928
26-Sep-20 26-Sep-20
849 849
-24 -24
10,594 10,594
7.2 7.2
62,777 62,777
3-Oct-20 3-Oct-20
767 767
-82 -82
9,398 9,398
6.4 6.4
63,544 63,544
10-Oct-20 10-Oct-20
842 842
75 75
8,472 8,472
5.8 5.8
64,386 64,386
17-Oct-20 17-Oct-20
791 791
-45 -45
7,823 7,823
5.3 5.3
65,183 65,183
24-Oct-20 24-Oct-20
758 758
-39 -39
7,222 7,222
4.9 4.9
65,941 65,941
31-Oct-20 31-Oct-20
757 757
-1 -1
6,801 6,801
4.6 4.6
66,698 66,698
7-Nov-20 7-Nov-20
711 711
-46 -46
6,370 6,370
4.3 4.3
67,409 67,409
14-Nov-20 14-Nov-20
748 748
37 37
6,089 6,089
4.2 4.2
68,157 68,157
21-Nov-20 21-Nov-20
787 787
39 39
5,527 5,527
3.8 3.8
68,944 68,944
28-Nov-20 28-Nov-20
716 716
-71 -71
5,781 5,781
3.9 3.9
69,660 69,660
5-Dec-20 5-Dec-20
853 853
134 134
5,614 5,614
3.8 3.8
70,513 70,513
12-Dec-20 12-Dec-20
873 873
20 20
5,433 5,433
3.7 3.7
71,386 71,386
~~Congressional Research Service~~

9

~~Global Economic Effects of COVID-19~~

~~Insured~~
~~Change from~~
~~Insured~~
~~Unemployment~~
~~Week Ending~~
~~Initial Claims~~
~~Prior Week~~
~~Unemployment~~
~~Rate~~
~~Total Claims~~
19-Dec-20 19-Dec-20
803 803
-70 -70
5,311 5,311
3.6 3.6
72,189 72,189
26-Dec-20 26-Dec-20
763 763
-40 -40
5,180 5,180
3.5 3.5
72,952 72,952
2-Jan-21 2-Jan-21
781 781
18 18
5,240 5,240
3.7 3.7
73,733 73,733 Congressional Research Service 10 Global Economic Effects of COVID-19 Insured Change from Insured Unemployment Week Ending Initial Claims Prior Week Unemployment Rate Total Claims
9-Jan-21 9-Jan-21
904 904
123 123
5,061 5,061
3.6 3.6
74,637 74,637
16-Jan-21 16-Jan-21
886 886
-18 -18
4,878 4,878
3.4 3.4
75,523 75,523
23-Jan 21 23-Jan 21
836 836
-50 -50
4,791 4,791
3.4 3.4
76,359 76,359
30-Jan-21 30-Jan-21
837 837
1 1
4,655 4,655
3.3 3.3
77,196 77,196
6-Feb-21 6-Feb-21
863 863
26 26
4,592 4,592
3.2 3.2
78,059 78,059
13-Feb-21 13-Feb-21
847 847
-16 -16
4,469 4,469
3.1 3.1
78,906 78,906
20-Feb-21 20-Feb-21
747 747
-100 -100
4,383 4,383
3.1 3.1
79,653 79,653
27-Feb-21 27-Feb-21
761 761
14 14
4,157 4,157
2.9 2.9
80,414 80,414
6-March-21 6-March-21
734 734
-27 -27
4,123 4,123
2.9 2.9
81,148 81,148
13-March-21 13-March-21
765 765
31 31
3,841 3,841
2.7 2.7
81,913 81,913
20-March-21 20-March-21
658 658
-107 -107
3,750 3,750
2.6 2.6
82,571 82,571
27-March-21 27-March-21
729 729
71 71
3,717 3,717
2.6 2.6
83,300 83,300
3-April-21 3-April-21
742 742
13 13
3,708 3,708
2.7 2.7
84,042 84,042
10-April-21 10-April-21
586 586
-156 -156
3, 3,~~651~~652
2.6 2.6
84,628 84,628
17-April-21 17-April-21
566 566
-20 -20
3, 3,~~652~~653
2.6 2.6
85,194 85,194
24-April-21 24-April-21
590 590
24 24
3, 3,~~690~~680
2.6 2.6
85,784 85,784
1-May-21 1-May-21
~~498~~
~~-92~~

~~86,282~~507 -83 3,640 2.6 86,291 8-May-21 478 -29 3,738 2.7 86,769 15-May-21 444 -34 3,611 2.6 87,213 22-May-21 405 -39 3,757 2.7 87,619 29-May-21 385 -20 3,499 2.5 88,003 5-June-21 376 -9 88,379
Source: Department of Labor, CRS calculations. Department of Labor, CRS calculations.
Impact on Output
According to the AprilAccording to the April 2021 2021 World Economic Outlook prepared by the International Monetary prepared by the International Monetary
Fund (IMF), the global economy is projected to experience a stronger recovery in 2021 and 2022 Fund (IMF), the global economy is projected to experience a stronger recovery in 2021 and 2022
than indicated in previous forecasts, with global growth projected to increase at a rate of 6% in than indicated in previous forecasts, with global growth projected to increase at a rate of 6% in
2021 and 4.4% in 2022.2021 and 4.4% in 2022.4247 The IMF also concluded the global economic recovery would occur at The IMF also concluded the global economic recovery would occur at
different speeds across and within individual countries, reflecting differences in the pace of different speeds across and within individual countries, reflecting differences in the pace of
vaccinations, the extent of policy support, and various structural conditions, such as the role of vaccinations, the extent of policy support, and various structural conditions, such as the role of
tourism in the economy. Within countries, the employment and earnings of youth, women, and tourism in the economy. Within countries, the employment and earnings of youth, women, and
the relativelythe relatively lower-lower-~~skil ed~~skilled workers has been affected the most. workers has been affected the most.
In addition to the asynchronous recovery, the IMF also concluded that fiscal and financial support In addition to the asynchronous recovery, the IMF also concluded that fiscal and financial support
provided by central banks may have unintended consequences by supporting equity valuations provided by central banks may have unintended consequences by supporting equity valuations
that are misaligned with their model-estimated fundamentals and by increasing financial risks that are misaligned with their model-estimated fundamentals and by increasing financial risks
~~overal that could become problematic should interest rates start rising.43 These risks could~~

42 ~~World~~ 47 World Economic Outlook, International Monetary Fund, April, 2021, p. xiii International Monetary Fund, April, 2021, p. xiii.
43 Global Financial Stability Report~~, International Monetary Fund, April, 2021, p. x~~. .
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overall that could become problematic should interest rates start rising.48 These risks could increase for non-financial firms and households that had high levels of debt relative to income increase for non-financial firms and households that had high levels of debt relative to income
prior to the pandemic crisis should interest rates rise. Accommodative monetary and fiscal prior to the pandemic crisis should interest rates rise. Accommodative monetary and fiscal
policies intended to limitpolicies intended to limit the economic impact of the crisis may have aided non-financial firms the economic impact of the crisis may have aided non-financial firms
and households, but such support may also have come at the expense of higher debt levels for and households, but such support may also have come at the expense of higher debt levels for
most countries and the prospect of a lower rate of economic growth in the future.most countries and the prospect of a lower rate of economic growth in the future.44
49 The staggered economic recovery is projected to widen gaps in living standards between The staggered economic recovery is projected to widen gaps in living standards between
developing countries and others. Such differences in living standards are estimated to reflect developing countries and others. Such differences in living standards are estimated to reflect
differences in cumulative per capital income with losses in 2020 to 2022 projected to be differences in cumulative per capital income with losses in 2020 to 2022 projected to be
equivalent to 20% of 2019 global GDP, or about $18 equivalent to 20% of 2019 global GDP, or about $18 ~~tril ion.~~ trillion. The heaviest losses are estimated to The heaviest losses are estimated to
~~fal~~ fall disproportionately on low-income and emerging market economies. In addition, the IMF disproportionately on low-income and emerging market economies. In addition, the IMF
estimated that 95 estimated that 95 ~~mil ion~~ million people may have entered into extreme poverty in 2020 with 80 people may have entered into extreme poverty in 2020 with 80 ~~mil ion~~million
more people being undernourished compared to pre-pandemic levels, as (1) per capita incomes more people being undernourished compared to pre-pandemic levels, as (1) per capita incomes
would remain below the pre-pandemic levels for several years, adversely affecting productivity; would remain below the pre-pandemic levels for several years, adversely affecting productivity;
(2) the demands placed on national health systems to address the pandemic could hinder the (2) the demands placed on national health systems to address the pandemic could hinder the
treatment of other diseases; (3) business bankruptcies could reduce productivity; and (4) rising treatment of other diseases; (3) business bankruptcies could reduce productivity; and (4) rising
debt levels could crowd out potential borrowing and investment.debt levels could crowd out potential borrowing and investment.45
50 The IMF urged G-20 leaders to maintain monetary and fiscal policies to lessen the economic The IMF urged G-20 leaders to maintain monetary and fiscal policies to lessen the economic
impact of the global recession, In particular, the IMF recommended a combination of impact of the global recession, In particular, the IMF recommended a combination of
accommodative monetary policies characterized by low interest rates and central bank programs accommodative monetary policies characterized by low interest rates and central bank programs
to facilitate credit availability,to facilitate credit availability, a continuation of fiscal support for individuals and firms, and a continuation of fiscal support for individuals and firms, and
engagement in a synchronized infrastructure investment program to promote growth. According engagement in a synchronized infrastructure investment program to promote growth. According
to an IMF analysis, to an IMF analysis, al all other things being equal, an increase in infrastructure spending by G-20 other things being equal, an increase in infrastructure spending by G-20
countries of one-half percent of their GDP in 2021 and 1% in 2022 through 2025 would increase countries of one-half percent of their GDP in 2021 and 1% in 2022 through 2025 would increase
global GDP by 2% in 2025, compared with under 1.2% growth for an unsynchronized approach.global GDP by 2% in 2025, compared with under 1.2% growth for an unsynchronized approach.4651
In contrast to remarks by Federal Reserve Chairman Jerome In contrast to remarks by Federal Reserve Chairman Jerome ~~Powel~~ Powell in early December 2020 that in early December 2020 that
the outlook was “extraordinarily uncertain,” and that, “….significant the outlook was “extraordinarily uncertain,” and that, “….significant ~~chal enges~~challenges and uncertainties and uncertainties
remain,”remain,”4752 his assessment on March 23, 2021 his assessment on March 23, 2021, before the House Financial Services Committee was before the House Financial Services Committee was
more upbeat.more upbeat.4853 He stated that, “The recovery has progressed more quickly than He stated that, “The recovery has progressed more quickly than ~~general y~~generally
expected and looks to be strengthening.” He cautioned, however, that, “…. the sectors of the expected and looks to be strengthening.” He cautioned, however, that, “…. the sectors of the
economy most adversely affected by the resurgence of the virus, and by greater social distancing, economy most adversely affected by the resurgence of the virus, and by greater social distancing,
remain weak, and the unemployment rate—remain weak, and the unemployment rate—~~stil~~ still elevated at 6.2 percent—underestimates the elevated at 6.2 percent—underestimates the
~~shortfal~~ shortfall, particularly as labor market participation remains notably below pre-pandemic levels.” , particularly as labor market participation remains notably below pre-pandemic levels.”
At the same hearing, Treasury Secretary Janet At the same hearing, Treasury Secretary Janet ~~Yel en~~Yellen stated: stated:
We are meeting at a hopeful moment for the economy We are meeting at a hopeful moment for the economy – but still a daunting one. While – but still a daunting one. While
we’re seeing signs of recovery, we should be clear-eyed about the hole we’re digging out we’re seeing signs of recovery, we should be clear-eyed about the hole we’re digging out
of: The country is still down nearly 10 million jobs from its pre-pandemic peak.of: The country is still down nearly 10 million jobs from its pre-pandemic peak.
~~One-in-ten homeowners with a mortgage are behind on their payments, and almost one-in-~~
~~five renters are behind on their rent. There are 22 million people who say they don’t have~~
~~enough food to eat. One-in-ten adults is hungry in America.~~

~~44 Ibid, p. 36.~~
45 48 Global Financial Stability Report, International Monetary Fund, April, 2021, p. x. 49 Ibid, p. 36. 50 G-20 Surveillance Note, International Monetary Fund, November, 2020, p. 6. , International Monetary Fund, November, 2020, p. 6.
4651 Ibid., p. 10. Ibid., p. 10.
4752 Powell, Jerome H., Powell, Jerome H., Coronavirus Aid, Relief, and Economic Security Act, December 1 and 2, 2020. , December 1 and 2, 2020.
https://www.federalreserve.gov/newsevents/testimony/powell20201201a.htm. https://www.federalreserve.gov/newsevents/testimony/powell20201201a.htm.
4853 Powell, Jerome H., Statement before the Financial Services Committee, House of Representatives, March 23, 2021, Powell, Jerome H., Statement before the Financial Services Committee, House of Representatives, March 23, 2021,
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One-in-ten homeowners with a mortgage are behind on their payments, and almost one-in-five renters are behind on their rent. There are 22 million people who say they don’t have enough food to eat. One-in-ten adults is hungry in America. We know that when the foundations of someone’s life fall apart – when they lose the roof We know that when the foundations of someone’s life fall apart – when they lose the roof
over their head or the ability to eat dinner every nightover their head or the ability to eat dinner every night – the pain can weigh on them for – the pain can weigh on them for
years. Their earning potential is permanently lowered. I worried about this happening on a years. Their earning potential is permanently lowered. I worried about this happening on a
mass scale.mass scale.4954
On December 2, IMF Managing Director Kristalina Georgieva indicated the global financial On December 2, IMF Managing Director Kristalina Georgieva indicated the global financial
system had been resilient enough to withstand the impact of the global pandemic, but she urged system had been resilient enough to withstand the impact of the global pandemic, but she urged
policymakers to “act quickly” to return economic growth to its re-pandemic levels and avoid policymakers to “act quickly” to return economic growth to its re-pandemic levels and avoid
widespread financial distress.widespread financial distress.5055 The Director reportedly also urged policymakers to take “urgent, The Director reportedly also urged policymakers to take “urgent,
coordinated steps” to deliver investment in digitalcoordinated steps” to deliver investment in digital technology, infrastructure and the environment. technology, infrastructure and the environment.
She also indicated the IMF had projected that the loss of global economic output between 2020 She also indicated the IMF had projected that the loss of global economic output between 2020
and 2025 as a consequence of the pandemic would total $28 and 2025 as a consequence of the pandemic would total $28 ~~tril ion~~trillion and that 120 and that 120 ~~mil ion~~ million jobs jobs
would be lost permanently in the tourism industry alone. The pandemic-related economic would be lost permanently in the tourism industry alone. The pandemic-related economic
recession has raised concerns over the growing debt problems in developing economies, where recession has raised concerns over the growing debt problems in developing economies, where
the IMF projected that as much as 40% of banks assets were in danger of becoming distressed. the IMF projected that as much as 40% of banks assets were in danger of becoming distressed.
~~To date~~Since early 2021, the global pandemic has affected a broad swath of international economic and trade , the global pandemic has affected a broad swath of international economic and trade
activities, from services activities, from services ~~general y~~generally to tourism and hospitality, medical supplies and other global to tourism and hospitality, medical supplies and other global
value chains, consumer electronics, and financial markets to energy, transportation, food, and a value chains, consumer electronics, and financial markets to energy, transportation, food, and a
range of social activities, to name a few. In addition, the health crisisrange of social activities, to name a few. In addition, the health crisis ~~has~~ disproportionately disproportionately
negatively affected developing economies that are constrained by limited financial resources and negatively affected developing economies that are constrained by limited financial resources and
where health systems where health systems ~~can quickly become~~have been overloaded. The IMF estimated in April 2021 the overloaded. The IMF estimated in April 2021 the
economic economic ~~fal out~~fallout from the pandemic could push 95 from the pandemic could push 95 ~~mil ion~~million people in Sub-Saharan Africa and people in Sub-Saharan Africa and
South Asia into extreme poverty, reversing a decades-long trend.South Asia into extreme poverty, reversing a decades-long trend.5156 However, the IMF also However, the IMF also
concluded that spending on social programs to limit the impact of the pandemic could reduce the concluded that spending on social programs to limit the impact of the pandemic could reduce the
number of people number of people ~~fal ing~~ falling into extreme poverty to 80 to 90 into extreme poverty to 80 to 90 ~~mil ion.~~
~~Without a clear understanding of when the global health and economic effects may peak and a~~
~~greater understanding of the impact on economies, forecasts must necessarily be considered~~
~~preliminary. Similarly, estimates of when any~~million. The two-track nature of the economic recovery between developed and developing economies combined with new variants of the virus and viral outbreaks in some major developing economies increase the cost of the crisis on the global economy and complicate economic forecasts. Similarly, estimates of when a sustained recovery might begin and the speed of the recovery recovery might begin and the speed of the recovery
are speculative. Forecasts have been updated several times are speculative. Forecasts have been updated several times ~~during the first three quarters of~~ since the global recession began in April 2020 2020
to incorporate additional data, to incorporate additional data, ~~initial y~~ initially reflecting worsening global and national economic growth reflecting worsening global and national economic growth
estimates, but also reflecting more positive data in estimates, but also reflecting more positive data in ~~the third quarter.~~
~~Efforts~~third quarter 2020 and first quarter 2021. Although individually experienced, the pandemic-related economic effects have been globally shared as national efforts to reduce social interaction to contain the spread of the virus disrupted the daily lives of to reduce social interaction to contain the spread of the virus disrupted the daily lives of
most Americans and added to the economic costs. Increased rates of unemployment raised the most Americans and added to the economic costs. Increased rates of unemployment raised the
prospects of social unrest in developed economies where lost incomes and health insurance prospects of social unrest in developed economies where lost incomes and health insurance
threaten living standards and in developing economies where populations reportedly are threaten living standards and in developing economies where populations reportedly are
concerned over access to basic necessities and the prospects of rising levels of concerned over access to basic necessities and the prospects of rising levels of ~~poverty.52 U.N.~~
~~Secretary General Antonio Guterres argued in a video conference before the U.N. Security~~
~~Council on April 10, 2020, that~~

49 54 Yellen, Janet, L., Yellen, Janet, L., ~~T estimony~~Testimony before the Financial Services Committee, House of Representatives March 23, 2021, p. before the Financial Services Committee, House of Representatives March 23, 2021, p.
1. 1.
50 55 Wheatley, Jonathan, IMF Chief Warns Against Complacency on Global Wheatley, Jonathan, IMF Chief Warns Against Complacency on Global Economy, Economy, Financial Times, December 2, , December 2,
2020. https://www.ft.com/content/fda34b47-33d2-457e-a0b6-45be6001920d. 2020. https://www.ft.com/content/fda34b47-33d2-457e-a0b6-45be6001920d.
5156 Fiscal Monitor, International Monetary Fund, April 2021, p. 31. , International Monetary Fund, April 2021, p. 31.
52 Sly, Liz, “ Stirrings of Unrest Around the World Could Portend T urmoil as Economies Collapse,” Washington Post,
~~April 19, 2020; Ingraham, Christopher, “Coronavirus Recession Could Plunge T ens of Millions Into Poverty, New~~
~~Report Warns,” Washington Post, April 20, 2020. https://www.washingtonpost.com/business/2020/04/20/coronavirus-~~
~~recession-could-plunge-tens-millions-into-poverty-new-report-warns/.~~
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~~Global Economic Effects of COVID-19~~

Congressional Research Service 13 Global Economic Effects of COVID-19 poverty.57 U.N. Secretary General Antonio Guterres argued in a video conference before the U.N. Security Council on April 10, 2020, that [T]he pandemic also poses a significant threat to the maintenance of international peace [T]he pandemic also poses a significant threat to the maintenance of international peace
and security—potentially leading to an increase in social unrest and violence that would and security—potentially leading to an increase in social unrest and violence that would
greatly undermine our ability to fight the disease.greatly undermine our ability to fight the disease.5358
Financial Markets
Policymakers and financial and commodity market participants had Policymakers and financial and commodity market participants had ~~general y~~generally estimated that a estimated that a
global economic recovery would take hold in the third quarter of 2020. A resurgence in infectious global economic recovery would take hold in the third quarter of 2020. A resurgence in infectious
cases in developed and developing countries starting in September, however, shifted more of the cases in developed and developing countries starting in September, however, shifted more of the
projected recovery to 2021. Various indicators in the third quarter suggested the worst of the projected recovery to 2021. Various indicators in the third quarter suggested the worst of the
economic crisis had passed, although the extent and strength of any global economic recovery economic crisis had passed, although the extent and strength of any global economic recovery
remained difficult to predict. Estimates indicated that China’s economy grew by 4.9% in the third remained difficult to predict. Estimates indicated that China’s economy grew by 4.9% in the third
quarter, driven by an increase in industrial production and consumer demand, marking it as one of quarter, driven by an increase in industrial production and consumer demand, marking it as one of
the few economies likely to post an the few economies likely to post an ~~overal~~ overall positive rate of growth for 2020.positive rate of growth for 2020.5459 At the same time, At the same time,
an economic recovery an economic recovery ~~stal ed~~stalled in Europe and the United States. The emergence of more infectious in Europe and the United States. The emergence of more infectious
strains of the COVID-19 virus pushed governments to re-impose lockdowns and curtail social strains of the COVID-19 virus pushed governments to re-impose lockdowns and curtail social
and economic activity during the fourth quarter. Updated forecasts indicate the pandemic could and economic activity during the fourth quarter. Updated forecasts indicate the pandemic could
negativelynegatively affect global economic growth in 2020 less negatively than had been forecasted in the affect global economic growth in 2020 less negatively than had been forecasted in the
spring, but that the effects could last longer with a slower rate of growth in 2021 and 2022.spring, but that the effects could last longer with a slower rate of growth in 2021 and 2022.
As one indicator of the economic impact of the pandemic, the Dow Jones Industrial Average As one indicator of the economic impact of the pandemic, the Dow Jones Industrial Average
Index (DJIA), along with other market indices, rose nearly three percentage points on Monday, Index (DJIA), along with other market indices, rose nearly three percentage points on Monday,
November 9, 2020, reportedly on news that a COVID-19 vaccine had been developed.November 9, 2020, reportedly on news that a COVID-19 vaccine had been developed.5560 During During
the period November 3 through 24, the DJIA rose over 9%. On November 24, 2020, the DJIA, the period November 3 through 24, the DJIA rose over 9%. On November 24, 2020, the DJIA,
along with global equities markets, increased by 1.5%, and reached an index milestone of 30,000 along with global equities markets, increased by 1.5%, and reached an index milestone of 30,000
for the first time and surpassed the previous high value recorded on February 14, 2020, prior to for the first time and surpassed the previous high value recorded on February 14, 2020, prior to
the pandemic-related economic shutdown. Reportedly, the rise in market indices reflected a the pandemic-related economic shutdown. Reportedly, the rise in market indices reflected a
positive assessment by investors of announcements of effective vaccines against COVID-19, positive assessment by investors of announcements of effective vaccines against COVID-19,
political developments in the United States, potential additional fiscal measures by governments political developments in the United States, potential additional fiscal measures by governments
to stimulate economic activity, and prospects of stronger economic growth in 2021.to stimulate economic activity, and prospects of stronger economic growth in 2021.5661
Prospects of a vaccine Prospects of a vaccine ~~initial y~~ initially signaled an eventual end to the business lockdowns and social signaled an eventual end to the business lockdowns and social
restrictions and reduced demands on policymakers to implement additionalrestrictions and reduced demands on policymakers to implement additional fiscal and monetary fiscal and monetary
policies. Until a vaccine can be broadly distributed, however, policymakers may have to weigh policies. Until a vaccine can be broadly distributed, however, policymakers may have to weigh
~~continuing efforts that balance the competing requirements of households, firms, and state and~~
~~local governments. Also, the impact of the currently available vaccines on new strains of the~~
~~COVID-19 virus are being evaluated.57 Various U.S. states reversed course in late June to impose~~
~~or re-impose social distancing guidelines and close businesses that had begun opening as a result~~

53 57 Sly, Liz, “Stirrings of Unrest Around the World Could Portend Turmoil as Economies Collapse,” Washington Post, April 19, 2020; Ingraham, Christopher, “Coronavirus Recession Could Plunge Tens of Millions Into Poverty, New Report Warns,” Washington Post, April 20, 2020. https://www.washingtonpost.com/business/2020/04/20/coronavirus-recession-could-plunge-tens-millions-into-poverty-new-report-warns/. 58 Secretary-General’s Remarks to the Security Council on the COVID-19 Pandemic, United Nations, April 9, 2020. , United Nations, April 9, 2020.
https://www.un.org/sg/en/content/sg/statement/2020-04-09/secretary-generals-remarks-the-security-council-the-covid-https://www.un.org/sg/en/content/sg/statement/2020-04-09/secretary-generals-remarks-the-security-council-the-covid-
19-pandemic-delivered. 19-pandemic-delivered.
~~54 Hale, T homas, T om~~59 Hale, Thomas, Tom Mitchell, Christian Shepherd, and Emma Zhou, “Chinese Economy Expands 4.9% in Mitchell, Christian Shepherd, and Emma Zhou, “Chinese Economy Expands 4.9% in ~~T hird~~Third
Quarter,” Quarter,” Financial ~~Tim es~~Times, October 19, 2020. https://www.ft.com/content/22108ddd-3280-4013-bcd8-1adc9e6ae13d. , October 19, 2020. https://www.ft.com/content/22108ddd-3280-4013-bcd8-1adc9e6ae13d.
~~55 T elford, T aylor~~60 Telford, Taylor, and Hamza Shaban, “, and Hamza Shaban, “ Dow ClimbsDow Climbs More More ~~T han~~Than 800 Points as Vaccine News, 800 Points as Vaccine News, ~~Biden~~ Biden Victory Rev Up Victory Rev Up
Markets,” Markets,” Washington Post, November 9, 2020. https://www.washingtonpost.com/business/2020/11/09/stocks-, November 9, 2020. https://www.washingtonpost.com/business/2020/11/09/stocks-
markets-biden-trump-coronavirus/. markets-biden-trump-coronavirus/.
5661 Smith, Colby, Camilla Smith, Colby, Camilla Hodgson, and HudsonHodgson, and Hudson ~~Lockett~~ Lockett, US Stocks Set Record High, US Stocks Set Record High as Investors Look to New as Investors Look to New
Administration, Administration, Financial ~~Tim es~~Times, November 24, 2020. https://www.ft.com/content/433048a5-c489-4ddd-aebd-, November 24, 2020. https://www.ft.com/content/433048a5-c489-4ddd-aebd-
d56fb8f3edfc. d56fb8f3edfc.
~~57 Didion, T imothy, COVID-19 Vaccine Likely to be Effective Against New Virus Strain, Experts Say, ABC News,~~
~~December 26, 2020. https://abc7news.com/covid-uk-new-strain-of-vaccine-effectiveness-stain/8988644/.~~
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~~Global Economic Effects of COVID-19~~

Congressional Research Service 14 Global Economic Effects of COVID-19 continuing efforts that balance the competing requirements of households, firms, and state and local governments. Also, the impact of the currently available vaccines on new strains of the COVID-19 virus are being evaluated.62 Various U.S. states reversed course in late June to impose or re-impose social distancing guidelines and close businesses that had begun opening as a result of a rise in new confirmed cases of COVID-19, raising the prospect of a delayed recovery. A of a rise in new confirmed cases of COVID-19, raising the prospect of a delayed recovery. A
prolonged recovery could also increase the financial strains on prolonged recovery could also increase the financial strains on ~~smal~~ small and medium-sized firms that and medium-sized firms that
face liquidity constraints and the prospects of insolvency.face liquidity constraints and the prospects of insolvency.5863
Differences in policy approaches between countries Differences in policy approaches between countries ~~initial y~~ initially slowed a coordinated response. This slowed a coordinated response. This
lack of response may have inflicted longer-term damage to the global economy by impairing lack of response may have inflicted longer-term damage to the global economy by impairing
international political, trade, and economic relations, particularly between countries that international political, trade, and economic relations, particularly between countries that
promoted nationalism and those that argued for a coordinated international response to the promoted nationalism and those that argued for a coordinated international response to the
pandemic. Policy differences also strained relations between developed and developing pandemic. Policy differences also strained relations between developed and developing
economies and between northern and southern members of the Eurozone, economies and between northern and southern members of the Eurozone, ~~chal enging al iances~~challenging alliances
and conventional concepts of national security, and raising questions about the future of global and conventional concepts of national security, and raising questions about the future of global
leadership.leadership.
In some countries, the pandemic elevated the importance of public health as a national security In some countries, the pandemic elevated the importance of public health as a national security
issue and as a national economic priority on a par with traditional national security concerns such issue and as a national economic priority on a par with traditional national security concerns such
as terrorism, cyberattacks, and proliferation of weapons of mass destruction.as terrorism, cyberattacks, and proliferation of weapons of mass destruction.5964 The pandemic- The pandemic-
related economic and human costs could have long-term repercussions for economies through the related economic and human costs could have long-term repercussions for economies through the
tragic loss of life and job losses that derail careers and permanently shutter businesses. Fiscal and tragic loss of life and job losses that derail careers and permanently shutter businesses. Fiscal and
monetary measures implemented to prevent a financial crisis and sustain economic activity may monetary measures implemented to prevent a financial crisis and sustain economic activity may
have inadvertently worsened income and wealth disparities that were being affected by the have inadvertently worsened income and wealth disparities that were being affected by the
disproportionate impact of quarantines and lockdowns on services sector workers. Within some disproportionate impact of quarantines and lockdowns on services sector workers. Within some
countries, the economic countries, the economic ~~fal out~~fallout may have widened racial and socio-economic cleavages and may have widened racial and socio-economic cleavages and
increased social unrest. In speaking about these costs for Americans, Federal Reserve Chairman increased social unrest. In speaking about these costs for Americans, Federal Reserve Chairman
~~Powel~~ Powell said on May 19, 2020, said on May 19, 2020,
Since the pandemic arrived in force just two months ago, more than 20 million people have Since the pandemic arrived in force just two months ago, more than 20 million people have
lost their jobs, reversing nearly 10 years of job gains. This precipitous drop in economic lost their jobs, reversing nearly 10 years of job gains. This precipitous drop in economic
activity has caused a level of pain that is hard to capture in words, as lives are upended activity has caused a level of pain that is hard to capture in words, as lives are upended
amid great uncertainty about the future.amid great uncertainty about the future.6065
BEA BEA reported that U.S. GDP reported that U.S. GDP ~~fel~~ fell by 9.0% in the second quarter of 2020 compared with the by 9.0% in the second quarter of 2020 compared with the
previous quarter, or at an annualized rate of -31%, the largest quarterly decline in U.S. GDP previous quarter, or at an annualized rate of -31%, the largest quarterly decline in U.S. GDP
recorded over the past 70 years.recorded over the past 70 years.6166 Additional data, however, indicated that U.S. GDP grew by Additional data, however, indicated that U.S. GDP grew by
7.5% in the third quarter, or at an annualized rate of 33%, based primarily on gains in personal 7.5% in the third quarter, or at an annualized rate of 33%, based primarily on gains in personal
consumption, reflecting an increase in income and continued government income support.consumption, reflecting an increase in income and continued government income support.62
~~Fourth quarter 2020 data indicate the U.S. economy grew by 1.0% over the third quarter, or at an~~
~~annualized rate of 4.0%. On a year-over-year basis, U.S. real GDP is estimated to have declined~~
~~by 3.5% in 2020 compared with 2019.63~~

5867 62 Didion, Timothy, COVID-19 Vaccine Likely to be Effective Against New Virus Strain, Experts Say, ABC News, December 26, 2020. https://abc7news.com/covid-uk-new-strain-of-vaccine-effectiveness-stain/8988644/. 63 Global Financial Stability Report, International Monetary Fund, October 2020, p. 1. , International Monetary Fund, October 2020, p. 1.
5964 Harris, Shane and Missy Ryan, Harris, Shane and Missy Ryan, ~~T o~~To Prepare for the Next Pandemic, the U.S. Needs Prepare for the Next Pandemic, the U.S. Needs to Change its National Security to Change its National Security
Priorities, Experts Say, Priorities, Experts Say, Washington Post, June 16, 2020. https://www.washingtonpost.com/national-security/to-, June 16, 2020. https://www.washingtonpost.com/national-security/to-
prepare-for-the-next-pandemic-the-us-needs-to-change-its-national-security-priorities-experts-say/2020/06/16/prepare-for-the-next-pandemic-the-us-needs-to-change-its-national-security-priorities-experts-say/2020/06/16/
b99807c0-aa9a-11ea-9063-e69bd6520940_story.html. b99807c0-aa9a-11ea-9063-e69bd6520940_story.html.
6065 Powell, Jerome H. Powell, Jerome H. Coronavirus and CARES Act, ~~T estimony~~Testimony before the Committee on Banking, Housing and Urban before the Committee on Banking, Housing and Urban
Affairs, U.S.Affairs, U.S. Senate, May 19, 2020. Senate, May 19, 2020.
61 66 Gross Domestic Product, 2nd Quarter 2020 (Advance Estimate) and Annual Update, Bureau of Economic Analysis, , Bureau of Economic Analysis,
JulyJuly 30, 2020. https://www.bea.gov/news/2020/gross-domestic-product30, 2020. https://www.bea.gov/news/2020/gross-domestic-product -2nd-quarter-2020-advance-estimate-and--2nd-quarter-2020-advance-estimate-and-
annual-update. annual-update.
6267 Gross Domestic Product, Third Quarter 2020 (Advance Estimate), Bureau of Economic Analysis, October 29, 2020. Bureau of Economic Analysis, October 29, 2020.
~~63 Gross Domestic Product, Fourth Quarter and Year 2020 (Advance Estimate), Bureau of Economic Analysis, January~~
~~28, 2021.~~
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~~Global Economic Effects of COVID-19~~
Congressional Research Service 15 Global Economic Effects of COVID-19 Fourth quarter 2020 data indicate the U.S. economy grew by 1.0% over the third quarter, or at an annualized rate of 4.0%. On a year-over-year basis, U.S. real GDP is estimated to have declined by 3.5% in 2020 compared with 2019.68
In its December 2, 2020, Beige Book analysis, the Federal Reserve (Fed) reported that economic In its December 2, 2020, Beige Book analysis, the Federal Reserve (Fed) reported that economic
activity had increased modestly in each of the 12 Federal Reserve districts during the third activity had increased modestly in each of the 12 Federal Reserve districts during the third
quarter, although economic activity remained below average levels. Four of the Districts reported quarter, although economic activity remained below average levels. Four of the Districts reported
littlelittle or no growth, while five indicated that economic activity remained below pre-pandemic or no growth, while five indicated that economic activity remained below pre-pandemic
levels for at least some sectors. The manufacturing, distribution and logistics, residential housing, levels for at least some sectors. The manufacturing, distribution and logistics, residential housing,
and homebuildingand homebuilding sectors reported positive increases in economic activity. Businesses, however, sectors reported positive increases in economic activity. Businesses, however,
raised concerns over renewed infections, actual and prospective restrictions, and expiring raised concerns over renewed infections, actual and prospective restrictions, and expiring
unemployment benefits and evictions or foreclosures.unemployment benefits and evictions or foreclosures.64
69 Similarly, in its February 2021 Beige Book, the Federal Reserve determined that economic Similarly, in its February 2021 Beige Book, the Federal Reserve determined that economic
activity activity ~~overal~~ overall had increased modestly from January to mid-February and that most businesses had increased modestly from January to mid-February and that most businesses
expected an economic recovery by summer. Of the 12 districts, 10 experienced modest increases expected an economic recovery by summer. Of the 12 districts, 10 experienced modest increases
in economic growth, while the New York District recorded mixed performance and the St. Louis in economic growth, while the New York District recorded mixed performance and the St. Louis
District recorded little change in economic activity during the period.District recorded little change in economic activity during the period.~~65 The April 14, 2021~~70 The June 2, 2021, Beige ~~Beige~~
Book analysis Book analysis ~~also reported the economy had begun recovering in the February to April~~reported that economic activity had improved at least moderately in all 12 Districts during the April to late May period. The rise in economic activity reflected additional stimulus payments, an increase in the number of vaccinations that prompted policymakers to relax social distancing rules, which, in turn, stimulated consumer activity and spending for leisure travel and at restaurants. Shortages of workers in some industries and disruptions to supply chains reportedly curtailed production in several sectors and created low inventories of supplies and goods.71 ~~period.~~
~~This recovery reflected growth in consumer spending as a result of the easing of pandemic-related~~
~~restrictions in numerous jurisdictions, increased vaccinations, and recent stimulus payments,~~
~~among other factors.66 Half the Federal Reserve Districts reported an increase in manufacturing~~
~~production, despite shortages of microchips in some sectors. The largest gains in activity by~~
~~industry also included construction, leisure, and hospitality sectors.~~
Country Responses
In Europe, governments attempted a phased reopening of businesses over the summer In Europe, governments attempted a phased reopening of businesses over the summer~~.67~~ of 2020.72 As a As a
result of these efforts, the Eurozone experienced a 12.5% increase in GDP in the third quarter of result of these efforts, the Eurozone experienced a 12.5% increase in GDP in the third quarter of
2020. Initial estimates indicate the EU economic rate of growth nearly 2020. Initial estimates indicate the EU economic rate of growth nearly ~~stal ed~~stalled in the fourth in the fourth
quarter, quarter, ~~fal ing~~falling by 0.5% due to a resumption of lockdown measures. After several months of data by 0.5% due to a resumption of lockdown measures. After several months of data
indicating an economic rebound had begun in the Eurozone, surveys of business activity in indicating an economic rebound had begun in the Eurozone, surveys of business activity in
August indicated the recovery had slowed amid an increase in new COVID-19 cases after August indicated the recovery had slowed amid an increase in new COVID-19 cases after
countries had begun re-imposing new quarantines and lockdowns in various parts of the Euro countries had begun re-imposing new quarantines and lockdowns in various parts of the Euro
area, although most lockdowns did not include schools or some manufacturing firms.area, although most lockdowns did not include schools or some manufacturing firms.~~68 Such~~
~~lockdowns became more widespread in September and October as infections cases began rising~~
~~in Germany, France, the United Kingdom, the Czech Republic, the Netherlands, Spain, and~~
~~Poland.69 By mid-October, Greece and Belgium also had begun implementing business~~

6473 Such 68 Gross Domestic Product, Fourth Quarter and Year 2020 (Advance Estimate), Bureau of Economic Analysis, January 28, 2021. 69 The Beige Book: Summary of Commentary on Current Economic Conditions by Federal Reserve District,, the Federal the Federal
Reserve System, December 2, 2020. https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm. Reserve System, December 2, 2020. https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm.
65 70 The Beige Book: Summary of Commentary on Current Economic Conditions by Federal Reserve District,, the Federal the Federal
Reserve System, March 3, 2021. https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm. Reserve System, March 3, 2021. https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm.
6671 The Beige Book: Summary of Commentary on Current Economic Conditions by Federal Reserve District,, the Federal the Federal
Reserve System, Reserve System, ~~April 14~~June 2, 2021. https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm. , 2021. https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm.
67 72 Stott, Michael, Coronavirus Set to Push 29m Latin Americans Into Poverty, Stott, Michael, Coronavirus Set to Push 29m Latin Americans Into Poverty, Financial Times, April 24, 2020. , April 24, 2020.
https://www.ft.com/content/3bf48b80-8fba-410c-9bb8-31e33fffc3b8; Hall, Benjamin, Coronavirus Pandemic https://www.ft.com/content/3bf48b80-8fba-410c-9bb8-31e33fffc3b8; Hall, Benjamin, Coronavirus Pandemic
~~T hreatens~~Threatens Livelihoods of 59m European Workers, Livelihoods of 59m European Workers, Financial ~~Tim es~~Times, April 19, 2020, https://www.ft.com/content/, April 19, 2020, https://www.ft.com/content/
36239c82-84ae-4cc9-89bc-8e71e53d6649, Romei, Valentina and Martin Arnold, Eurozone Economy Shrinks by 36239c82-84ae-4cc9-89bc-8e71e53d6649, Romei, Valentina and Martin Arnold, Eurozone Economy Shrinks by
Fastest Rate on Record, Fastest Rate on Record, Financial ~~Tim es~~Times, April 30, 2020, https://www.ft.com/content/dd6cfafa-a56d-48f3-a9fd-, April 30, 2020, https://www.ft.com/content/dd6cfafa-a56d-48f3-a9fd-
aa71d17d49a8. aa71d17d49a8.
6873 Arnold, Martin, Eurozone Economic Rebound is Arnold, Martin, Eurozone Economic Rebound is Losing Steam, SurveysLosing Steam, Surveys Suggest,Suggest, Financial Times, August, August ~~21, 2020.~~
~~https://www.ft.com/content/cc4fa3df-40e7-4e19-be9f-9d01efb74f69. Chazan, Guy and Anna Gross, Europe Battles to~~
~~Contain Surge in Coronavirus Cases. Financial Tim es, July 29, 2020. https://www.ft.com/content/bcddc297-b7f2-444d-~~
~~908f-54e8ce6f4f98.~~
~~69 Lockdown 2.0: Europe Imposes Painful Curbs as Infections Surge, Financial Times, October 16, 2020.~~
~~Congressional Research Service~~

15

~~Global Economic Effects of COVID-19~~

21, 2020. Congressional Research Service 16 Global Economic Effects of COVID-19 lockdowns became more widespread in September and October as infections cases began rising in Germany, France, the United Kingdom, the Czech Republic, the Netherlands, Spain, and Poland.74 By mid-October, Greece and Belgium also had begun implementing business lockdowns and social distancing measures. Germany reportedly closed bars, restaurants, and most lockdowns and social distancing measures. Germany reportedly closed bars, restaurants, and most
public entertainment, France closed bars and restaurants and imposed travel restrictions, and on public entertainment, France closed bars and restaurants and imposed travel restrictions, and on
October 31, UK Prime Minister Boris Johnson announced a month-long lockdown across the October 31, UK Prime Minister Boris Johnson announced a month-long lockdown across the
~~UK.70~~UK.75
The European Commission’s (EC) February 2021 forecast projected that EU economic growth in The European Commission’s (EC) February 2021 forecast projected that EU economic growth in
2020 could have contracted by 7.4% and may 2020 could have contracted by 7.4% and may ~~partial y~~partially recover in 2021 with a projected rate of recover in 2021 with a projected rate of
growth of 4.1%.growth of 4.1%.7176 The EC forecast indicated a The EC forecast indicated a ~~smal er~~smaller drop in gross domestic product (GDP) in drop in gross domestic product (GDP) in
2020 among European economies than it had forecasted in its summer report, as a result of a third 2020 among European economies than it had forecasted in its summer report, as a result of a third
quarter rebound in growth before an anticipated slow-down in the fourth quarter as a result of the quarter rebound in growth before an anticipated slow-down in the fourth quarter as a result of the
resumption of business lockdowns. The autumn forecast was published prior to the announcement resumption of business lockdowns. The autumn forecast was published prior to the announcement
of potential COVID-19 vaccines and incorporated assumptions of lockdowns extending into of potential COVID-19 vaccines and incorporated assumptions of lockdowns extending into
2021. The forecast also concluded that the speed of an economic recovery in 2021 likely would 2021. The forecast also concluded that the speed of an economic recovery in 2021 likely would
vary across the EU members, reflecting differences in the severity of the pandemic and the extent vary across the EU members, reflecting differences in the severity of the pandemic and the extent
of containment measures, but also differences in economic structures and policy responses.of containment measures, but also differences in economic structures and policy responses.72
77 Fourth quarter data indicate that economic growth in the EU decreased by 0.7% from the third Fourth quarter data indicate that economic growth in the EU decreased by 0.7% from the third
quarter of 2020, but was down by 4.8% compared with the same quarter in 2019.quarter of 2020, but was down by 4.8% compared with the same quarter in 2019.7378 The decline in The decline in
economic activity primarily reflected a drop in consumer spending of 3.0% from the previous economic activity primarily reflected a drop in consumer spending of 3.0% from the previous
quarter. Fourth quarter data also indicated the UK economy grew by 1.3%, compared with a rate quarter. Fourth quarter data also indicated the UK economy grew by 1.3%, compared with a rate
of growth of 16.9% in the third quarter and a decline of 19.5% in the second quarter, the largest of growth of 16.9% in the third quarter and a decline of 19.5% in the second quarter, the largest
quarterly decline on record. Eurostat, the statistical office of the European Commission, released quarterly decline on record. Eurostat, the statistical office of the European Commission, released
data indicating the Eurozone experienced price inflation in the fourth quarter of about 0.2%.data indicating the Eurozone experienced price inflation in the fourth quarter of about 0.2%.
After protracted talks, European leaders agreed on July 21 After protracted talks, European leaders agreed on July 21,2020, to a to a ~~new €750 bil ion~~ €750 billion (about $859 (about $859
~~bil ion)~~ billion) pandemic economic assistance package to support European economies. Draft budget pandemic economic assistance package to support European economies. Draft budget
estimates submitted by Eurozone governments in the estimates submitted by Eurozone governments in the ~~fal~~ fall of 2020 indicated the countries could of 2020 indicated the countries could
experience a combined budget deficit of nearly €1 experience a combined budget deficit of nearly €1 ~~tril ion,~~ trillion, or equivalent to about 9% of their or equivalent to about 9% of their
annual GDP.annual GDP.7479 The rise in budget deficits reflects the growing cost to governments of supporting The rise in budget deficits reflects the growing cost to governments of supporting
their economies to sustain economic activity and a marked change in attitudes toward budget their economies to sustain economic activity and a marked change in attitudes toward budget
deficits also reflected in statements by the IMF and World Bank. Second quarter data also deficits also reflected in statements by the IMF and World Bank. Second quarter data also
indicated that employment among EU countries indicated that employment among EU countries ~~fel~~ fell by 2.6%, or 5.5 by 2.6%, or 5.5 ~~mil ion~~million jobs in 2020. The jobs in 2020. The
jobs data, however, do not include roughly 45 jobs data, however, do not include roughly 45 ~~mil ion~~ million people, or a third of the workforce in https://www.ft.com/content/cc4fa3df-40e7-4e19-be9f-9d01efb74f69. Chazan, Guy and Anna Gross, Europe Battles to Contain Surge in Coronavirus Cases. Financial Times, July 29, 2020. https://www.ft.com/content/bcddc297-b7f2-444d-908f-54e8ce6f4f98. 74 Lockdown 2.0: Europe Imposes Painful Curbs as Infections Surge, Financial Times, October 16, 2020. ~~people, or a third of the workforce in~~
~~Germany, France, Britain, Italy, and Spain, that were covered by employment protection~~
~~programs.75~~
~~Similarly, Japan reported that its economy contracted by 8.2% in the second quarter of 2020,~~
~~compared with the previous quarter, or at an annual rate of 32%.76 In the third quarter, however,~~

https://www.ft.com/content/b1a7d1e8-4bb9-41cf-be5b-2f7f04bdb9bb. https://www.ft.com/content/b1a7d1e8-4bb9-41cf-be5b-2f7f04bdb9bb.
7075 Peel, Michael, European Countries Impose Shutdowns Peel, Michael, European Countries Impose Shutdowns as Covid-19 Casesas Covid-19 Cases Rise,Rise, Financial Times, October 30, 2020. , October 30, 2020.
https://www.ft.com/content/a89f89ba-08be-44e2-8d21-3e9ada605e17; Packard, Jim, Boris Johnson Announces Second https://www.ft.com/content/a89f89ba-08be-44e2-8d21-3e9ada605e17; Packard, Jim, Boris Johnson Announces Second
Lockdown for England, Lockdown for England, Financial ~~Tim es~~Times, October 31, 2020, https://www.ft.com/content/8c2ede22-9dcf-4d31-81ef-, October 31, 2020, https://www.ft.com/content/8c2ede22-9dcf-4d31-81ef-
82ae4ee76e10. 82ae4ee76e10.
71 76 European Economic Forecast Winter 2020, European Commission, February 2021. , European Commission, February 2021.
7277 Ibid., p. 2. Ibid., p. 2.
7378 Newsrelease, Eurostat, February 2, 2020. Eurostat, February 2, 2020.
7479 Arnold, Martin and Sam Arnold, Martin and Sam Fleming, Eurozone BudgetFleming, Eurozone Budget Deficits RiseDeficits Rise Nearly Nearly ~~T enfold~~Tenfold to Counter Pandemic, to Counter Pandemic, Financial
~~Tim es~~Times, October 19, 2020. https://www.ft.com/content/5579361f-5aac-4cd3-9e93-190fffdc0baf. , October 19, 2020. https://www.ft.com/content/5579361f-5aac-4cd3-9e93-190fffdc0baf.
~~75 Ben Hall, Ben, Delphine Strauss, and Daniel Dombey, Millions of European Jobs at Risk When Furlough Support~~
~~Ends, Financial Tim es, August 14, 2020. https://www.ft.com/content/0f01a9ed-5b15-4e2d-921c-6eed7a80d0bd.~~
~~76 Quarterly Estimates of GDP for April - June 2020 (First Preliminary Estimates), Cabinet Office, August 17, 2020.~~
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~~Global Economic Effects of COVID-19~~

Congressional Research Service 17 Global Economic Effects of COVID-19 Germany, France, Britain, Italy, and Spain, that were covered by employment protection programs.80 Similarly, Japan reported that its economy contracted by 8.2% in the second quarter of 2020, compared with the previous quarter, or at an annual rate of 32%.81 In the third quarter, however, the economy grew at a positive rate of 5.3%, while the economy grew by a rate of 2.8% in the the economy grew at a positive rate of 5.3%, while the economy grew by a rate of 2.8% in the
fourth quarter on a quarter over quarter basis. On an annual basis, however, Japan’s economic fourth quarter on a quarter over quarter basis. On an annual basis, however, Japan’s economic
growth rate growth rate ~~fel~~ fell to 4.8%, the first negative annual rate of growth experienced since 2009. to 4.8%, the first negative annual rate of growth experienced since 2009.
On September 10, 2020, European Central Bank (ECB) President Christine Lagarde indicated the On September 10, 2020, European Central Bank (ECB) President Christine Lagarde indicated the
Eurozone economy could contract by 8% in 2020, but the rate of growth was projected to Eurozone economy could contract by 8% in 2020, but the rate of growth was projected to
~~partial y~~partially recover in 2021 by growing at an annual rate of 5.0%. recover in 2021 by growing at an annual rate of 5.0%.7782 In the early stages of the In the early stages of the
pandemic, foreign investors pulled an estimated $26 pandemic, foreign investors pulled an estimated $26 ~~bil ion~~ billion out of developing Asian economies out of developing Asian economies
not including more than $16 not including more than $16 ~~bil ion~~ billion out of India, increasing concerns about a major economic out of India, increasing concerns about a major economic
recession in Asia. Some estimates indicate that 29 recession in Asia. Some estimates indicate that 29 ~~mil ion~~ million people in Latin America could people in Latin America could ~~fal~~ fall into into
poverty, reversing a decade of efforts to narrow income inequality. Some analysts also expressed poverty, reversing a decade of efforts to narrow income inequality. Some analysts also expressed
concern that Africa, after escaping the initial spread of infections, could face a sharp increase in concern that Africa, after escaping the initial spread of infections, could face a sharp increase in
rates of infection outside South Africa, Egypt, Nigeria, Algeria, and Ghana, where most of the rates of infection outside South Africa, Egypt, Nigeria, Algeria, and Ghana, where most of the
~~initial~~ initial infections had occurred.infections had occurred.78
83 In October 2020, the Bank of Canada indicated that Canada’s quarterly rate of growth declined by In October 2020, the Bank of Canada indicated that Canada’s quarterly rate of growth declined by
13.0% in the second quarter of 2020, but by 4.4% in the third quarter as business and other 13.0% in the second quarter of 2020, but by 4.4% in the third quarter as business and other
restrictions were relaxed and by a rebound in home sales. The Bank also estimated that growth restrictions were relaxed and by a rebound in home sales. The Bank also estimated that growth
for 2020 would decline at an annual rate of 4.3% in 2020, but could increase by about 3.8% in for 2020 would decline at an annual rate of 4.3% in 2020, but could increase by about 3.8% in
2021. On December 1, the Canadian government adopted a C$1 2021. On December 1, the Canadian government adopted a C$1 ~~tril ion~~ trillion spending package to spending package to
support economic growth, reportedly the largest such fiscal stimulus package adopted in the post-support economic growth, reportedly the largest such fiscal stimulus package adopted in the post-
World War II period.World War II period.7984 The package provided relief to provinces and territories to improve The package provided relief to provinces and territories to improve
infection in long-term care facilities, industries hard hit by the pandemic, such as tourism, travel infection in long-term care facilities, industries hard hit by the pandemic, such as tourism, travel
and arts, and provide loans to eligibleand arts, and provide loans to eligible businesses and to lower and middle income families. businesses and to lower and middle income families.
In April In April 2021, India reported that in the second quarter its GDP growth rate 2021, India reported that in the second quarter its GDP growth rate ~~fel~~ fell by 25.8% by 25.8%
compared with the first quarter, raising concerns that the country could experience its most severe compared with the first quarter, raising concerns that the country could experience its most severe
economic contraction on record.economic contraction on record.8085 Subsequent forecasts indicate that India’s economy grew by Subsequent forecasts indicate that India’s economy grew by
23.7% in the third quarter of 2020, reportedly reflecting higher levels of consumer activity, and 23.7% in the third quarter of 2020, reportedly reflecting higher levels of consumer activity, and
by 7.9% in the fourth quarter.by 7.9% in the fourth quarter.8186 On an annual basis, India’s economy reportedly grew at a rate of On an annual basis, India’s economy reportedly grew at a rate of
-3.5%. On November 12, India’s finance minister announced a new package of fiscal measures -3.5%. On November 12, India’s finance minister announced a new package of fiscal measures
totaling $35 totaling $35 ~~bil ion~~ billion to increase consumer spending and to assist manufacturing, agriculture, and to increase consumer spending and to assist manufacturing, agriculture, and
exports. The move followed an announcement by India’s cabinet that it had approved a spending exports. The move followed an announcement by India’s cabinet that it had approved a spending
~~package of $27 bil ion to provide incentives over five years to manufacturing firms, including~~
~~automobiles, auto parts, pharmaceuticals, textiles, and food products.82~~
~~As a consequence of the resurgence in cases and renewed lockdowns in economies, the IMF~~
~~argued that advanced economies needed to sustain fiscal support for consumers and businesses as~~
~~the most effective means of stimulating their economies. The IMF argued this support was~~

~~77 Remarks by ECB President Christine Lagarde, press conference, September 10, 2020.~~
~~78 Pilling, David, T he Pandemic is Getting Worse: Africa Prepares for Surge~~ 80 Ben Hall, Ben, Delphine Strauss, and Daniel Dombey, Millions of European Jobs at Risk When Furlough Support Ends, Financial Times, August 14, 2020. https://www.ft.com/content/0f01a9ed-5b15-4e2d-921c-6eed7a80d0bd. 81 Quarterly Estimates of GDP for April - June 2020 (First Preliminary Estimates), Cabinet Office, August 17, 2020. 82 Remarks by ECB President Christine Lagarde, press conference, September 10, 2020. 83 Pilling, David, The Pandemic is Getting Worse: Africa Prepares for Surge in Infections, in Infections, Financial Times, July 20, , July 20,
2020. https://www.ft.com/content/1b3274ce-de3b-411d-8544-a024e64c3542. 2020. https://www.ft.com/content/1b3274ce-de3b-411d-8544-a024e64c3542.
7984 Canada Unveils Largest Economic Relief Package Since Canada Unveils Largest Economic Relief Package Since WW2, BBC News,WW2, BBC News, December 1, 2020. December 1, 2020.
https://www.bbc.com/news/world-us-canada-55139229. https://www.bbc.com/news/world-us-canada-55139229.
80 85 Slater, Joanna, India’s Economy Contracts by Nearly 24%, It’s Sharpest Drop On Record, Slater, Joanna, India’s Economy Contracts by Nearly 24%, It’s Sharpest Drop On Record, Washington Post, August , August
31, 2020. https://www.washingtonpost.com/world/asia_pacific/indias-economy-contracts-by-nearly-24-percent-amid-31, 2020. https://www.washingtonpost.com/world/asia_pacific/indias-economy-contracts-by-nearly-24-percent-amid-
pandemic/2020/08/31/92318fbe-eb70-11ea-bd08-1b10132b458f_story.html?hpid=hp_world-rightpandemic/2020/08/31/92318fbe-eb70-11ea-bd08-1b10132b458f_story.html?hpid=hp_world-right -4-0_world-latest--4-0_world-latest-
feed%3Ahomepage%2Fstory-ans. feed%3Ahomepage%2Fstory-ans.
8186 RBI Bulletin – November 2020, Reserve Bank of India, November 2020. , Reserve Bank of India, November 2020.
~~82 Sharma, Ashok, India Announces $35 Billion Economic Stimulus Package, ABCNews, November 12, 2020.~~
~~https://abcnews.go.com/International/wireStory/india-announces-35-billion-economic-stimulus-package-74165709.~~
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1718 Global Economic Effects of COVID-19 package of $27 billion to provide incentives over five years to manufacturing firms, including automobiles, auto parts, pharmaceuticals, textiles, and food products.87 As a consequence of the resurgence in cases and renewed lockdowns in economies, the IMF argued that advanced economies needed to sustain fiscal support for consumers and businesses as the most effective means of stimulating their economies. The IMF argued this support was

~~Global Economic Effects of COVID-19~~

necessary because the global economy was experiencing what economists term a Keynesian necessary because the global economy was experiencing what economists term a Keynesian
liquidityliquidity trap, named after economist John Maynard Keynes. In theoretical terms, a liquidity trap trap, named after economist John Maynard Keynes. In theoretical terms, a liquidity trap
exists when central banks’ key interest rates are so low they have little impact through traditional exists when central banks’ key interest rates are so low they have little impact through traditional
means to affect business and consumer activity. According to the IMF, in 60% of the global means to affect business and consumer activity. According to the IMF, in 60% of the global
economy, central banks have pushed key interest rates below 1% and in one-fifth of the global economy, central banks have pushed key interest rates below 1% and in one-fifth of the global
economy, interest rates are below zero. In these circumstances, adjusting fiscal policy, or economy, interest rates are below zero. In these circumstances, adjusting fiscal policy, or
government taxing and spending, is more effective in raising the rate of economic growth.government taxing and spending, is more effective in raising the rate of economic growth.8388 The The
IMF concluded that, “Fiscal policy must play a leading role in the recovery.” IMF concluded that, “Fiscal policy must play a leading role in the recovery.”
Economic Policy Responses
After a delayed response, central banks and monetary authorities in developed and emerging After a delayed response, central banks and monetary authorities in developed and emerging
market economies have engaged in an ongoing series of interventions in financial markets and market economies have engaged in an ongoing series of interventions in financial markets and
national governments have adopted an array of fiscal policy initiatives to stimulate their national governments have adopted an array of fiscal policy initiatives to stimulate their
economies. The Bank for International Settlements (BIS) characterized the pandemic as fully economies. The Bank for International Settlements (BIS) characterized the pandemic as fully
global in nature, eliciting a fiscal, monetary, and prudential response that has surpassed that of the global in nature, eliciting a fiscal, monetary, and prudential response that has surpassed that of the
global financial crisis of 2008-2009. In addition, the BIS argues the evolving nature of the health global financial crisis of 2008-2009. In addition, the BIS argues the evolving nature of the health
crisis is causing the financial crisis to evolve as crisis is causing the financial crisis to evolve as ~~wel~~ well, changing from a liquidity, changing from a liquidity crisis in the initial crisis in the initial
stages to a solvency crisis that could worsen if the economic recovery is delayed. As a result of stages to a solvency crisis that could worsen if the economic recovery is delayed. As a result of
the potential damage to the global economy arising from the pandemic, the BIS stated that future the potential damage to the global economy arising from the pandemic, the BIS stated that future
economic historians may describe the pandemic as, “the defining moment of the 21st century.”economic historians may describe the pandemic as, “the defining moment of the 21st century.”84
89 Industry Measures
During 2020, governments adopted a range of measures at both the national and international During 2020, governments adopted a range of measures at both the national and international
level to address the health and economic consequences of the COVID-19 pandemic, as indicated level to address the health and economic consequences of the COVID-19 pandemic, as indicated
in in Table 1~~.85~~2.90 These measure include incentives to increase domestic production of vaccines and These measure include incentives to increase domestic production of vaccines and
personal protective equipment (PPE) and direct state intervention through nationalization or personal protective equipment (PPE) and direct state intervention through nationalization or
through directives to increase output at facilities that currently produced PPE materials or to through directives to increase output at facilities that currently produced PPE materials or to
initiateinitiate production at other facilities. In some cases, policy changes include enhanced foreign production at other facilities. In some cases, policy changes include enhanced foreign
investment screening of foreign investment for “public interest” reasons that may remain after the investment screening of foreign investment for “public interest” reasons that may remain after the
pandemic crisis.pandemic crisis.86
91 The shift in approach toward the national security dimensions of foreign investment, The shift in approach toward the national security dimensions of foreign investment, ~~especial y~~especially
by developed economies, has tended to blur the distinction between foreign investment, trade, and by developed economies, has tended to blur the distinction between foreign investment, trade, and
national security and reflects the evolving nature of the concept of national security relative to national security and reflects the evolving nature of the concept of national security relative to
~~foreign investment. Conceivably, changes in technology and the global economy have made it~~
~~more difficult to assess the economic costs and benefits of changes in foreign investment policies~~
~~taken on national security grounds.~~

~~83 Gopinath, Gita, Global Liquidity T rap Requires a Big Fiscal~~ 87 Sharma, Ashok, India Announces $35 Billion Economic Stimulus Package, ABCNews, November 12, 2020. https://abcnews.go.com/International/wireStory/india-announces-35-billion-economic-stimulus-package-74165709. 88 Gopinath, Gita, Global Liquidity Trap Requires a Big Fiscal Response, Response, Financial Times, November 3, 2020, , November 3, 2020,
https://www.ft.com/content/2e1c0555-d65b-48d1-9af3-825d187eec58. https://www.ft.com/content/2e1c0555-d65b-48d1-9af3-825d187eec58.
8489 Annual Economic Report 2020, Bank for International Settlements, June 2020, p. ix. , Bank for International Settlements, June 2020, p. ix.
8590 Countries include Countries include Australia, Canada,Australia, Canada, the European Union, France, Germany, Hungary, Italy, the European Union, France, Germany, Hungary, Italy, ~~I ndia~~India, Japan, Poland, , Japan, Poland,
and Spain, among others. and Spain, among others. World ~~Investm ent~~Investment Report 2020, United Nations Conference on , United Nations Conference on ~~T rade~~Trade and Development 2020, and Development 2020,
p. 93. p. 93.
86 91 World Investment Report 2020, United Nations Conference on , United Nations Conference on ~~T rade~~Trade and Development, June 16, 2020, p. 96. and Development, June 16, 2020, p. 96.
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foreign investment. Conceivably, changes in technology and the global economy have made it more difficult to assess the economic costs and benefits of changes in foreign investment policies taken on national security grounds. Table 2. Investment Policy Instruments Adopted at the National and International
level to Address the COVID-19 Pandemic
Investment policy areas
Policy measures
Policy actions at the national level
Investment facilitation Investment facilitation
~~Al eviate administrative~~ Alleviate administrative burdens and bureaucratic burdens and bureaucratic
obstacles for firms. obstacles for firms.

Use of online tools and e-platforms. Use of online tools and e-platforms.
Investment retention and aftercare by investment Investment retention and aftercare by investment
COVID-19-related information services. COVID-19-related information services.
promotion agencies (IPAs) promotion agencies (IPAs)

Administrative Administrative and operational support during the and operational support during the
crisis. crisis.

Move to online services. Move to online services.
Investment incentives Investment incentives
Financial or fiscal incentives to produce COVID-19- Financial or fiscal incentives to produce COVID-19-
related medicalrelated medical equipment. equipment.

Incentives for conversion of production lines. Incentives for conversion of production lines.

Incentives for enhancement of contracted economic Incentives for enhancement of contracted economic
activities. activities.
State participation in crisis-affected State participation in crisis-affected industries industries
Acquisition of equity in companies, Acquisition of equity in companies, including including
nationalization. nationalization.
Local Local ~~smal~~ small and mediumand medium ~~enterprises~~ enterprises (SMEs) and supply (SMEs) and supply
Financial or fiscal support for domestic suppliers Financial or fiscal support for domestic suppliers (such (such
chains chains
as SMEs). as SMEs).
National security and public health National security and public health
Application and potential reinforcement Application and potential reinforcement of FDI of FDI
screening in pandemic-relevant industries. screening in pandemic-relevant industries.
Other State intervention in the health industry Other State intervention in the health industry
Mandatory production. Mandatory production.

Export bans. Export bans.

Import facilitation. Import facilitation.
~~Intel ectual~~Intellectual property (IP) property (IP)
General General authorization of non-voluntary licensing,authorization of non-voluntary licensing, to to
speed up research and development (R&D). speed up research and development (R&D).

IP holder-specific non-voluntary licensing, IP holder-specific non-voluntary licensing, to enable to enable
importsimports of medication. of medication.
Policy actions at the international level
International support measures International support measures for investmentfor investment
International pledges in support of cross-border International pledges in support of cross-border
investment. investment.
IIAs IIAs
Reform International Investment Agreements Reform International Investment Agreements (IIAs) to (IIAs) to
support public health policiessupport public health policies and to minimizeand to minimize investor–investor–
State dispute risks. State dispute risks.
~~Intel ectual~~Intellectual property (IP) property (IP)
General General authorization of non-voluntary licensing,authorization of non-voluntary licensing, to to
speed up research and development (R&D). speed up research and development (R&D).
Source: World Investment Report 2020, United Nations Conference on Trade and Development,, United Nations Conference on Trade and Development, June 16, 2020, p. 89. Congressional Research Service 20 link to page 27 link to page 27 link to page 27 Global Economic Effects of COVID-19 ~~June 16, 2020,~~
~~p. 89.~~
Fiscal Measures
As indicated in As indicated in Table 23, central governments adopted various fiscal measures to provide financial , central governments adopted various fiscal measures to provide financial
support to the health sector, households, and firms, although the size and scope of the programs support to the health sector, households, and firms, although the size and scope of the programs
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~~link to page 26 link to page 26 link to page 26~~ ~~Global Economic Effects of COVID-19~~

~~vary by country.87~~vary by country.92 These measures broadly include tax cuts and tax deferrals for individuals and These measures broadly include tax cuts and tax deferrals for individuals and
businesses, wage and income supplements to individuals, including expanding unemployment businesses, wage and income supplements to individuals, including expanding unemployment
insurance, and other payments to businesses. The U.S. Congress also approved historic fiscal insurance, and other payments to businesses. The U.S. Congress also approved historic fiscal
spending packages. In other countries, governments abandoned traditional borrowing caps to spending packages. In other countries, governments abandoned traditional borrowing caps to
increase fiscal spending in order to sustain economic growth. In some emerging economies, increase fiscal spending in order to sustain economic growth. In some emerging economies,
governments reportedly adopted special programs to provide financial assistance to “informal” governments reportedly adopted special programs to provide financial assistance to “informal”
workers, or workers outside traditional labor markets such as family businesses.workers, or workers outside traditional labor markets such as family businesses.88
93 In developed economies, however, as governments adopted fiscal packages to assist households, In developed economies, however, as governments adopted fiscal packages to assist households,
consumers sharply increased their savings as they faced limited spending opportunities, or a form consumers sharply increased their savings as they faced limited spending opportunities, or a form
of involuntary saving, and concerns over lost jobs, incomes, and the course of their economies, or of involuntary saving, and concerns over lost jobs, incomes, and the course of their economies, or
precautionary saving. (For additional countries and measures, see precautionary saving. (For additional countries and measures, see Appendix A of this report.) of this report.)
International organizations also took steps to provide loans and other financial assistance to International organizations also took steps to provide loans and other financial assistance to
countries in need. These and other actions have been labeled “unprecedented,” a term that has countries in need. These and other actions have been labeled “unprecedented,” a term that has
been used frequently to describe the pandemic and the policy responses. been used frequently to describe the pandemic and the policy responses.
Table 3. Elements of Announced Fiscal Measures to Address COVID-19

Advanced Economies
Emerging Market Economies
Measures Measures
US US
JP JP
DE DE
FR FR
IT IT
ES ES
GB GB
BR BR
CN CN
ID ID
IN IN
KR KR
MX MX
RU RU
ZA ZA
Measures supporting ~~the health~~ the health sector

x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
Measures supporting households
Targeted Targeted
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x

x x
x x
transfer transfersa
Other Other
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x

x x
x x
labor labor
income income
supporsupportb
Wage Wage
x x
x x
x x
x x
x x
x x
x x
x x
x x

x x
x x

x x
x x
subsidies subsidies
Tax cuts Tax cuts
x x
x x
x x
x x

x x

x x
x x
x x
x x

x x
x x
Tax deferral Tax deferral
x x
x x
x x

x x
x x
x x

x x
x x
x x

x x
Measures supporting firms
Tax deferral Tax deferral
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
Liquidity Liquidity
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
suppor supportc
Tax cuts Tax cuts
x x
x x
x x

x x
x x
x x
x x
x x
x x
x x
x x

x x

Targeted Targeted

x x
x x
x x
x x

x x

x x
x x

x x
x x
transfers transfers
92 Ibid. 93 Ibid., p. 25. Congressional Research Service 21 Global Economic Effects of COVID-19 Source: Annual Economic ~~Source:~~ ~~Annual Economic~~ Report 2020, Bank for International Settlements,, Bank for International Settlements, June 2020, p. 24, based on data June 2020, p. 24, based on data
col ected by the International Monetary Fund and the Organization for Economic Cooperation and col ected by the International Monetary Fund and the Organization for Economic Cooperation and
Development. Development.
Notes:

~~87 Ibid.~~
~~88 Ibid., p. 25.~~
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a. Includes cash and in-kind transfers to affected households. a. Includes cash and in-kind transfers to affected households.
b. Extended unemployment and sickb. Extended unemployment and sick leave benefits. leave benefits.
c. Non-budgetary measuresc. Non-budgetary measures such as equity injections,such as equity injections, asset purchases, loans and debt assumptions or asset purchases, loans and debt assumptions or
government guarantees and contingent liabilities, government guarantees and contingent liabilities, US: United States; JP: Japan; DE: Germany; FR: France; IT: US: United States; JP: Japan; DE: Germany; FR: France; IT:
Italy; ES: Spain; GB: Great Britain; BR: Brazil; CN: China; ID: Indonesia; IN: India; KR: South Korea; MX: Italy; ES: Spain; GB: Great Britain; BR: Brazil; CN: China; ID: Indonesia; IN: India; KR: South Korea; MX:
Mexico; RU: Russia; ZA:Mexico; RU: Russia; ZA: South Africa.South Africa.
Fiscal Deficits
As one measure of the global fiscal and monetary responses, the IMF estimated that government As one measure of the global fiscal and monetary responses, the IMF estimated that government
spending and revenue measures to sustain economic activity adopted through mid-March 2021 spending and revenue measures to sustain economic activity adopted through mid-March 2021
amounted to $16 amounted to $16 ~~tril ion.89~~trillion.94 The IMF also updated its estimate of the increase in borrowing by The IMF also updated its estimate of the increase in borrowing by
governments governments ~~global y~~globally to rise from 3.9% of global gross domestic product (GDP) in 2019 to to rise from 3.9% of global gross domestic product (GDP) in 2019 to
10.8% in 2020, as indicated in 10.8% in 2020, as indicated in Figure 3. Other estimates indicate that central banks have . Other estimates indicate that central banks have
committed $17 committed $17 ~~tril ion~~trillion to support their economies to counter pandemic to support their economies to counter pandemic -related economic effects.-related economic effects.90
95 Figure 3. IMF Projected Government Fiscal Deficits Relative to GDP
In percentage shares of Gross Domestic Product In percentage shares of Gross Domestic Product

Source: Fiscal Monitor, International Monetary Fund, April International Monetary Fund, April 2021. Created by CRS. 2021. Created by CRS.
Notes: Data for 2021 and 2022 are estimates. Data for 2021 and 2022 are estimates.
Among developed economies, the fiscal deficit to GDP ratio is projected to rise from 2.9% in Among developed economies, the fiscal deficit to GDP ratio is projected to rise from 2.9% in
2019 to 11.7% in 2020; the ratio for the United States is projected to rise from 5.7% to 15.8%, 2019 to 11.7% in 2020; the ratio for the United States is projected to rise from 5.7% to 15.8%,
respectively, the highest ratio for any country or region.respectively, the highest ratio for any country or region.9196 For most areas and countries, the IMF For most areas and countries, the IMF
forecasts that debt to GDP rations forecasts that debt to GDP rations ~~wil fal~~ will fall some in 2021, but fall more some in 2021, but fall more ~~substantial y~~substantially as percentage as percentage
shares of GDP in 2022 as the economic recovery is projected to take hold. Some economists and shares of GDP in 2022 as the economic recovery is projected to take hold. Some economists and
~~others have raised concerns that fiscal deficits financed through borrowing in a low -interest rate~~
~~environment could substantial y increase the debt servicing costs on government budgets under~~
~~certain conditions, particularly if national economic growth rates rise, which tend to push up~~

89 94 Fiscal Monitor, International Monetary Fund, April 2021. p. 1. International Monetary Fund, April 2021. p. 1.
9095 Wigglesworth, Robin, Long Live Jay Powell, the New Wigglesworth, Robin, Long Live Jay Powell, the New Monarch of the Bond Market, Monarch of the Bond Market, Financial Times, June 23, , June 23,
2020. https://www.ft.com/content/5db9d0f1-3742-49f0-a6cd-16c471875b5e. 2020. https://www.ft.com/content/5db9d0f1-3742-49f0-a6cd-16c471875b5e.
9196 Fiscal Monitor, ~~T able~~Table 1.1. 1.1.
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others have raised concerns that fiscal deficits financed through borrowing in a low-interest rate environment could substantially increase the debt servicing costs on government budgets under certain conditions, particularly if national economic growth rates rise, which tend to push up central banks’ interest rates, and if the accumulated debt is refinanced at those higher rates, central banks’ interest rates, and if the accumulated debt is refinanced at those higher rates,
thereby increasing debt servicing costs.thereby increasing debt servicing costs.92
97 According to the IMF, France, Germany, Italy, Japan, and the United Kingdom have each According to the IMF, France, Germany, Italy, Japan, and the United Kingdom have each
announced public sector support measures that total more than 10% of their annual GDP.announced public sector support measures that total more than 10% of their annual GDP.9398 For For
developing economies, the fiscal deficit to GDP ratio is projected to rise from 4.9% in 2019 to developing economies, the fiscal deficit to GDP ratio is projected to rise from 4.9% in 2019 to
9.8% in 2021, significantly increasing their debt burden and raising prospects of defaults or debt 9.8% in 2021, significantly increasing their debt burden and raising prospects of defaults or debt
rescheduling.rescheduling.9499 According to some estimates, the most According to some estimates, the most ~~fiscal y~~fiscally vulnerable countries are Argentina, vulnerable countries are Argentina,
Venezuela, Lebanon, Jordan, Iran, Zambia, Zimbabwe, and South Africa.Venezuela, Lebanon, Jordan, Iran, Zambia, Zimbabwe, and South Africa.95100 The IMF concluded The IMF concluded
that among low-income developing countries high debt levels could near-term debt vulnerabilities that among low-income developing countries high debt levels could near-term debt vulnerabilities
remain high.remain high.96
101 The IMF has argued there is a growing disconnect between the pricing of risk in financial markets The IMF has argued there is a growing disconnect between the pricing of risk in financial markets
and projected economic prospects, because investors apparently expect a quick recovery based on and projected economic prospects, because investors apparently expect a quick recovery based on
continued and unprecedented central bank intervention. However, a perceived or real shift in continued and unprecedented central bank intervention. However, a perceived or real shift in
central bank intervention in financial markets could negatively affect investors’ concept of risk central bank intervention in financial markets could negatively affect investors’ concept of risk
and, in turn, negatively affect asset markets and the economic recovery.and, in turn, negatively affect asset markets and the economic recovery.97102 In addition to central In addition to central
banks’ actions, the IMF concludes that a number of preexisting vulnerabilities could affect the banks’ actions, the IMF concludes that a number of preexisting vulnerabilities could affect the
timing and the rate of the economic recovery. These vulnerabilities include corporate and timing and the rate of the economic recovery. These vulnerabilities include corporate and
household debt levels in developed and some emerging market economies that could become household debt levels in developed and some emerging market economies that could become
unmanageable in a prolonged recession; a rising number of insolvencies that could test the unmanageable in a prolonged recession; a rising number of insolvencies that could test the
resilience of the banking sector; additional stresses that could affect nonbank financial resilience of the banking sector; additional stresses that could affect nonbank financial
institutions; and the prospect of some developing economies facing high external financing institutions; and the prospect of some developing economies facing high external financing
requirements.requirements.98103
Worker Assistance Programs
As part of their fiscal policy measures, governments in advanced economies either enhanced As part of their fiscal policy measures, governments in advanced economies either enhanced
existing worker support programs, or adopted new programs. As indicated in existing worker support programs, or adopted new programs. As indicated in Table 4, the OECD , the OECD
categorized the various job retention programs into six major groups, which the OECD estimated categorized the various job retention programs into six major groups, which the OECD estimated
had supported 50 had supported 50 ~~mil ion~~million workers in developed economies. The programs consisted of short-term workers in developed economies. The programs consisted of short-term
support that subsidized hours not worked, or wage subsidies that also subsidized hours worked. support that subsidized hours not worked, or wage subsidies that also subsidized hours worked.
Some countries also eased qualification requirements to facilitate workers or businesses gaining Some countries also eased qualification requirements to facilitate workers or businesses gaining
~~access to support funds.~~
~~Programs to assist workers varied across countries, but they general y comprised subsidies to~~
~~support workers for work hours lost or extended wage subsidies to maintain pre-pandemic~~
~~employment levels. Other programs assisted individual firms in retaining workers with the~~
~~objective of facilitating a quick return to full activity once pandemic-related restrictions are~~

92access to support funds. 97 Hagaman, Chase, Hagaman, Chase, Fiscal, Monetary, and Economic Challenges of the Post-Pandemic Economy, , ~~T he~~The Concord Concord
Coalition, February 18, 2021, Edelberg, Wendy, and LouiseCoalition, February 18, 2021, Edelberg, Wendy, and Louise Sheiner,Sheiner, ~~The Macroeconom ic Im plications~~ The Macroeconomic Implications of Biden’s $1.9
Trillion Fiscal Package, ~~T he~~The Hamilton Project, Brookings Institution, January 28, 2021. Hamilton Project, Brookings Institution, January 28, 2021.
93 98 Global Financial Stability Report Update. International Monetary Fund, April 2021, p. 3. . International Monetary Fund, April 2021, p. 3.
9499 Ibid, Ibid, p. 3 p. 3
95100 Wheatley, Jonathan, Wheatley, Jonathan, ~~T ommy~~Tommy Stubbington, Michael Stott, Andrew England, and Joseph Cotterill, Debt Relief: Stubbington, Michael Stott, Andrew England, and Joseph Cotterill, Debt Relief: Which Which
Countries Are Most Vulnerable?Countries Are Most Vulnerable? Financial ~~Tim es~~Times, May 6, 2020. https://www.ft.com/content/31ac88a1-9131-4531-, May 6, 2020. https://www.ft.com/content/31ac88a1-9131-4531-
99be-7bfd8394e8b9. 99be-7bfd8394e8b9.
96 101 Global Financial Stability Report, April 2021,April 2021, p. 8 p. 8
97102 Global Financial Stability Report Update. International Monetary Fund, December 2020, p. 4. . International Monetary Fund, December 2020, p. 4.
98103 Ibid., pp. 6-7. Ibid., pp. 6-7.
Congressional Research Service Congressional Research Service

2223 Global Economic Effects of COVID-19 Programs to assist workers varied across countries, but they generally comprised subsidies to support workers for work hours lost or extended wage subsidies to maintain pre-pandemic employment levels. Other programs assisted individual firms in retaining workers with the objective of facilitating a quick return to full activity once pandemic-related restrictions are lifted.104

~~Global Economic Effects of COVID-19~~

~~lifted.99~~ In some cases, benefits were increased by extending the length of time benefits are In some cases, benefits were increased by extending the length of time benefits are
availableavailable and benefits were extended to workers in non-standard jobs such as temporary and self-and benefits were extended to workers in non-standard jobs such as temporary and self-
employed workers. New programs adopted by some OECD members were designed to assist employed workers. New programs adopted by some OECD members were designed to assist
some temporary and non-standard workers quickly gain access to support funds.some temporary and non-standard workers quickly gain access to support funds.~~100~~
105 Beyond the pandemic, the OECD encouraged governments to: Beyond the pandemic, the OECD encouraged governments to:
 Increase the contribution of firms to the cost of hours not worked to strengthen  Increase the contribution of firms to the cost of hours not worked to strengthen
incentives to use subsidies for jobs that incentives to use subsidies for jobs that ~~wil~~ will be viable after the pandemic crisis;be viable after the pandemic crisis;
 Set time limits on the extent of job support programs, although with the ability to  Set time limits on the extent of job support programs, although with the ability to
adjust the limits depending on circumstances; adjust the limits depending on circumstances;
 More closely align short-time work and unemployment benefits;  More closely align short-time work and unemployment benefits;
 Provide assistance for job searches and career guidance, and promote training. Provide assistance for job searches and career guidance, and promote training.~~101~~106

Table 4. Developed Economy Worker Support Programs During COVID-19
Increased
access for
Preexisting
workers in
short-time
Increased
Increased
non-
New short-
New wage
work
access and
benefit
standard
time work
subsidy
scheme
coverage
generosity
jobs
scheme
scheme

Australia Australia
x x

Austria Austria
x x
x x
x x

Belgium Belgium
x x
x x
x x

Canada Canada
x x
x x

Chile Chile
x x
x x
x x
x x

Czech Republic Czech Republic
x x
x x
x x

Denmark Denmark
x x
x x
x x

Estonia Estonia
x x

Finland Finland
x x
x x
x x
x x

France France
x x
x x
x x
x x

Germany Germany
x x
x x
x x
x x

Greece Greece
x x

Hungary Hungary
x x

Iceland Iceland
x x

Ireland Ireland
x x
x x

~~Italy~~
x
x
x

~~Japan~~
x
x
x
x

~~Korea~~
x
x
x

99 104 Job Retention Schemes During the COVID-19 Lockdown and Beyond, Organization for Economic Cooperation and , Organization for Economic Cooperation and
Development, October 7, 2020, p. 2. Development, October 7, 2020, p. 2.
~~100~~105 Ibid, Ibid, pp. 5-6. pp. 5-6.
~~101~~106 Ibid, Ibid, pp. 2-3. pp. 2-3.
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Increased
access for
Preexisting
workers in
short-time
Increased
Increased
non-
New short-
New wage
work
access and
benefit
standard
time work
subsidy
scheme
coverage
generosity
jobs
scheme
scheme

Italy x x x Japan x x x x Korea x x x Latvia Latvia
x x

Lithuania Lithuania
x x

Luxembourg Luxembourg
x x
x x
x x

Netherlands Netherlands
x x
x x

New Zealand New Zealand
x x

Norway Norway
x x
x x
x x

Poland Poland
x x

Portugal Portugal
x x
x x
x x

Slovak Republic Slovak Republic
x x
x x
x x

Slovenia Slovenia
x x

Spain Spain
x x
x x
x x
x x

Sweden Sweden
x x
x x
x x

Switzerland Switzerland
x x
x x
x x

Turkey Turkey
x x
x x
x x

United Kingdom United Kingdom

x x

United States United States
x x
x x
x x

Source: Job Retention Schemes During the COVID-19 Lockdown and Beyond, Organization for Economic , Organization for Economic
Cooperation and Development,Cooperation and Development, October 12, 2020, p. 7. October 12, 2020, p. 7.
Monetary and Prudential Measures
Among central banks, the Federal Reserve initiatedAmong central banks, the Federal Reserve initiated extraordinary steps not experienced since the extraordinary steps not experienced since the
2008-2009 global financial crisis to address the economic effects of COVID-19. Simultaneously, 2008-2009 global financial crisis to address the economic effects of COVID-19. Simultaneously,
as indicated in as indicated in Table 5, various central banks and monetary authorities adopted an array of , various central banks and monetary authorities adopted an array of
measures to address the potential economic effects of the pandemic, including lowering interest measures to address the potential economic effects of the pandemic, including lowering interest
rates and reserve requirements, announcing new lending and financing facilities, asset purchases, rates and reserve requirements, announcing new lending and financing facilities, asset purchases,
foreign exchange swaps, prudential measures, and relaxed capital buffers and, in some cases, foreign exchange swaps, prudential measures, and relaxed capital buffers and, in some cases,
countercyclical capital buffers,countercyclical capital buffers,~~102~~107 adopted after the 2008-2009 financial crisis, adopted after the 2008-2009 financial crisis, ~~potential y~~potentially freeing freeing
~~up an estimated $5 tril ion in funds.103~~
~~Central banks not only fil ed the role of lender of last resort through large purchases of~~
~~government debt, but also the buyers or lenders of last resort for private sector securities, in many~~
~~cases engaging in activities that previously had been considered off-limits.104 As a result of these~~

~~102~~up an estimated $5 trillion in funds.108 107 Countercyclical capital buffers require Countercyclical capital buffers require banks to increase their capital buffers duringbanks to increase their capital buffers during periods of rapid growth in periods of rapid growth in
assets (when they are making a lot of loans), to ensure they have sufficient capital to absorb lossesassets (when they are making a lot of loans), to ensure they have sufficient capital to absorb losses ~~during~~ during a recession. a recession.
Countercyclical Capital Buffers, Bank for International Settlements, April 3, 2020. https://www.bis.org/bcbs/ccyb/. , Bank for International Settlements, April 3, 2020. https://www.bis.org/bcbs/ccyb/.
~~103~~108 Arnold, Martin, “Regulators Free up $500bn Capital for Lenders to Fight Virus Arnold, Martin, “Regulators Free up $500bn Capital for Lenders to Fight Virus Storm,” Storm,” Financial Times, April 7, April 7,
2020. https://www.ft.com/content/9a677506-a44e-4f69-b852-4f34018bc45f. 2020. https://www.ft.com/content/9a677506-a44e-4f69-b852-4f34018bc45f.
~~104 For a review of monetary policies of the Federal Reserve, the ECB, the Bank of Japan, and the Bank of England,~~
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link to page link to page 3132 link to page link to page 3132 Global Economic Effects of COVID-19 Central banks not only filled the role of lender of last resort through large purchases of government debt, but also the buyers or lenders of last resort for private sector securities, in many cases engaging in activities that previously had been considered off-limits.109 As a result of these ~~Global Economic Effects of COVID-19~~

activities, the BIS argued that central banks effectively managed the initial liquidityactivities, the BIS argued that central banks effectively managed the initial liquidity crisis, the crisis, the
first of three phases often identified with financial crises. The second and third phases, insolvency first of three phases often identified with financial crises. The second and third phases, insolvency
and recovery, are being navigated in some cases and could become more and recovery, are being navigated in some cases and could become more ~~chal enging~~challenging should the should the
pandemic-related economic crisis be prolonged. Capital buffers were raised after the financial pandemic-related economic crisis be prolonged. Capital buffers were raised after the financial
crisis to assist banks in absorbing losses and staying solvent during financial crises. Some crisis to assist banks in absorbing losses and staying solvent during financial crises. Some
governments have directed banks to freeze dividend payments and halt pay bonuses. The governments have directed banks to freeze dividend payments and halt pay bonuses. The
Financial Stability Board (FSB) argued in its July 15, 2020, report to the G-20 Finance Ministers Financial Stability Board (FSB) argued in its July 15, 2020, report to the G-20 Finance Ministers
and Governors that the actions taken to date to support the functioning of the global financial and Governors that the actions taken to date to support the functioning of the global financial
system appeared to have effectively worked to contain the financial and economic impact of the system appeared to have effectively worked to contain the financial and economic impact of the
pandemic so far, although the crisis is not over.pandemic so far, although the crisis is not over.~~105~~110
Table 5. Selected Central Bank and Prudential Measures to Address COVID-19

Advanced economies
Emerging market economies
Type of Type of
Measures Measures
U U
E E
J J
G G
C C
A A
C C
B B
C C
I I
I I
K K
M M
T T
Z Z
tool tool
S S
A A
P P
B B
A A
U U
H H
R R
N N
D D
N N
R R
X X
H H
A A
Interest Interest
Policy rate Policy rate
x x

x x
x x
x x

x x
x x
x x
x x
x x
x x
x x
x x
rate rate
cut cut
Lending Lending
Gen. Gen.
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
liquidity liquidity
liquidity liquidity
provisioprovisiona
Specialized Specialized
x x
x x
x x
x x

x x
x x
x x
x x

x x
x x
x x
x x

lending lending
Asset Asset
Governme Governme
x x
x x
x x
x x
x x
x x

x x
x x
x x

x x
x x
purchase purchase
nt bonds nt bonds
s/ sales s/ sales
Commercia Commercia
x x
x x
x x
x x
x x

x x

l paper l paper
Corporate Corporate
x x
x x
x x
x x
x x

x x

x x

bonds bonds
Other Other

x x
x x

x x

private private
~~securitie~~sbsecuritiesb
FX swap/ FX swap/
USD swap USD swap

x x
x x
x x
x x
x x
x x
x x

x x
x x

interven- interven-
line line
tion tion
FX FX

x x
x x

x x
x x
x x
x x

interven- interven-
tion tion
Pruden- Pruden-
Capital Capital
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x

x x
tial rules tial rules
require- require-
and and
ments ments
~~Regula-~~
~~tions~~
~~Liquidity~~
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
~~require-~~
~~ments~~
~~Payout~~

x

x
x
x
x
x

x
x
x
x
x
x
~~restrictions~~

~~see: Haas, Jacob,~~ 109 For a review of monetary policies of the Federal Reserve, the ECB, the Bank of Japan, and the Bank of England, see: Haas, Jacob, Christopher J. Neely, William B. Emmons, Responses of International Central Banks to the COVIDChristopher J. Neely, William B. Emmons, Responses of International Central Banks to the COVID --
19 Crisis,19 Crisis, Federal Reserve Bank of St. Louis Review,, Fourth Quarter 2020. Fourth Quarter 2020.
~~105~~ 110 COVID-19 Pandemic: Financial Stability Implications and Policy Measures Taken: Report Submitted to the G-20
Finance Ministers and Governors, Financial Stability Board, July, Financial Stability Board, July 15, 2020. 15, 2020.
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link to page link to page 3132 Global Economic Effects of COVID-19

Advanced economies
Emerging market economies
Type of Type of
Measures Measures
U U
E E
J J
G G
C C
A A
C C
B B
C C
I I
I I
K K
M M
T T
Z Z
tool tool
S S
A A
P P
B B
A A
U U
H H
R R
N N
D D
N N
R R
X X
H H
A A
Regula- Liquidity x x x x x x x x x x x x x x x tions require-ments Payout x x x x x x x x x x x x restrictions Market Market

x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
x x
functionin functioningc
Source: Annual Economic Report 2020, Bank for International Settlements,, Bank for International Settlements, June 2020, p. 23. June 2020, p. 23.
Notes: :
a. Repo and reversea. Repo and reverse repo operations, standing facilities,repo operations, standing facilities, modified discount window and lowermodified discount window and lower reserve reserve
requirement requirement ratio. ratio.
b. Asset- and mortgage-backed securities, b. Asset- and mortgage-backed securities, covered bonds and exchange-traded funds. covered bonds and exchange-traded funds.
c. Shortsel ingc. Shortsel ing bans and circuit breakers.bans and circuit breakers. US: United States; EA: Euro Area; JP: Japan; GB: Great Britain; CA: US: United States; EA: Euro Area; JP: Japan; GB: Great Britain; CA:
Canada; AU: Australia; CH: Switzerland; BR: Brazil; CN: China; ID: Indonesia; IN: India; KR: South Korea; Canada; AU: Australia; CH: Switzerland; BR: Brazil; CN: China; ID: Indonesia; IN: India; KR: South Korea;
MX: Mexico; TH: Thailand; ZA: South Africa. MX: Mexico; TH: Thailand; ZA: South Africa.
Economic Forecasts
Global Growth
Although prospects have brightened for renewed rates of growth, the economic situation remains Although prospects have brightened for renewed rates of growth, the economic situation remains
highly fluid highly fluid ~~global y~~globally and for most countries and regions. Uncertainty about the length and depth and for most countries and regions. Uncertainty about the length and depth
of the health crisis-related economic effects continue to drive perceptions of risk and volatility in of the health crisis-related economic effects continue to drive perceptions of risk and volatility in
financial markets and corporate decision-making. In addition, uncertainties concerning the global financial markets and corporate decision-making. In addition, uncertainties concerning the global
pandemic and the effectiveness of public policies intended to contain its spread and prevent a pandemic and the effectiveness of public policies intended to contain its spread and prevent a
subsequent rounds of infections have added to market volatility. At various times, corporations subsequent rounds of infections have added to market volatility. At various times, corporations
postponed investment decisions, laid off workers who previously had been furloughed, and in postponed investment decisions, laid off workers who previously had been furloughed, and in
~~some cases filed for bankruptcy.~~
some cases filed for bankruptcy. Progress in producing and administering vaccines through the first half of 2021 raised prospects that social distancing rules could be relaxed or removed, which could improve economic activity. Most forecasts indicate that 2021 GDP growth rates for most countries could outpace pre-pandemic forecasts; while economic growth in 2022 could return to more historical rates. In the early months of the economic recession, the economic situation was compounded by a In the early months of the economic recession, the economic situation was compounded by a
historic drop in the price of crude oil. Since then, oil prices have recovered from the low of nearly historic drop in the price of crude oil. Since then, oil prices have recovered from the low of nearly
$20 per barrel in April 2020. Through the end of 2020, oil prices moved in the range of $40 to $20 per barrel in April 2020. Through the end of 2020, oil prices moved in the range of $40 to
$45 per barrel, in part reflecting the decline in$45 per barrel, in part reflecting the decline in global economic activity. By early global economic activity. By early ~~January~~June 2021, 2021,
the international price of Brent crude oil crossed the $the international price of Brent crude oil crossed the $6570 per barrel threshold not reached since per barrel threshold not reached since
before the pandemic-related recession began. On April ~~the economic crisis began.~~
~~On April~~ 29, 2020, Federal Reserve Chairman Jerome 29, 2020, Federal Reserve Chairman Jerome ~~Powel~~ Powell stated that the Federal Reserve stated that the Federal Reserve
would use its “full range of tools” to support economic activity as the U.S. economic growth rate would use its “full range of tools” to support economic activity as the U.S. economic growth rate
dropped by 33.0% at an annual rate in the second quarter of 2020. In assessing the state of the dropped by 33.0% at an annual rate in the second quarter of 2020. In assessing the state of the
U.S. economy, the Federal Open Market Committee released a statement indicating that, “The U.S. economy, the Federal Open Market Committee released a statement indicating that, “The
Congressional Research Service 27 Global Economic Effects of COVID-19 ongoing public health crisis ongoing public health crisis ~~wil~~ will weigh heavily on economic activity, employment, and inflation weigh heavily on economic activity, employment, and inflation
in the near term, and poses considerable risks to the economic outlook over the medium term.”in the near term, and poses considerable risks to the economic outlook over the medium term.”~~106~~111
Before the COVID-19 outbreak, the global economy was struggling to regain a broad-based Before the COVID-19 outbreak, the global economy was struggling to regain a broad-based
recovery as a result of a number of issues, including the lingering impact of growing trade recovery as a result of a number of issues, including the lingering impact of growing trade
protectionism; trade disputes among major trading partners; protectionism; trade disputes among major trading partners; ~~fal ing~~falling commodity and energy prices; commodity and energy prices;
and economic uncertainties in Europe over the impact of the UKand economic uncertainties in Europe over the impact of the UK withdrawal from the European withdrawal from the European
Union. Union. ~~Individual y~~Individually, each of these issues presented a solvable , each of these issues presented a solvable ~~chal enge~~challenge for the global economy. for the global economy.
Collectively, however, the issues weakened the global economy and reduced the available policy Collectively, however, the issues weakened the global economy and reduced the available policy

~~106 Federal Reserve Issues FOMC Statement, Board of Governors of the Federal Reserve System, April 29, 2020.~~
~~https://www.federalreserve.gov/newsevents/pressreleases/monetary20200429a.htm.~~
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26

~~Global Economic Effects of COVID-19~~

~~flexibility~~ flexibility of many national leaders, of many national leaders, ~~especial y~~especially among the leading developed economies. While among the leading developed economies. While
the level of economic effects has become clearer, the response to the pandemic the level of economic effects has become clearer, the response to the pandemic ~~potential y~~potentially has has
had a significant and enduring impact on the way businesses organize their work forces, on global had a significant and enduring impact on the way businesses organize their work forces, on global
supply chains, and how governments respond to a global health crisis.supply chains, and how governments respond to a global health crisis.~~107~~112 As a result of the rapidly As a result of the rapidly
spreading virus and its compounding effects on global and national rates of economic growth, spreading virus and its compounding effects on global and national rates of economic growth,
forecasting the impact of the virus has been forecasting the impact of the virus has been ~~especial y chal enging~~especially challenging. .
The International Monetary Fund (IMF), the Organization for Economic Cooperation and The International Monetary Fund (IMF), the Organization for Economic Cooperation and
Development (OECD), and The World Bank Development (OECD), and The World Bank al all revised their forecasts downward between late revised their forecasts downward between late
2019 and mid-2020, reflecting the rapidly deteriorating state of the global economy and a marked 2019 and mid-2020, reflecting the rapidly deteriorating state of the global economy and a marked
decline in projected rates of growth. Between October 2019 and January 2021, for instance, the decline in projected rates of growth. Between October 2019 and January 2021, for instance, the
IMF lowered its global economic growth forecast for 2020 from a positive 3.4% to a negative IMF lowered its global economic growth forecast for 2020 from a positive 3.4% to a negative
3.5%. In its June 2020 forecast, the OECD forecasted the effects of a single and double wave of 3.5%. In its June 2020 forecast, the OECD forecasted the effects of a single and double wave of
infections, with the projections for a single wave reflected in infections, with the projections for a single wave reflected in Table 6. By late 2020 and early . By late 2020 and early
2021, most forecasts were revised upward to reflect assessments the recession would be less 2021, most forecasts were revised upward to reflect assessments the recession would be less
severe than had been forecasted for 2021, as indicated in severe than had been forecasted for 2021, as indicated in Figure 4. The OECD The OECD ~~projected~~estimated in May in
~~March~~ 2021 that global GDP 2021 that global GDP ~~could decline by 3.4~~had declined by 3.5% in 2020, compared with % in 2020, compared with ~~an earlier~~a December forecast of forecast of
--4.2%, and would experience a stronger recovery in 2021 of 5.4.2%, and would experience a stronger recovery in 2021 of 5.68% instead of % instead of ~~an earlier~~a March forecast of forecast of
~~4.2%.108~~5.6%.113 Between January 2020 and January 2021, the World Bank also lowered its forecast of Between January 2020 and January 2021, the World Bank also lowered its forecast of
global growth from 2.5% to a negative 4.3%. In most forecasts, advanced economies were global growth from 2.5% to a negative 4.3%. In most forecasts, advanced economies were
projected to experience the steepest declines in economic growth from 2019 to mid-June 2020. projected to experience the steepest declines in economic growth from 2019 to mid-June 2020.
Table 6. Major Economic Forecasts
Percentage changes at annual rates Percentage changes at annual rates
World
Advanced economies Developing economies
United States

2020 2021 2020 2021
2020 2020
2021 2021
2020 2020
2021 2021
2020 2020
2021 2021
International Monetary Fund
October 2019 October 2019
3.4% 3.4%
3.6% 3.6%
1.7% 1.7%
1.6% 1.6%
4.6% 4.6%
4.8% 4.8%
2.1% 2.1%
1.7% 1.7%
April April 2020 2020
–3.0 –3.0
5.8 5.8
–6.1 –6.1
4.5 4.5
–1.0 –1.0
6.6 6.6
–5.9 –5.9
4.7 4.7
June 2020 June 2020
-4.9 -4.9
5.4 5.4
-8.0 -8.0
4.8 4.8
-3.0 -3.0
5.9 5.9
-8.0 -8.0
4.5 4.5
October 2020 October 2020
–4.4 –4.4
5.2 5.2
–5.8 –5.8
3.9 3.9
–3.3 –3.3
6.0 6.0
–4.3 –4.3
3.1 3.1
111 Federal Reserve Issues FOMC Statement, Board of Governors of the Federal Reserve System, April 29, 2020. https://www.federalreserve.gov/newsevents/pressreleases/monetary20200429a.htm. 112 Rowland, Christopher and Peter Whoriskey, “U.S. Health System is Showing Why It’s Not Ready for a COVID-19 Pandemic,” Washington Post, March 4, 2020. https://www.washingtonpost.com/business/economy/the-us-health-system-is-showing-why-its-not-ready-for-a-COVID-19-pandemic/2020/03/04/7c307bb4-5d61-11ea-b29b-9db42f7803a7_story.html. 113 OECD Economic Outlook, Interim Report March 2021, Organization for Economic Cooperation and Development, March, 2021. Congressional Research Service 28 Global Economic Effects of COVID-19 World Advanced economies Developing economies United States 2020 2021 2020 2021 2020 2021 2020 2021 January 2021 January 2021
-3.5 -3.5
5.5 5.5
-4.9 -4.9
4.3 4.3
-2.4 -2.4
6.3 6.3
-3.4 -3.4
5.1 5.1
Organization for Economic Cooperation and Development
Nov 2019 Nov 2019
2.9 2.9
3.0 3.0
1.6 1.6
1.7 1.7
4.0 4.0
4.0 4.0
2.0 2.0
2.0 2.0
March 2020 March 2020
2.4 2.4
3.3 3.3
0.8 0.8
1.2 1.2
NA NA
NA NA
1.9 1.9
2.1 2.1
June 2020 single June 2020 single
-6.0 -6.0
5.2 5.2
-7.5 -7.5
4.8 4.8
-4.6 -4.6
5.6 5.6
-7.3 -7.3
4.1 4.1
June 2020 double June 2020 double
-7.6 -7.6
2.8 2.8
-9.3 -9.3
2.2 2.2
-6.1 -6.1
3.2 3.2
-8.5 -8.5
1.9 1.9
Sept. 2020 Sept. 2020
-7.6 -7.6
2.8 2.8
-9.3 -9.3
2,2 2,2
-6.1 -6.1
3.2 3.2
-8.5 -8.5
1.9 1.9

~~107 Rowland, Christopher and Peter Whoriskey, “U.S. Health System is Showing Why It’s Not Ready for a COVID-19~~
~~Pandemic,” Washington Post, March 4, 2020. https://www.washingtonpost.com/business/economy/the-us-health-~~
~~system-is-showing-why-its-not-ready-for-a-COVID-19-pandemic/2020/03/04/7c307bb4-5d61-11ea-b29b-~~
~~9db42f7803a7_story.html.~~
~~108 OECD Economic Outlook, Interim Report March 2021 , Organization for Economic Cooperation and Development,~~
~~March, 2021.~~
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~~Global Economic Effects of COVID-19~~

~~World~~
~~Advanced economies Developing economies~~
~~United States~~

~~2020 2021~~
~~2020~~
~~2021~~
~~2020~~
~~2021~~
~~2020~~
~~2021~~
~~Dec. 2020~~
~~-4.2~~
~~4.2~~
~~-5.5~~
~~3,2~~
~~-3.0~~
~~5.1~~
~~-3.7~~
~~3.2~~
~~March 2021~~
~~-3.4~~
~~5.6~~
NA
NA
NA
NA
~~-3.5~~
~~6.5~~ Dec. 2020 -4.2 4.2 -5.5 3,2 -3.0 5.1 -3.7 3.2 March 2021 -3.4 5.6 NA NA NA NA -3.5 6.5 May 2021 -3.5 5.8 -4.8 5.3 -2.3 6.2 -3.5 6.9
World Bank
January 2020 January 2020
2.5 2.5
2.6 2.6
1.4 1.4
1.5 1.5
4.1 4.1
4.3 4.3
1.8 1.8
1.7 1.7
June 2020 June 2020
-5.2 -5.2
4.2 4.2
-7.0 -7.0
3.9 3.9
-2.5 -2.5
4.6 4.6
-6.1 -6.1
4.0 4.0
January 2021 January 2021
-4.3 -4.3
4.0 4.0
-5.4 -5.4
3.3 3.3
-2.6 -2.6
5.0 5.0
-3.6 -3.6
3.5 3.5
Source: World Economic Outlook,, various issues,various issues, International Monetary Fund; International Monetary Fund; OECD Economic Outlook, various various
issues,issues, Organization for Economic Cooperation and Development;Organization for Economic Cooperation and Development; Global Economic Prospects,, various issues, various issues,
WorldWorld Bank. Bank.
Figure 4. Major Economic Forecasts by Region

Source: OECD Economic Outlook, March 2021, Organization for Economic Cooperation and Development. , Organization for Economic Cooperation and Development.
March 2021; March 2021; World Economic Outlook, Update, International Monetary Fund, January 26, 2021; International Monetary Fund, January 26, 2021; Global Economic
Prospects,, ~~World~~ World Bank Group, January 2021, Created by CRS. Bank Group, January 2021, Created by CRS.
Congressional Research Service 29 Global Economic Effects of COVID-19 Notes: The OECD estimated The OECD estimated rates of growth as a result of two scenarios,rates of growth as a result of two scenarios, indicated as OECD1 and OECD2. indicated as OECD1 and OECD2.
The first scenario assumesThe first scenario assumes there is a singlethere is a single wave of infections from COVID-19, while the second scenario wave of infections from COVID-19, while the second scenario
estimatesestimates the effect of a two-wave scenario. the effect of a two-wave scenario.
The OECD Forecast
The Organization for Economic Cooperation and Development (OECD) released an updated The Organization for Economic Cooperation and Development (OECD) released an updated
forecast in forecast in ~~April~~May 2021 that 2021 that ~~projects~~estimates that global economic growth global economic growth ~~would decline~~declined by 3. by 3.45% in 2020, % in 2020,
compared with a June 2020 forecast of a 6.9% decline under a single-wave scenario in 2020 and a compared with a June 2020 forecast of a 6.9% decline under a single-wave scenario in 2020 and a
~~Congressional Research Service~~

28

~~Global Economic Effects of COVID-19~~

7.6% decline under a second wave scenario.7.6% decline under a second wave scenario.~~109~~114 In the updated In the updated ~~forecast, developed economies~~
~~were projected to experience a decline in GDP of 3.2% in 2020, compared with a projected rate of~~
~~positive growth of 6.2% in 2021. The forecast reflects the OECD’s continued high level of~~
~~uncertainty about the course of the global economy over the remainder of 2020, because the~~
~~pandemic is “a global public health crisis without precedent in living memory.”~~ estimate, the rate of GDP growth in developed economies declined by 4.8% in 2020 and by 2.3% in developing economies. The updated forecast projects the global economy could grow by 5.8% in 2021 and 4.4% in 2022; developed economies could grow by 5.5% in 2021 and 3.8% in 2022, while developing economies could grow by 6.2% in 2021 and 4.9% in 2022. Despite the improvement in economic growth rates, the OECD concluded that living standards in “too many” developed economies by the end of 2022 would not met levels that had been projected prior to the pandemic.115 The OECD also ~~The OECD also~~
concluded that an economic recovery would take place over the next two years, but “the recovery concluded that an economic recovery would take place over the next two years, but “the recovery
would be uneven across countries, would be uneven across countries, ~~potential y~~potentially leading to lasting changes in the world leading to lasting changes in the world
economy.”economy.”~~110~~116 In addition, the OECD argued that the pandemic is fragmenting the global economy In addition, the OECD argued that the pandemic is fragmenting the global economy
through a growing number of trade and investment restrictions and diverging policy approaches through a growing number of trade and investment restrictions and diverging policy approaches
~~that are being implemented on a country-by-country basis.~~
that are being implemented on a country-by-country basis. The OECD concluded further that: ….as long as the vast majority of the global population is not vaccinated, all of us remain vulnerable to the emergence of new variants. Confidence could be seriously eroded by further lockdowns, and a stop-and-go of economic activities. Firms, so far well protected but often with higher debt than before the pandemic, could go bankrupt. The most vulnerable members of society would risk further suffering from prolonged spells of inactivity or reduced income, exacerbating inequalities, across and within countries, and potentially destabilizing economies.117 As a consequence of the slowdown in economic activity in the fourth quarter of 2020 and As a consequence of the slowdown in economic activity in the fourth quarter of 2020 and
projected slow, but partial recovery in 2021, the OECD estimated there would be long-lasting projected slow, but partial recovery in 2021, the OECD estimated there would be long-lasting
effects on the global economy, including effects on the global economy, including
 Output  Output iswas projected to remain around 5% below pre-crisis expectations in many projected to remain around 5% below pre-crisis expectations in many
countries in 2022, raising the specter of substantial permanent costs, countries in 2022, raising the specter of substantial permanent costs,
disproportionately affecting vulnerable populations. disproportionately affecting vulnerable populations.
  ~~Smal er~~Smaller firms and entrepreneurs are more likely to go out of business. firms and entrepreneurs are more likely to go out of business.
 Many low wage earners  Many low wage earners ~~have~~who lost their jobs and are only covered by lost their jobs and are only covered by
unemployment insurance, at best, with poor prospects of finding new jobs unemployment insurance, at best, with poor prospects of finding new jobs ~~soon.~~
~~ People living in poverty and usual y less wel~~ quickly. 114 OECD Economic Outlook, Interim Report: Coronavirus (COVID-19): Living With Uncertainty, Organization for Economic Cooperation and Development, September 2020. 115 OECD Economic Outlook May 2021, Preliminary Version, Organization for Economic Cooperation and Development, June 2021. 116 OECD Economic Outlook, Interim Report March 2021, Organization for Economic Cooperation and Development. March 2021, p. 4. http://www.oecd.org/economic-outlook/#resources. 117 OECD Economic Outlook May 2021, Preliminary Version, p. 9. Congressional Research Service 30 Global Economic Effects of COVID-19  People living in poverty and usually less well covered by social safety nets covered by social safety nets
experienced a deterioration in their living standards. experienced a deterioration in their living standards.
 Children and youth from less  Children and youth from less ~~wel~~ well-off backgrounds, and less qualified adult -off backgrounds, and less qualified adult
workers workers ~~have~~ struggled to learn and work from home, with struggled to learn and work from home, with ~~potential y~~potentially long long
lasting damage.lasting damage.~~111~~
~~As a result of uncertainty~~118 Uncertainty concerning the course of the global economy over the remainder of concerning the course of the global economy over the remainder of
~~2020,~~2020 led the the OECD to produce~~OECD produced~~ two estimates in its June 2020 outlook that it determined were two estimates in its June 2020 outlook that it determined were
~~“equal y likely~~ “equally likely scenarios:” one that assumed containment measures that existed at the time would scenarios:” one that assumed containment measures that existed at the time would
be successful in curtailing infections, and another that assumed there would be a second wave of be successful in curtailing infections, and another that assumed there would be a second wave of
rapid contagion.rapid contagion.~~112~~119 Under both scenarios, the OECD estimated the global economic recovery Under both scenarios, the OECD estimated the global economic recovery
would be slow and gradual.would be slow and gradual.~~113~~120 The OECD also estimated that the average unemployment rate The OECD also estimated that the average unemployment rate
among OECD countries could rise to 9.2% under a single wave scenario and 10.0% under the among OECD countries could rise to 9.2% under a single wave scenario and 10.0% under the
second wave scenario.second wave scenario. Through the third and fourth quarters of 2020Through the third and fourth quarters of 2020 and the first quarter of 2021, however, most OECD , however, most OECD
countries had not experienced extended periods of high rates of unemployment, in part due to countries had not experienced extended periods of high rates of unemployment, in part due to
nationalnational income and wage maintenance programs, as indicated in income and wage maintenance programs, as indicated in Figure 5. The main exceptions . The main exceptions
were the United States and Canada, where unemployment rates spiked starting at the end of the were the United States and Canada, where unemployment rates spiked starting at the end of the
first quarter and into the second quarter of 2020. By first quarter and into the second quarter of 2020. By ~~February~~April 2021, most OECD economies had 2021, most OECD economies had
unemployment rates in the unemployment rates in the ~~7.0~~6.5% to 9.0% range with some exceptions: Japan (2.9%) and Germany % to 9.0% range with some exceptions: Japan (2.9%) and Germany
(4.5%) had rates below the OECD average of 6.(4.5%) had rates below the OECD average of 6.75%, while Colombia (%, while Colombia (~~14.3~~15.0%), Spain (%), Spain (~~16.1~~15.4%), and %), and
Italy (10.Italy (10.27%) had rates that were higher than the OECD average. In a major difference between %) had rates that were higher than the OECD average. In a major difference between

~~109 OECD Economic Outlook, Interim Report: Coronavirus (COVID-19): Living With Uncertainty, Organization for~~
~~Economic Cooperation and Development, September 2020.~~
~~110 OECD Economic Outlook, Interim Report March 2021, Organization for Economic Cooperation and Development.~~
~~March 2021, p. 4. http://www.oecd.org/economic-outlook/#resources.~~
~~111 Ibid, p. 8.~~
~~112 Ibid, p. 13.~~
~~113~~U.S. and EU data, EU workers absent from work due to temporary layoff are counted as employed, whereas, in the United States, they are counted as unemployed. 118 Ibid, p. 8. 119 Ibid, p. 13. 120 OECD Economic Outlook, June 2020, Organization for Economic Cooperation and Development. June 2020, p. 23. , Organization for Economic Cooperation and Development. June 2020, p. 23.
http://www.oecd.org/economic-outlook/#resources. http://www.oecd.org/economic-outlook/#resources.
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Global Economic Effects of COVID-19

~~U.S. and EU data, EU workers absent from work due to temporary layoff are counted as~~
~~employed, whereas, in the United States, they are counted as unemployed.~~
Figure 5. Unemployment Rates Among Major OECD Countries
In percentage terms In percentage terms

Source: OECD Dataset: Short-termOECD Dataset: Short-term Labor Market Statistics, Organization for Economic Cooperation and Labor Market Statistics, Organization for Economic Cooperation and
Development.Development. Created by CRS. Created by CRS.
Global trade was projected to contract by 9.5% or 11.4% in 2020 under the single or second wave Global trade was projected to contract by 9.5% or 11.4% in 2020 under the single or second wave
scenarios, respectively. The OECD projections in scenarios, respectively. The OECD projections in Table 7 reflect the single wave scenario. reflect the single wave scenario.~~114~~121
According to this scenario, global economic growth was projected to According to this scenario, global economic growth was projected to ~~fal~~ fall by 6.0% in 2020, but by 6.0% in 2020, but
rise by 5.2% in 2021. In contrast, the OECD’s second wave scenario projected a global economic rise by 5.2% in 2021. In contrast, the OECD’s second wave scenario projected a global economic
contraction of 7.6% in 2020 and a growth rate of 2.8% in 2021, delaying a return to full recovery contraction of 7.6% in 2020 and a growth rate of 2.8% in 2021, delaying a return to full recovery
until 2022. until 2022.
The OECD The OECD ~~March~~May 2021 forecast projects that economic growth among developed economies 2021 forecast projects that economic growth among developed economies
would would be ~~be particularly~~ weak in Europe, where the growth rate was projected to weak in Europe, where the growth rate was projected to ~~fal by 3.4~~fall by 6.7% in % in
2020, compared with the March 2020 forecast of an increase of 0.8% in 2020 and by 1.2% in 2020, compared with the March 2020 forecast of an increase of 0.8% in 2020 and by 1.2% in
2021. Similarly,2021. Similarly, U.S. economic growth was projected to contract in 2020 by 3.5%, but rebound U.S. economic growth was projected to contract in 2020 by 3.5%, but rebound
by 6.by 6.59% in 2021. The % in 2021. The UK was~~UK is~~ projected to experience a contraction in GDP growth in 2020 of projected to experience a contraction in GDP growth in 2020 of
~~9.9~~9.8%, slightly less than the earlier forecast of a decline of 10.1%. World trade was also projected %, slightly less than the earlier forecast of a decline of 10.1%. World trade was also projected
to decline by to decline by ~~10.3~~8.5% in 2020, before rising by % in 2020, before rising by ~~3.9~~8.2% in 2021 and % in 2021 and ~~4.4% in 2022.~~

~~114~~5.8% in 2022, estimates that are higher than earlier forecasts. 121 Ibid., p. 13. Ibid., p. 13.
Congressional Research Service Congressional Research Service

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Table 7. OECD, IMF and World Bank Economic Forecasts
Percentage change in Real GDP Growth Percentage change in Real GDP Growth
OECD ~~Mar.~~May 2021
IMF Apr. 2021
World Bank Jan.

Projections

Projections

2021 Projections
2020 2020
2021 2021
2022 2022
2020 2020
2021 2021
2022 2022

2019 2019
2020 2020
2021 2021

World World
-3. -3.45% %
5. 5.68% %
4. 4.04% %
World World
–3.5 –3.5%
5.5 5.5%
4.2 4.2%
World World
2.3 2.3%
-4.3 -4.3%
4.0 4.0%
Adv. Economies Adv. Economies
- -~~3.2~~
~~6.2~~
~~4.1~~4.8 5.3 3.8
Adv. Economies Adv. Economies
–4.9 –4.9
4.3 4.3
3.1 3.1
Adv. Economies Adv. Economies
1.6 1.6
-5.4 -5.4
3.3 3.3
Australia Australia
-2.5 -2.5
~~4.5~~5.1
3. 3.14
United States United States
–3.4 –3.4
5.1 5.1
2.5 2.5
United States United States
2.2 2.2
-3.6 -3.6
3.5 3.5
Canada Canada
-5.4 -5.4
~~4.7~~
~~4.0~~8,1 3.8
Euro Area Euro Area
–7.2 –7.2
4.2 4.2
3.6 3.6
Euro Area Euro Area
1.3 1.3
-7.4 -7.4
3.6 3.6
Euro area Euro area
-6. -6.8
~~3.9~~
~~3.8~~7 4.3 4.4
Germany Germany
–5.4 –5.4
3.5 3.5
3.1 3.1
Japan Japan
0.3 0.3
-5.3 -5.3
2.5 2.5
Germany Germany
-5. -5.31
3. 3.0
~~3.7~~3 4.4
France France
–9.0 –9.0
5.5 5.5
4.1 4.1
Emerging Emerging
3.6 3.6
-2.6 -2.6
5.0 5.0
France France
-8.2 -8.2
5. 5.9
~~3.8~~8 4.0
Italy Italy
–9.2 –9.2
3.0 3.0
3.6 3.6
E. Asia E. Asia
5.8 5.8
0.9 0.9
7.4 7.4
Italy Italy
-8.9 -8.9
4. 4.15
4. 4.04
Spain Spain
–11.1 –11.1
5.9 5.9
4.7 4.7
China China
6.1 6.1
2.0 2.0
7.9 7.9
Spain Spain
- -1110.8
5. 5.7
~~4.8~~9 6.3
Japan Japan
–5.1 –5.1
3.1 3.1
2.4 2.4
Indonesia Indonesia
5.0 5.0
-2.2 -2.2
4.4 4.4
Japan Japan
-4. -4.87
2. 2.7
~~1.8~~6 2.0
United Kingdom United Kingdom
–10.0 –10.0
4.5 4.5
5.0 5.0
Thailand Thailand
2.4 2.4
-6.5 -6.5
4.0 4.0
Korea Korea
- -~~1.0~~0.9
3. 3.3
~~3.1~~8 2.8
Canada Canada
–5.5 –5.5
3.6 3.6
4.1 4.1
Cen. Asia Cen. Asia
2.3 2.3
-2.9 -2.9
3.3 3.3
Mexico Mexico
-8. -8.5
~~4.5~~2 5.0
3. 3.02
China China
2.3 2.3
8.1 8.1
5.6 5.6
Russia Russia
1.3 1.3
-4.0 -4.0
2.6 2.6
Turkey Turkey
1.8 1.8
5. 5.97
3. 3.04
India India
–8.0 –8.0
11.5 11.5
6.8 6.8
Turkey Turkey
0.9 0.9
0.5 0.5
4.5 4.5
United United
-9. -9.9
~~5.1~~
~~4.7~~8 7.2 5.5
–3.6 –3.6
3.0 3.0
3.9 3.9
4.5 4.5
-3.4 -3.4
3.5 3.5
Kingdom Kingdom
Russia Russia
Poland Poland
United States United States
-3.5 -3.5
6. 6.5
~~4.0~~9 3.6
Latin America Latin America
–7.4 –7.4
4.1 4.1
2.9 2.9
Brazil Brazil
1.4 1.4
-4.5 -4.5
3.0 3.0
Argentina Argentina
- -~~10.5~~
~~4.6~~
~~2.1~~9.9 6.1 1,8
Brazil Brazil
–4.5 –4.5
3.6 3.6
2.6 2.6
Mexico Mexico
-0.1 -0.1
-9.0 -9.0
3.7 3.7
Brazil Brazil
-4. -4.41
3.7 3.7
2. 2.75
Mexico Mexico
–8.5 –8.5
4.3 4.3
2.5 2.5
Argentina Argentina
-2.1 -2.1
-10.6 -10.6
4.9 4.9
China China
2.3 2.3
~~7.8~~
~~4.9~~8.5 5.8
Mid. East Mid. East
–3.2 –3.2
3.0 3.0
4.2 4.2
Mid. East Mid. East
0.1 0.1
-5.0 -5.0
2.1 2.1
India India
-7. -7.4
~~12.6~~
~~5.4~~7 9.9 8.2
Saudi Arabia Saudi Arabia
–3.9 –3.9
2.6 2.6
4.0 4.0
Saudi Arabia Saudi Arabia
0.3 0.3
-5.4 -5.4
2.0 2.0
Indonesia Indonesia
-2.1 -2.1
4. 4.97
5. 5.41
Africa Africa
–2.6 –2.6
3.2 3.2
3.9 3.9
Iran Iran
-6.8 -6.8
-3.7 -3.7
1.5 1.5
CRS- CRS-3133

OECD ~~Mar.~~May 2021
IMF Apr. 2021
World Bank Jan.

Projections

Projections

2021 Projections
2020 2020
2021 2021
2022 2022
2020 2020
2021 2021
2022 2022

2019 2019
2020 2020
2021 2021

S. Africa S. Africa
~~0.2~~
~~-8.1~~
~~3.1~~=7.0 3.8 2.5
Nigeria Nigeria
–3.2 –3.2
1.5 1.5
2.5 2.5
Egypt Egypt
5.6 5.6
3.6 3.6
2.7 2.7

S. Africa S. Africa
–7.5 –7.5
2.8 2.8
1.4 1.4
S. Asia S. Asia
4.4 4.4
-6.7 -6.7
3.3 3.3

World World Trade Trade
–9.6 –9.6
8.1 8.1
6.3 6.3
Volume Volume
India India
4.2 4.2
-9.6 -9.6
5.4 5.4

Oil prices Oil prices ($) ($)
–32.7 –32.7
21.2 21.2
–2.4 –2.4
Pakistan Pakistan
1.9 1.9
-1.5 -1.5
0.5 0.5

Bangladesh Bangladesh
8.2 8.2
2.0 2.0
1.6 1.6

Africa Africa
2.4 2.4
-3.7 -3.7
2.7 2.7

Nigeria Nigeria
2.2 2.2
-4.1 -4.1
1.1 1.1

S. Africa S. Africa
0.2 0.2
-7.8 -7.8
3.3 3.3

Angola Angola
-0.9 -0.9
-4.0 -4.0
0.9 0.9
Sources: OECD Economic Outlook, Interim Report March 2021, Organization for Economic Cooperation and Development., Organization for Economic Cooperation and Development. ~~December~~ December 2020; 2020; World Economic Outlook,
International Monetary Fund, April,International Monetary Fund, April, 2021; 2021; Global Economic Prospects,, ~~World~~ World Bank Group, January 2021, Bank Group, January 2021,
Note: The OECD forecast includes a single-wave scenario and a double-wave scenario The OECD forecast includes a single-wave scenario and a double-wave scenario in which the pandemic remainsin which the pandemic remains under control and recedesunder control and recedes and another in which and another in which
there is a second wave of the pandemic, The OECD forecast numbers is this table reflectthere is a second wave of the pandemic, The OECD forecast numbers is this table reflect the single-wave scenario. the single-wave scenario.

CRS- CRS-3234

Global Economic Effects of COVID-19

Among developing and emerging economies, the economic downturn is projected to most Among developing and emerging economies, the economic downturn is projected to most
negatively affect countries that rely on commodity exports to support annual economic growth. In negatively affect countries that rely on commodity exports to support annual economic growth. In
addition to lower prices for commodity exports and reduced global demand for exports, addition to lower prices for commodity exports and reduced global demand for exports,
developing countries are projected to be negatively affected by reduced remittances, weaker developing countries are projected to be negatively affected by reduced remittances, weaker
currencies and tighter financial conditions. currencies and tighter financial conditions.
The OECD also concluded that The OECD also concluded that
 Real per capita income in 2020 was projected to decline by 8% and 9.5%,  Real per capita income in 2020 was projected to decline by 8% and 9.5%,
respectively, depending on a one- or two-wave contagion, with substantial respectively, depending on a one- or two-wave contagion, with substantial
declines in declines in al all economies. Even with an economic recovery in 2021, real per economies. Even with an economic recovery in 2021, real per
capita income was projected to rise to only that of 2013. capita income was projected to rise to only that of 2013.
 Unemployment was projected to rise to its highest level in more than 25 years,  Unemployment was projected to rise to its highest level in more than 25 years,
while the average unemployment rate was projected to rise to 7.4% in 2021and while the average unemployment rate was projected to rise to 7.4% in 2021and
6.9% in 2022. The OECD concludes that, “scarring effects from job losses are 6.9% in 2022. The OECD concludes that, “scarring effects from job losses are
likelylikely to be felt particularly by younger workers and lower-to be felt particularly by younger workers and lower-~~skil ed~~skilled workers, with workers, with
attendant risks of many people becoming trapped in joblessness for an extended attendant risks of many people becoming trapped in joblessness for an extended
period.” period.”
 Net productive investment (business and government) was weak prior to the  Net productive investment (business and government) was weak prior to the
pandemic, pandemic, ~~fal ing~~falling behind the average rate of investment during the previous behind the average rate of investment during the previous
decade. Investment was forecast to contract by half as a percent of real GDP, decade. Investment was forecast to contract by half as a percent of real GDP,
~~fal ing~~falling from 4.7% to 2.3% and 2.0%, respectively for the one-wave and two- from 4.7% to 2.3% and 2.0%, respectively for the one-wave and two-
wave scenarios and increasing the risk of entrenched weak economic growth. wave scenarios and increasing the risk of entrenched weak economic growth.
Investment is also expected to be negatively affected by bankruptcies and Investment is also expected to be negatively affected by bankruptcies and
insolvencies among corporations and financial institutions.insolvencies among corporations and financial institutions.~~115~~122
The OECD estimated in its March 2020 forecast that increased direct and indirect economic costs The OECD estimated in its March 2020 forecast that increased direct and indirect economic costs
through global supply chains, reduced demand for goods and services, and declines in tourism through global supply chains, reduced demand for goods and services, and declines in tourism
and business travel mean that, “the adverse consequences of these developments for other and business travel mean that, “the adverse consequences of these developments for other
countries (non-OECD) are significant.”countries (non-OECD) are significant.”~~116~~123 Global trade, measured by trade volumes, slowed in the Global trade, measured by trade volumes, slowed in the
last quarter of 2019 and had been expected to decline further in 2020, as a result of weaker global last quarter of 2019 and had been expected to decline further in 2020, as a result of weaker global
economic activity associated with the pandemic, which is negatively affecting economic activity economic activity associated with the pandemic, which is negatively affecting economic activity
in various sectors, including airlines, hospitality, ports, and the shipping industry.in various sectors, including airlines, hospitality, ports, and the shipping industry.~~117~~
124 According to the OECD’s forecast According to the OECD’s forecast
 The greatest impact of the containment restrictions has been on retail and  The greatest impact of the containment restrictions has been on retail and
wholesale trade, and in professional and real estate services, although there are wholesale trade, and in professional and real estate services, although there are
notable differences between countries. notable differences between countries.
 Business closures may have reduced economic output in advanced and major  Business closures may have reduced economic output in advanced and major
emerging economies by 15% or more; other emerging economies could have emerging economies by 15% or more; other emerging economies could have
experienced a decline in output of 25%.experienced a decline in output of 25%.
 Countries dependent on tourism have been affected more severely, while  Countries dependent on tourism have been affected more severely, while
countries with large agricultural and mining sectors experienced less severe countries with large agricultural and mining sectors experienced less severe
effects.effects.

~~115 Ibid, p. 31.~~
~~116~~ 122 Ibid, p. 31. 123 OECD Interim Economic Assessment: COVID-19: The World Economy at Risk, Organization for Economic , Organization for Economic
Cooperation and Development. March 2, 2020, p. 2. Cooperation and Development. March 2, 2020, p. 2.
~~117~~124 Ibid, Ibid, p. 4. p. 4.
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 Economic effects likely varied across countries reflecting differences in the  Economic effects likely varied across countries reflecting differences in the
timing and degree of containment measures. timing and degree of containment measures.~~118~~
125 In addition, the OECD argued that China’s emergence as a global economic actor marked a In addition, the OECD argued that China’s emergence as a global economic actor marked a
significant departure from previous global health episodes. China’s growth, in combination with significant departure from previous global health episodes. China’s growth, in combination with
globalizationglobalization and the interconnected nature of economies through capital flows, supply chains, and the interconnected nature of economies through capital flows, supply chains,
and foreign investment, magnify the cost of containing the spread of the virus through and foreign investment, magnify the cost of containing the spread of the virus through
quarantines and restrictions on labor mobility and travel.quarantines and restrictions on labor mobility and travel.~~119~~126 China’s global economic role and China’s global economic role and
globalizationglobalization mean that trade has played a role in spreading the economic effects of COVID-19. mean that trade has played a role in spreading the economic effects of COVID-19.
More broadly, the economic effects of the pandemic were spread through three trade channels: (1) More broadly, the economic effects of the pandemic were spread through three trade channels: (1)
directly through supply chains as reduced economic activity spread from intermediate goods directly through supply chains as reduced economic activity spread from intermediate goods
producers to finished goods producers; (2) as a result of a drop producers to finished goods producers; (2) as a result of a drop ~~overal~~ overall in economic activity, in economic activity,
which reduced demand for goods in general, including imports; and (3) through reduced trade which reduced demand for goods in general, including imports; and (3) through reduced trade
with commodity exporters that supplied producers, which, in turn, reduced their imports and with commodity exporters that supplied producers, which, in turn, reduced their imports and
negatively affected trade and economic activity of exporters. negatively affected trade and economic activity of exporters.
The IMF Forecast
Having labeled the projected decline in global economic activity as the “Great Lockdown,” the Having labeled the projected decline in global economic activity as the “Great Lockdown,” the
IMF released an updated forecast in April 2021. The IMF concluded in its revised forecast that IMF released an updated forecast in April 2021. The IMF concluded in its revised forecast that
the global economy was improving, but cautioned that renewed waves of infections and new the global economy was improving, but cautioned that renewed waves of infections and new
variants of the virus could “pose concerns for the outlook.”variants of the virus could “pose concerns for the outlook.”~~120~~127 In addition, the IMF estimated in In addition, the IMF estimated in
its baseline projection that the global economy could decline by 3.5% in 2020, slightly less its baseline projection that the global economy could decline by 3.5% in 2020, slightly less
negative than its October forecast of -4.4%, before growing by 5.5% in 2021, revised up from its negative than its October forecast of -4.4%, before growing by 5.5% in 2021, revised up from its
previous forecast of 5.2%; global trade was projected to previous forecast of 5.2%; global trade was projected to ~~fal~~ fall in 2020 by 8.5% and oil prices were in 2020 by 8.5% and oil prices were
projected to projected to ~~fal~~ fall by 32.7%. For 2021, the IMF forecast indicates that global trade could grow by by 32.7%. For 2021, the IMF forecast indicates that global trade could grow by
8.4% and that oil prices could rebound by 21.2%. The forecast also indicates the economic 8.4% and that oil prices could rebound by 21.2%. The forecast also indicates the economic
recovery recovery ~~wil~~ will be uneven across countries depending on, “access to medical interventions, be uneven across countries depending on, “access to medical interventions,
effectiveness of policy support, exposure to cross-country effectiveness of policy support, exposure to cross-country ~~spil overs~~spillovers, and structural characteristics , and structural characteristics
entering the crisis.” India and China, in particular, are projected to outpace the rate of global entering the crisis.” India and China, in particular, are projected to outpace the rate of global
economic growth, experiencing a rate of growth in 2021 of 12.5% and 8.4%, respectively. economic growth, experiencing a rate of growth in 2021 of 12.5% and 8.4%, respectively.
The IMF’s forecasts reflect the impact of policy measures on the U.S. economy in the first half of The IMF’s forecasts reflect the impact of policy measures on the U.S. economy in the first half of
2020 that are larger than it had assumed in its earlier forecasts, a slower recovery in the second 2020 that are larger than it had assumed in its earlier forecasts, a slower recovery in the second
half of 2020, and the impact of U.S. spending measures adopted in 2021. Also, the IMF forecast half of 2020, and the impact of U.S. spending measures adopted in 2021. Also, the IMF forecast
reflects an estimated larger decline in consumption than previously assumed as consumers reflects an estimated larger decline in consumption than previously assumed as consumers
curtailed spending to increase their savings and the effects of social distancing on economic curtailed spending to increase their savings and the effects of social distancing on economic
activity. The IMF also stated that many countries have faced a multi-layered crisis that included a activity. The IMF also stated that many countries have faced a multi-layered crisis that included a
health crisis, a domestic economic crisis, health crisis, a domestic economic crisis, ~~fal ing~~falling external demand, capital outflows, and a collapse external demand, capital outflows, and a collapse
in commodity prices. In combination, these various effects have interacted in ways that made in commodity prices. In combination, these various effects have interacted in ways that made
forecasting difficult. As a result, the IMF indicated the forecast depend on a number of factors, forecasting difficult. As a result, the IMF indicated the forecast depend on a number of factors,
including including
 The length of the pandemic and required lockdowns.  The length of the pandemic and required lockdowns.
 Voluntary social distancing, which affects consumer spending. Voluntary social distancing, which affects consumer spending.

~~118~~ 125 Evaluating the Initial Impact of COVID Containment Measures on Activity, Organization for Economic Cooperation , Organization for Economic Cooperation
and Development, March 27, 2020. and Development, March 27, 2020.
~~119~~126 Goldin, Goldin, Ian, “COVID-19 ShowsIan, “COVID-19 Shows ~~How~~ How Globalization SpreadsGlobalization Spreads Contagion of All Kinds,”Contagion of All Kinds,” Financial Times, March 2, , March 2,
2020. https://www.ft.com/content/70300682-5d33-11ea-ac5e-df00963c20e6. 2020. https://www.ft.com/content/70300682-5d33-11ea-ac5e-df00963c20e6.
~~120~~ 127 World Economic Outlook, Update, International Monetary Fund, January 26, 2021. , International Monetary Fund, January 26, 2021.
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 The ability of displaced workers to secure employment, possibly in different  The ability of displaced workers to secure employment, possibly in different
sectors. sectors.
 The long-term impact of firm closures and unemployed workers leaving the  The long-term impact of firm closures and unemployed workers leaving the
workforce, compounding the ability of the economy to recover. workforce, compounding the ability of the economy to recover.
 The impact of changes to strengthen workplace safety—such as staggered work  The impact of changes to strengthen workplace safety—such as staggered work
shifts, enhanced hygiene and cleaning between shifts, new workplace practices shifts, enhanced hygiene and cleaning between shifts, new workplace practices
relating to proximity of personnel on production lines—which incur business relating to proximity of personnel on production lines—which incur business
costs.costs.
 Global supply chain reconfigurations that affect productivity as companies try to  Global supply chain reconfigurations that affect productivity as companies try to
enhance their resilience to supply disruptions. enhance their resilience to supply disruptions.
 The extent of cross-border  The extent of cross-border ~~spil overs~~spillovers from weaker external demand as from weaker external demand as ~~wel~~ well as as
funding funding ~~shortfal s.~~
shortfalls.  A resolution of the current disconnect between rising asset values, as reflected in  A resolution of the current disconnect between rising asset values, as reflected in
market indices, and forecasts of a synchronized downturn in global economic market indices, and forecasts of a synchronized downturn in global economic
activity. activity.
The IMF also forecasted that advanced economies as a group could experience an economic The IMF also forecasted that advanced economies as a group could experience an economic
contraction in 2020 of 4.9% of GDP, with the U.S. economy also projected to decline by 3.4%, contraction in 2020 of 4.9% of GDP, with the U.S. economy also projected to decline by 3.4%,
greater than the rate of decline experienced in 2009 during the financial crisis, as indicated in greater than the rate of decline experienced in 2009 during the financial crisis, as indicated in
Figure 6. The rate of economic growth in Euro area GDP in 2020 was projected to decline by . The rate of economic growth in Euro area GDP in 2020 was projected to decline by
7.2%, but growing by 4.2% in 2021. Most developing and emerging economies were projected to 7.2%, but growing by 4.2% in 2021. Most developing and emerging economies were projected to
experience a decline in the average rate of economic growth of 2.2% in 2020, reflecting experience a decline in the average rate of economic growth of 2.2% in 2020, reflecting
tightening global financial conditions and tightening global financial conditions and ~~fal ing~~falling global trade and commodity prices. In contrast, global trade and commodity prices. In contrast,
China was projected to experience China was projected to experience ~~smal~~ small, but positive rate of growth in 2020 of 2.3% and by 8.4% , but positive rate of growth in 2020 of 2.3% and by 8.4%
in 2021, while India’s rate of growth was projected to decline by 8.0% in 2020 and grow by in 2021, while India’s rate of growth was projected to decline by 8.0% in 2020 and grow by
12.5% in 2021. The IMF also argued that recovery of the global economy could be weaker than 12.5% in 2021. The IMF also argued that recovery of the global economy could be weaker than
projected as a result of lingering uncertainty about possible contagion, lack of confidence, and projected as a result of lingering uncertainty about possible contagion, lack of confidence, and
permanent closure of businesses and shifts in the behavior of firms and households.permanent closure of businesses and shifts in the behavior of firms and households.~~121~~
128 In an August 2020 analysis, the IMF indicated that fiscal and monetary actions by developed In an August 2020 analysis, the IMF indicated that fiscal and monetary actions by developed
economies provided developing and emerging market economies the abilityeconomies provided developing and emerging market economies the ability to avoid tightening to avoid tightening
monetary policy to stem capital outflows. Instead, the countries relied on movements in their monetary policy to stem capital outflows. Instead, the countries relied on movements in their
exchange rates to carry the brunt of the economic adjustment, while also following developed exchange rates to carry the brunt of the economic adjustment, while also following developed
economies in easing monetary policy, providing liquidityeconomies in easing monetary policy, providing liquidity injections, and using unconventional injections, and using unconventional
monetary policy measures such as purchases of government and corporate bonds. The IMF also monetary policy measures such as purchases of government and corporate bonds. The IMF also
indicated that a prolonged health crisis could push developing economies to take such measures indicated that a prolonged health crisis could push developing economies to take such measures
as price controls, export restrictions, and unorthodox measures to ease credit and financial as price controls, export restrictions, and unorthodox measures to ease credit and financial
regulation.regulation.~~122~~

~~121 Ibid, p. 9.~~
~~122 Mühleisen, Martin, T ryggvi Gudmundsson,~~ 129 128 Ibid, p. 9. 129 Mühleisen, Martin, Tryggvi Gudmundsson, and Hélène Poirson Ward, and Hélène Poirson Ward, COVID-19 Response in Emerging Market
~~Econom ies~~Economies: Conventional Policies and Beyond, International Monetary Fund, August International Monetary Fund, August 6, 2020. https://blogs.imf.org/6, 2020. https://blogs.imf.org/
2020/08/06/covid-19-response-in-emerging-market-economies-conventional-policies-and-beyond/?utm_medium=2020/08/06/covid-19-response-in-emerging-market-economies-conventional-policies-and-beyond/?utm_medium=
email&utm_source=govdelivery. email&utm_source=govdelivery.
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Figure 6. IMF Forecast, Gross Domestic Product
Percentage change Percentage change

Source: World Economic Outlook, Update,, International Monetary Fund, AprilInternational Monetary Fund, April 8, 2021. Created by CRS. 8, 2021. Created by CRS.
As a result of the various As a result of the various ~~chal enges~~challenges, the IMF qualified, the IMF qualified its forecast by arguing that its forecast by arguing that
A partial recovery is projected for 2021, with above trend growth rates, but the level of A partial recovery is projected for 2021, with above trend growth rates, but the level of
GDP will remain below theGDP will remain below the pre-viruspre-virus ~~trend, with considerable uncertainty about~~ trend, with considerable uncertainty about the the
strength of the rebound. Much worse growth outcomes are possible and maybe even likely. strength of the rebound. Much worse growth outcomes are possible and maybe even likely.
This would follow if the pandemic and containment This would follow if the pandemic and containment ~~measu res~~measures last longer, emerging and last longer, emerging and
developing economies are even more severely hit, tight financial conditions persist, or if developing economies are even more severely hit, tight financial conditions persist, or if
widespread scarring effects emerge due to firm closures and extended unemployment.widespread scarring effects emerge due to firm closures and extended unemployment.~~123~~130
The World Bank Forecast
In January 2021, the World Bank released its updated economic forecast, which indicated that In January 2021, the World Bank released its updated economic forecast, which indicated that
global economic growth would reach 4.3% in 2020 and 4.0% in 2021, compared with June 2020 global economic growth would reach 4.3% in 2020 and 4.0% in 2021, compared with June 2020
projections of -5.2% for 2020 and 4.2% in 2021, but rise by a slower rate of 3.8% in 2022.projections of -5.2% for 2020 and 4.2% in 2021, but rise by a slower rate of 3.8% in 2022.~~124~~131 The The
assessment also concluded that absent “substantial and effective reforms,” the global economy assessment also concluded that absent “substantial and effective reforms,” the global economy
would experience a decade of “disappointing growth.” The Bank concluded that the forecast was would experience a decade of “disappointing growth.” The Bank concluded that the forecast was
tilted toward downside risks. In particular, the Bank assessed that tilted toward downside risks. In particular, the Bank assessed that al all regions of the world remain regions of the world remain
vulnerable to renewed outbreaks of the virus, that there were logistical impediments to the vulnerable to renewed outbreaks of the virus, that there were logistical impediments to the
distribution of effective vaccines, that there are financial stresses in addition to elevated debt distribution of effective vaccines, that there are financial stresses in addition to elevated debt
levels and there is the possibility that the pandemic could have a more negative effect on incomes levels and there is the possibility that the pandemic could have a more negative effect on incomes
and growth.and growth.~~125~~132
An earlier forecast published on June 8, 2020 indicated the economic recession in 2020 would be An earlier forecast published on June 8, 2020 indicated the economic recession in 2020 would be
the deepest since World War II. It also estimated that the global economic recession would affect the deepest since World War II. It also estimated that the global economic recession would affect
90% of the world’s economies, a percentage that is greater than what was experienced during the 90% of the world’s economies, a percentage that is greater than what was experienced during the
Great Depression.Great Depression.~~126~~133 Similar to the OECD and the IMF forecasts, the World Bank argued that the Similar to the OECD and the IMF forecasts, the World Bank argued that the

~~123~~ ~~World~~ 130 World Economic Outlook, p. v. , p. v.
~~124~~131 Global Economic Prospects, World Bank Group, January 2021, p. xvii. , World Bank Group, January 2021, p. xvii.
~~125~~132 Ibid, Ibid, p. xviii. p. xviii.
~~126~~133 Global Economic Prospects, World Bank Group, June, World Bank Group, June 8, 2020, p. 15. 8, 2020, p. 15.
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economic impact of the global recession would economic impact of the global recession would ~~fal~~ fall most heavily on developing and emerging most heavily on developing and emerging
economies that rely on global trade, tourism, or remittances from abroad, and those that depend economies that rely on global trade, tourism, or remittances from abroad, and those that depend
on commodity exports. In addition, the World Bank forecasted that most emerging and on commodity exports. In addition, the World Bank forecasted that most emerging and
developing economies could experience rates of growth in 2020 that could be the lowest developing economies could experience rates of growth in 2020 that could be the lowest ~~overal~~
overall since the 1960s, with 90% of such economies expected to experience contractions in per capita since the 1960s, with 90% of such economies expected to experience contractions in per capita
incomes and many incomes and many ~~mil ions~~millions of people of people ~~fal ing~~falling back into poverty. back into poverty.
The World Bank also estimated that economic growth in advanced economies could decline by The World Bank also estimated that economic growth in advanced economies could decline by
5.4% in 2020 and recover to 3.3% in 2021, compared with the June forecast of 7.0% and 3.8%, 5.4% in 2020 and recover to 3.3% in 2021, compared with the June forecast of 7.0% and 3.8%,
respectively. The United States, the Euro area and Japan were respectively. The United States, the Euro area and Japan were al all estimated to experience a slower estimated to experience a slower
rate of growth in 2020 and rise at a rate of growth in 2020 and rise at a ~~smal er~~smaller rate in 2021 than the IMF forecast. rate in 2021 than the IMF forecast.
The global economic recession was projected to affect The global economic recession was projected to affect al all regions in a type of synchronous regions in a type of synchronous
downturn, with some regions faring worse than others. Differences in the magnitude of regional downturn, with some regions faring worse than others. Differences in the magnitude of regional
growth rates were attributed to the “scale of the domestic outbreak, vulnerability of the economy growth rates were attributed to the “scale of the domestic outbreak, vulnerability of the economy
to to ~~spil overs~~spillovers from global economic and financial stress the severity of preexisting from global economic and financial stress the severity of preexisting ~~chal enges~~challenges such such
as widespread poverty, and the degree to which debt levels constrain the fiscal response.”as widespread poverty, and the degree to which debt levels constrain the fiscal response.”~~127~~
134 According to the Bank’s baseline scenario, the projected economic recovery was expected to be According to the Bank’s baseline scenario, the projected economic recovery was expected to be
slow, reflecting shifts in consumption and work patterns as consumers attempted to rebuild slow, reflecting shifts in consumption and work patterns as consumers attempted to rebuild
savings and businesses strengthen balance sheets. The World Bank also issued both a downside savings and businesses strengthen balance sheets. The World Bank also issued both a downside
and an upside scenario in which government lockdown policies were required to remain in effect and an upside scenario in which government lockdown policies were required to remain in effect
for a longer or a shorter period of time, respectively. The downside scenario projects a contraction for a longer or a shorter period of time, respectively. The downside scenario projects a contraction
in global economic growth of 8% in 2020, as lockdown procedures are assumed to last an in global economic growth of 8% in 2020, as lockdown procedures are assumed to last an
additional three months, followed by a sluggish recovery. In contrast, the upside scenario projects additional three months, followed by a sluggish recovery. In contrast, the upside scenario projects
a decline in economic activity in 2020 of 4%, based on the assumption that economic activity a decline in economic activity in 2020 of 4%, based on the assumption that economic activity
rebounds quickly in the third quarter of 2020.rebounds quickly in the third quarter of 2020.~~128~~135
The Bank also concluded that global value chains (GVCs) had been important conduits through The Bank also concluded that global value chains (GVCs) had been important conduits through
which macroeconomic developments associated with the pandemic had been transmitted across which macroeconomic developments associated with the pandemic had been transmitted across
national borders. The economic effects of the pandemic were spread through trade linkages but national borders. The economic effects of the pandemic were spread through trade linkages but
also amplifiedalso amplified through quarantines, production shutdowns and border closures.through quarantines, production shutdowns and border closures.~~129~~136 Estimates by Estimates by
the World Bank indicated that nationalthe World Bank indicated that national policies adopted to blunt the spread of the virus affected policies adopted to blunt the spread of the virus affected
the global economy through four shocks: a decline in employment due to factory closures and the global economy through four shocks: a decline in employment due to factory closures and
social distancing, a trade shock as a result of an increase in the cost of traded goods, a tourism social distancing, a trade shock as a result of an increase in the cost of traded goods, a tourism
shock through a sharp contraction in international tourism, and a services shock. The magnitude shock through a sharp contraction in international tourism, and a services shock. The magnitude
of the shocks varies by country depended on various factors, including the composition of output, of the shocks varies by country depended on various factors, including the composition of output,
reliance on trade, and the level of GVC integration. reliance on trade, and the level of GVC integration.
Global Trade
According to a March 31, 2021According to a March 31, 2021, forecast update, the World Trade Organization (WTO) estimated forecast update, the World Trade Organization (WTO) estimated
that global trade volumes that global trade volumes ~~fel~~ fell by 5.3% in 2020, nearly half as much as the drop of 9.2% the WTO by 5.3% in 2020, nearly half as much as the drop of 9.2% the WTO
had forecasted in October 2020.had forecasted in October 2020.~~130~~137 The WTO concluded that the less negative outcome likely The WTO concluded that the less negative outcome likely
resulted from strong monetary and fiscal policy actions of many governments. In particular, the resulted from strong monetary and fiscal policy actions of many governments. In particular, the
~~WTO attributed the improved growth performance to fiscal policies that supported personal~~

~~127~~ 134 Global Economic Prospects June 8, 2020, p. 115. June 8, 2020, p. 115.
~~128~~135 Ibid, Ibid, p. 33. p. 33.
~~129~~136 Ibid, Ibid, p. 118. p. 118.
~~130~~137 World Trade Primed for Strong but Uneven Recovery After COVID-19 Pandemic Shock, World , World ~~T rade~~Trade Organization, Organization,
March 31, 2021. March 31, 2021.
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WTO attributed the improved growth performance to fiscal policies that supported personal incomes in advanced economies that, in turn, supported relatively higher levels of consumption incomes in advanced economies that, in turn, supported relatively higher levels of consumption
and global trade.and global trade.
~~Preliminary data for the fourth quarter indicate that the decline in global trade in 2020 was not as~~
~~severe as was estimated in the October 2020 forecast. Global trade volumes are projected to~~
~~partial y~~ Similarly, UNCTAD concluded in its May 2021 forecast that global trade increased by about 10% in the first quarter of 2021 year-over-year and that the rebound in global trade in 2021 would be faster than that experienced in the previous two recessions (2009, 2015). The growth in merchandise trade was reportedly being driven by exports from East Asian countries, while trade in services remained below recent averages. The forecast concluded that global trade would increase by 16% in 2021 relative to the second and third quarters of 2020.138 WTO preliminary fourth quarter 2020 data indicate the decline in global trade in 2020 was not as severe as it had estimated in its October 2020 forecast. Global trade volumes are projected to partially recover in 2021 by increasing at an annual growth rate of 7.2%. This forecast reflects a recover in 2021 by increasing at an annual growth rate of 7.2%. This forecast reflects a
marked revision from the WTO’s April 8, 2020 forecast that global trade volumes could decline marked revision from the WTO’s April 8, 2020 forecast that global trade volumes could decline
between 13% and 32% in 2020 as a result of the economic impact of COVID-19, as indicated in between 13% and 32% in 2020 as a result of the economic impact of COVID-19, as indicated in
Table 8. The updated forecast also indicates that the recovery in global trade in 2021 could be The updated forecast also indicates that the recovery in global trade in 2021 could be
noticeably slower than the WTO had projected in April 2020, primarily reflecting expectations of noticeably slower than the WTO had projected in April 2020, primarily reflecting expectations of
a slower recovery in global GDP in 2021. a slower recovery in global GDP in 2021.
In the first quarter of 2020, global exports and imports In the first quarter of 2020, global exports and imports ~~fel~~ fell by 7.8% and 6.8%, respectively, in by 7.8% and 6.8%, respectively, in
volume terms and 10.6% and 8.6% in value terms, reflecting the global economic impact of the volume terms and 10.6% and 8.6% in value terms, reflecting the global economic impact of the
pandemic, as indicated in pandemic, as indicated in Figure 7. In the second quarter, global exports and imports dropped by . In the second quarter, global exports and imports dropped by
11.6% and 11.1%, respectively, in volume and by 13.4% and 14.1%, in value terms. The WTO 11.6% and 11.1%, respectively, in volume and by 13.4% and 14.1%, in value terms. The WTO
also estimated that some trade sectors were affected more than others, particularly trade in fuels also estimated that some trade sectors were affected more than others, particularly trade in fuels
and mineral products and mineral products ~~fel~~ fell by 38%, while trade in agricultural products by 38%, while trade in agricultural products ~~fel~~ fell by 5%. In the third by 5%. In the third
quarter, however, export and import volumes rebounded, increasing by 15.7% and 12.9%, quarter, however, export and import volumes rebounded, increasing by 15.7% and 12.9%,
respectively, while export and import values increased by 20.7% and 18.3%, respectively. In the respectively, while export and import values increased by 20.7% and 18.3%, respectively. In the
fourth quarter, global exports and imports increased by 6.1% and 7.2%, respectively, in volume fourth quarter, global exports and imports increased by 6.1% and 7.2%, respectively, in volume
terms and by 9.7% and 9.6%, in value terms. Although the WTO has no comprehensive data on terms and by 9.7% and 9.6%, in value terms. Although the WTO has no comprehensive data on
trade in services, it concluded that the trend in trade in services likely matched that experienced in trade in services, it concluded that the trend in trade in services likely matched that experienced in
trade in merchandise goods. The updated forecast also projected that global GDP could decline at trade in merchandise goods. The updated forecast also projected that global GDP could decline at
an annual rate of 4.8% in 2020, but recover in 2021 with an annual growth rate of 4.9%.an annual rate of 4.8% in 2020, but recover in 2021 with an annual growth rate of 4.9%.
The WTO indicated in its forecast update that renewed economic lockdowns in response to a The WTO indicated in its forecast update that renewed economic lockdowns in response to a
resurgence of COVID-19 cases in the resurgence of COVID-19 cases in the ~~fal~~ fall of 2020 could shave an additionalof 2020 could shave an additional 2% to 3% percentage 2% to 3% percentage
points off the annual global GDP growth rate in 2021 and negatively affect global trade. In points off the annual global GDP growth rate in 2021 and negatively affect global trade. In
addition, the WTO estimated that uncertainty over additional fiscal measures and relatively high addition, the WTO estimated that uncertainty over additional fiscal measures and relatively high
rates of unemployment could reduce global merchandise trade growth by up to 4% in 2021. By rates of unemployment could reduce global merchandise trade growth by up to 4% in 2021. By
region, the WTO forecast indicated that Europe and North America could experience the largest region, the WTO forecast indicated that Europe and North America could experience the largest
declines in the rate of growth of trade volumes, while Asia would experience the declines in the rate of growth of trade volumes, while Asia would experience the ~~smal est~~smallest decline decline
in the growth rate of trade volumes, primarily based on a projected increase in trade by China. in the growth rate of trade volumes, primarily based on a projected increase in trade by China.
The WTO reported in its June 29, 2020 report on G-20 trade measures that during the mid- The WTO reported in its June 29, 2020 report on G-20 trade measures that during the mid-
October 2019 to mid-May 2020 period, countries had made “significant” progress in facilitating October 2019 to mid-May 2020 period, countries had made “significant” progress in facilitating
imports, including products related to COVID-19.imports, including products related to COVID-19.~~131~~139 According to the report, various According to the report, various
governments governments ~~initial y~~ initially responded to the pandemic by introducing new trade restrictive measures, responded to the pandemic by introducing new trade restrictive measures,
90% of which were export bans on medical products, such as surgical masks, gloves, medicine 90% of which were export bans on medical products, such as surgical masks, gloves, medicine
and disinfectant. Since then, the WTO indicated that G20 economies have repealed 36% of the and disinfectant. Since then, the WTO indicated that G20 economies have repealed 36% of the
~~restrictions and lowered barriers to imports of many pandemic-related products. As of mid-May~~
~~2020, the WTO reported that 65 of the 93 pandemic-related trade measures implemented during~~
~~the monitoring period were of a trade-facilitating measures, rather than trade-restricting~~
~~measures.132~~

~~131 WT O Report on G20 Shows~~ 138 Global Trade Update, United Nations Conference on Trade and Development, May, 2021. 139 WTO Report on G20 Shows Moves to Facilitate Imports Even as Moves to Facilitate Imports Even as ~~T rade~~Trade Restrictions Remain Widespread, Restrictions Remain Widespread, World
Trade Organization, June 29, 2020. https://www.wto.org/english/news_e/news20_e/trdev_29jun20_e.htm. June 29, 2020. https://www.wto.org/english/news_e/news20_e/trdev_29jun20_e.htm.
~~132 Report on G20 Trade Measures (Mid-October 2019 to Mid-May 2020), World T rade Organization, June 29, 2020.~~
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Congressional Research Service 40 Global Economic Effects of COVID-19 restrictions and lowered barriers to imports of many pandemic-related products. As of mid-May 2020, the WTO reported that 65 of the 93 pandemic-related trade measures implemented during the monitoring period were of a trade-facilitating measures, rather than trade-restricting measures.140 Figure 7. WTO Estimates of Quarterly Global Exports and Imports,
Volumes and Values

Source: WorldWorld Trade Organization, March 31, 2021. Created by CRS. Trade Organization, March 31, 2021. Created by CRS.
In its April 2020 forecast, the WTO presented two estimates of global growth, reflecting the high In its April 2020 forecast, the WTO presented two estimates of global growth, reflecting the high
degree of uncertainty concerning the length and economic impact of the pandemic. According to degree of uncertainty concerning the length and economic impact of the pandemic. According to
the WTO, the more optimistic scenario assumed that trade volumes would recover quickly in the the WTO, the more optimistic scenario assumed that trade volumes would recover quickly in the
second half of 2020 to their pre-pandemic trend, or that the global economy would experience a second half of 2020 to their pre-pandemic trend, or that the global economy would experience a
V-shaped recovery. In comparison, the more pessimistic scenario assumed there would be a V-shaped recovery. In comparison, the more pessimistic scenario assumed there would be a
partial recovery in global trade that lasted into 2021, or that global economic activity would partial recovery in global trade that lasted into 2021, or that global economic activity would
experience a U-shaped recovery. The updated forecast reflects the WTO’s estimate that global experience a U-shaped recovery. The updated forecast reflects the WTO’s estimate that global
trade volumes in 2020 trade volumes in 2020 ~~wil not fal~~ will not fall by as much as it had projected under both of the scenarios in by as much as it had projected under both of the scenarios in
its Aprilits April 2020 forecast. The WTO concluded, however, that the impact on global trade volumes 2020 forecast. The WTO concluded, however, that the impact on global trade volumes
could exceed the drop in global trade during the height of the 2008-2009 financial crisis.could exceed the drop in global trade during the height of the 2008-2009 financial crisis.~~133~~
141 Table 8. WTO Forecast: Merchandise Trade Volume and Real GDP 2020-2021
Annual percentage change Annual percentage change
Forecast Forecast

Optimistic Optimistic
Pessimistic Pessimistic
scenario scenario
Forecast scenario Forecast scenario
scenario (April scenario (April
scenario (April scenario (April
(October (October

2020) 2020)
2020) 2020)
2020) 2020)
(March 2021 (March 2021

2020 2020
2021 2021
2020 2020
2021 2021
2020 2020
2021 2021
2020 2020
2021 2021
2022 2022
Volume of world
merchandise trade
-12.9% -12.9%
21.3% 21.3%
-31.9% -31.9%
24.0% 24.0%
-9.2% -9.2%
7.2% 7.2%
-5.3% -5.3%
8.0% 8.0%
4.0% 4.0%
Exports

140 Report on G20 Trade Measures (Mid-October 2019 to Mid-May 2020), World Trade Organization, June 29, 2020. 141 Trade Set to Plunge as COVID-19 Pandemic Upends Global Economy, World Trade Organization, April 8, 2020. https://www.wto.org/english/news_e/pres20_e/pr855_e.htm. Congressional Research Service 41 Global Economic Effects of COVID-19 Forecast Optimistic Pessimistic scenario Forecast scenario scenario (April scenario (April (October 2020) 2020) 2020) (March 2021 North America North America
-17.1 -17.1
23.7 23.7
-40.9 -40.9
19.3 19.3
-14.7 -14.7
10.7 10.7
-8.5 -8.5
7.7 7.7
5.1 5.1
South and Central America South and Central America
-12.9 -12.9
18.6 18.6
-31.3 -31.3
14.3 14.3
-7.7 -7.7
5.4 5.4
-4.5 -4.5
3.2 3.2
2.7 2.7
Europe Europe
-12.2 -12.2
20.5 20.5
-32.8 -32.8
22.7 22.7
-11.7 -11.7
8.2 8.2
-8.0 -8.0
8.3 8.3
3.9 3.9
CIS CIS

-3.9 -3.9
4.4 4.4
1.9 1.9
Africa Africa

-8.1 -8.1
8.1 8.1
3 3

~~133 Trade Set to Plunge as COVID-19 Pandemic Upends Global Economy, World T rade Organization, April 8, 2020.~~
~~https://www.wto.org/english/news_e/pres20_e/pr855_e.htm.~~
~~Congressional Research Service~~

39

~~Global Economic Effects of COVID-19~~

~~Forecast~~

~~Optimistic~~
~~Pessimistic~~
~~scenario~~
~~Forecast scenario~~
~~scenario (April~~
~~scenario (April~~
~~(October~~

~~2020)~~
~~2020)~~
~~2020)~~
~~(March 2021~~

~~2020~~
~~2021~~
~~2020~~
~~2021~~
~~2020~~
~~2021~~
~~2020~~
~~2021~~
~~2022~~
Middle East Middle East

-8.2 -8.2
12.4 12.4
5.0 5.0
Asia Asia
-13.5 -13.5
24.9 24.9
-36.2 -36.2
36.1 36.1
-4.5 -4.5
5.7 5.7
0.3 0.3
8.4 8.4
3.5 3.5
Other regions Other regions
-8.0 -8.0
8.6 8.6
-8.0 -8.0
9.3 9.3
-9.5 -9.5
6.1 6.1

Imports

North America North America
-14.5 -14.5
27.3 27.3
-33.8 -33.8
29.5 29.5
-8.7 -8.7
6.7 6.7
-6.1 -6.1
11.4 11.4
4.9 4.9
South and Central America South and Central America
-22.2 -22.2
23.2 23.2
-43.8 -43.8
19.5 19.5
-13.5 -13.5
6.5 6.5
-9.3 -9.3
8.1 8.1
3.7 3.7
Europe Europe
-10.3 -10.3
19.9 19.9
-28.9 -28.9
24.5 24.5
-10.3 -10.3
8.7 8.7
-7.6 -7.6
8.4 8.4
3.7 3.7
CIS CIS

-4.7 -4.7
5.7 5.7
2.7 2.7
Africa Africa

-8.8 -8.8
5.5 5.5
4 4
Middle East Middle East

-11.3 -11.3
7.2 7.2
4.5 4.5
Asia Asia
-11.8 -11.8
23.1 23.1
-31.5 -31.5
25.1 25.1
-4.4 -4.4
6.2 6.2
-1.3 -1.3
5.7 5.7
4.4 4.4
Other regions Other regions
-10 -10
13.6 13.6
-22.6 -22.6
18.0 18.0
-16.0 -16.0
5.6 5.6

World Real GDP at
market exchange rates
-2.5 -2.5
7.4 7.4
-8.8 -8.8
5.9 5.9
-4.8 -4.8
4.9 4.9
-3.8 -3.8
5.1 5.1
3.8 3.8
North America North America
-3.3 -3.3
7.2 7.2
-9.0 -9.0
5.1 5.1
-4.4 -4.4
3.9 3.9
-4.1 -4.1
5.9 5.9
3.8 3.8
South and Central America South and Central America
-4.3 -4.3
6.5 6.5
-11 -11
4.8 4.8
-7.5 -7.5
3.8 3.8
-7.8 -7.8
3.8 3.8
3.0 3.0
Europe Europe
-3.5 -3.5
6.6 6.6
-10.8 -10.8
5.4 5.4
-7.3 -7.3
5.2 5.2
-7.1 -7.1
3.7 3.7
3.6 3.6
CIS CIS

-0.5 -0.5
1.0 1.0
1.2 1.2
Africa Africa

-2.9 -2.9
2.6 2.6
3.8 3.8
Middle East Middle East

-6.0 -6.0
2.4 2.4
3.5 3.5
Asia Asia
-0.7 -0.7
8.7 8.7
-7.1 -7.1
7.4 7.4
-2.4 -2.4
5.9 5.9
-1.1 -1.1
6.1 6.1
4.1 4.1
Other regions Other regions
-1.5 -1.5
6.0 6.0
-6.7 -6.7
5.2 5.2
-5.5 -5.5
3.5 3.5

Source: World Trade Primed for Strong but Uneven Recovery After COVID-19 Pandemic Shock,, World Trade World Trade
Organization, MarchOrganization, March, 31, 2021. 31, 2021.
Note: Data for 2021 and 2022 are projections; GDP projections are based on scenarios Data for 2021 and 2022 are projections; GDP projections are based on scenarios simulated with the simulated with the
WTO Global Trade Model. In the April and October forecasts, the CIS countries, Africa,WTO Global Trade Model. In the April and October forecasts, the CIS countries, Africa, and the Middle East and the Middle East
were grouped together as “Other Regions.. CIS is the Commonwealthwere grouped together as “Other Regions.. CIS is the Commonwealth of Independent States: Azerbaijan, of Independent States: Azerbaijan,
Armenia,Armenia, Belarus, Georgia,Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan,Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan, and Turkmenistan, Uzbekistan, and
Ukraine. Ukraine.
The WTO’s various forecasts indicate that The WTO’s various forecasts indicate that al all geographic regions could experience a rise in trade geographic regions could experience a rise in trade
volumes in 2021 and 2022 compared with 2020, while North America and Europe could volumes in 2021 and 2022 compared with 2020, while North America and Europe could
experience a percentage increase in trade volumes in 2021 comparable to the decline in volumes experience a percentage increase in trade volumes in 2021 comparable to the decline in volumes
in percentage terms experienced in 2020. The forecast also projected that sectors with extensive in percentage terms experienced in 2020. The forecast also projected that sectors with extensive
value chains, such as automobile products and electronics, could experience the steepest declines value chains, such as automobile products and electronics, could experience the steepest declines
Congressional Research Service 42 Global Economic Effects of COVID-19 in 2020. Although services were not included in the WTO forecast, this segment of the economy in 2020. Although services were not included in the WTO forecast, this segment of the economy
could experience the largest disruption as a consequence of restrictions on travel and transport could experience the largest disruption as a consequence of restrictions on travel and transport
and the closure of retail and hospitality establishments. Such services as information technology, and the closure of retail and hospitality establishments. Such services as information technology,
however, were growing to satisfy the demands of employees working from home.however, were growing to satisfy the demands of employees working from home.
~~Congressional Research Service~~

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~~Global Economic Effects of COVID-19~~

The pandemic also raised questions about the costs and benefits of the global supply chains that The pandemic also raised questions about the costs and benefits of the global supply chains that
businesses have erected over the past three decades. Evidence indicates that growth in supply businesses have erected over the past three decades. Evidence indicates that growth in supply
chains had slowed prior to the pandemic, but there is little consensus on the long-term impact of chains had slowed prior to the pandemic, but there is little consensus on the long-term impact of
the crisis. According to a December 2020 report by DHL and the New York University Stern the crisis. According to a December 2020 report by DHL and the New York University Stern
Scholl of Business, global interconnectedness comprises four distinct types of transactions: trade, Scholl of Business, global interconnectedness comprises four distinct types of transactions: trade,
capital, information, and people.capital, information, and people.~~134~~142 This analysis concluded that the pandemic affected cross- This analysis concluded that the pandemic affected cross-
border movements of people in response to travel restrictions and in trade through a sharp border movements of people in response to travel restrictions and in trade through a sharp
contraction in the global economy. Capital flows also dropped during 2020 as a result of lower contraction in the global economy. Capital flows also dropped during 2020 as a result of lower
corporate earnings, business travel restrictions, negative business prospects, and concerns over corporate earnings, business travel restrictions, negative business prospects, and concerns over
global supply chains.global supply chains.~~135~~143
In some cases, businesses have been reassessing their exposure to the risks posed by extensive In some cases, businesses have been reassessing their exposure to the risks posed by extensive
supply chains that supply chains that ~~potential y~~potentially are vulnerable to numerous points of disruption. Also, some are vulnerable to numerous points of disruption. Also, some
governments have been assessing the risks supply chains pose to national supplies of items governments have been assessing the risks supply chains pose to national supplies of items
considered to be important to national security as a result of firms locating or shifting production considered to be important to national security as a result of firms locating or shifting production
offshore. For multinational businesses, changing suppliers and shifting production locations can offshore. For multinational businesses, changing suppliers and shifting production locations can
be be ~~especial y~~ especially costly for some firms and can introduce additional risks.costly for some firms and can introduce additional risks.~~136~~144 In addition, businesses In addition, businesses
may be reluctant to relocate from production locations, such as China, that not only serve as may be reluctant to relocate from production locations, such as China, that not only serve as
production platforms, but are also important markets for their output. For instance, the Bureau of production platforms, but are also important markets for their output. For instance, the Bureau of
Economic Analysis (BEA)Economic Analysis (BEA) reports that 10% of the global sales of the majority-owned foreign reports that 10% of the global sales of the majority-owned foreign
affiliates of U.S. parent companies is shipped back to the U.S. parent company. In contrast, 60% affiliates of U.S. parent companies is shipped back to the U.S. parent company. In contrast, 60%
of such sales take place in the foreign country where the affiliate is located and another 30% is of such sales take place in the foreign country where the affiliate is located and another 30% is
shipped to other foreign countries in close proximity. For China, about 6% of the sales of the shipped to other foreign countries in close proximity. For China, about 6% of the sales of the
majority-owned foreign affiliates of U.S. parent companies are shipped to the U.S. parent, while majority-owned foreign affiliates of U.S. parent companies are shipped to the U.S. parent, while
82% is sold in China and another 12% is shipped to other foreign countries.82% is sold in China and another 12% is shipped to other foreign countries.~~137~~145
Beyond the current Beyond the current ~~chal enges~~challenges the pandemic poses to global supply chains, a recent report the pandemic poses to global supply chains, a recent report
catalogues a number of risks that can disrupt supply chains.catalogues a number of risks that can disrupt supply chains.~~138~~146 The report estimates that 16% to The report estimates that 16% to
26% of global goods exports, worth $2.9 26% of global goods exports, worth $2.9 ~~tril ion to $4.6 tril ion, potential y~~trillion to $4.6 trillion, potentially could move to new could move to new
countries over the next five years “if companies restructure their supplier networks.” The report countries over the next five years “if companies restructure their supplier networks.” The report
concluded, however, that the pandemic so far had not reshaped global production networks in concluded, however, that the pandemic so far had not reshaped global production networks in
dramatic ways, because the networks reflect, “economic logic, hundreds of dramatic ways, because the networks reflect, “economic logic, hundreds of ~~bil ions~~billions of dollars’ of dollars’
worth of investment, and long-standing supplier relationships.”worth of investment, and long-standing supplier relationships.”~~139~~147 In addition, the report In addition, the report
concluded that although firms can shift production locations, the interconnected nature of these concluded that although firms can shift production locations, the interconnected nature of these
chains “limits the economic case for making large-scale changes in their physical location.”chains “limits the economic case for making large-scale changes in their physical location.”~~140~~
~~Instead of shifting production locations, firms are considering a number of strategies to withstand~~
~~the chal enges of a global economy by increasing sources of raw materials and critical materials,~~

~~134~~148 142 Altman, Steven A. and Phillip Bastian, Altman, Steven A. and Phillip Bastian, DHL Global Connectedness Index 2020, 2020 , 2020
~~135~~143 Ibid, Ibid, p. 32. p. 32.
~~136~~144 Beattie, Alan, Will Coronavirus Pandemic Finally Kill Off Global Beattie, Alan, Will Coronavirus Pandemic Finally Kill Off Global ~~Supply~~ Supply Chains?, Chains?, Financial Times, May 28, 2020. , May 28, 2020.
https://www.ft.com/content/4ee0817a-809f-11ea-b0fb-13524ae1056b. https://www.ft.com/content/4ee0817a-809f-11ea-b0fb-13524ae1056b.
~~137~~145 Activities of U.S. Multinational Enterprises: U.S. Parent Companies and Their Foreign Affiliates, ~~Preliminary~~ Preliminary 2017
Statistics, Bureau, Bureau of Economic Analysis, Augustof Economic Analysis, August 23, 2019, 23, 2019, ~~T able~~Table II.E.2. https://www.bea.gov/news/2019/activities-us- II.E.2. https://www.bea.gov/news/2019/activities-us-
multinational-enterprises-2017. multinational-enterprises-2017.
~~138~~ 146 Risk, Resilience, and Rebalancing in Global Value Chains, McKinsey Global, McKinsey Global Institute, August 2020, p. 1 Institute, August 2020, p. 1
~~139~~147 Ibid, Ibid, p. 2. p. 2.
~~140~~148 Ibid, Ibid, In Brief. In Brief.
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Global Economic Effects of COVID-19

Instead of shifting production locations, firms are considering a number of strategies to withstand the challenges of a global economy by increasing sources of raw materials and critical materials, expanding and diversifying supplier bases, investing in suppliers to upgrade their capabilities, and expanding and diversifying supplier bases, investing in suppliers to upgrade their capabilities, and
~~regionalizing~~ regionalizing supply chains, among a number of possible actions.supply chains, among a number of possible actions.~~141~~149
Amidst the decline in global trade, 15 countries, including Brunei, Colombia, Indonesia, Laos, Amidst the decline in global trade, 15 countries, including Brunei, Colombia, Indonesia, Laos,
Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam. Australia, China, Japan, New Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam. Australia, China, Japan, New
Zealand, and South Korea, signed the Regional Comprehensive Economic Partnership (RCEP) on Zealand, and South Korea, signed the Regional Comprehensive Economic Partnership (RCEP) on
November 15, 2020, to create November 15, 2020, to create ~~potential y~~potentially one of the largest free trade agreements. one of the largest free trade agreements.~~142~~150 The The
agreement needs to be ratified by at least six ASEAN countries and three non-ASEAN countries. agreement needs to be ratified by at least six ASEAN countries and three non-ASEAN countries.
This agreement follows by two years the conclusion of negotiations over the Comprehensive and This agreement follows by two years the conclusion of negotiations over the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP) that replaced the proposed Trans-Progressive Agreement for Trans-Pacific Partnership (CPTPP) that replaced the proposed Trans-
Pacific Partnership agreement after the United States pulled out of the negotiations. The Pacific Partnership agreement after the United States pulled out of the negotiations. The
agreement includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, agreement includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand,
Peru, Singapore, and Vietnam. The UK reportedly has applied to join the trade agreement. Peru, Singapore, and Vietnam. The UK reportedly has applied to join the trade agreement.
Global Foreign Investment
~~According to the United Nations Conference on Trade and Development (UNCTAD), global~~
~~foreign direct investment inflows fel by 42% in 2020 compared with the same period in 2019,~~
~~with continued weakness expected in 2021, as indicated in Figure 8.143 Global inflow totals were~~
~~driven in large part by the decline in foreign investment inflows to developed economies, which~~
~~fel by 69%. Inflows to Europe fel to -$4 bil ion, compared with inflows in 2019 of $344 bil ion.~~
~~In contrast, inflows to developing economies fel by 12% over the period, aided in large part by~~
~~positive inflows to China. Investment flows to developing Asia, at $476 bil ion, dropped by 4%~~
~~compared with 2019 and accounted for about half the total $859 bil ion global direct investment~~
~~inflows in 2020.~~

~~141 Risk, Resilience, and Rebalancing in Global Value Chains, p. 16.~~
~~142 Shih, Gerry, and Simon Denyer, As T rump Era Ends, Massive New Asian T rade Deal Leaves U.S.~~ Similar to the negative impact policy measures to control the spread of COVID-19 have had on global trade, the measures negatively affected global foreign investment flows. In addition, national governments have implemented new or expanded foreign investment policies related to national security, while attempting to navigate between legitimate national security risks and policies that some policymakers argue are fundamentally protectionist. During 2020, various governments adopted measures at both the national and international level to address the health and economic consequences of the COVID-19 pandemic, as indicated in Table 9.151 According to UNCTAD, these measure include incentives to increase domestic production of vaccines and personal protective equipment (PPE) and direct state intervention through nationalization or through directives to increase output at facilities that currently produced PPE materials or to initiate production at other facilities. EU members are moving independently to amend current legislation or adopt new rules to expand their review of foreign investments for national security reasons, particularly rules related to acquisitions of firms involved in the production of medical care and health. Also, Australia, Canada, and Japan expanded the range of foreign investments they screen In some cases, policy changes include enhanced foreign investment screening of foreign investment for “public interest” reasons that may remain after the pandemic crisis.152 The UN also reported that governments adopted new regulations across a spectrum of areas and also supported joint international efforts to address public aspects of the pandemic, as indicated in Table 10. State intervention has spanned policy approaches from investment incentives to promote the production of medicines and medical equipment, assistance to affected firms and industries, measures to circumvent intellectual property rights restrictions, and international efforts to speed up vaccine production and cross-border sharing. The shift in approach toward the national security dimensions of foreign investment, especially by developed economies, has tended to blur the distinction between foreign investment, trade, and national security and reflects the evolving nature of the concept of national security relative to 149 Risk, Resilience, and Rebalancing in Global Value Chains, p. 16. 150 Shih, Gerry, and Simon Denyer, As Trump Era Ends, Massive New Asian Trade Deal Leaves U.S. on the Sidelines, on the Sidelines,
Washington Post, November 16, 2020. https://www.washingtonpost.com/world/asia_pacific/trade-china-trump-obama- November 16, 2020. https://www.washingtonpost.com/world/asia_pacific/trade-china-trump-obama-
asia/2020/11/16/f02f43e4-27b7-11eb-9c21-3cc501d0981f_story.html. asia/2020/11/16/f02f43e4-27b7-11eb-9c21-3cc501d0981f_story.html.
~~143 Investment Trends Monitor, United Nations Conference on T rade and Development, January, 2021.~~
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~~Figure 8. Foreign Direct Investment Inflows by Major Country Groups~~
~~Inflows in $ bil ions~~

Source: United Nations Conference on Trade and Development. Created by CRS.
~~As indicated in Figure 9, al major geographic areas except Asia experienced a drop in foreign~~
~~direct investment inflows in 2020 compared with 2019.144 This drop in foreign investment was~~
~~apparent in the three major types of foreign investment: cross-border investments; greenfield~~
~~investment, or investment in new business activity; and international project finance. In the three~~
~~types of investment activity, global activity fel by 10%, 35%, and 2%, respectively in 2020~~
~~compared with 2019. Cross-border merger and acquisition (M&A) activity increased by 31% and~~
~~147%, respectively, in Asia and Transition economies, but declined by 11% in developed~~
~~economies and 67% in Latin America. International project finance, reportedly an important~~
~~source of infrastructure finance, fel global y by 2%, but rose by 7% in developed economies,~~
~~primarily in Europe, and by 17% in Asia.~~

~~144 Investment Trends Monitor, United Nations Conference on T rade and Development, January 24, 2021.~~
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~~Global Economic Effects of COVID-19~~

~~Figure 9. Global Foreign Direct Investment Inflows~~
~~In bil ions of dol ars and percentage change~~

Source: United Nations Conference on Trade and Development. Created by CRS.
~~For the United States, BEA reported that U.S. direct investment abroad (outflows) and foreign~~
~~direct investment in the United States (inflows) fel by 74% and 89%, respectively, in the first~~
~~half of 2020 compared with the first half of 2019, as indicated in Figure 10.145 The lower~~
~~investment numbers reflect, in part, the lower values for equity, mirroring the declines in major~~
~~equity markets in the first half of 2020. For 2020 as a whole, U.S. direct investment outflows fel~~
~~by 19%, while foreign direct investment inflows fel by 40%.~~
~~Figure 10. U.S. Direct Investment; Inflows and Outflows~~

Source: Bureau of Economic Analysis, Created by CRS.

~~145 U.S. International Transactions, Fourth Quarter and Year 2020, Bureau of Economic Analysis, March 23, 2020.~~
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~~Global Economic Effects of COVID-19~~

Notes: In the balance of payments, direct investment outflows are represented as a negative value, indicating an
~~outflow and direct investment inflows are represented as positive values. For presentation purposes, the signs~~
~~for direct investment abroad, or outflows, have been reversed.~~
~~Economic Policy Challenges~~
~~The chal enge for policymakers has been one of implementing targeted policies that address what~~
~~had been expected to be short-term problems without creating distortions in economies that can~~
~~outlast the impact of the virus itself. Policymakers, however, have been overwhelmed by the~~
~~quickly changing nature of the global health crisis that turned into a global trade and economic~~
~~crisis. During the initial stages of the pandemic, policymakers weighed the impact of policies that~~
~~addressed the immediate economic effects at the expense of longer-term considerations such as~~
~~debt accumulation. As the pandemic persisted, however, policymakers adopting additional fiscal~~
~~or monetary measures, in particular, that could complicate the economic impact of the policies~~
~~after the pandemic resides. Initial y, many policymakers felt constrained in their ability to respond~~
~~to the crisis as a result of limited flexibility for monetary and fiscal support within conventional~~
~~standards, given the broad-based synchronized slowdown in global economic growth, especial y~~
~~in manufacturing and trade, that had developed prior to the viral outbreak. The pandemic has also~~
~~affected global politics as world leaders cancel ed international meetings,146 nations began~~
~~competing for medical supplies, and some nations reportedly stoked conspiracy theories that~~
~~shifted blame to other countries.147~~
~~Initial y, the economic effects of the virus were expected to be short-term supply issues as factory~~
~~output fel because workers were quarantined to reduce the spread of the virus through social~~
~~interaction. The drop in economic activity, initial y in China, has had international repercussions~~
~~as firms experienced delays in supplies of intermediate and finished goods through supply chains.~~
~~Concerns grew, however, that virus-related supply shocks created more prolonged and wide-~~
~~ranging demand shocks as reduced activity by consumers and businesses leads to a lower rate of~~
~~economic growth. As demand shocks unfold, businesses experience reduced activity and profits~~
~~and potential y escalating and binding credit and liquidity constraints. While manufacturing firms~~
~~experienced supply chain shocks, reduced consumer activity through social distancing affected~~
~~the services sector of the economy, which accounts for two-thirds of annual U.S. economic~~
~~output. In this environment, manufacturing and services firms initial y tended to hoard cash,~~
~~which affected market liquidity. In response, the Federal Reserve, along with other central banks,~~
~~lowered interest rates where possible and expanded lending facilities to provide liquidity to~~
~~financial markets and to firms potential y facing insolvency.~~
~~As the economic effects have persisted, their impact has spread through trade and financial~~
~~linkages to an ever-broadening group of countries, firms and households. These growing~~
~~economic effects potential y increased liquidity constraints and credit market tightening in global~~
~~financial markets as firms hoarded cash, with negative fal out effects on economic growth. At the~~
~~same time, financial markets had been factoring in an increase in government bond issuance in~~
~~the United States, Europe, and elsewhere as government debt levels began rising to meet~~
~~spending obligations during an expected economic recession and increased fiscal spending to~~
~~fight the effects of COVID-19. Unlike the 2008-2009 financial crisis, reduced demand by~~

~~146 T aylor, Adam, T eo Armus, and Rick Noak, “ Live updates: COVID-19 T urmoil Widens as U.S. Death T oll Mounts;~~
~~Xi Cancels Japan T rip, Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/COVID-~~
~~19-live-updates/.~~
~~147 Shih, Gerry, “ China Is Subtly Stoking COVID-19 Conspiracy T heories T hat Blame the U.S. for Outbreak,”~~
Washington Post, March 5, 2020. https://www.washingtonpost.com/world/2020/03/05/COVID-19-live-updates/.
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~~Global Economic Effects of COVID-19~~

~~consumers, labor market issues, and a reduced level of activity among businesses, rather than~~
~~risky trading by global banks, led to corporate credit issues and potential insolvency. These~~
~~market dynamics led some observers at the time to question if these events marked the beginning~~
~~of a full-scale global financial crisis.148~~
~~Liquidity and credit market issues presented policymakers with a different set of chal enges than~~
~~addressing supply-side constraints. As a result, the focus of government policy expanded from a~~
~~health crisis to macroeconomic and financial market issues that were addressed through a~~
~~combination of monetary, fiscal, and other policies, including border closures, quarantines, and~~
~~restrictions on social interactions. Essential y, while businesses attempted to address worker and~~
~~output issues at the firm level, national leaders attempted to implement fiscal policies to prevent~~
~~economic growth from contracting sharply by assisting workers and businesses that faced~~
~~financial strains, and central bankers adjusted monetary policies to address mounting credit~~
~~market issues.~~
~~In the initial stages of the health crisis, households did not experience the same kind of wealth~~
~~losses they saw during the 2008-2009 financial crisis when the value of their primary residence~~
~~dropped sharply. However, as unemployment numbers rose, job losses resulted in defaults on~~
~~mortgages and delinquencies on rent payments, requiring some financial institutions to provide~~
~~loan forbearance or other mechanism to provide financial assistance. In turn, mortgage defaults~~
~~threatened to negatively affect the market for mortgage-backed securities, the availability of funds~~
~~for mortgages, and negatively affect the overal rate of economic growth. Losses in the value of~~
~~most equity markets in the U.S., Asia, and Europe also affect household wealth, especial y that of~~
~~retirees living on a fixed income and others who own equities. Investors that trade in mortgage-~~
~~backed securities reportedly reduced their holdings while the Federal Reserve attempted to~~
~~support the market.149 In the initial stages of the crisis, even traditional policy tools, such as~~
~~monetary accommodation, apparently were not always processed by markets in a traditional~~
~~manner, with equity market indices displaying heightened, rather than lower, levels of uncertainty~~
~~following the Federal Reserve’s cut in interest rates. Such volatility added to uncertainties about~~
~~what governments could do to address weaknesses in the global economy.~~
~~Major Economic Developments~~
~~Between late February 2020 and January 2021, financial markets from the United States to Asia~~
~~and Europe were whipsawed as investors alternated between optimism and pessimism amid~~
~~concerns that COVID-19 would create a global economic and financial crisis with few metrics to~~
~~indicate how prolonged and extensive the economic effects could be.150 Investors searched for~~
~~safe-haven investments, such as the benchmark U.S. Treasury 10-year security, which~~
~~experienced a historic drop in yield to below 1% on March 3, 2020.151 In response to concerns~~
~~that the global economy was in a freefal , the Federal Reserve lowered key interest rates on~~

~~148 Foroohar, Rana, “ How COVID-19 Became a Corporate Credit Run,” Financial Times, March 15, 2020.~~
~~https://www.ft.com/content/f1ea5096-6531-11ea-a6cd-df28cc3c6a68.~~
~~149 Armstrong, Robert, “ Mortgage Investment Funds Become ‘Epicenter’ of Crisis,” Financial Times, March 24, 2020.~~
~~https://www.ft.com/content/18909cda-6d40-11ea-89df-41bea055720b.~~
~~150 Samson, Adam and Hudson Lockett , “Stocks Fall Again in Worst Week Since 2008 Crisis,” Financial Times,~~
~~February 28. https://www.ft.com/content/4b23a140-59d3-11ea-a528-dd0f971febbc.~~
~~151 T he price and yield of a bond are inversely related; increased demand for T reasury securities raises their price,~~
~~which lowers their yield. Levisohn, Ben, “ T he 10-Year T reasury Yield Fell Below 1% for the First T ime Ever. What~~
~~T hat Means,” Barrons, March 3, 2020. https://www.barrons.com/articles/the-10-year-treasury-yield-fell-below-1-for-~~
~~the-first-time-ever-what -that-means-51583267310.~~
~~Congressional Research Service~~

46

~~link to page 53~~ ~~Global Economic Effects of COVID-19~~

~~March 3, 2020, to shore up economic activity, while the Bank of Japan engaged in asset~~
~~purchases to provide short-term liquidity to Japanese banks; Japan’s government indicated it~~
~~would also assist workers with wage subsidies. The Bank of Canada also lowered its key interest~~
~~rate. The International Monetary Fund (IMF) announced that it was making about $50 bil ion~~
~~available through emergency financing facilities for low-income and emerging market countries~~
~~and through funds available in its Catastrophe Containment and Relief Trust (CCRT).152~~
~~Financial Markets~~
~~Reflecting investors’ uncertainties, the DJIA lost about one-third of its value between February~~
~~14, 2020, and March 23, 2020, as indicated in Figure 11. Expectations that the U.S. Congress~~
~~would adopt a $2.0 tril ion spending package moved the DJIA up by more than 11% on March 24,~~
~~2020. From March 23 to April 15, the DJIA moved higher by 18%, paring its initial losses by~~
~~half. Since then, the DJIA trended upward, but moved erratical y at times as investors weighed~~
~~news about the human cost and economic impact of the pandemic and the prospects of various~~
~~medical treatments. Between March 23 and July 1, the DJIA regained 70% of the value lost~~
~~during the February to March decline. On Monday, November 9, the DJIA gained over 800~~
~~points, or nearly three percentage points, as markets responded positively to press reports that an~~
~~effective COVID-19 vaccine had been developed. On November 10, the DJIA rose above 29,400~~
~~for the first time since the index fel in February 2020. Between January 1, 2021, and February 4,~~
~~2021, the DJIA increased by about 3.0%, continuing a rise in the index of 17% since the end of~~
~~October 2020. Through April, 2021, the DJIA had gained more than 12% in value and was 16%~~
~~higher than the value on February 14, 2020.~~
~~As indicated in Table 9, the DJIA lost the largest part of its market valuation in trading during~~
~~February and March when the index lost nearly one-fourth of its value as more trading sessions~~
~~ended with overal market values lower than higher. Since March, the index has posted more~~
~~trading sessions that closed with positive gains than losses. By October 23, the DJIA had~~
~~recovered most of the value lost in February and March. During the final week of October, the~~
~~DJIA lost more than 1,800 points, the largest weekly loss since March 2020 as Germany, France~~
~~and other European countries reinstituted lockdowns in response to a resurgence of COVID-19~~
~~cases. In the first three days of November, however, the Index regained three-fourths of the value~~
~~it lost the previous week. During the first four months of 2021, the DJIA has gained 12% in value.~~
~~Announcements of vaccines portending a resurgence of economic activity boosted market~~
~~sentiment in November and December with the DJIA rising by over a combined 3,700 points or~~
~~by nearly 14%. In January 2021, the DJIA dropped by about 1% with more trading days ending~~
~~with the index down than days with the index up from the previous day. For some policymakers,~~
~~the drop in equity prices in February and March raised concerns that foreign investors might~~
~~attempt to exploit the situation by increasing their purchases of firms in sectors considered~~
~~important to national security. For instance, Ursula von der Leyen, president of the European~~
~~Commission, urged EU members to better screen foreign investments, especial y in areas such as~~
~~health, medical research, and critical infrastructure.153~~

~~152 Georgieva, Kristalina, “Potential Impact of the COVID-19 Epidemic: What We Know and What We Can Do,”~~
International Monetary Fund, March 4, 2020. https://blogs.imf.org/2020/03/04/potential-impact-of-the-COVID-19-
~~epidemic-what-we-know-and-what -we-can-do/.~~
~~153 Chazan, Guy and Jim Brunsden, “COVID-19 Crisis Pushes Europe into Nationalist Economic T urn,”~~ ~~Financial~~
~~Tim es, March 26, 2020. https://www.ft.com/content/79c0ae80-6df1-11ea-89df-41bea055720b.~~
~~Congressional Research Service~~

47

~~Global Economic Effects of COVID-19~~

~~Table 9. Dow Jones Industrial Average Market Changes by Month~~
~~Sessions up Sessions down~~
~~Open~~
~~Close~~
~~Change in index~~ 151 World Investment Report 2020, United Nations Conference on Trade and Development, 2020, p. 93. 152 Ibid, p. 96. Congressional Research Service 44 Global Economic Effects of COVID-19 foreign investment. Conceivably, changes in technology and the global economy have made it more difficult to assess the economic costs and benefits of changes in foreign investment policies taken on national security grounds. Table 9. Foreign Investment Screening Legislation Adopted During COVID-19 Country Investment Measure Spain Adopted a Royal Decree to suspend its liberalization regime regarding listed and unlisted Spanish companies and require authorization to acquire 10% or more of stock in certain sectors, including critical infrastructure, critical technologies, media and food security. European Union The EU Commission issued a Guidance to Member States concerning efforts by non-EU investors to attempt to acquire health care capacities or related industries through foreign investment during the pandemic and recommended that EU members make ful use of FDI screening regimes or establish such regimes where they are not ful y developed. Australia Temporarily lowered the monetary screening threshold to zero for all foreign investments, requiring prior approval for all foreign investments and extended the timeframe for screening procedures from 30 days to six months. Italy Expanded the scope of its FDI screening regime, including acquisitions from within the EU, by adding finance, credit and insurance to its list of strategic sectors. India Introduced a requirement for prior governmental approval for all investment originating from countries that share land borders with India. Canada Announced “enhanced security” reviews of foreign investments in Canadian firms to prevent foreign firms from taking advantage of low stock valuations during the pandemic to acquire any Canadian firm, but particularly those related to public health or involved in the supply of critical goods and services to Canadians to protect Canadian’s health and safety. France Added biotechnology to its list of critical sectors requiring prior governmental approval for foreign acquisitions and temporarily lowered the voting rights threshold for listed companies for FDI screening from 25% to 10%. Germany Amended its Foreign Trade and Payments Ordinance to emphasize critical public health sectors and require prior governmental approval for foreign acquisitions of 10% or more of the stock of German companies involved in developing, manufacturing or producing vaccines, medicines, protective medical equipment and other medical goods for the treatment of highly infectious diseases. Also adopted measures to align German reviews with EU rules. Hungary Adopted a foreign investment screening mechanism that requires approval for investments in 21 industries, including health care, pharmaceuticals and medical device manufacturing, and non-medical industries. An investment can be denied that violates or threatens public security or order, particularly the security of supply of basic social needs. Japan Amended its list of sectors considered critical to national security by adding the production of vaccines, medicines and advanced medical equipment, including ventilators. Poland Adopted a FDI screening regime for foreign acquisitions of 20 % or more in publicly listed companies, companies control ing strategic infrastructure or developing critical IT software, or companies active in 21 industries, including pharmaceuticals, manufacturing of medical devices, food processing and utilities. Source: World Investment Report 2020, United Nations Conference on Trade and Development, 2020, p. 92-93. Congressional Research Service 45 Global Economic Effects of COVID-19 Table 10. Investment Policy Instruments Adopted at the National and International Levels to Address the COVID-19 Pandemic Investment policy areas Policy measures Policy actions at the national level Investment facilitation Alleviate administrative burdens and bureaucratic obstacles for firms. Use of online tools and e-platforms. Investment retention and aftercare by investment COVID-19-related information services. promotion agencies (IPAs) Administrative and operational support during the crisis. Move to online services. Investment incentives Financial or fiscal incentives to produce COVID-19-related medical equipment. Incentives for conversion of production lines. Incentives for enhancement of contracted economic activities. State participation in crisis-affected industries Acquisition of equity in companies, including nationalization. Local small and medium enterprises (SMEs) and supply Financial or fiscal support for domestic suppliers (such chains as SMEs). National security and public health Application and potential reinforcement of FDI screening in pandemic-relevant industries. Other State intervention in the health industry Mandatory production. Export bans. Import facilitation. Intellectual property (IP) General authorization of non-voluntary licensing, to speed up research and development (R&D). IP holder-specific non-voluntary licensing, to enable imports of medication. Policy actions at the international level International support measures for investment International pledges in support of cross-border investment. IIAs Reform International Investment Agreements (IIAs) to support public health policies and to minimize investor–State dispute risks. Intellectual property (IP) General authorization of non-voluntary licensing, to speed up research and development (R&D). Source: World Investment Report 2020, United Nations Conference on Trade and Development, 2020, p. 89. According to the United Nations Conference on Trade and Development (UNCTAD), global foreign direct investment inflows fell by 42% in 2020 compared with the same period in 2019, Congressional Research Service 46 Global Economic Effects of COVID-19 with continued weakness expected in 2021, as indicated in Figure 8.153 Global inflow totals were driven in large part by the decline in foreign investment inflows to developed economies, which fell by 69%. Inflows to Europe fell to -$4 billion, compared with inflows in 2019 of $344 billion. In contrast, inflows to developing economies fell by 12% over the period, aided in large part by positive inflows to China. Investment flows to developing Asia, at $476 billion, dropped by 4% compared with 2019 and accounted for about half the total $859 billion global direct investment inflows in 2020. Figure 8. Foreign Direct Investment Inflows by Major Country Groups Inflows in $ billions Source: United Nations Conference on Trade and Development. Created by CRS. As indicated in Figure 9, all major geographic areas except Asia experienced a drop in foreign direct investment inflows in 2020 compared with 2019.154 This drop in foreign investment was apparent in the three major types of foreign investment: cross-border investments; greenfield investment, or investment in new business activity; and international project finance. In the three types of investment activity, global activity fell by 10%, 35%, and 2%, respectively in 2020 compared with 2019. Cross-border merger and acquisition (M&A) activity increased by 31% and 147%, respectively, in Asia and Transition economies, but declined by 11% in developed economies and 67% in Latin America. International project finance, reportedly an important source of infrastructure finance, fell globally by 2%, but rose by 7% in developed economies, primarily in Europe, and by 17% in Asia. 153 Investment Trends Monitor, United Nations Conference on Trade and Development, January, 2021. Investment Policy Instruments Adopted at the National and International level to Address the COVID-19 Pandemic 154 Investment Trends Monitor, United Nations Conference on Trade and Development, January 24, 2021. Congressional Research Service 47 Global Economic Effects of COVID-19 Figure 9. Global Foreign Direct Investment Inflows In billions of dollars and percentage change Source: United Nations Conference on Trade and Development. Created by CRS. For the United States, BEA reported that U.S. direct investment abroad (outflows) and foreign direct investment in the United States (inflows) fell by 74% and 89%, respectively, in the first half of 2020 compared with the first half of 2019, as indicated in Figure 10.155 The lower investment numbers reflect, in part, the lower values for equity, mirroring the declines in major equity markets in the first half of 2020. For 2020 as a whole, U.S. direct investment outflows fell by 19%, while foreign direct investment inflows fell by 40%. Figure 10. U.S. Direct Investment; Inflows and Outflows Source: Bureau of Economic Analysis, Created by CRS. 155 U.S. International Transactions, Fourth Quarter and Year 2020, Bureau of Economic Analysis, March 23, 2020. Congressional Research Service 48 Global Economic Effects of COVID-19 Notes: In the balance of payments, direct investment outflows are represented as a negative value, indicating an outflow and direct investment inflows are represented as positive values. For presentation purposes, the signs for direct investment abroad, or outflows, have been reversed. Economic Policy Challenges The challenge for policymakers has been one of implementing targeted policies that address what had been expected to be short-term problems without creating distortions in economies that can outlast the impact of the virus itself. Policymakers, however, have been overwhelmed by the quickly changing nature of the global health crisis that turned into a global trade and economic crisis. During the initial stages of the pandemic, policymakers weighed the impact of policies that addressed the immediate economic effects at the expense of longer-term considerations such as debt accumulation. As the pandemic persisted, however, policymakers adopting additional fiscal or monetary measures, in particular, that could complicate the economic impact of the policies after the pandemic resides. Initially, many policymakers felt constrained in their ability to respond to the crisis as a result of limited flexibility for monetary and fiscal support within conventional standards, given the broad-based synchronized slowdown in global economic growth, especially in manufacturing and trade, that had developed prior to the viral outbreak. The pandemic has also affected global politics as world leaders cancelled international meetings,156 nations began competing for medical supplies, and some nations reportedly stoked conspiracy theories that shifted blame to other countries.157 Initially, the economic effects of the virus were expected to be short-term supply issues as factory output fell because workers were quarantined to reduce the spread of the virus through social interaction. The drop in economic activity, initially in China, has had international repercussions as firms experienced delays in supplies of intermediate and finished goods through supply chains. Concerns grew, however, that virus-related supply shocks created more prolonged and wide-ranging demand shocks as reduced activity by consumers and businesses leads to a lower rate of economic growth. As demand shocks unfold, businesses experience reduced activity and profits and potentially escalating and binding credit and liquidity constraints. While manufacturing firms experienced supply chain shocks, reduced consumer activity through social distancing affected the services sector of the economy, which accounts for two-thirds of annual U.S. economic output. In this environment, manufacturing and services firms initially tended to hoard cash, which affected market liquidity. In response, the Federal Reserve, along with other central banks, lowered interest rates where possible and expanded lending facilities to provide liquidity to financial markets and to firms potentially facing insolvency. As the economic effects have persisted, their impact has spread through trade and financial linkages to an ever-broadening group of countries, firms and households. These growing economic effects potentially increased liquidity constraints and credit market tightening in global financial markets as firms hoarded cash, with negative fallout effects on economic growth. At the same time, financial markets had been factoring in an increase in government bond issuance in the United States, Europe, and elsewhere as government debt levels began rising to meet spending obligations during an expected economic recession and increased fiscal spending to fight the effects of COVID-19. Unlike the 2008-2009 financial crisis, reduced demand by 156 Taylor, Adam, Teo Armus, and Rick Noak, “Live updates: COVID-19 Turmoil Widens as U.S. Death Toll Mounts; Xi Cancels Japan Trip, Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/COVID-19-live-updates/. 157 Shih, Gerry, “China Is Subtly Stoking COVID-19 Conspiracy Theories That Blame the U.S. for Outbreak,” Washington Post, March 5, 2020. https://www.washingtonpost.com/world/2020/03/05/COVID-19-live-updates/. Congressional Research Service 49 Global Economic Effects of COVID-19 consumers, labor market issues, and a reduced level of activity among businesses, rather than risky trading by global banks, led to corporate credit issues and potential insolvency. These market dynamics led some observers at the time to question if these events marked the beginning of a full-scale global financial crisis.158 Liquidity and credit market issues presented policymakers with a different set of challenges than addressing supply-side constraints. As a result, the focus of government policy expanded from a health crisis to macroeconomic and financial market issues that were addressed through a combination of monetary, fiscal, and other policies, including border closures, quarantines, and restrictions on social interactions. Essentially, while businesses attempted to address worker and output issues at the firm level, national leaders attempted to implement fiscal policies to prevent economic growth from contracting sharply by assisting workers and businesses that faced financial strains, and central bankers adjusted monetary policies to address mounting credit market issues. In the initial stages of the health crisis, households did not experience the same kind of wealth losses they saw during the 2008-2009 financial crisis when the value of their primary residence dropped sharply. However, as unemployment numbers rose, job losses resulted in defaults on mortgages and delinquencies on rent payments, requiring some financial institutions to provide loan forbearance or other mechanism to provide financial assistance. In turn, mortgage defaults threatened to negatively affect the market for mortgage-backed securities, the availability of funds for mortgages, and negatively affect the overall rate of economic growth. Losses in the value of most equity markets in the U.S., Asia, and Europe also affect household wealth, especially that of retirees living on a fixed income and others who own equities. Investors that trade in mortgage-backed securities reportedly reduced their holdings while the Federal Reserve attempted to support the market.159 In the initial stages of the crisis, even traditional policy tools, such as monetary accommodation, apparently were not always processed by markets in a traditional manner, with equity market indices displaying heightened, rather than lower, levels of uncertainty following the Federal Reserve’s cut in interest rates. Such volatility added to uncertainties about what governments could do to address weaknesses in the global economy. Major Economic Developments Between late February 2020 and January 2021, financial markets from the United States to Asia and Europe were whipsawed as investors alternated between optimism and pessimism amid concerns that COVID-19 would create a global economic and financial crisis with few metrics to indicate how prolonged and extensive the economic effects could be.160 Investors searched for safe-haven investments, such as the benchmark U.S. Treasury 10-year security, which experienced a historic drop in yield to below 1% on March 3, 2020.161 In response to concerns that the global economy was in a freefall, the Federal Reserve lowered key interest rates on 158 Foroohar, Rana, “How COVID-19 Became a Corporate Credit Run,” Financial Times, March 15, 2020. https://www.ft.com/content/f1ea5096-6531-11ea-a6cd-df28cc3c6a68. 159 Armstrong, Robert, “Mortgage Investment Funds Become ‘Epicenter’ of Crisis,” Financial Times, March 24, 2020. https://www.ft.com/content/18909cda-6d40-11ea-89df-41bea055720b. 160 Samson, Adam and Hudson Lockett, “Stocks Fall Again in Worst Week Since 2008 Crisis,” Financial Times, February 28. https://www.ft.com/content/4b23a140-59d3-11ea-a528-dd0f971febbc. 161 The price and yield of a bond are inversely related; increased demand for Treasury securities raises their price, which lowers their yield. Levisohn, Ben, “The 10-Year Treasury Yield Fell Below 1% for the First Time Ever. What That Means,” Barrons, March 3, 2020. https://www.barrons.com/articles/the-10-year-treasury-yield-fell-below-1-for-the-first-time-ever-what-that-means-51583267310. Congressional Research Service 50 link to page 57 Global Economic Effects of COVID-19 March 3, 2020, to shore up economic activity, while the Bank of Japan engaged in asset purchases to provide short-term liquidity to Japanese banks; Japan’s government indicated it would also assist workers with wage subsidies. The Bank of Canada also lowered its key interest rate. The International Monetary Fund (IMF) announced that it was making about $50 billion available through emergency financing facilities for low-income and emerging market countries and through funds available in its Catastrophe Containment and Relief Trust (CCRT).162 Financial Markets Reflecting investors’ uncertainties, the DJIA lost about one-third of its value between February 14, 2020, and March 23, 2020, as indicated in Figure 11. Expectations that the U.S. Congress would adopt a $2.0 trillion spending package moved the DJIA up by more than 11% on March 24, 2020. From March 23 to April 15, the DJIA moved higher by 18%, paring its initial losses by half. Since then, the DJIA trended upward, but moved erratically at times as investors weighed news about the human cost and economic impact of the pandemic and the prospects of various medical treatments. Between March 23 and July 1, the DJIA regained 70% of the value lost during the February to March decline. On Monday, November 9, the DJIA gained over 800 points, or nearly three percentage points, as markets responded positively to press reports that an effective COVID-19 vaccine had been developed. On November 10, the DJIA rose above 29,400 for the first time since the index fell in February 2020. Between January 1, 2021, and February 4, 2021, the DJIA increased by about 3.0%, continuing a rise in the index of 17% since the end of October 2020. Through April, 2021, the DJIA had gained more than 12% in value and was 16% higher than the value on February 14, 2020. As indicated in Table 11, the DJIA lost the largest part of its market valuation in trading during February and March when the index lost nearly one-fourth of its value as more trading sessions ended with overall market values lower than higher. Since March, the index has posted more trading sessions that closed with positive gains than losses. By October 23, the DJIA had recovered most of the value lost in February and March. During the final week of October, the DJIA lost more than 1,800 points, the largest weekly loss since March 2020 as Germany, France and other European countries reinstituted lockdowns in response to a resurgence of COVID-19 cases. In the first three days of November, however, the Index regained three-fourths of the value it lost the previous week. During the first four months of 2021, the DJIA has gained 12% in value. Announcements of vaccines portending a resurgence of economic activity boosted market sentiment in November and December with the DJIA rising by over a combined 3,700 points or by nearly 14%. In January 2021, the DJIA dropped by about 1% with more trading days ending with the index down than days with the index up from the previous day. For some policymakers, the drop in equity prices in February and March raised concerns that foreign investors might attempt to exploit the situation by increasing their purchases of firms in sectors considered important to national security. For instance, Ursula von der Leyen, president of the European Commission, urged EU members to better screen foreign investments, especially in areas such as health, medical research, and critical infrastructure.163 162 Georgieva, Kristalina, “Potential Impact of the COVID-19 Epidemic: What We Know and What We Can Do,” International Monetary Fund, March 4, 2020. https://blogs.imf.org/2020/03/04/potential-impact-of-the-COVID-19-epidemic-what-we-know-and-what-we-can-do/. 163 Chazan, Guy and Jim Brunsden, “COVID-19 Crisis Pushes Europe into Nationalist Economic Turn,” Financial Times, March 26, 2020. https://www.ft.com/content/79c0ae80-6df1-11ea-89df-41bea055720b. Congressional Research Service 51 Global Economic Effects of COVID-19 Table 11. Dow Jones Industrial Average Market Changes by Month Sessions up Sessions down Open Close Change in index valuation

January January
13 13
8 8
28,638.97 28,638.97
28,256.03 28,256.03
-382.94 -382.94
-1.34% -1.34%
February February
8 8
11 11
28,319.65 28,319.65
25,409.36 25,409.36
-2,910.29 -2,910.29
-10.28% -10.28%
March March
10 10
12 12
25,590.51 25,590.51
21,917.16 21,917.16
-3,673.35 -3,673.35
-14.35% -14.35%
April April
12 12
9 9
21,227.38 21,227.38
24,345.72 24,345.72
3,118.34 3,118.34
14.69% 14.69%
May May
10 10
10 10
24,120.78 24,120.78
25,383.11 25,383.11
1,262.33 1,262.33
5.23% 5.23%
June June
14 14
8 8
25,342.99 25,342.99
25,812.88 25,812.88
469.89 469.89
1.85% 1.85%
July July
13 13
9 9
25,879.38 25,879.38
26,428.32 26,428.32
548.94 548.94
2.12% 2.12%
August August
14 14
7 7
26,542.32 26,542.32
28,430.05 28,430.05
1,887.73 1,887.73
7.11% 7.11%
September September
12 12
9 9
28,439.61 28,439.61
27,781.70 27,781.70
-657.91 -657.91
-2.31% -2.31%
October October
10 10
12 12
27,816.90 27,816.90
26,501.60 26,501.60
-1,315.30 -1,315.30
-4.73% -4.73%
November November
12 12
8 8
26,691.28 26,691.28
29,638.64 29,638.64
2,947.36 2,947.36
11.04% 11.04%
December December
14 14
8 8
29,707.50 29,707.50
30,606.48 30,606.48
808.98 808.98
2.71% 2.71%
January 2021 January 2021
8 8
11 11
30,223.89 30,223.89
29,981.10 29,981.10
-242.79 -242.79
-0.80% -0.80%
February February
15 15
5 5
30,054.73 30,054.73
30,932.37 30,932.37
877.64 877.64
2.92% 2.92%
March March
13 13
10 10
31,065.90 31,065.90
32,981.55 32,981.55
1,915.65 1,915.65
6.17% 6.17%
April April
12 12
8 8
33,054.58 33,054.58
33,874.85 33,874.85
820.27 820.27
2.48% May 13 7 33,904.89 34,529.45 624.56 1.84% ~~2.48%~~
Source: Financial Times, calculations by CRS. , calculations by CRS.
Similar to the 2008-2009 global financial crisis, central banks implemented a series of monetary Similar to the 2008-2009 global financial crisis, central banks implemented a series of monetary
operations to provide liquidityoperations to provide liquidity to their economies. These actions, however, to their economies. These actions, however, ~~initial y~~initially were not were not
viewed entirely positively by viewed entirely positively by al all financial market participants who questioned the use of policy financial market participants who questioned the use of policy
tools by central banks that were similar to those employed during the 2008-2009 financial crisis, tools by central banks that were similar to those employed during the 2008-2009 financial crisis,
despite the fact that the despite the fact that the ~~current and previous crisis are fundamental y~~COVID-19 and the previous crises were fundamentally different in origin. During different in origin. During
the previous financial crisis, central banks intervened to restart credit and spending by banks that the previous financial crisis, central banks intervened to restart credit and spending by banks that
had engaged in risky assets. In the had engaged in risky assets. In the ~~current~~2020 environment, central banks attempted to address environment, central banks attempted to address
financial market volatility and prevent large-scale corporate insolvencies that reflected the financial market volatility and prevent large-scale corporate insolvencies that reflected the
underlying economic uncertainty caused by the pandemic. underlying economic uncertainty caused by the pandemic.
Congressional Research Service Congressional Research Service

4852 Global Economic Effects of COVID-19 Figure 11. Dow Jones Industrial Average February 14, 2020, through June 10, 2021 Source: Financial Times. Created by CRS. The yield on U.S. Treasury securities dropped to historic levels on March 6, 2020, and March 9, 2020, as investors moved

~~Global Economic Effects of COVID-19~~

~~Figure 11. Dow Jones Industrial Average~~
~~February 14, 2020, through May 3, 2021~~

Source: Financial Times. Created by CRS.
~~International Role of the Dollar~~
~~Similar to conditions during the 2008-2009 financial crisis, the dollar emerged as the preferred~~
~~currency by investors, reinforcing its role as the dominant global reserve currency. As indicated in~~
Figure 12, the dollar appreciated more than 3.0% during the period between March 3 and Marc h
~~13, 2020, reflecting increased international demand for the dollar and dollar-denominated assets.~~
~~Since the highs reached on March 23, the exchange value of the dollar has dropped between 1%~~
~~and 2% per month in a slow decline as financial strains have eased and demand for the dollar in~~
~~international financial markets has lessened.~~
~~Between mid-May and mid-June, the dollar lost about 3% of its value relative to the currencies of~~
~~other major trading partners and was equal to its value in mid-March. During July, the dollar lost~~
~~over 2% of its value against the currencies of major trading partners, about where it was in mid-~~
~~March. By mid-October, the trade-weighted value of the dollar had declined by 8% from the~~
~~highest values reached in March and nearly matched the value it recorded at the beginning of~~
~~2020. On November 5, the dollar index returned to the value reported on January 2, 2020 and has~~
~~remained below that value since. By the end of January 2021, the dollar had depreciated by more~~
~~than 11% from the highest value it reached in March 2020. The development of COVID-19~~
~~vaccines likely affects the value of the dollar in various ways, including factors that tend to~~
~~appreciate the dollar as a result of renewed economic growth in the United States and opposing~~
~~forces that tend to depreciate the dollar if demand declines for the dollar as a safe-haven currency.~~
~~Despite the appreciation and subsequent depreciation of the dollar through 2020 and 2021 by the~~
~~end of April, 2021, the dollar was down 2% compared with the value on January 2, 2020. In part,~~
~~the resolution of the UK’s withdrawal from the EU has strengthened both the Euro and the pound,~~
~~tending to depreciate the value of the dollar. The decline in the value of the dollar reportedly has~~
~~pushed some countries to consider intervening to weaken their currencies.154~~

~~154 Szalay, Eva, Central Banks T ake Rare Step of Flagging Currency Sales in Advance, Financial Times, February 3,~~
~~2021. https://www.ft.com/content/0383f3a4-41a0-464a-b831-fd1a09a6b1b0.~~

~~Congressional Research Service~~

49

~~link to page 56~~

~~Global Economic Effects of COVID-19~~

~~Figure 12. U.S. Dollar Trade-Weighted Broad Index, Goods and Services~~
~~January 2, 2020, through April 30, 2021~~

Source: St. Louis Federal Reserve Bank. Created by CRS.
~~The Bank for International Settlements (BIS) emphasized the role of the dollar as a dominant~~
~~global currency in its 2019 triennial survey of currency markets.155 According to the survey, the~~
~~dollar accounts for 88% of global foreign exchange market turnover and is key in funding an~~
~~array of financial transactions, including serving as an invoicing currency to facilitate~~
~~international trade, as indicated in Figure 13. It also accounts for about 60% of central bank~~
~~foreign exchange holdings, half of non-U.S. banks foreign currency deposits, and two-thirds of~~
~~non-U.S. corporate borrowings from banks and the corporate bond market.156 In comparison, the~~
~~United States accounts for about one-fourth of global GDP and about one-fifth of global trade~~
~~(exports plus imports).~~

~~155 Foreign Exchange Turnover in April 2019, Bank for International Settlements, September 16, 2019.~~
~~https://www.bis.org/statistics/rpfx19_fx.htm.~~
~~156 See CRS In Focus IF10112, Introduction to Financial Services: The International Foreign Exchange Market.~~
~~Congressional Research Service~~

50

~~Global Economic Effects of COVID-19~~

~~Figure 13. International Role of the Dollar~~

Source: U.S. Dol ar Funding: An International Perspective, CGFS Papers No. 65, Bank for International Settlements,
~~June 2020. Created by CRS.~~
Notes: (1) Data refer to 2019. (2) Data refer to 2019. (3) US dol ar-denominated cross-border loans by banks
~~to counterparties in al countries; data refer to Q4 2019 (excluding interoffice claims but including interbank~~
~~claims on account of loans and deposits); loans comprise nonnegotiable debt instruments that are loaned by~~
~~creditors directly to a debtor or represented by evidence of a deposit. (4) US dol ar denominated international~~
~~debt securities by al issuers; data refer to Q4 2019; these securities are issued outside the local market of the~~
~~country where the borrower resides, and capture issues conventional y known as eurobonds and foreign bonds~~
~~and exclude negotiable loans; instruments such as bonds, medium-term notes and money market instruments are~~
~~included. (5) Data refer to 2019. (6) Data refer to Q4 2019. (7) As estimated in Gopinath (2015). (8) Data refer~~
~~to February 2020. Sources: Gopinath (2015); Federal Reserve; IMF; CPB World Trade Monitor; Bloomberg;~~
~~SWIFT; BIS Triennial Central Bank Survey of Foreign Exchange and Over-the-counter (OTC) Derivatives~~
~~Markets; BIS locational banking statistics (LBS).~~
~~As a result of dominant role of the dollar as a global reserve currency, disruptions in the smooth~~
~~functioning of the global dollar market can have wide-ranging repercussions on international~~
~~trade and financial transactions. A June 2020 report by BIS stresses the central role of the dollar~~
~~in the global economy. The report concludes that dollar funding activities are highly complex,~~
~~geographical y dispersed, and interconnected in ways that provide benefits to the stability of the~~
~~global financial system. This also means, however, that strains in the system can easily be~~
~~transmitted across different financial markets and across regions.157~~
~~In addition, the dominant role of the dollar in international trade pricing and trade financing~~
~~means the dollar plays a key role in the global economic recovery and that it could amplify the~~
~~impact of the pandemic, according to the IMF.158 Traditional y, most economic models are based~~
~~on the assumption that countries set their prices in their home currencies. As a result,~~
~~domestical y produced goods and services become cheaper for trading partners when the~~
~~domestic currency weakens, leading to increased demand from trading partners and more exports.~~
~~However, much international trade, including many commodities, is priced in dollars, which~~
~~means that trade volumes respond less than they would if goods were priced in exporters’ home~~
~~currencies. Limited evidence indicates that a significant share of bilateral trade between countries~~

~~157 Bank for International Settlements, U.S, Dollar Funding: An International Perspective, CGFS Papers, No. 65, June~~
~~2020, p. 52. https://www.bis.org/publ/cgfs65.htm.~~
~~158 Dominant Currencies and External Adjustment, IMF Staff Discussion Note 20/05, International Monetary Fund,~~
~~July 2020.~~
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~~other than the United States is invoiced in U.S. dollars.159 As a result, an appreciation of the dollar~~
~~against other currencies, or a weakening in other currencies, has a muted effect on exports by~~
~~other countries, at least in the short run, as has been evident in recent movements in exchange~~
~~rates and trade volumes of emerging market and developing economies. The IMF also concluded~~
~~that because countries other than the United States price much of their trade in dollars, an~~
~~appreciation in the value of the dollar, or a depreciation in the value of other currencies relative to~~
~~the dollar, reduces both exports and imports. As a result, a depreciation in other currencies~~
~~relative to the dollar provides less of a boost in their exports and, therefore, less of a~~
~~countercyclical support.~~
~~Together, these effects translate into movements in the exchange value of the dollar that at times~~
~~contrasts with traditional theory, since such movements do not affect trade volumes as might be~~
~~expected. For instance, after appreciating in March 2020, the trade-weighted value of the dollar~~
~~steadily depreciated through December. In standard models, the depreciation in the dollar would~~
~~be expected to lower export prices and, in turn, increase demand for U.S. exports, or increase the~~
~~volume of exports, while import volumes would be expected to decline along with the rising price~~
~~of foreign currencies relative to the dollar. GDP data through the third quarter indicate, however,~~
~~that U.S. trade dropped sharply in real, or index terms, in both the quantity of goods exported or~~
~~imported and in the value of those goods, as indicated in Figure 14.~~
~~Figure 14. Quarterly Price and Quantity Indexes, U.S. Goods Exports and Imports~~

Source: Bureau of Economic Analysis. Created by CRS.
Notes: 2012 = 100.
~~BEA data show the sharp drop in U.S. trade volumes for both exports and imports in the first and~~
~~second quarters of 2020 compared with the previous quarters, largely reflecting the global~~
~~economic recession due to policy actions to contain the spread of the viral pandemic, as indicated~~
~~in Table 10. In quantity terms, U.S. export and import volumes fel by 24% and 16%,~~
~~respectively, in the second quarter, compared with the preceding quarter.160 In value terms, the~~
~~price of U.S. exports fel by 6.5%, while the price of imports fel by 3.8% in the second quarter~~
~~compared with the first quarter. In the third quarter, both export and import volumes increased by~~
~~about 20% in volume terms, while export and import prices rose by 3.7% and 2.3%, respectively,~~
~~despite a depreciation in the dollar. In the fourth quarter, U.S. export and import prices increased~~
~~slightly, while export and import volumes both increased by 7.0%. As a result, the overal value~~

~~159 Ibid, p. 8.~~
~~160 Gross Domestic Product, First Quarter, 2021 (Advance Estimate), Bureau of Economic Analysis, April 29, 2021.~~
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~~of exports and imports rose slightly less than 5% in the fourth quarter of 2020. According to U.S.~~
~~balance of payments data, the overal annual value of U.S, goods exports and imports (the~~
~~combined changes in prices and volumes) dropped by 35% and 16%, respectively year-over-year~~
~~(2020 compared to 2019).~~
~~In the first quarter of 2021, U.S. export volumes fel slightly, while import volumes rose by1.4%.~~
~~Export and import price indexes both rose, reflecting an increase in petroleum export prices of~~
~~30% and a rise in petroleum import prices of 38%. Compared to the decline in exports and import~~
~~volumes in the second quarter of 2020, first quarter 2021 export and import volumes were up~~
~~28% and 31%, respectively, reflecting an increase in the global rate of economic growth.~~
~~Table 10. U.S. Exports and Imports, Change in Quarterly Price and Quantity Indexes~~
~~(percent change)~~

~~Year over Year % Change~~
~~Quarter over Quarter % Change~~

~~2019~~
~~2020~~
~~2020~~
~~2021~~

1q
2q
3q
4q
1q
~~Exports~~
~~Quantity~~
~~-0.1%~~
~~-3.6%~~
~~-0.7%~~
~~-24.1%~~
~~19.5%~~
~~7.0%~~
~~-0.2%~~
~~Price~~
~~-2.2~~
~~-2.6~~
~~-1.2~~
~~-6.5~~
~~3.7~~
~~1.7~~
~~6.0~~
~~Imports~~
~~Quantity~~
~~-2.9~~
~~5.3~~
~~-3.0~~
~~-15.7~~
~~20.4~~
~~7.0~~
~~1.4~~
~~Price~~
~~-2.5~~
~~-1.5~~
~~0.4~~
~~-3.8~~
~~2.3~~
~~0.5~~
~~3.6~~
Source: Bureau of Economic Analysis. Quarterly GDP estimates, export and imports price and quantity indices.
~~Created by CRS.~~
Notes: Annual changes represent percent change in 4th quarter index values over the 4th quarter of the
~~preceding year; quarterly changes represent the change in quarterly index values over the previous quarter.~~
~~The international role of the dollar and the wel -developed U.S. capital markets also provide the~~
~~United States with greater latitude in financing its trade deficit. For some trade specialists, the~~
~~widely accepted characterization of the current account as a product of a domestic saving-~~
~~investment relationship fails to distinguish between a country’s domestic saving-investment~~
~~balance, its ability to finance its trade deficit, and the role of cross-border capital flows. These~~
~~flows suggest that the ability of the United States to finance its trade imbalances through capital~~
~~inflows eases the constraint imposed by the domestic saving-investment balance.~~
~~The international role of the dollar also increases pressure on the Federal Reserve essential y to~~
~~assume the lead role as the global lender of last resort. Reminiscent of the financial crisis, the~~
~~global economy has experienced a period of dollar shortage, requiring the Federal Reserve to take~~
~~numerous steps to ensure the supply of dollars to the U.S. and global economies, including~~
~~activating existing currency swap arrangements, establishing such arrangements with additional~~
~~central banks, and creating new financial facilities to provide liquidity to central banks and~~
~~monetary authorities.161 Typical y, banks lend long-term and borrow short-term and can only~~
~~borrow from their home central bank. In turn, central banks can only provide liquidity in their~~
~~own currency. Consequently, a bank can become il iquid in a panic, meaning it cannot borrow in~~

~~161 Politi, James, Brendan Greeley, and Colby Smith, “Fed Sets Up Scheme to Meet Booming Foreign Demand for~~
~~Dollars,” Financial Tim es, March 31, 2020. https://www.ft.com/content/6c976586-a6ea-42ec-a369-9353186c05bb.~~
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~~private markets to meet short-term cash flow needs. Swap lines are designed to al ow foreign~~
~~central banks the funds necessary to provide needed liquidity to their country’s banks in dollars.~~
~~March 2020~~
~~The yield on U.S. Treasury securities dropped to historic levels on March 6, 2020, and March 9,~~
~~2020, as investors continued to move~~ out of stocks and into Treasury securities and other out of stocks and into Treasury securities and other
sovereign bonds, including UK and German bonds, due in part to concerns over the impact the sovereign bonds, including UK and German bonds, due in part to concerns over the impact the
pandemic would have on economic growth and expectations the Federal Reserve and other pandemic would have on economic growth and expectations the Federal Reserve and other
central banks would lower short-term interest rates.central banks would lower short-term interest rates.~~162~~164 On March 5, the U.S. Congress passed an On March 5, the U.S. Congress passed an
~~$8 bil ion spending bil~~ $8 billion spending bill to provide assistance for health care, sick leave, to provide assistance for health care, sick leave, ~~smal~~ small business loans, and business loans, and
international assistance. At the same time, commodity prices dropped sharply as a result of international assistance. At the same time, commodity prices dropped sharply as a result of
reduced economic activity and disagreements among oil producers over production cuts in crude reduced economic activity and disagreements among oil producers over production cuts in crude
oil and lower global demand for commodities, including crude oil. oil and lower global demand for commodities, including crude oil.
The drop in some commodity prices raised concerns about corporate profits and led some The drop in some commodity prices raised concerns about corporate profits and led some
investors to investors to ~~sel~~ sell equities and buy sovereign bonds. In overnight trading in various sessions equities and buy sovereign bonds. In overnight trading in various sessions
between March 8, and March 24, U.S. stock market indexes moved sharply (both higher and between March 8, and March 24, U.S. stock market indexes moved sharply (both higher and
lower), triggering automatic circuit breakers designed to halt trading if the indexes rise or lower), triggering automatic circuit breakers designed to halt trading if the indexes rise or ~~fal~~ fall by by
more than 5% when markets are closed and 7% when markets are open.more than 5% when markets are closed and 7% when markets are open.~~163~~165 By early April, By early April, the the
global mining industry had reduced production by an estimated 20% in response to global mining industry had reduced production by an estimated 20% in response to ~~fal ing~~
falling demand and labor quarantines and as a strategy for raising prices.demand and labor quarantines and as a strategy for raising prices.~~164~~
166 Ahead of a March 12, 2020, scheduled meeting of the European Central Bank (ECB), the German Ahead of a March 12, 2020, scheduled meeting of the European Central Bank (ECB), the German
central bank (Deutsche Bundesbank) announced a package of measures to provide liquidity central bank (Deutsche Bundesbank) announced a package of measures to provide liquidity
support to German businesses and financial support for public infrastructure projects.support to German businesses and financial support for public infrastructure projects.~~165 At the~~
~~same time, the Fed announced that it was expanding its repo market transactions (in the~~
~~repurchase market, investors borrow cash for short periods in exchange for high-quality collateral~~
~~like Treasury securities) after stock market indexes fel sharply, government bond yields fel to~~
~~record lows (reflecting increased demand), and demand for corporate bonds fel . Together these~~
~~developments raised concerns for some analysts that instability in stock markets could threaten~~
~~global financial conditions.166~~
~~On March 11, as the WHO designated COVID-19 a pandemic, governments and central banks~~
~~adopted additional monetary and fiscal policies to address the growing economic impact.~~
~~European Central Bank (ECB) President Christine Lagarde in a conference cal to EU leaders~~
~~warned that without coordinated action, Europe could face a recession similar to the 2008-2009~~
~~financial crisis.167 The Bank of England lowered its key interest rate, reduced capital buffers for~~

~~162~~167 At the 164 Smith, Colby, Richard Smith, Colby, Richard Henderson, Philip Georgiadis,Henderson, Philip Georgiadis, and Hudsonand Hudson Lockett, “Lockett, “ Stocks Stocks ~~T umble~~Tumble and Government Bonds and Government Bonds
Hit HighsHit Highs on Viruson Virus Fears,” Fears,” Financial ~~Tim es~~Times, March 6, 2020. https://www.ft.com/content/9f94d6f8-5f51-11ea-b0ab-, March 6, 2020. https://www.ft.com/content/9f94d6f8-5f51-11ea-b0ab-
339c2307bcd4. 339c2307bcd4.
~~163~~165 Georgiadis, Georgiadis, Philip, Adam Samson, and HudsonPhilip, Adam Samson, and Hudson Lockett, “Stocks Plummet as Oil Crash ShakesLockett, “Stocks Plummet as Oil Crash Shakes Financial Markets,” Financial Markets,”
Financial ~~Tim es~~Times, March 9, 2020. https://www.ft.com/content/8273a32a-61e4-11ea-a6cd-df28cc3c6a68. , March 9, 2020. https://www.ft.com/content/8273a32a-61e4-11ea-a6cd-df28cc3c6a68.
~~164~~166 Hume, Neil, “Mine Closures Hume, Neil, “Mine Closures Bolster Metals Prices as Demand Collapses,” Bolster Metals Prices as Demand Collapses,” Financial Times, April 7, 2020. , April 7, 2020.
https://www.ft.com/content/06ef38c9-18d8-427e-8675-a567227397c0. https://www.ft.com/content/06ef38c9-18d8-427e-8675-a567227397c0.
~~165~~ 167 Chazan, Guy, Chazan, Guy, David Keohane, and Martin Arnold, “Europe’s Policymakers Search for AnswersDavid Keohane, and Martin Arnold, “Europe’s Policymakers Search for Answers to Virusto Virus Crisis,” Crisis,”
Financial ~~Tim es~~Times, March 9, 2020. https://www.ft.com/content/d46467da-61e1-11ea-b3f3-fe4680ea68b5. , March 9, 2020. https://www.ft.com/content/d46467da-61e1-11ea-b3f3-fe4680ea68b5.
~~166 Smith, Colby and Brendan Greeley, “Fed Pumps Extra Liquidity Into Overnight Lending Markets,”~~ ~~Financial~~
~~Tim es, March 9, 2020. https://www.ft.com/content/e8c7b5f0-6200-11ea-a6cd-df28cc3c6a68.~~
~~167 O’Brien, Fergal, “ECB’s Lagarde Warns of 2008-Style Crisis Unless Europe Acts,” Washington Post, March 11,~~
~~2020. https://www.bloomberg.com/news/articles/2020-03-11/ecb-s-lagarde-warns-of-2008-style-crisis-without -urgent -~~
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~~Global Economic Effects of COVID-19~~

~~UK banks, and provided a funding program for smal and medium businesses. The UK~~
~~Chancel or of the Exchequer also proposed a budget that would appropriate £30 bil ion (about~~
~~$35 bil ion) for fiscal stimulus spending, including funds for sick pay for workers, guarantees for~~
~~loans to smal businesses, and cuts in business taxes. The European Commission announced a €25~~
~~bil ion (about $28 bil ion) investment fund to assist EU countries and the Federal Reserve~~
~~announced that it would expand its repo market purchases to provide larger and longer-term~~
~~funding to provide added liquidity to financial markets.~~
~~President Trump imposed restrictions on travel from Europe to the United States on March 12,~~
~~2020, surprising European leaders and adding to financial market volatility.168 At its March 12~~
~~meeting, the ECB announced €27 bil ion (about $30 bil ion) in stimulus funding, combining~~
~~measures to expand low-cost loans to Eurozone banks and smal~~ Congressional Research Service 53 Global Economic Effects of COVID-19 same time, the Fed announced that it was expanding its repo market transactions (in the repurchase market, investors borrow cash for short periods in exchange for high-quality collateral like Treasury securities) after stock market indexes fell sharply, government bond yields fell to record lows (reflecting increased demand), and demand for corporate bonds fell. Together these developments raised concerns for some analysts that instability in stock markets could threaten global financial conditions.168 On March 11, as the WHO designated COVID-19 a pandemic, governments and central banks adopted additional monetary and fiscal policies to address the growing economic impact. European Central Bank (ECB) President Christine Lagarde in a conference call to EU leaders warned that without coordinated action, Europe could face a recession similar to the 2008-2009 financial crisis.169 The Bank of England lowered its key interest rate, reduced capital buffers for UK banks, and provided a funding program for small and medium businesses. The UK Chancellor of the Exchequer also proposed a budget that would appropriate £30 billion (about $35 billion) for fiscal stimulus spending, including funds for sick pay for workers, guarantees for loans to small businesses, and cuts in business taxes. The European Commission announced a €25 billion (about $28 billion) investment fund to assist EU countries and the Federal Reserve announced that it would expand its repo market purchases to provide larger and longer-term funding to provide added liquidity to financial markets. President Trump imposed restrictions on travel from Europe to the United States on March 12, 2020, surprising European leaders and adding to financial market volatility.170 At its March 12 meeting, the ECB announced €27 billion (about $30 billion) in stimulus funding, combining measures to expand low-cost loans to Eurozone banks and small and medium-sized businesses and medium-sized businesses
and implement an asset purchase program to provide liquidity to firms. Germany indicated that it and implement an asset purchase program to provide liquidity to firms. Germany indicated that it
would provide tax breaks for businesses and “unlimited” loans to affected businesses. The ECB’s would provide tax breaks for businesses and “unlimited” loans to affected businesses. The ECB’s
Largarde roiled markets by stating that it was not the ECB’s job to “close the spread” between Largarde roiled markets by stating that it was not the ECB’s job to “close the spread” between
Italian and German government bond yields (a key risk indicator for Italy), a comment reportedly Italian and German government bond yields (a key risk indicator for Italy), a comment reportedly
interpreted as an indicator the ECB was preparing to abandon its support for Italy, a notion that interpreted as an indicator the ECB was preparing to abandon its support for Italy, a notion that
was denied by the ECB.was denied by the ECB.~~169~~171 The Fed also announced that it would increase its lending in the repo The Fed also announced that it would increase its lending in the repo
market and its purchases of Treasury securities to provide liquidity. As a result of tight market market and its purchases of Treasury securities to provide liquidity. As a result of tight market
conditions for corporate bonds, firms turned to their revolving lines of credit with banks to build conditions for corporate bonds, firms turned to their revolving lines of credit with banks to build
up their cash reserves. The price of bank shares up their cash reserves. The price of bank shares ~~fel~~ fell, reflecting sales by investors who reportedly , reflecting sales by investors who reportedly
had grown concerned that banks would experience a rise in loan defaults.had grown concerned that banks would experience a rise in loan defaults.~~170~~172 Despite the various Despite the various
actions, the DJIA actions, the DJIA ~~fel~~ fell by nearly 10% on March 12, recording the worst one-day drop since 1987. by nearly 10% on March 12, recording the worst one-day drop since 1987.
Between February 14 and March 12, the DJIA Between February 14 and March 12, the DJIA ~~fel~~ fell by more than 8,000 points, or 28% of its value. 168 Smith, Colby and Brendan Greeley, “Fed Pumps Extra Liquidity Into Overnight Lending Markets,” Financial Times, March 9, 2020. https://www.ft.com/content/e8c7b5f0-6200-11ea-a6cd-df28cc3c6a68. 169 O’Brien, Fergal, “ECB’s Lagarde Warns of 2008-Style Crisis Unless Europe Acts,” Washington Post, March 11, 2020. https://www.bloomberg.com/news/articles/2020-03-11/ecb-s-lagarde-warns-of-2008-style-crisis-without-urgent-action. 170 McAuley, James and Michael Birnbaum, “Europe Blindsided by Trump’s Travel~~by more than 8,000 points, or 28% of its value.~~
~~Credit rating agencies began reassessing corporate credit risk, including the risk of firms that had~~
~~been considered stable.171~~
~~On March 13, President Trump declared a national emergency, potential y releasing $50 bil ion in~~
~~disaster relief funds to state and local governments. The announcement moved financial markets~~
~~sharply higher, with the DJIA rising 10%.172 Financial markets also reportedly moved higher on~~
~~expectations the Fed would lower interest rates. House Democrats and President Trump agreed to~~
~~a $2 tril ion spending package to provide paid sick leave, unemployment insurance, food stamps,~~

~~action.~~
~~168 McAuley, James and Michael Birnbaum, “Europe Blindsided by T rump’s T ravel~~ Restrictions, with Many Seeing Restrictions, with Many Seeing
Political Motive,” Political Motive,” Washington Post, March 12, 2020. https://www.washingtonpost.com/world/europe/europe-, March 12, 2020. https://www.washingtonpost.com/world/europe/europe-
blindsided-by-trumps-travel-restrictions-with-many-seeing-political-motive/2020/03/12/42a279d0-6412-11ea-8a8e-blindsided-by-trumps-travel-restrictions-with-many-seeing-political-motive/2020/03/12/42a279d0-6412-11ea-8a8e-
5c5336b32760_story.html. 5c5336b32760_story.html.
~~169~~171 Arnold, Martin, “ECB Enters Damage-Limitation Mode with Pledge Arnold, Martin, “ECB Enters Damage-Limitation Mode with Pledge of More Action,” of More Action,” Financial Times, March 13, , March 13,
2020. https://www.ft.com/content/f1cbd4f8-650f-11ea-b3f3-fe4680ea68b5. 2020. https://www.ft.com/content/f1cbd4f8-650f-11ea-b3f3-fe4680ea68b5.
~~170~~172 Morris, Stephen, Laura Noonan, Henny Sender, and Olaf Storbeck, “Banks Scramble Morris, Stephen, Laura Noonan, Henny Sender, and Olaf Storbeck, “Banks Scramble as Companies Rushas Companies Rush ~~to T ap~~ to Tap
Back-up Credit Lines,” Back-up Credit Lines,” Financial ~~Tim es~~Times, March 12, 2020. https://www.ft.com/content/a3513a54-6486-11ea-b3f3-fe4680ea68b5. Congressional Research Service 54 Global Economic Effects of COVID-19 Credit rating agencies began reassessing corporate credit risk, including the risk of firms that had been considered stable.173 On March 13, President Trump declared a national emergency, potentially releasing $50 billion in disaster relief funds to state and local governments. The announcement moved financial markets sharply higher, with the DJIA rising 10%.174 Financial markets also reportedly moved higher on expectations the Fed would lower interest rates. House Democrats and President Trump agreed to a $2 trillion spending package to provide paid sick leave, unemployment insurance, food stamps, support for small businesses, and other measures.175~~, March 12, 2020. https://www.ft.com/content/a3513a54-6486-11ea-b3f3-~~
~~fe4680ea68b5.~~
~~171 Edgecliffe-Johnson, Andrew, Peggy Hollinger, Joe Rennison, and Robert Smith, “Will the COVID-19 T rigger a~~
~~Corporate Debt Crisis?” Financial Tim es, March 12, 2020. https://www.ft.com/content/4455735a-63bc-11ea-b3f3-~~
~~fe4680ea68b5. Sectors most exposed to debt financing issues include automotive, insurance, capital goods, utilities, oil~~
~~and gas, technology, aerospace and defense, real estate, telecoms, consumer products, metals, mining and steel,~~
~~healthcare, retail/restaurants, chemicals, packaging, transportation, media and entertainment, and forest products.~~
~~172 Fritz, Angela and Meryl Kornfield, “President T rump Declares a National Emergency, Freeing $50 Billion in~~
~~Funding,” Washington Post, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/COVID-19-latest-~~
~~news.~~
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~~support for smal businesses, and other measures.173~~ The EU indicated that it would relax budget The EU indicated that it would relax budget
rules that restrict deficit spending by EU members. In other actions, the People’s Bank of China rules that restrict deficit spending by EU members. In other actions, the People’s Bank of China
cut its reserve requirements for Chinese banks, cut its reserve requirements for Chinese banks, ~~potential y~~potentially easing borrowing costs for firms and easing borrowing costs for firms and
adding $79 adding $79 ~~bil ion~~ billion in funds to stimulate the Chinese economy; Norway’s central bank reduced its in funds to stimulate the Chinese economy; Norway’s central bank reduced its
key interest rate; the Bank of Japan acquired key interest rate; the Bank of Japan acquired ~~bil ions~~billions of dollars of government securities (thereby of dollars of government securities (thereby
increasing liquidity); and the Reserve Bank of Australia injected nearly $6 increasing liquidity); and the Reserve Bank of Australia injected nearly $6 ~~bil ion~~ billion into its into its
financial system.financial system.~~174~~176 The Bank of Canada also lowered its overnight bank lending rate. The Bank of Canada also lowered its overnight bank lending rate.
The Federal Reserve lowered its key interest rate to near zero on March 15, 2020, arguing that the The Federal Reserve lowered its key interest rate to near zero on March 15, 2020, arguing that the
pandemic had “harmed communities and disrupted economic activity in many countries, pandemic had “harmed communities and disrupted economic activity in many countries,
including the United States” and that it was prepared to use its “full range of tools.”including the United States” and that it was prepared to use its “full range of tools.”~~175~~177 It also It also
announced an additional $700 announced an additional $700 ~~bil ion~~ billion in asset purchases, including Treasury securities and in asset purchases, including Treasury securities and
mortgage-backed securities, expanded repurchase operations, activated dollar swap lines with mortgage-backed securities, expanded repurchase operations, activated dollar swap lines with
Canada, Japan, Europe, the UK, and Switzerland, opened its discount window to commercial Canada, Japan, Europe, the UK, and Switzerland, opened its discount window to commercial
banks to ease household and business lending, and urged banks to use their capital and liquidity banks to ease household and business lending, and urged banks to use their capital and liquidity
buffers to support lending.buffers to support lending.~~176~~
178 Despite the Fed’s actions the previous day to lower interest rates, interest rates in the U.S. Despite the Fed’s actions the previous day to lower interest rates, interest rates in the U.S.
commercial paper market, where corporations raise cash by commercial paper market, where corporations raise cash by ~~sel ing~~selling short-term debt, rose on short-term debt, rose on
March 16, 2020, to their highest levels since the 2008-2009 financial crisis, prompting investors March 16, 2020, to their highest levels since the 2008-2009 financial crisis, prompting investors
to to ~~cal~~ call on the Fed to intervene.on the Fed to intervene.~~177~~179 The DJIA dropped nearly 3,000 points, or about 13%. Most The DJIA dropped nearly 3,000 points, or about 13%. Most
automobile manufacturers announced major declines in sales and production;automobile manufacturers announced major declines in sales and production;~~178 similarly, most~~
~~airlines reported they faced major cutbacks in flights and employee layoffs due to diminished~~
~~economic activity.179 Economic data from China indicated the economy would slow markedly in~~
~~the first quarter of 2020, potential y greater than that experienced during the global financial~~
~~crisis.180 The Bank of Japan announced that it would double its purchases of exchange traded~~
~~funds and the G-7 countries181 issued a joint statement promising “a strongly coordinated~~
~~international approach,” although no specific actions were mentioned. The IMF issued a~~
~~statement indicating its support for additional fiscal and monetary actions by governments and~~
~~that the IMF “stands ready to mobilize its $1 tril ion lending capacity to help its membership.”~~

~~173~~180 similarly, most 173 Edgecliffe-Johnson, Andrew, Peggy Hollinger, Joe Rennison, and Robert Smith, “Will the COVID-19 Trigger a Corporate Debt Crisis?” Financial Times, March 12, 2020. https://www.ft.com/content/4455735a-63bc-11ea-b3f3-fe4680ea68b5. Sectors most exposed to debt financing issues include automotive, insurance, capital goods, utilities, oil and gas, technology, aerospace and defense, real estate, telecoms, consumer products, metals, mining and steel, healthcare, retail/restaurants, chemicals, packaging, transportation, media and entertainment, and forest products. 174 Fritz, Angela and Meryl Kornfield, “President Trump Declares a National Emergency, Freeing $50 Billion in Funding,” Washington Post, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/COVID-19-latest-news. 175 Werner, Erica, Mike DeBonis, Paul Kane, Jeff Stein, “White House, House Democrats Reach Deal on COVID-19 Werner, Erica, Mike DeBonis, Paul Kane, Jeff Stein, “White House, House Democrats Reach Deal on COVID-19
Economic Relief Package, Pelosi Announces,” Economic Relief Package, Pelosi Announces,” Washington Post, March 13, 2020. https://www.washingtonpost.com/, March 13, 2020. https://www.washingtonpost.com/
us-policy/2020/03/13/paid-leave-democrats-trump-deal-COVID-19/. us-policy/2020/03/13/paid-leave-democrats-trump-deal-COVID-19/.
~~174~~ 176 Georgiadis, Georgiadis, Philip, Hudson Lockett, and Leo Lewis,Philip, Hudson Lockett, and Leo Lewis, “European Stocks and US“European Stocks and US Futures SoarFutures Soar After Historic Rout,” After Historic Rout,”
Financial ~~Tim es~~Times, March 13, 2020. https://www.ft.com/content/3bab76ac-64cd-11ea-a6cd-df28cc3c6a68. , March 13, 2020. https://www.ft.com/content/3bab76ac-64cd-11ea-a6cd-df28cc3c6a68.
~~175~~177 Federal Reserve Releases FOMC Statement, Board of Governors of the Federal, Board of Governors of the Federal Reserve System, March 15, 2020. Reserve System, March 15, 2020.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm. https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm.
~~176~~178 Greeley, Brendan, Colby Smith, Adam Samson, Joe Rennison, Katie Martin, and Jennifer Ablan, Greeley, Brendan, Colby Smith, Adam Samson, Joe Rennison, Katie Martin, and Jennifer Ablan, “Fed Cuts“Fed Cuts Rates to Rates to
Zero as Part of SweepingZero as Part of Sweeping ~~Crisis~~ Crisis Measures,” Measures,” Financial ~~Tim es~~Times, March 15, 2020. https://www.ft.com/content/a9a28bc0- March 15, 2020. https://www.ft.com/content/a9a28bc0-
66fb-11ea-a3c9-1fe6fedcca75. 66fb-11ea-a3c9-1fe6fedcca75.
~~177~~ 179 Rennison, Joe Rennison and Colby Smith, “Investors Call for Fed Help in ‘Frozen’ Commercial Paper Market,” Rennison, Joe Rennison and Colby Smith, “Investors Call for Fed Help in ‘Frozen’ Commercial Paper Market,”
Financial ~~Tim es~~Times, March 16, 2020. https://www.ft.com/content/34213560-677b-11ea-a3c9-1fe6fedcca75. , March 16, 2020. https://www.ft.com/content/34213560-677b-11ea-a3c9-1fe6fedcca75.
~~178~~180 Campbell, Peter, Joe Miller, and David Keohane, “European Car Plants Close as Industry Crisis Campbell, Peter, Joe Miller, and David Keohane, “European Car Plants Close as Industry Crisis Deepens,” Deepens,”
Financial ~~Tim es~~Times, March 16, 2020. https://www.ft.com/content/dd76d42a-678b-11ea-a3c9-1fe6fedcca75. , March 16, 2020. https://www.ft.com/content/dd76d42a-678b-11ea-a3c9-1fe6fedcca75.
~~179 Smyth, Jamie Smyth, Andrew Edgecliffe-Johnson, Peggy Hollinger, Myles McCormick, David Keohane, and~~
~~Richard Milne, “ Most Airlines Face Bankruptcy by End of May, Industry Body Warns,” Financial Tim es, March 16,~~
~~2020. https://www.ft.com/content/30a3a26e-674f-11ea-800d-da70cff6e4d3.~~
~~180 Weinland, Don and Xinning Liu, “Chinese Economy Suffers Record Blow from COVID-19,” Financial Times,~~
~~March 16, 2020. https://www.ft.com/content/318ae26c-6733-11ea-800d-da70cff6e4d3.~~
~~181 T he G-7 comprises Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.~~
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~~The World Bank also promised an additional $14 bil ion to assist governments and companies~~
~~address the pandemic.182~~
~~Following the drop in equity market indexes the previous day, the Federal Reserve unveiled a~~
Congressional Research Service 55 Global Economic Effects of COVID-19 airlines reported they faced major cutbacks in flights and employee layoffs due to diminished economic activity.181 Economic data from China indicated the economy would slow markedly in the first quarter of 2020, potentially greater than that experienced during the global financial crisis.182 The Bank of Japan announced that it would double its purchases of exchange traded funds and the G-7 countries183 issued a joint statement promising “a strongly coordinated international approach,” although no specific actions were mentioned. The IMF issued a statement indicating its support for additional fiscal and monetary actions by governments and that the IMF “stands ready to mobilize its $1 trillion lending capacity to help its membership.” The World Bank also promised an additional $14 billion to assist governments and companies address the pandemic.184 Following the drop in equity market indexes the previous day, the Federal Reserve unveiled a number of facilities on March 17, 2020, in some cases reviving actions it had not taken since the number of facilities on March 17, 2020, in some cases reviving actions it had not taken since the
financial crisis. It announced that it would financial crisis. It announced that it would ~~al ow~~allow the 24 primary dealers in Treasury securities to the 24 primary dealers in Treasury securities to
borrow cash collateralized against some stocks, municipal debt, and higher-rated corporate bonds; borrow cash collateralized against some stocks, municipal debt, and higher-rated corporate bonds;
revive a facility to buy commercial paper; and provide additional funding for the overnight repo revive a facility to buy commercial paper; and provide additional funding for the overnight repo
market.market.~~183~~185 The UK government proposed government-backed loans to support businesses; a three- The UK government proposed government-backed loans to support businesses; a three-
month moratorium on mortgage payments for homeowners; a new lending facility with the Bank month moratorium on mortgage payments for homeowners; a new lending facility with the Bank
of England to provide low-cost commercial paper to support lending; and loans for businesses. of England to provide low-cost commercial paper to support lending; and loans for businesses.
In an emergency session on March 18, the ECB announced a temporary, nonstandard asset In an emergency session on March 18, the ECB announced a temporary, nonstandard asset
purchase program, the Pandemic Emergency Purchase Program (PEPP), to acquire an additional purchase program, the Pandemic Emergency Purchase Program (PEPP), to acquire an additional
€750 €750 ~~bil ion~~ billion (over $820 (over $820 ~~bil ion)~~ billion) in public and private sector bonds to counter the risks posed by in public and private sector bonds to counter the risks posed by
the pandemic crisis (as of May 5, the ECB had purchased about $180 the pandemic crisis (as of May 5, the ECB had purchased about $180 ~~bil ion~~billion in securities). in securities).~~184~~186 The The
ECB also broadened the types of assets it would accept as collateral to include nonfinancial ECB also broadened the types of assets it would accept as collateral to include nonfinancial
commercial paper, eased collateral standards for banks, and waived restrictions on acquiring commercial paper, eased collateral standards for banks, and waived restrictions on acquiring
Greek government debt.Greek government debt.~~185~~187 The program was expected to end no later than yearend 2020. The program was expected to end no later than yearend 2020.
The Federal Reserve broadened its central bank dollar swap lines to include Brazil, Mexico, The Federal Reserve broadened its central bank dollar swap lines to include Brazil, Mexico,
Australia, Denmark, Norway, and Sweden. Automobile manufacturers announced they were Australia, Denmark, Norway, and Sweden. Automobile manufacturers announced they were
suspending production at an estimated 100 plants across North America, following similar plant suspending production at an estimated 100 plants across North America, following similar plant
closures in Europe.closures in Europe.~~186~~188 Major U.S. banks announced a moratorium on share repurchases, or stock Major U.S. banks announced a moratorium on share repurchases, or stock
buy-backs, denying equity markets a major source of support and buy-backs, denying equity markets a major source of support and ~~potential y amplifying market~~
~~volatility.187 During the week, more than 22 central banks in emerging economies, including~~
~~Brazil, Turkey, and Vietnam, lowered their key interest rates.~~
~~By March 19, 2020, investors were sel ing sovereign and other bonds as firms and other financial~~
~~institutions attempted to increase their cash holdings, although actions central banks took during~~
~~the week appeared to calm financial markets. Compared to previous financial market dislocations~~
~~in which stock market values declined while bond prices rose, stock and bond values fel at the~~
~~same time in March 2020 as investors reportedly adopted a “sel everything” mentality to build~~
~~up cash reserves.188 Senate Republicans introduced the Coronavirus Aid, Relief, and Economic~~
~~Security Act to provide $2 tril ion in spending to support the U.S. economy.~~

~~182 Wheatley, Jonathan, “Surging Dollar, Coronavirus and Oil Slump~~ potentially amplifying market 181 Smyth, Jamie Smyth, Andrew Edgecliffe-Johnson, Peggy Hollinger, Myles McCormick, David Keohane, and Richard Milne, “Most Airlines Face Bankruptcy by End of May, Industry Body Warns,” Financial Times, March 16, 2020. https://www.ft.com/content/30a3a26e-674f-11ea-800d-da70cff6e4d3. 182 Weinland, Don and Xinning Liu, “Chinese Economy Suffers Record Blow from COVID-19,” Financial Times, March 16, 2020. https://www.ft.com/content/318ae26c-6733-11ea-800d-da70cff6e4d3. 183 The G-7 comprises Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. 184 Wheatley, Jonathan, “Surging Dollar, Coronavirus and Oil Slump Hit Emerging Economies,” Hit Emerging Economies,” Financial Times,
March 18, 2020. https://www.ft.com/content/69fc6e2a-69d3-11ea-a3c9-1fe6fedcca75. March 18, 2020. https://www.ft.com/content/69fc6e2a-69d3-11ea-a3c9-1fe6fedcca75.
~~183~~185 Politi, James, Brendan Greeley, Colby Smith, and Joe Rennison, “Fed to Lend Against Stocks and Bonds in Bid Politi, James, Brendan Greeley, Colby Smith, and Joe Rennison, “Fed to Lend Against Stocks and Bonds in Bid to to
StabilizeStabilize Markets,” Markets,” Financial ~~Tim es~~Times, March 17, 2020. https://www.ft.com/content/cf485398-689d-11ea-800d-, March 17, 2020. https://www.ft.com/content/cf485398-689d-11ea-800d-
da70cff6e4d3. da70cff6e4d3.
~~184~~ 186 “ECB Announces €750 Billion Pandemic Emergency Purchase Program (PEPP),” European Central Bank, March “ECB Announces €750 Billion Pandemic Emergency Purchase Program (PEPP),” European Central Bank, March
18, 2020. https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html. 18, 2020. https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html.
~~185~~187 Arnold, Martin, “ECB to Launch €750 Billion Purchase Program in Response to Coronavirus,” Arnold, Martin, “ECB to Launch €750 Billion Purchase Program in Response to Coronavirus,” Financial Times, ,
March 18, 2020. https://www.ft.com/content/5919c6fb-1f5f-315d-8353-94f04afcf340. March 18, 2020. https://www.ft.com/content/5919c6fb-1f5f-315d-8353-94f04afcf340.
~~186~~ 188 Campbell, Peter and Claire Campbell, Peter and Claire Bushey, “Ford, General Motors and Fiat Chrysler AgreeBushey, “Ford, General Motors and Fiat Chrysler Agree Widespread Shutdown,” Widespread Shutdown,”
Financial ~~Tim es~~Times, March 18, 2020. https://www.ft.com/content/feae3808-6949-11ea-800d-da70cff6e4d3. , March 18, 2020. https://www.ft.com/content/feae3808-6949-11ea-800d-da70cff6e4d3.
~~187 Henderson, Richard, “Bank-Led Freeze on Stock Buybacks Could Spread Across US Market,” Financial Times,~~
~~March 18, 2020. https://www.ft.com/content/b1fa1688-68f6-11ea-a3c9-1fe6fedcca75.~~
~~188 Stubbington, T ommy and Colby Smith, “Investment Veterans T ry to Get to Grips With ‘Broken’ Markets,”~~
Financial Tim es, March 20, 2020. https://www.ft.com/content/97186440-6aa0-11ea-800d-da70cff6e4d3.
~~Congressional Research Service~~

57Congressional Research Service 56 Global Economic Effects of COVID-19 volatility.189 During the week, more than 22 central banks in emerging economies, including Brazil, Turkey, and Vietnam, lowered their key interest rates. By March 19, 2020, investors were selling sovereign and other bonds as firms and other financial institutions attempted to increase their cash holdings, although actions central banks took during the week appeared to calm financial markets. Compared to previous financial market dislocations in which stock market values declined while bond prices rose, stock and bond values fell at the same time in March 2020 as investors reportedly adopted a “sell everything” mentality to build up cash reserves.190 Senate Republicans introduced the Coronavirus Aid, Relief, and Economic Security Act to provide $2 trillion in spending to support the U.S. economy. On March 20, the

~~Global Economic Effects of COVID-19~~

~~By the close of trading on March 20, the DJIA index had fal en by 17% from March 13. At the~~
~~same time, the dollar gained in value against other major currencies, but general y trended lower~~
~~since May and the price of Brent crude oil dropped close to $20 per barrel on March 20, as~~
~~indicated in Figure 15. As a result of the steep drop in oil prices, oil producers agreed in April to~~
~~reduce global supply by 10%, or 9.6 mil ion barrels per day. Since the low prices recorded in~~
~~April, the price of Brent crude oil general y moved within a range of $40 to $44 per barrel~~
~~through late November, when it began edging above $50 per barrel. In trading December 10, the~~
~~price of Brent crude oil breached the $50 per barrel mark for the first time since March 2020. As~~
~~energy demand showed some signs of recovering, the cuts in oil production that began in April~~
~~were trimmed to 7.7 mil ion barrels per day and were expected to be trimmed by an additional 2~~
~~mil ion barrels per day in January 2021. On February 23, 2021, the price of Brent crude oil rose~~
~~above $67 per barrel, the highest price since January 9, 2020. By March 3, 2021, the price of~~
~~Brent crude oil had dropped to $64 per barrel. On March 5, 2021, the Brent crude price of a barrel~~
~~of oil rose to $69 per barrel, the highest since January 2020, as OPEC and Russia decided against~~
~~increasing petroleum output.189~~
~~On December 3, OPEC and Russia agreed to increase oil production by 500,000 barrels per day~~
~~starting in January 2021, despite concerns over continued weak global demand.190 According to~~
~~the International Energy Agency (IEA), expectations about a COVID-19 vaccine tended to boost~~
~~markets prices in November and December, although oil market fundamentals—primarily weak~~
~~demand in Developed economies, slightly stronger demand in developing economies, and~~
~~production increases in Libya, Iraq, and the United States—raised questions about the viability of~~
~~oil price increases.191 The IEA also attributed the rise in oil prices since late spring to increased~~
~~demand in China and India as those economies regained strength.~~

~~189 Raval, Anjli, Oil Jumps as OPEC and Allies Decide Against Big Rise in Output, Financial Tim es, March 5, 2021.~~
~~https://www.ft.com/content/771ebf3a-cff0-4ff3-ab9a-0bbd01a33f55.~~
~~190 Raval, Anjli, OPEC and Russia Agree to Raise Oil Supply From January, Financial Times, December 3, 2020.~~
~~https://www.ft.com/content/18279043-f2ef-40a8-b65d-b68ea0bf21ba.~~
~~191 Oil Market Report June 2020, International Energy Agency, June 2020. https://www.iea.org/reports/oil-market-~~
~~report -november-2020.~~
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~~Figure 15. Brent Crude Oil Price Per Barrel in Dollars~~
~~January 9, 2020, through May 4, 2021~~

Source: Markets Insider. Created by CRS.
~~The~~ Federal Reserve announced that it would expand a facility to support the municipal bond Federal Reserve announced that it would expand a facility to support the municipal bond
~~market.~~market and Britain’s Finance Minister announced an “unprecedented” fiscal package to pay up to Britain’s Finance Minister announced an “unprecedented” fiscal package to pay up to
80% of an employee’s wages and deferring value added taxes by businesses.80% of an employee’s wages and deferring value added taxes by businesses.~~192~~191 The ECB’s The ECB’s
Largarde justified actions by the Bank during the week to provide Largarde justified actions by the Bank during the week to provide ~~liquidity~~ liquidity by arguing that the by arguing that the
“coronavirus pandemic is a public health emergency unprecedented in recent history.” Market “coronavirus pandemic is a public health emergency unprecedented in recent history.” Market
~~indexes fel~~ indexes fell again on March 23, 2020, as the Senate debated the parameters of a new spending again on March 23, 2020, as the Senate debated the parameters of a new spending ~~bil~~
bill to support the economy. Oil prices also continued to to support the economy. Oil prices also continued to ~~fal~~ fall as oil producers appeared to be in a as oil producers appeared to be in a
standoff over cuts to production. standoff over cuts to production.
Financial market indexes continued to Financial market indexes continued to ~~fal~~ fall on March 23, 2020, reaching their lowest point since on March 23, 2020, reaching their lowest point since
the start of the pandemic crisis. The Federal Reserve announced a number of new facilities to the start of the pandemic crisis. The Federal Reserve announced a number of new facilities to
provide an unlimited expansion in bond buying programs. The measures included additional provide an unlimited expansion in bond buying programs. The measures included additional
purchases of Treasury and mortgage-backed securities; additional funding for employers, purchases of Treasury and mortgage-backed securities; additional funding for employers,
consumers, and businesses; establishing the Primary Market Corporate Credit Facility (PMCCF) consumers, and businesses; establishing the Primary Market Corporate Credit Facility (PMCCF)
to support issuing new bonds and loans and the Secondary Market Corporate Credit Facility to support issuing new bonds and loans and the Secondary Market Corporate Credit Facility
(SMCCF) to provide liquidity(SMCCF) to provide liquidity for outstanding corporate bonds; establishing the Term Asset-for outstanding corporate bonds; establishing the Term Asset-
Backed Securities Loan Facility (TALF), to support credit to consumers and businesses; Backed Securities Loan Facility (TALF), to support credit to consumers and businesses;
expanding the Money Market Mutual Fund Liquidity Facility (MMLF) to provide credit to expanding the Money Market Mutual Fund Liquidity Facility (MMLF) to provide credit to
municipalities; and expanding the Commercial Paper Funding Facility (CPFF) to facilitate the municipalities; and expanding the Commercial Paper Funding Facility (CPFF) to facilitate the
flow of credit to municipalities.flow of credit to municipalities.~~193~~192 The OECD released a statement encouraging its members to The OECD released a statement encouraging its members to
support “immediate, large-scale and coordinated actions.” These actions included (1) more support “immediate, large-scale and coordinated actions.” These actions included (1) more
international cooperation to address the health crisis; (2) coordinated government actions to international cooperation to address the health crisis; (2) coordinated government actions to
increase spending to support health care, individuals, and firms; (3) coordinated central bank increase spending to support health care, individuals, and firms; (3) coordinated central bank

~~192 Parker, George Parker, Chris Giles, and Sebastian Payne, “Sunak T urns on Financial Firepower to Help Workers,”~~
Financial Tim es, March 20, 2020, https://www.ft.com/content/826d465a-6ac3-11ea-a3c9-1fe6fedcca75.
~~193~~ ~~Federal Reserve Announces Extensive New~~ action to supervise and regulate financial markets; and (4) policies directed at restoring confidence.193 Reacting to the Fed’s announcement, the DJIA closed up 11% on March 24, marking one of the sharpest reversals in the market index since February 2020. European markets, however, did not follow U.S. market indexes as various indicators signaled a decline in business activity in the Eurozone that was greater than that during the financial crisis and indicated the growing potential 189 Henderson, Richard, “Bank-Led Freeze on Stock Buybacks Could Spread Across US Market,” Financial Times, March 18, 2020. https://www.ft.com/content/b1fa1688-68f6-11ea-a3c9-1fe6fedcca75. 190 Stubbington, Tommy and Colby Smith, “Investment Veterans Try to Get to Grips With ‘Broken’ Markets,” Financial Times, March 20, 2020. https://www.ft.com/content/97186440-6aa0-11ea-800d-da70cff6e4d3. 191 Parker, George Parker, Chris Giles, and Sebastian Payne, “Sunak Turns on Financial Firepower to Help Workers,” Financial Times, March 20, 2020, https://www.ft.com/content/826d465a-6ac3-11ea-a3c9-1fe6fedcca75. 192 Federal Reserve Announces Extensive New Measures to Support the Economy, Board of Governors of the Federal , Board of Governors of the Federal
Reserve System, March 23, 2020. https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm. Reserve System, March 23, 2020. https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm.
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~~action to supervise and regulate financial markets; and (4) policies directed at restoring~~
~~confidence.194~~
~~Reacting to the Fed’s announcement, the DJIA closed up 11% on March 24, marking one of the~~
~~sharpest reversals in the market index since February 2020. European markets, however, did not~~
~~follow U.S. market indexes as various indicators signaled a decline in business activity in the~~
~~Eurozone that was greater than that during the financial crisis and indicated the growing potential~~
~~for a severe economic recession.195~~193 Gurria, Angel, COVID-19: Joint Actions to Win the War, Organization for Economic Cooperation and Development, March 23, 2020. https://www.oecd.org/coronavirus/#op-ed. Congressional Research Service 57 Global Economic Effects of COVID-19 for a severe economic recession.194 U.S. financial markets were buoyed on March 25 and 26 over U.S. financial markets were buoyed on March 25 and 26 over
passage in Congress of a $2.2 passage in Congress of a $2.2 ~~tril ion~~trillion economic stimulus package. economic stimulus package.
On March 27, leaders of the G-20 countries announced through a video conference they had On March 27, leaders of the G-20 countries announced through a video conference they had
agreed to inject $5 agreed to inject $5 ~~tril ion~~ trillion into the global economy and to do “whatever it takes to overcome the into the global economy and to do “whatever it takes to overcome the
pandemic.” Also at the meeting, the OECD offered an updated forecast of the viral infection, pandemic.” Also at the meeting, the OECD offered an updated forecast of the viral infection,
which projected that the global economy could shrink by as much as 2% a month. Nine Eurozone which projected that the global economy could shrink by as much as 2% a month. Nine Eurozone
countries, including France, Italy, and Spain countries, including France, Italy, and Spain ~~cal ed~~called on the ECB to consider issuing on the ECB to consider issuing
“coronabonds,” a common European debt instrument to assist Eurozone countries in fighting “coronabonds,” a common European debt instrument to assist Eurozone countries in fighting
COVID-19.COVID-19.~~196~~195 The ECB announced that it was removing self-imposed limits that it had followed The ECB announced that it was removing self-imposed limits that it had followed
in previous asset purchase programs that restricted its purchases of any one country’s bonds.in previous asset purchase programs that restricted its purchases of any one country’s bonds.~~197~~
196 Japan announced that it would adopt an emergency spending package worth $238 Japan announced that it would adopt an emergency spending package worth $238 ~~bil ion~~billion, or , or
equivalent to 10% of the country’s annual GDP.equivalent to 10% of the country’s annual GDP.~~198~~197 Despite the various actions, global financial Despite the various actions, global financial
markets turned lower March 27 (the DJIA dropped by 900 points) reportedly over volatility in oil markets turned lower March 27 (the DJIA dropped by 900 points) reportedly over volatility in oil
markets and concerns that the economic effects of the COVID-19 pandemic were worsening.markets and concerns that the economic effects of the COVID-19 pandemic were worsening.~~199~~
198 By March 30, central banks in developing countries from Poland, Columbia, South Africa, the By March 30, central banks in developing countries from Poland, Columbia, South Africa, the
Philippines, Brazil, and the Czech Republic reportedly had begun adopting monetary policies Philippines, Brazil, and the Czech Republic reportedly had begun adopting monetary policies
similar to that of the Federal Reserve to stimulate their economies.similar to that of the Federal Reserve to stimulate their economies.~~200~~199 In commodity markets, In commodity markets,
Brent crude oil prices continued to Brent crude oil prices continued to ~~fal~~ fall, reaching a low of $22.76. Strong global demand for , reaching a low of $22.76. Strong global demand for
dollars continued to put upward pressure on the international value of the dollar. In response, the dollars continued to put upward pressure on the international value of the dollar. In response, the
Federal Reserve introduced a new temporary facility that would work with its swap lines to Federal Reserve introduced a new temporary facility that would work with its swap lines to ~~al ow~~allow
central banks and international monetary authorities to enter into repurchase agreements with the central banks and international monetary authorities to enter into repurchase agreements with the
Fed.Fed.~~201~~200 From mid-March to mid-April, U.S. workers’ claims for unemployment benefits reached From mid-March to mid-April, U.S. workers’ claims for unemployment benefits reached
over 17 over 17 ~~mil ion~~ million as firms faced a collapse in demand and requirements for employees to self-as firms faced a collapse in demand and requirements for employees to self-
quarantine caused them to begin furloughing or laying off employees. Financial markets began to quarantine caused them to begin furloughing or laying off employees. Financial markets began to
recover somewhat in early Aprilrecover somewhat in early April in response to the accumulated monetary and fiscal policy in response to the accumulated monetary and fiscal policy

~~194 Gurria, Angel, COVID-19: Joint Actions to Win the War, Organization for Economic Cooperation and Development,~~
~~March 23, 2020. https://www.oecd.org/coronavirus/#op-ed.~~
~~195 Arnold, Martin Arnold and Valentina Romei, “Business Activity Crashes to Record Low in Eurozone,”~~ ~~Financial~~
~~Tim es, March 24, 2020. https://www.ft.com/content/f5ebabd4-6dad-11ea-89df-41bea055720b.~~
~~196 Dombrey, Daniel, Guy Chazan, and Jim Brunsden, “Nine Eurozone Countries Issue Call for ‘Coronabonds,’”~~
Financial Tim es, March 26, 2020. https://www.ft.com/content/258308f6-6e94-11ea-89df-41bea055720b.
~~197 Arnold, Martin and T ommy Stubbington, “ECB Shakes Off Limits on New €750bn Bond-Buying Plan,”~~ ~~Financial~~
~~Tim es, March 27, 2020. https://www.ft.com/content/d775a99e-13b2-444e-8de5-fd2ec6caf4bf.~~
~~198 Kajimoto, T etsushi, Izumi Nakagawa, “Japan Plans Huge Stimulus Package to Cushion Blow~~ initiatives, but remained volatile as a result of uncertainty over efforts to reach an output agreement among oil producers and the continued impact of the viral health effects. International Role of the Dollar Similar to conditions during the 2008-2009 financial crisis, the dollar emerged as the preferred currency by investors, reinforcing its role as the dominant global reserve currency. As indicated in Figure 12, the dollar appreciated more than 3.0% during the period between March 3 and March 13, 2020, reflecting increased international demand for the dollar and dollar-denominated assets. 194 Arnold, Martin Arnold and Valentina Romei, “Business Activity Crashes to Record Low in Eurozone,” Financial Times, March 24, 2020. https://www.ft.com/content/f5ebabd4-6dad-11ea-89df-41bea055720b. 195 Dombrey, Daniel, Guy Chazan, and Jim Brunsden, “Nine Eurozone Countries Issue Call for ‘Coronabonds,’” Financial Times, March 26, 2020. https://www.ft.com/content/258308f6-6e94-11ea-89df-41bea055720b. 196 Arnold, Martin and Tommy Stubbington, “ECB Shakes Off Limits on New €750bn Bond-Buying Plan,” Financial Times, March 27, 2020. https://www.ft.com/content/d775a99e-13b2-444e-8de5-fd2ec6caf4bf. 197 Kajimoto, Tetsushi, Izumi Nakagawa, “Japan Plans Huge Stimulus Package to Cushion Blow from Coronavirus,” from Coronavirus,”
Reuters, March 27, 2020, https://www.reuters.com/article/us-health-coronavirus-japan-stimulus/japan-plans-huge-, March 27, 2020, https://www.reuters.com/article/us-health-coronavirus-japan-stimulus/japan-plans-huge-
stimulus-package-to-cushion-blow-from-coronavirus-idUSKBN21E0UW. stimulus-package-to-cushion-blow-from-coronavirus-idUSKBN21E0UW.
~~199~~ 198 Georgiadis, Georgiadis, Philip, Hudson Lockett, and Leo Lewis,Philip, Hudson Lockett, and Leo Lewis, “Global Stocks Falter After “Global Stocks Falter After ~~T wo~~Two Days of Big Days of Big Gains,”Gains,” Financial
~~Tim es~~Times, March 27, 2020. https://www.ft.com/content/bc33c31c-f019-4ef8-85df-0014a5406ac1. , March 27, 2020. https://www.ft.com/content/bc33c31c-f019-4ef8-85df-0014a5406ac1.
~~200~~199 Wheatley, Jonathan, “Emerging Market Central Banks Embark on Radical Stimulus Wheatley, Jonathan, “Emerging Market Central Banks Embark on Radical Stimulus Policies,” Policies,” Financial Times, ,
March 30, 2020. https://www.ft.com/content/70398316-3fd5-4428-88ab-6f898ee42fd5. March 30, 2020. https://www.ft.com/content/70398316-3fd5-4428-88ab-6f898ee42fd5.
~~201~~200 Politi, James, Brendan Greeley, and Colby Politi, James, Brendan Greeley, and Colby Smith, “Fed Sets Up Scheme to Meet Booming Foreign Demand for Smith, “Fed Sets Up Scheme to Meet Booming Foreign Demand for
Dollars,” Dollars,” Financial ~~Tim es~~Times, March 31, 2020. https://www.ft.com/content/6c976586-a6ea-42ec-a369-9353186c05bb. , March 31, 2020. https://www.ft.com/content/6c976586-a6ea-42ec-a369-9353186c05bb.
Congressional Research Service Congressional Research Service

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Global Economic Effects of COVID-19 Since the highs reached on March 23, the exchange value of the dollar has dropped between 1% and 2% per month in a slow decline as financial strains have eased and demand for the dollar in international financial markets has lessened. Between mid-May and mid-June, the dollar lost about 3% of its value relative to the currencies of other major trading partners and was equal to its value in mid-March. During July, the dollar lost over 2% of its value against the currencies of major trading partners, about where it was in mid-March. By mid-October, the trade-weighted value of the dollar had declined by 8% from the highest values reached in March and nearly matched the value it recorded at the beginning of 2020. On November 5, the dollar index returned to the value reported on January 2, 2020 and has remained below that value since. By the end of January 2021, the dollar had depreciated by more than 11% from the highest value it reached in March 2020. The development of COVID-19 vaccines likely affects the value of the dollar in various ways, including factors that tend to appreciate the dollar as a result of renewed economic growth in the United States and opposing forces that tend to depreciate the dollar if demand declines for the dollar as a safe-haven currency. Despite the appreciation and subsequent depreciation of the dollar through 2020 and 2021 by the end of April, 2021, the dollar was down 2% compared with the value on January 2, 2020. In part, the resolution of the UK’s withdrawal from the EU has strengthened both the Euro and the pound, tending to depreciate the value of the dollar. The decline in the value of the dollar reportedly has pushed some countries to consider intervening to weaken their currencies.201 Figure 12. U.S. Dollar Trade-Weighted Broad Index, Goods and Services January 2, 2020, through June 11, 2021 Source: St. Louis Federal Reserve Bank. Created by CRS. The Bank for International Settlements (BIS) emphasized the role of the dollar as a dominant global currency in its 2019 triennial survey of currency markets.202 According to the survey, the dollar accounts for 88% of global foreign exchange market turnover and is key in funding an array of financial transactions, including serving as an invoicing currency to facilitate 201 Szalay, Eva, Central Banks Take Rare Step of Flagging Currency Sales in Advance, Financial Times, February 3, 2021. https://www.ft.com/content/0383f3a4-41a0-464a-b831-fd1a09a6b1b0. 202 Foreign Exchange Turnover in April 2019, Bank for International Settlements, September 16, 2019. https://www.bis.org/statistics/rpfx19_fx.htm. Congressional Research Service 59 link to page 65 Global Economic Effects of COVID-19 international trade, as indicated in Figure 13. It also accounts for about 60% of central bank foreign exchange holdings, half of non-U.S. banks foreign currency deposits, and two-thirds of non-U.S. corporate borrowings from banks and the corporate bond market.203 In comparison, the United States accounts for about one-fourth of global GDP and about one-fifth of global trade (exports plus imports). Figure 13. International Role of the Dollar Source: U.S. Dollar Funding: An International Perspective, CGFS Papers No. 65, Bank for International Settlements, June 2020. Created by CRS. Notes: (1) Data refer to 2019. (2) Data refer to 2019. (3) US dol ar-denominated cross-border loans by banks to counterparties in all countries; data refer to Q4 2019 (excluding interoffice claims but including interbank claims on account of loans and deposits); loans comprise nonnegotiable debt instruments that are loaned by creditors directly to a debtor or represented by evidence of a deposit. (4) US dol ar denominated international debt securities by all issuers; data refer to Q4 2019; these securities are issued outside the local market of the country where the borrower resides, and capture issues conventionally known as eurobonds and foreign bonds and exclude negotiable loans; instruments such as bonds, medium-term notes and money market instruments are included. (5) Data refer to 2019. (6) Data refer to Q4 2019. (7) As estimated in Gopinath (2015). (8) Data refer to February 2020. Sources: Gopinath (2015); Federal Reserve; IMF; CPB World Trade Monitor; Bloomberg; SWIFT; BIS Triennial Central Bank Survey of Foreign Exchange and Over-the-counter (OTC) Derivatives Markets; BIS locational banking statistics (LBS). As a result of dominant role of the dollar as a global reserve currency, disruptions in the smooth functioning of the global dollar market can have wide-ranging repercussions on international trade and financial transactions. A June 2020 report by BIS stresses the central role of the dollar in the global economy. The report concludes that dollar funding activities are highly complex, geographically dispersed, and interconnected in ways that provide benefits to the stability of the global financial system. This also means, however, that strains in the system can easily be transmitted across different financial markets and across regions.204 In addition, the dominant role of the dollar in international trade pricing and trade financing means the dollar plays a key role in the global economic recovery and that it could amplify the impact of the pandemic, according to the IMF.205 Traditionally, most economic models are based 203 See CRS In Focus IF10112, Introduction to Financial Services: The International Foreign Exchange Market. 204 Bank for International Settlements, U.S, Dollar Funding: An International Perspective, CGFS Papers, No. 65, June 2020, p. 52. https://www.bis.org/publ/cgfs65.htm. 205 Dominant Currencies and External Adjustment, IMF Staff Discussion Note 20/05, International Monetary Fund, July 2020. Congressional Research Service 60 Global Economic Effects of COVID-19 on the assumption that countries set their prices in their home currencies. As a result, domestically produced goods and services become cheaper for trading partners when the domestic currency weakens, leading to increased demand from trading partners and more exports. However, much international trade, including many commodities, is priced in dollars, which means that trade volumes respond less than they would if goods were priced in exporters’ home currencies. Limited evidence indicates that a significant share of bilateral trade between countries other than the United States is invoiced in U.S. dollars.206 As a result, an appreciation of the dollar against other currencies, or a weakening in other currencies, has a muted effect on exports by other countries, at least in the short run, as has been evident in recent movements in exchange rates and trade volumes of emerging market and developing economies. The IMF also concluded that because countries other than the United States price much of their trade in dollars, an appreciation in the value of the dollar, or a depreciation in the value of other currencies relative to the dollar, reduces both exports and imports. As a result, a depreciation in other currencies relative to the dollar provides less of a boost in their exports and, therefore, less of a countercyclical support. Together, these effects translate into movements in the exchange value of the dollar that at times contrasts with traditional theory, since such movements do not affect trade volumes as might be expected. For instance, after appreciating in March 2020, the trade-weighted value of the dollar steadily depreciated through December. In standard models, the depreciation in the dollar would be expected to lower export prices and, in turn, increase demand for U.S. exports, or increase the volume of exports, while import volumes would be expected to decline along with the rising price of foreign currencies relative to the dollar. GDP data through the third quarter indicate, however, that U.S. trade dropped sharply in real, or index terms, in both the quantity of goods exported or imported and in the value of those goods, as indicated in Figure 14. Figure 14. Quarterly Price and Quantity Indexes, U.S. Goods Exports and Imports Source: Bureau of Economic Analysis. Created by CRS. Notes: 2012 = 100. BEA data show the sharp drop in U.S. trade volumes for both exports and imports in the first and second quarters of 2020 compared with the previous quarters, largely reflecting the global economic recession due to policy actions to contain the spread of the viral pandemic, as indicated in Table 10. In quantity terms, U.S. export and import volumes fell by 24% and 16%, 206 Ibid, p. 8. Congressional Research Service 61 Global Economic Effects of COVID-19 respectively, in the second quarter, compared with the preceding quarter.207 In value terms, the price of U.S. exports fell by 6.5%, while the price of imports fell by 3.8% in the second quarter compared with the first quarter. In the third quarter, both export and import volumes increased by about 20% in volume terms, while export and import prices rose by 3.7% and 2.3%, respectively, despite a depreciation in the dollar. In the fourth quarter, U.S. export and import prices increased slightly, while export and import volumes both increased by 7.0%. As a result, the overall value of exports and imports rose slightly less than 5% in the fourth quarter of 2020. According to U.S. balance of payments data, the overall annual value of U.S, goods exports and imports (the combined changes in prices and volumes) dropped by 35% and 16%, respectively year-over-year (2020 compared to 2019). In the first quarter of 2021, U.S. export volumes fell slightly, while import volumes rose by1.4%. Export and import price indexes both rose, reflecting an increase in petroleum export prices of 30% and a rise in petroleum import prices of 38%. Compared to the decline in exports and import volumes in the second quarter of 2020, first quarter 2021 export and import volumes were up 28% and 31%, respectively, reflecting an increase in the global rate of economic growth. Table 12. U.S. Exports and Imports, Change in Quarterly Price and Quantity Indexes (percent change) Year over Year % Change Quarter over Quarter % Change 2019 2020 2020 2021 1q 2q 3q 4q 1q Exports Quantity -0.1% -3.6% -0.7% -24.1% 19.5% 7.0% -0.2% Price -2.2 -2.6 -1.2 -6.5 3.7 1.7 6.0 Imports Quantity -2.9 5.3 -3.0 -15.7 20.4 7.0 1.4 Price -2.5 -1.5 0.4 -3.8 2.3 0.5 3.6 Source: Bureau of Economic Analysis. Quarterly GDP estimates, export and imports price and quantity indices. Created by CRS. Notes: Annual changes represent percent change in 4th quarter index values over the 4th quarter of the preceding year; quarterly changes represent the change in quarterly index values over the previous quarter. The international role of the dollar and the well-developed U.S. capital markets also provide the United States with greater latitude in financing its trade deficit. For some trade specialists, the widely accepted characterization of the current account as a product of a domestic saving-investment relationship fails to distinguish between a country’s domestic saving-investment balance, its ability to finance its trade deficit, and the role of cross-border capital flows. These flows suggest that the ability of the United States to finance its trade imbalances through capital inflows eases the constraint imposed by the domestic saving-investment balance. The international role of the dollar also increases pressure on the Federal Reserve essentially to assume the lead role as the global lender of last resort. Reminiscent of the financial crisis, the global economy has experienced a period of dollar shortage, requiring the Federal Reserve to take numerous steps to ensure the supply of dollars to the U.S. and global economies, including 207 Gross Domestic Product, First Quarter, 2021 (Advance Estimate), Bureau of Economic Analysis, April 29, 2021. Congressional Research Service 62 Global Economic Effects of COVID-19 activating existing currency swap arrangements, establishing such arrangements with additional central banks, and creating new financial facilities to provide liquidity to central banks and monetary authorities.208 Typically, banks lend long-term and borrow short-term and can only borrow from their home central bank. In turn, central banks can only provide liquidity in their own currency. Consequently, a bank can become illiquid in a panic, meaning it cannot borrow in private markets to meet short-term cash flow needs. Swap lines are designed to allow foreign central banks the funds necessary to provide needed liquidity to their country’s banks in dollars. Global Energy Markets By the close of trading on March 20, the DJIA index had fallen by 17% from March 13. At the same time, the dollar gained in value against other major currencies, but generally trended lower since May and the price of Brent crude oil dropped close to $20 per barrel on March 20, as indicated in Figure 15. As a result of the steep drop in oil prices, oil producers agreed in April to reduce global supply by 10%, or 9.6 million barrels per day. Since the low prices recorded in April, the price of Brent crude oil generally moved within a range of $40 to $44 per barrel through late November, when it began edging above $50 per barrel. In trading December 10, the price of Brent crude oil breached the $50 per barrel mark for the first time since March 2020. As energy demand showed some signs of recovering, the cuts in oil production that began in April were trimmed to 7.7 million barrels per day and were expected to be trimmed by an additional 2 million barrels per day in January 2021. On February 23, 2021, the price of Brent crude oil rose above $67 per barrel, the highest price since January 9, 2020. By March 3, 2021, the price of Brent crude oil had dropped to $64 per barrel. On March 5, 2021, the Brent crude price of a barrel of oil rose to $69 per barrel, the highest since January 2020, as OPEC and Russia decided against increasing petroleum output.209 On December 3, OPEC and Russia agreed to increase oil production by 500,000 barrels per day starting in January 2021, despite concerns over continued weak global demand.210 According to the International Energy Agency (IEA), expectations about a COVID-19 vaccine tended to boost markets prices in November and December, although oil market fundamentals—primarily weak demand in Developed economies, slightly stronger demand in developing economies, and production increases in Libya, Iraq, and the United States—raised questions about the viability of oil price increases.211 The IEA also attributed the rise in oil prices since late spring to increased demand in China and India as those economies regained strength. 208 Politi, James, Brendan Greeley, and Colby Smith, “Fed Sets Up Scheme to Meet Booming Foreign Demand for Dollars,” Financial Times, March 31, 2020. https://www.ft.com/content/6c976586-a6ea-42ec-a369-9353186c05bb. 209 Raval, Anjli, Oil Jumps as OPEC and Allies Decide Against Big Rise in Output, Financial Times, March 5, 2021. https://www.ft.com/content/771ebf3a-cff0-4ff3-ab9a-0bbd01a33f55. 210 Raval, Anjli, OPEC and Russia Agree to Raise Oil Supply From January, Financial Times, December 3, 2020. https://www.ft.com/content/18279043-f2ef-40a8-b65d-b68ea0bf21ba. 211 Oil Market Report June 2020, International Energy Agency, June 2020. https://www.iea.org/reports/oil-market-report-november-2020. Congressional Research Service 63 Global Economic Effects of COVID-19 Figure 15. Brent Crude Oil Price Per Barrel in Dollars January 9, 2020, through June 8, 2021 Source: Markets Insider. Created by CRS. Congressional Research Service 64 Global Economic Effects of COVID-19 Comparing the Current Crisis and the 2008 Crisis Sharp declines in the stock market and broader financial sector turbulence; interest rate cuts and large-scale Federal Reserve intervention; and discussions of massive government stimulus packages have led some observers to compare the current market reaction to that experienced a little over a decade ago. There are similarities and important differences between the current economic crisis and the global financial crisis of 2008/2009. Foremost, the earlier crisis was rooted in structural weakness in the U.S. financial sector. Fol owing the col apse of the U.S. housing bubble, it became impossible for firms to identify demand and hold inventories across many sectors (construction, retail, etc.). This led to massive oversupply and sharp retail losses which extended to other sectors of the U.S. economy and eventual y the global economy. Moreover, financial markets across countries were linked together by credit default swaps. As the crisis unfolded, large numbers of banks and other financial institutions were negatively affected, raising questions about capital sufficiency and reserves. The crisis then quickly engulfed credit-rating agencies, mortgage lending companies, and the real estate industry broadly. Market resolution came gradually with a range of monetary and fiscal policy measures that were closely coordinated at the global level. These were focused on putting a floor under the falling markets, stabilizing banks, and shoring up investor confidence to get spending started again. Starting in September 2007, the Federal Reserve cut interest rates from over 5% in September 2007 to between 0 and 0.25% before the end of the 2008. Once interest rates approached zero, the Fed turned to other so-called “unconventional measures,” including targeted assistance to financial institutions, encouraging Congress to pass the Troubled Asset Relief Program (TARP) to prevent the col apse of the financial sector and boost consumer spending. Other measures included swap arrangements between the Federal Reserve and the European Central Bank and smaller central banks, and so-called “quantitative easing” to boost the money supply. On a global level, the United States and other countries tripled the resources of the IMF (from $250 bil ion to $750 bil ion) and coordinated domestic stimulus efforts. Unlike the 2008 crisis, the current crisis began as a supply shock. As the global economy has become more interdependent in recent decades, most products are produced as part of a global value chain (GVC), where an item such as a car or mobile device consists of parts manufactured all over the world, and involving multiple border crossings before final assembly. The earliest implications of the current crisis came in January as plant closures in China and other parts of Asia led to interruptions in the supply chain and concerns about dwindling inventories. As the virus spread from Asia to Europe, the crisis switched from supply concerns to a broader demand crisis as the measures being introduced to contain the spread of the virus (social distancing, travel restrictions, cancelling sporting events, closing shops and restaurants, and mandatory quarantine measures) prevent most forms of economic activity from occurring. Thus, unlike the 2008 crisis response, which involved liquidity and solvency-related policy measures to get people spending again, the current crisis did not start as a financial crisis, but could evolve into one if a recovery in economic activity is delayed. While larger firms may have sufficient capital to wait out a crisis, many aspects of the economy (such as restaurants or retail operations) operate on very tight margins and would likely not be able to pay employees after closures lasting more than a few days. Many people wil also need to balance child care and work during quarantine or social distancing measures. During this type of crisis, while monetary policy measures play a part—and the Federal Reserve has once again cut rates to near zero—they cannot compensate for the physical interaction that the global economy is dependent upon. As a result, fiscal stimulus wil likely play a relatively larger role in this crisis in order to prevent personal and corporate bankruptcies during the peak crisis period. Efforts to coordinate U.S. and foreign economic policy measures wil also have an important role in mitigating the scale and length of any global economic downtown. Source: Prepared by Martin A. Weiss, CRS. Policy Responses In response to growing concerns over the global economic impact of the pandemic, G-7 finance ministers and central bankers released a statement on March 3, 2020, indicating they would “use all appropriate policy tools” to sustain economic growth.212 The Finance Ministers also pledged fiscal support to ensure health systems can sustain efforts to fight the outbreak.213 In most cases, 212 Statement of G-7 Finance Ministers and Central Bank Governors, March 3, 2020. https://home.treasury.gov/news/press-releases/sm927. Long, Heather, “G-7 Leaders Promise to Help Economy as COVID-19 Spreads, But They Don’t Announce Any New Action,” Washington Post, March 3, 2020. https://www.washingtonpost.com/business/2020/03/03/economy-COVID-19-rate-cuts/. 213 Giles et al., “Finance Ministers Ready to Take Action.” Congressional Research Service 65 link to page 129 Global Economic Effects of COVID-19 however, countries pursued their own divergent strategies, in some cases including banning exports of medical equipment. Following the G-7 statement, the U.S. Federal Reserve (Fed) lowered its federal funds rate by 50 basis points, or 0.5%, to a range of 1.0% to 1.25% due to concerns about the “evolving risks to economic activity of the COVID-19.”214 At the time, the cut was the largest one-time reduction in the interest rate by the Fed since the 2008-2009 global financial crisis. After a delayed response, other central banks followed the actions of the G-7 countries. Most central banks lowered interest rates and acted to increase liquidity in their financial systems through a combination of measures, including lowering capital buffers and reserve requirements, creating temporary lending facilities for banks and businesses, and easing loan terms. In addition, national governments adopted various fiscal measures to sustain economic activity. In general, these measures included making payments directly to households, temporarily deferring tax payments, extending unemployment insurance, and increasing guarantees and loans to businesses. See Appendix B to this report for detailed information about the policy actions by individual governments.215 The United States Recognizing the growing impact the pandemic was having on financial markets and economic growth, the Federal Reserve (Fed) took a number of steps to promote economic and financial stability involving the Fed’s monetary policy and “lender of last resort” roles. Some of these actions were intended to stimulate economic activity by reducing interest rates; other actions were intended to provide liquidity to financial markets so firms would have access to needed funding. In announcing its decisions, the Fed indicated that “[t]he COVID-19 outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected.216” On March 31, 2020, the Trump Administration announced that it was suspending for 90 days tariffs it had placed on imports of apparel and light trucks from China, but not on other consumer goods and metals.217 In October, Congress and the Trump Administration negotiated over the substance of an additional spending package to support the U.S. economy. On April 29, 2021, the Bureau of Economic Analysis (BEA) released updated data on U.S. GDP growth for the first quarter of 2021 and updated data for 2020 that indicates the economy grew by 6.4% in the first quarter of 2020, outpacing the 4th quarter 2020 rate of 4.3%. In contrast, U.S. GDP fell at an annual rate of 31.4% in the second quarter, after falling by 5.0% at an annual rate in the first quarter, as indicated in Figure 16.218 On an annual basis, the 2020 rate of growth fell by 3.5%, compared with a 2019 rate of 2.9%. In the second quarter, amidst a large decline overall in U.S. economic activity in response to business lockdowns, some sectors experienced a decline in activity of 80% or more, including recreation, food services and accommodation and transportation sectors. In the third quarter, however, all sectors except mining experienced 214 Federal Reserve Releases FOMC Statement, March 3, 2020, https://www.federalreserve.gov/newsevents/pressreleases/monetary20200303a.htm. 215 Stage Three Proposal, U.S. Department of the Treasury, March 17, 2020. https://www.washingtonpost.com/context/department-of-treasury-proposal-for-COVID-19-response/6c2d2ed5-a18b-43d2-8124-28d394fa51ff/?itid=lk_inline_manual_3. 216 Federal Reserve Issues FOMC Statement, March 15, 2020. https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm. 217 Politi, James and Aime Williams, “Trump to Suspend Some Tariffs for 90 Days,” Financial Times, March 31, 2020. https://www.ft.com/content/46add447-2048-4348-bd34-2088ad0e3bc8. 218 Gross Domestic Product, First Quarter 2021 (Advance Estimate), Bureau of Economic Analysis, April 29, 2021. Congressional Research Service 66 Global Economic Effects of COVID-19 positive rate of growth. Personal consumption increased by 41% in the third quarter, after falling by 31.4% in the second quarter. Figure 16. U.S. GDP, Percentage Change From Preceding Quarter Seasonally adjusted at annual rate Source: Bureau of Economic Analysis. Created by CRS. Notes: Exports and imports represent the combination of goods and services. On June 8, 2021, the U.S. Census Bureau reported a decrease in the overall U.S. goods and services trade deficit in April 2021, compared with March 2021, of $6 billion to reach a monthly total of $68.9 billion. The decrease in the monthly deficit in goods and services primarily reflected a 1.0% increase in goods exports and a 2.0% decrease in goods imports relative to the previous month’s totals. Nominal values for services trade rose in small percentage terms for exports and imports, as indicated in Figure 17.219 According to BEA data, goods exports increased from $143.7 billion in March 2021 to $145.3 billion in April 2021 and goods imports fell from $236.5 billion to $232.0 billion. On a year-over-basis, the overall goods and services trade deficit in 2020 increased by $105 billion, or 18.2%, compared with 2019 and demonstrates 219 Monthly U.S. International Trade in Goods and Services, April 2021, Census Bureau, June 8, 2021. Congressional Research Service 67 Global Economic Effects of COVID-19 the impact that ~~Global Economic Effects of COVID-19~~

~~initiatives, but remained volatile as a result of uncertainty over efforts to reach an output~~
~~agreement among oil producers and the continued impact of the viral health effects.~~
~~April 2020~~
~~The Federal Reserve announced on April 8 that it was establishing a facility to fund smal~~
~~businesses through the Paycheck Protection Program. Japan also announced that it was preparing~~
~~to declare areas around Tokyo to be in a state of emergency and that it would adopt a $989 bil ion~~
~~funding package.202~~
~~On April 9, OPEC and Russia agreed to cut oil production by 10 mil ion barrels per day.203 On~~
~~April 15, G-20 finance ministers and central bank governors announced their support for the~~
~~proposed agreement by Saudi Arabia and Russia to reduce oil production.204 They also announced~~
~~an agreement to freeze government loan payments until the end of the year to help low -income~~
~~developing countries address the pandemic and asked international financial institutions to do~~
~~likewise.205 G-7 finance ministers and central bank governors agreed to support the G-20 proposal~~
~~to suspend debt payments by developing countries.206 Eurozone finance ministers announced a~~
~~€500 bil ion (about $550 bil ion) emergency spending package to support governments,~~
~~businesses, and workers. Reportedly, the measure wil provide funds to the European Stability~~
~~Mechanism, the European Investment Bank, and for unemployment insurance.207~~
~~In other policy areas, the IMF announced that it was doubling its emergency lending capability to~~
~~$100 bil ion, in response to requests from more than 100 countries for assistance.208 The Bank of~~
~~England announced that it would take the unprecedented move of temporarily directly financing~~
~~UK government emergency spending needs through monetary measures rather than through the~~
~~typical method of issuing securities to fight the effects of COVID-19.209 Secretary-General of the~~
~~United Nations Guterres declared on April 9, 2020, before the United Nations Security Council~~
~~that the pandemic posed a significant threat to the maintenance of international peace and security~~
~~and outlined eight specific risks, including the erosion of trust in public institutions, increased~~
~~risks from terrorism and bioterrorism, and worsening existing human rights abuses.210~~

~~202 T akeo, Yuko and Yoshiaki Nohara, “Japan’s Virus Stimulus Package to Come in T wo Phases,” Bloomberg, April 5,~~
~~2020. https://www.bloomberg.com/news/articles/2020-04-06/japan-s-virus-stimulus-package-to-come-in-two-phases-~~
~~documents-k8nuj552.~~
~~203 Sheppard, David, Anjli Raval, Derek Brower, and Henry Foy, “G20 Ministers Meet to Endorse OPEC-Russia Deal~~
~~to Slash Oil Production,” Financial Tim es, April 10, 2020. https://www.ft.com/content/c7a1e2e6-8c17-48d5-8c16-~~
~~edce911b5cbb.~~
~~204 Sheppard, David, Anjli Raval, Derek Brower. and Henry Foy, G20 Backs Largest Oil Supply Agreement in History,~~
Financial Tim es, April 15, 2020. https://www.ft.com/content/16ac91d8-42bf-4190-88de-f3d89b2b36f4.
~~205 England, Andrew, Jonathan Wheatley and James Politi, G20 Agrees Debt Relief for Low Income Nations,~~ ~~Financial~~
~~Tim es, April 15, 2020. https://www.ft.com/content/5f296d54-d29e-4e87-ae7d-95ca6c0598d5.~~
~~206 Politi, James and Jonathan Wheatley, G7 Countries Back Debt Relief For Poorest Nations, Financial Times, April~~
~~14, 2020. https://www.ft.com/content/c384ed59-1ca3-476f-9b89-eaf5cf31e42c.~~
~~207 Fleming, Sam and Mehreen Khan, “Eurozone Countries Strike Emergency Deal on Coronavirus Rescue,”~~ ~~Financial~~
~~Tim es, April 9, 2020. https://www.ft.com/content/b984101a-42b8-40db-9a92-6786aec2ba5c.~~
~~208 Politi, James, “IMF Boosts Emergency Lending Capacity to $100bn,” Financial Times, April 9, 2020.~~
~~https://www.ft.com/content/e46faadc-456b-4cf8-a2fd-2017702747ab.~~
~~209 Giles, Chris and Philip Georgiadis, “Bank of England to Directly Finance UK Government’s Extra Spending,”~~
Financial Tim es, April 9, 2020. https://www.ft.com/content/664c575b-0f54-44e5-ab78-2fd30ef213cb.
~~210 Secretary-General’s Remarks to the Security Council on the COVID-19 Pandemic [as delivered], United Nations,~~
~~April 9, 2020. https://www.un.org/sg/en/content/sg/statement/2020-04-09/secretary-generals-remarks-the-security-~~
~~council-the-covid-19-pandemic-delivered.~~
~~Congressional Research Service~~

61

~~Global Economic Effects of COVID-19~~

~~Federal Reserve Chairman Jerome Powel , stating that the U.S. economy was deteriorating “with~~
~~alarming speed,” announced on April 10 that the Fed would provide an additional $2.3 tril ion in~~
~~loans, including a new financial facility to assist firms by acquiring shares in exchange traded~~
~~funds that own the debt of lower-rated, riskier firms that are among the most exposed to~~
~~deteriorating economic conditions associated with COVID-19 and low oil prices.211 On April 16,~~
~~the U.S. Labor Department reported that 5.2 mil ion Americans filed for unemployment insurance~~
~~during the previous week, raising the total claims since mid-March to over 22 mil ion.212~~
~~According to Chinese official statistics, the Chinese economy shrank by 6.8% on an annual basis~~
~~during the first quarter of 2020, reportedly the first such contraction in 40 years.213~~
~~Financial market indicators rose on April 17, reportedly on an upbeat sentiment that actions taken~~
~~by the Federal Reserve and other central banks would stabilize conditions in the corporate credit~~
~~market.214 The price of futures contracts for oil delivery in May 2020 for the U.S. West Texas~~
~~Intermediate (WTI) fel to $18 per barrel, the lowest it had been since 2002, reportedly reflecting~~
~~rising inventories and low global demand.215 Leaders of emerging economies in Latin America~~
~~and Africa argued that the G-20 cal for suspension of interest payments fel short of what is~~
~~needed. National leaders from Columbia, Brazil, Mexico, and Chile encouraged the World Bank,~~
~~the InterAmerican Development Bank, and the IMF to double their net lending to Latin America,~~
~~arguing that, “The Covid-19 pandemic is a shock of unprecedented magnitude, uncertain duration~~
~~and catastrophic consequences that, if not properly addressed, could lead to one of the most tragic~~
~~episodes in the history of Latin America and the Caribbean.”216~~
~~The price of oil fel to its lowest level in two decades on April 19, reportedly reflecting a~~
~~significant drop in global demand for energy and rising inventories.217 Some Eurozone members~~
~~reportedly argued for the ECB to create a Eurozone “bad bank” to remove bil ions of euros in~~
~~nonperforming debts from banks’ balance sheets to provide more capacity for Eurozone banks at~~
~~a potential y critical time when banks could see an increase in nonperforming loans.218 The World~~
~~Bank confirmed that its “pandemic bonds” would pay out $133 bil ion to the poorest countries~~
~~affected by the pandemic.219~~

~~211 Rennison, Joe, Robin Wigglesworth, and Colby Smith, “Federal Reserve Enters New T erritory with Support for~~
~~Risky Debt,” Financial Tim es, April 10, 2020. https://www.ft.com/content/c0b78bc9-0ea8-461c-a5a2-89067ca94ea4.~~
~~Heather Long, “ Fed Chair Powell Says U.S. Economy Deteriorating ‘With Alarming Speed,’” Washington Post, April~~
~~9, 2020. https://www.washingtonpost.com/business/2020/04/09/federal-reserve-unveils-over-2-trillion-new-lending-~~
~~small-businesses-city-governments-big-firms/.~~
~~212 Unemployment Insurance Weekly Claims, Department of Labor, April 16, 2020. https://www.dol.gov/ui/data.pdf.~~
~~213 Hale, T homas, Xinning Liu, and Yuan Yang, China’s Economy Shrinks for First T ime in Four Deca des,~~ ~~Financial~~
~~Tim es,~~ ~~April 17, 2020. https://www.ft.com/content/8f941520-67ad-471a-815a-d6ba649d22ed.~~
~~214 Smith, Colby, Myles McCormick, T ommy Stubbington, and Hudson Lockett, US Stocks Extend Rally With Central~~
~~Bank Safety Net, Financial Tim es, April 17, 2020. https://www.ft.com/content/5ebbc2d8-ade3-4d5c-86f5-~~
~~49b9478fe03d.~~
~~215 Sheppard, David, US Crude T umbles to 18-year Low as Supply Overwhelms Demand, Financial Times, April 17,~~
~~2020. https://www.ft.com/content/d0a0cfc3-765c-4b55-ada7-11e0d378d406.~~
~~216 Wheatley, Jonathan, Michael Stott, and David Pilling, Emerging Economies Call for More Financial Help After G20~~
~~Deal, Financial Tim es, April 17, 2020. https://www.ft.com/content/203ed8f5-6bb2-4016-80a9-dd99269bfa26.~~
~~217 Lockett, Hudson Lockett and David Sheppard, US Oil Price Plunges to 20 -year Low as Coronavirus Hits Demand,~~
Financial Tim es, April 19, 2020. https://www.ft.com/content/a5292644-958d-4065-92e8-ace55d766654.
~~218 Arnold, Martin and Javier Espinoza, ECB Pushes for Eurozone Bad Bank to Clean up Soured Loans,~~ ~~Financial~~
~~Tim es, April 19, 2020. https://www.ft.com/content/15d17d1d-8e1b-4f84-97b4-b62e6ae8f962.~~
~~219 Gross, Anna, World Bank Pandemic Bonds to Pay $133m to Poorest Virus-hit Nations, Financial Times, April 19,~~
~~2020. https://www.ft.com/content/c8556c9f-72f7-48b4-91bf-c9e32ddab6ff.~~
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~~Global Economic Effects of COVID-19~~

~~On April 21, Agricultural Ministers of the G-20 countries released a joint statement that supported~~
~~measures to “ensure the health, safety, welfare, and mobility of workers in agriculture and~~
~~throughout the food supply chain.” The joint statement also indicated that the G-20 countries~~
~~would adopt measures that are “targeted, proportionate, transparent, and temporary, and that they~~
~~do not create unnecessary barriers to trade or disruption to global food supply chains.” The~~
~~statement also indicated that the G-20 would, “guard against any unjustified restrictive measures~~
~~that could lead to excessive food price volatility in international markets and threaten the food~~
~~security and nutrition of large proportions of the world population, especial y the most vulnerable~~
~~living in environments of low food security.”220~~
~~On April 23, the House passed H.R. 266 (P.L. 116-139), the Paycheck Protection Program and~~
~~Health Care Enhancement Act, following similar actions by the Senate the previous day. The~~
~~measure provided $484 bil ion for smal business loans, health care providers, and COVID-19~~
~~testing. The U.S. Labor Department reported that 4.4 mil ion Americans filed for unemployment~~
~~insurance in the previous week, raising the total that have applied to over 26 mil ion.221 Indicators~~
~~of manufacturing and services activity in Europe dropped to their lowest level since 1990,~~
~~reflecting the impact of the pandemic on the European economy.222 The Bank of England~~
~~indicated that it would quadruple its borrowing over the second quarter of 2020, reflecting a~~
~~contraction in the UK economy, lower tax revenues, and increased financial demands to support~~
~~fiscal policy measures to fight the pandemic.223 The Saudi Presidency of the G-20 cal ed on~~
~~international organizations on April 24 to fund an emergency response to the pandemic. The Bank~~
~~of Japan announced on April 27 that it would purchase unlimited amounts of government bonds~~
~~and quadruple its purchases of corporate debt to keep interest rates low and stimulate the~~
~~Japanese economy.224~~
~~At its April 29 scheduled meeting, the U.S. Federal Open Market Committee left its main interest~~
~~rates unchanged, but reiterated its commitment to use “its full range of tools to support the U.S.~~
~~economy.” The policy statement concluded that, “The ongoing public health crisis wil weigh~~
~~heavily on economic activity, employment, and inflation in the near term, and poses considerable~~
~~risks to the economic outlook over the medium term.”225 The Federal Reserve also announced a~~
~~change in its eligibility requirements for a $500 bil ion lending program for municipalities. The~~
~~statement followed the release of the preliminary estimate of U.S. first quarter GDP, which~~
~~indicated that the economy had contracted by an annualized rate of 4.8% (revised to 5.0%).226~~
~~On April 30, the Department of Labor released its weekly data on applications for unemployment~~
~~insurance, which indicated that an additional 3.8 mil ion people had filed for unemployment~~

~~220 G20 Extraordinary Agriculture Ministers Meeting: Statement on COVID-19, G-20, April 21, 2020. https://g20.org/~~
~~en/media/Pages/pressroom.aspx.~~
~~221 Unemployment Insurance Weekly Claims, April 23, 2020. https://www.dol.gov/ui/data.pdf.~~
~~222 Arnold, Martin and Valentina Romei, European Business Activity Crashes Under Coronavirus Lockdowns,~~
Financial Tim es, April 23, 2020. https://www.ft.com/content/8520895f-3249-4a8b-b0e5-881a64e77971.
~~223 Giles, Chris, and T ommy Stubbington, UK T reasury to Quadruple Borrowing to £180bn Over Next Quarter,~~
Financial Tim es, April 23, 2020. https://www.ft.com/content/8886e002-c260-4daa-8b7b-509b3f7e6edb.
~~224 Harding, Robin, Bank of Japan Steps up Coronavirus Stimulus With Bond-buying Pledge, Financial Times, April~~
~~27, 2020. https://www.ft.com/content/7ba5c507-df9e-4107-87eb-73afa2c13e91.~~
~~225 Federal Reserve Issues FOMC Statement, Board of Governors of the Federal Reserve System, April 29, 2020.~~
~~https://www.federalreserve.gov/newsevents/pressreleases/monetary20200429a.htm.~~
~~226 Gross Domestic Product, First Quarter 2020 (Advance Estimate), Bureau of Economic Analysis, April 29, 2020.~~
~~https://www.bea.gov/.~~
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~~insurance during the week, raising the total number who had applied to 30 mil ion.227 The Federal~~
~~Reserve also announced an expansion in its medium-size business loan program by al owing~~
~~firms with up to 15,000 employees or with revenues up to $5 bil ion to access a new $600 bil ion~~
~~program. In addition, the Fed lowered the minimum loan amount for smal businesses and~~
~~announced a loan program to assist riskier businesses.228 At the same time, the ECB expanded a~~
~~record low-interest rate loan program for Eurozone banks to support economic activity, while~~
~~warning that the Eurozone economy could contract between 5% and 12% in 2020 as it faces, “an~~
~~economic contraction of a magnitude and speed that are unprecedented in peacetime.”229 The~~
~~ECB also announced a new nontargeted low-interest rate pandemic emergency longer-term~~
~~refinancing operation (PELTROs) to complement its Pandemic Emergency Refinance Operations~~
~~announced in March.230 House Speaker Pelosi stated that House Democrats were considering a $1~~
~~tril ion spending bil to support state and local governments.231 In a development that seemed~~
~~incongruous with the broader economic situation, between April 1, 2020, and April 30, 2020, the~~
~~DJIA rose more than 3,400 points, or 16%, marking the strongest monthly increase since 1987.232~~
~~May 2020~~
~~On May 5, Germany’s Constitutional court issued a ruling that could prevent the German central~~
~~bank, the Bundesbank, from making additional bond purchases under the Pandemic Emergency~~
~~Purchase Program (PEPP). The ECB’s program is intended to ease borrowing costs across the~~
~~Eurozone to stimulate economic growth.~~
~~The U.S. Census Bureau reported on May 5 that U.S. exports and imports fel in March; exports~~
~~fel by a greater amount than imports, thereby increasing the monthly U.S. goods and services~~
~~trade deficit. The trade balance for March was -$44.5 bil ion, an increase of about $4.6 bil ion~~
~~over the trade deficit in February. The decline in export and import values reflected lower imports~~
~~and exports of both goods and services.~~
~~On May 6, the European Commission released its spring economic forecast, which indicated that~~
~~economic activity in the EU would decline by 7.4% in 2020 as a result of measures to contain the~~
~~pandemic. The Commission forecast that economic growth would advance by 6.0% in 2021,~~
~~assuming the containment measures can be lifted gradual y, the viral effects remain contained,~~
~~and that the fiscal and monetary measures implemented by the EU members are effective in~~
~~blunting the negative effects on economies.233 On May 7, the Labor Department announced that~~

~~227 Unemployment Insurance Weekly Claims, April 30, 2020. https://www.dol.gov/ui/data.pdf.~~
~~228 Politi, James, Colby Smith and Robert Armstrong, Federal Reserve Extends $600bn Main Street Lending Program.~~
Financial Tim es, April 30, 2020. https://www.ft.com/content/46fdc853-1d7d-49af-93e8-f12e0d006fc2.
~~229 Introductory Statement, European Central Bank, April 29, 2020. https://www.ecb.europa.eu/press/pressconf/2020/~~
~~html/ecb.is200430~ab3058e07f.en.html.~~
~~230 Arnold, Martin and T ommy Stubbington, ECB Launches Fresh Push to Lend to Banks at Ultra -low Rates,~~ ~~Financial~~
~~Tim es, April 30, 2020. https://www.ft.com/content/cef090d0-97dc-4e75-a4b1-deebfd4afacf.~~
~~231 Werner, Erica, Pelosi Points to $1 T rillion Need for State and Local Governments in Next Coronavirus Bill,~~
Washington Post, April 30, 2020. https://www.washingtonpost.com/us-policy/2020/04/30/congress-coronavirus-
~~economy/.~~
~~232 Henderson, Richard Henderson, Robin Wigglesworth, and Katie Martin, U.S. Stocks Close Out Best Month Since~~
~~1987 in Global Rebound, Financial Tim es, April 30, 2020. https://www.ft.com/content/88e57ec9-42d4-455d-a045-~~
~~293a6a54837d.~~
~~233 European Economic Forecast Spring 2020, European Commission, May 2020. https://ec.europa.eu/commission/~~
~~presscorner/detail/en/ip_20_799.~~
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~~2.7 mil ion Americans had filed for unemployment insurance during the week, raising the total~~
~~that had filed over the previous seven weeks to 33 mil ion.234~~
~~On May 8, the U.S. Department of Labor announced that 20.5 mil ion Americans had lost their~~
~~jobs in April, pushing the national unemployment rate to 14.5%. Despite the rise in the~~
~~unemployment rate, the DJIA rose by 2.0%, reportedly based on optimism that the monetary~~
~~policy actions the Federal Reserve, the ECB, and the Bank of Japan had taken to support financial~~
~~markets would stabilize and stimulate the markets and optimism that the health crisis is ebbing.235~~
~~On May 12, House Democrats introduced H.R. 6800, the Heroes Act, to provide a $3 tril ion~~
~~supplemental spending bil for additional financial resources to state and local governments and~~
~~for other purposes. The measure passed the House on May 15 and was sent to the Senate for~~
~~consideration. On May 13, the UK Office of National Statistics reported that UK GDP contracted~~
~~by 2.0% in the first quarter, the largest decline in the UK’s GDP since 2008 with al major~~
~~economic sector affected.236 On May 14, the U.S. Department of Labor announced that an~~
~~additional 2.4 mil ion Americans had filed for unemployment insurance during the previous~~
~~week, increasing the total number filing for unemployment insurance over the previous eight~~
~~weeks to 36 mil ion.237~~
~~On May 18, German Chancel or Angela Merkel and French President Emmanuel Macron~~
~~proposed a €500 bil ion (about $620 bil ion) EU recovery fund in an effort to gain a coordinated~~
~~EU fiscal response to the pandemic.238~~
~~The Department of Labor announced on May 21 that an additional 2.4 mil ion Americans had~~
~~filed for Unemployment Insurance, raising the total to 38.4 mil ion over the previous nine~~
~~weeks.239~~
~~On May 27, European Commission President Ursula von der Leyen proposed a €750 bil ion~~
~~(about $825 bil ion) coronavirus recovery plan to provide loans and grants to the hardest hit EU~~
~~economies and changes to the EU budget. The Japanese Cabinet proposed a second supplemental~~
~~appropriation measure that includes $296 bil ion in spending and a total value of about $1.1~~
~~tril ion in loans and guarantees, funded through new bonds.240~~
~~On May 28, the Department of Labor announced that an additional 1.9 mil ion (revised)~~
~~Americans filed for Unemployment Insurance, raising the ten-week total to 42.6 mil ion.241~~
~~June 2020~~
~~On June 4, the U.S. Census Bureau reported that U.S. imports fel by 13.7% and exports fel by~~
~~20.5% in April, increasing the monthly current account deficit and registering the largest decline~~

~~234 Unemployment Insurance Weekly Claims, May 5, 2020. https://www.dol.gov/ui/data.pdf.~~
~~235 Platt, Eric, Colby Smith, Adam Samson, and Hudson Lockett, Wall Street closes higher despite dire US jobs data,~~
Financial Tim es, May 8, 2020. https://www.ft.com/content/a9999ef1-1373-41b7-8d55-d780fd06825d.
~~236 GDP Monthly Estimate, UK: March 2020, Office for National Statistics, May 13, 2020. https://www.ons.gov.uk/~~
~~economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/march2020.~~
~~237 Unemployment Insurance Weekly Claims, May 14, 2020. https://www.dol.gov/ui/data.pdf.~~
~~238 Fleming, Sam, Victor Mallet, and Guy Chazan, Germany and France Unite in Call for €500 Billion Europe~~
~~Recovery Fund, Financial Tim es, May 18, 2020. https://www.ft.com/content/c23ebc5e-cbf3-4ad8-85aa-032b574d0562.~~
~~239 Unemployment Insurance Weekly Claims, May 21, 2020. https://www.dol.gov/ui/data.pdf.~~
~~240 Harding, Robin, Japan’s Cabinet Approves Extra $1.1 T rillion Budget to Counter Recession, Financial Times, May~~
~~27, 2020. https://www.ft.com/content/ce7f3564-c997-339c-ad3d-c6d092fb7f1e.~~
~~241 Unemployment Insurance Weekly Claims, May 29, 2020. https://www.dol.gov/ui/data.pdf.~~
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~~in U.S. trade since the global financial crisis.242 In addition, the Labor Department announced that~~
~~an additional 1.9 mil ion Americans filed for unemployment insurance, increasing the 11-week~~
~~total to 44 mil ion.243 The European Central Bank announced that it would double to $1.5 tril ion~~
~~its Pandemic Emergency Purchase Program to stimulate the European economy.244 The DJIA rose~~
~~by more than 800 points on June 5 as a positive jobs report, apparently signaling to some that the~~
~~U.S. economy would recover quickly from the pandemic-driven economic downturn.245 OPEC~~
~~and Russia reportedly agreed on June 7 to maintain their cuts in oil production for one additional~~
~~month in an effort to raise international oil prices.246~~
~~On June 8, the DJIA rose nearly 2% reportedly on positive jobs data, extending gains in the value~~
~~of the index and rising to its highest level since late February.247 Most foreign markets indices~~
~~similarly rose. The World Bank forecasted that emerging and developing economies would~~
~~contract in 2020 for the first time in 60 years.248~~
~~On June 11, the DJIA fel by more than 1,800 points, or 6.9% reportedly on fears that a spike in~~
~~new coronavirus cases signaled the pandemic was not contained and over concerns about U.S.~~
~~economic growth as a result of projections by the Federal Reserve that were interpreted as~~
~~gloomy.249 The Labor Department reported that an additional 1.57 mil ion Americans filed for~~
~~unemployment insurance during the previous week, raising the 12-week total from mid-March to~~
~~44 mil ion Americans.250 According to a report by Eurostat on June 12, industrial production in~~
~~the Eurozone fel by 17.1% in April, reportedly the largest decline in production recorded since~~
~~records began in 1991. The decline reflects lower levels of economic activity in manufacturing~~
~~and construction throughout the Eurozone.251 The Federal Reserve released its semi-annual~~
Monetary Policy Report.252
~~The Institute of International Finance reported on June 15, that capital outflows from developing~~
~~economies had reversed with funds flowing back into developing economies, primarily by bond~~
~~issuance through the international bond market, rather than by refinancing existing debt.253~~

~~242 Monthly U.S. International Trade in Goods and Services in April 2020 , U.S. Census Bureau, June 4, 2020.~~
~~https://www.census.gov/foreign-trade/data/index.html.~~
~~243 Unemployment Insurance Weekly Claims, June 4, 2020. https://www.dol.gov/ui/data.pdf.~~
~~244 Arnold, Martin, ECB Boosts Bond-Buying Stimulus Package by €600, Financial Times, June 4, 2020.~~
~~https://www.ft.com/content/c59ab92d-e614-4284-a028-46ee3bcf92f9.~~
~~245 T elford, T aylor, and T homas Heath, Dow Soars 1,000 Points as Wall Street Closes in on Pre -Pandemic Levels~~,
~~Washington Post, June 5, 2020. https://www.washingtonpost.com/business/2020/06/05/stocks-market-today-~~
~~coronavirus-economy/.~~
~~246 Sheppard, David, Anjli Raval, and Derek Brower, OPEC and Russia Agree to Extend Record Oil Supply Cuts,~~
Financial Tim es, June 7, 2020. https://www.ft.com/content/88747416-0fc4-4808-999f-753793589ca7.
~~247 Dempsey, Harry, Bryce Elder, and Hudson Lockett, U.S. Stocks Erase Losses for the Year, Financial Times, June 8,~~
~~2020. https://www.ft.com/content/1dfaeb58-6d65-4f17-b710-b1ebc6622649.~~
~~248 Politi, James, Emerging Economies Forecast to Shrink for First T ime in 60 Years, Financial Times, June 8, 2020.~~
~~https://www.ft.com/content/47998ee3-b2d3-4066-a914-edbf60b797b5.~~
~~249 Seigel, Rachel and T homas Heath, Dow Slides More T han 1,800 Points on Fears of Coronavirus Resurgence, More~~
~~Economic Pain, Washington Post, June 11, 2020. https://www.washingtonpost.com/business/2020/06/11/markets-~~
~~today-fed-coronavirus/.~~
~~250 Unemployment Insurance Weekly Claims, Department of Labor, June 11, 2020. https://www.dol.gov/ui/data.pdf.~~
~~251 Arnold, Martin, Eurozone Industrial Production Falls by Record 17.1% in April, Financial Times, June 12, 2020.~~
~~https://www.ft.com/content/e3301cd6-27ce-35f0-829a-c6613849b378.~~
~~252 Board of Governors of the Federal Reserve System, Monetary Policy Report, June 12, 2020.~~
~~https://www.federalreserve.gov/monetarypolicy/2020-06-mpr-summary.htm~~
~~253 Wheatley, Jonathan, Developing Economies Borrow More Despite Debt Relief Initiative, Financial Times, June 15,~~
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~~In testimony before the Senate Banking Committee on June 17, Federal Reserve Chairman~~
~~Powel stressed that although there were positive signs that U.S. economic growth was beginning~~
~~to rebound, there was “significant uncertainty” about the timing and strength of the recovery.254~~
~~On June 17, the Bank of Japan announced that it was maintaining its low interest rates even as it~~
~~increased its coronavirus lending facility to $1 tril ion.255 The U.S. Energy Information~~
~~Administration reported that U.S. crude oil production fel to its lowest point since March 2018,~~
~~while stockpiles reached record highs. The price of Brent crude reached $41 per barrel,~~
~~encouraging some U.S. producers to consider restarting wel s that were closed when prices~~
~~dropped to around $20 per barrel.256~~
~~On June 18, the Department of Labor announced that an additional 1.54 mil ion Americans filed~~
~~for unemployment during the week, raising the 13-week total to 45.7 mil ion Americans.257~~
~~During May, U.S. retail sales increased by 17.7% as some businesses began reopening and~~
~~increasing optimism in financial markets that economic activity was on course for a quick~~
~~recovery. Concerns over trade disputes and a rise in new coronavirus cases, however, reportedly~~
~~overcame the optimism of increased sales and were factors in DJIA losses on June 24 of more~~
~~than 700 points. In addition, the IMF issued its updated economic outlook, forecasting that global~~
~~economic growth would contract by 4.9% in 2020, compared with an April forecast of a decline~~
~~of 3.0%.258~~
~~On June 25, the ECB and the German government announced they had reached a tentative accord~~
~~to end the conflict over the ECB’s bond-buying program.259 Elsewhere, the Labor Department~~
~~reported that an additional 1.48 mil ion Americans filed for unemployment insurance, raising the~~
~~14-week total from mid-March to over 47 mil ion.260 Between June 1 and June 26, the DJIA~~
~~posted 13 days with gains and 7 days of declines, with the DJIA value at the end of the period~~
~~nearly the same as it was in early March 2020. On June 24 and 26, the DJIA index fel by more~~
~~than 700 points, reportedly over investors’ concerns over a spike in new coronavirus cases in~~
~~various U.S. States.261 Also on June 25, the Federal Reserve announced the result of stress tests~~
~~on 33 U.S. banks under 3 scenarios262 to ascertain their capital sufficiency given the strains to the~~
~~financial system caused by COVID-19.263 The Fed reported that al large U.S. banks are~~

~~2020. https://www.ft.com/content/54c545aa-01b5-4e95-8adc-e680f5d82be1.~~
~~254 Powell, Jerome H., Semiannual Monetary Report to the Congress, June 16, 2020. https://www.federalreserve.gov/~~
~~newsevents/testimony/powell20200616a.htm.~~
~~255 Harding, Robin, Bank of Japan Pledges $1 T rillion in Coronavirus Lending, Financial Times, June 17, 2020.~~
~~https://www.ft.com/content/5d8e5df2-dfb6-44f1-a434-ab8a745d37ba.~~
~~256 Brower, Derek, U.S. Oil Production Drops to Lowest Point Since 2018, Financial Times, June 17, 2020.~~
~~https://www.ft.com/content/6b877160-28e4-4ddf-8959-2a7cd0acd4ba.~~
~~257 Unemployment Insurance Weekly Claims, Department of Labor, June 18, 2020. https://www.dol.gov/ui/data.pdf.~~
~~258 World Economic Outlook Update, p. 5.~~
~~259 Arnold, Martin, Berlin and ECB Signal End to Legal Impasse to Bond-Buying, Financial Times, June 22, 2020.~~
~~https://www.ft.com/content/5f000a25-3d54-4610-8579-cab9b21759ee.~~
~~260 Unemployment Insurance Weekly Claims, Department of Labor, June 25, 2020. https://www.dol.gov/ui/data.pdf.~~
~~261 Elder, Bryce, Sarah Provan, and Hudson Lockett, U.S. Stocks End Lower as States Roll Back Reopening Measures,~~
Financial Tim es, June 26, 2020. https://www.ft.com/content/5013d097-c1bf-4ed9-979a-842749e5956a.
~~262 T he three scenarios include (1) a rapid, or “V”-shaped recovery; (2) a slower, or “U”-shaped recovery; and (3) a~~
~~“W”-shaped or double-dip recession with a short -lived recovery followed by a severe drop in activity later this year due~~
~~to a second COVID event. Assessm ent of Bank Capital During the Recent Coronavirus Event, Board of Governors of~~
~~the Federal Reserve System, June 2020, p. 2.~~
~~263 Ibid.~~
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~~“sufficiently capitalized” to survive the three scenarios.264 Both the IMF and the WTO released~~
~~forecasts indicating that global trade had declined sharply in the first quarter of 2020 and was~~
~~projected to post similarly sharp declines for the year. By the end of June, the international price~~
~~of crude had risen slightly above $40 per barrel, regaining about half the value it had lost during~~
~~the first quarter of 2020.~~
~~July 2020~~
~~The Department of Labor announced on July 2 that an additional 1.4 mil ion Americans had filed~~
~~for Unemployment Insurance, raising the total to 48.7 mil ion over the 15-week period from mid-~~
~~March.265 The insured seasonal y adjusted unemployment rate in June was estimated at 13.2%,~~
~~unchanged from the revised rate in the previous week. On July 2, the BLS also released data on~~
~~the employment situation in June, indicating that nonfarm payroll rose by 4.8 mil ion, lowering~~
~~the unemployment rate to 11.5%. The Census Bureau also released U.S. trade data for May~~
~~indicating that the U.S. merchandise trade deficit rose by nearly 10% over that recorded in April~~
~~as exports fel by more than imports.266~~
~~On July 9, the BLS reported that an additional 1.3 mil ion Americans filed for Unemployment~~
~~Insurance, raising the 16-week total from mid-March to 50 mil ion.267 On July 17, the European~~
~~Council met to approve a proposed plan to provide an additional €750 bil ion in pandemic~~
~~support funds to assist European economies. Negotiations failed to produce an agreement and~~
~~talks continued over the weekend and resumed on July 20. On July21, however, European leaders~~
~~announced they had agreed to a €750 bil ion (about $859 bil ion) pandemic economic relief~~
~~package.~~
~~On July 29, the Federal Open Market Committee (FOMC) announced it was not changing key~~
~~interest rates. It also announced that it was extending foreign currency swap lines and a number~~
~~of its lending facilities. Federal Reserve Chairman Powel indicated “The ongoing public health~~
~~crisis wil weigh heavily on economic activity, employment, and inflation in the near term, and~~
~~poses considerable risks to the economic outlook over the medium term.” On July 30, second~~
~~quarter GDP data indicated that U.S. economic output fel by 9.5% from the previous quarter, but~~
~~at an annualized rate of 33%. The Department of Labor also announced that an additional 1.4~~
~~mil ion individuals applied for unemployment insurance during the previous week, raising the 19-~~
~~week total to 54 mil ion.~~
~~August 2020~~
~~On August 20, the Department of Labor announced that an additional 1.1 mil ion workers filed~~
~~for unemployment insurance during the previous week, raising the total over the 22-week period~~
~~from mid-March to mid-August 2020 to 56 mil ion Americans who had filed for unemployment~~
~~insurance.268 On a seasonal y adjusted basis, the number of insured unemployed workers was 14.8~~
~~mil ion in mid-August, down from a peak of 25 mil ion in mid-May. The total number of people~~
~~claiming benefits in al programs in the week ending August 1, totaled 28 mil ion, up from 1.7~~

~~264 Ibid., pp. 1-2.~~
~~265 Unemployment Insurance Weekly Claims, July 1, 2020. https://www.dol.gov/ui/data.pdf.~~
~~266 Monthly U.S. International Trade in Goods and Services, May 2020 , U.S. Census Bureau, July 2, 2020.~~
~~https://www.census.gov/foreign-trade/data/index.html.~~
~~267 Unemployment Insurance Weekly Claims, July 9, 2020. https://www.dol.gov/ui/data.pdf.~~
~~268 Unemployment Insurance Weekly Claims, Department of Labor, August 20, 2020. https://www.dol.gov/.~~
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~~mil ion in the comparable week in 2019. The insured unemployment rate was 10.2%, also down~~
~~from the peak reached in early May.~~
~~The Bank of England announced through its standard Monetary Policy Committee meeting that it~~
~~would maintain its key interest rate at 0.1% and continue its purchases of UK government bond~~
~~and nonfinancial investment-grade corporate bonds.269~~
~~September 2020~~
~~On September 17, the Department of Labor announced that over the 26-week period from mid-~~
~~March to mid-September 2020, 61 mil ion Americans filed for unemployment insurance.270 On a~~
~~seasonal y adjusted basis, the number of insured unemployed workers was 12.6 mil ion in late~~
~~August, down from a peak of 25 mil ion in mid-May. The total number of people claiming~~
~~benefits in al programs in the week ending August 29, totaled 29.7 mil ion, up from 1.6 mil ion~~
~~in the comparable week in 2019. The insured unemployment rate was 8.6%, also down from the~~
~~peak reached in early May. On September 4, BLS reported that nonfarm employment increased~~
~~by 1.4 mil ion in August, reducing the total number of unemployed Americans to 13.6 mil ion271~~
~~and pushing the unemployment rate down to 8.4%, again with some caveats.272~~
~~On September 29, 2021, global deaths from COVID-19 surpassed one mil ion.~~
~~October 2020~~
~~On October 1, IMF Managing Director Kristalina Georgieva warned there was a risk of a rise in~~
~~sovereign bankruptcies unless temporary debt relief measures adopted early in the year were~~
~~extended and sovereign debt contracts and processes are overhauled.273~~
~~On October 2, BLS reported that nonfarm employment increased by 661,000 in September,~~
~~reducing the total number of unemployed Americans to 13.6 mil ion274 and pushing the~~
~~unemployment rate down to 7.9%, again with some caveats.275 President Trump announced that~~
~~he had tested positive for COVID-19.~~

~~269 Monetary Policy Report August 2020, Bank of England, August 6, 2020.~~
~~270 Unemployment Insurance Weekly Claims, Department of Labor, September 17, 2020. https://www.dol.gov/; Romm,~~
~~T ony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week T otal to 38.6~~
~~Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-~~
~~claims-coronavirus/~~
~~271 T his total does not include 7.6 million workers who were working part time not by choice and 7.0 million~~
~~individuals who were seeking employment.~~
~~272 The Employment Situation-August 2020, Bureau of Labor Statistics, September 4, 2020, https://www.bls.gov/. BLS~~
~~indicated that some individuals were misclassified in previous months. Instead of being classified as unemployed, they~~
~~were misclassified as employed, but absent from work due to coronavirus-related business closures. If such individuals~~
~~had been classified as unemployed, the unemployment rate would have been 5 percentage points higher in April.~~
~~273 Smith, Colby, IMF Calls for Urgent Action to Prevent Debt Crisis in Emerging Economies, Financial Times,~~
~~October 1, 2020. https://www.ft.com/content/b61c8dea-58bc-476d-ae9f-c2de104808de.~~
~~274 T his total does not include 7.6 million workers who were working part time not by choice and 7.0 million~~
~~individuals who were seeking employment.~~
~~275 The Employment Situation-August 2020, Bureau of Labor Statistics, September 4, 2020, https://www.bls.gov/. BLS~~
~~indicated that some individuals were misclassified in previous months. Instead of being classified as unemployed, they~~
~~were misclassified as employed, but absent from work due to coronavirus-related business closures. If such individuals~~
~~had been classified as unemployed, the unemployment rate would have been 5 percentage points higher in April.~~
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~~On October 29, DOL reported that over the 32-week period from mid-March to late October~~
~~2020, about 66 mil ion Americans filed for unemployment insurance.276 On a seasonal y adjusted~~
~~basis, the number of insured unemployed individuals was 7.8 mil ion in late October, down from~~
~~a peak of 25 mil ion in mid-May. On October 30, UK Prime Minister Boris Johnson announced~~
~~the resurgence of coronavirus cases in the UK and cal ed for another countrywide business~~
~~lockdown. In response the resurgence of coronavirus cases across Europe, financial markets lost~~
~~value; the Dow Jones Industrial Average lost more than 1.800 points in the last week of October,~~
~~or more than 4% of its value.~~
~~November 2020~~
~~In the first three days of November, the DJIA regained three-fourths of the value lost during the~~
~~previous week as congressional leaders and the Trump Administration signaled the possibility of~~
~~a new stimulus package to support the U.S. economy.~~
~~Preliminary forecasts indicate that India’s economy contracted by 8.6% in the third quarter of~~
~~2020, reportedly reflecting increased consumer activity.277 On November 12, India’s finance~~
~~minister announced a new package of fiscal measures totaling $35 bil ion to increase consumer~~
~~spending and to assist manufacturing, agriculture, and exports. The move followed an~~
~~announcement by India’s cabinet that it had approved a spending package of $27 bil ion to~~
~~provide in incentives over five years to manufacturing firms, including automobiles, auto parts,~~
~~pharmaceuticals, textiles, and food products.278~~
~~On November 12, the DOL reported that over the 35-week period from mid-March to the first~~
~~week of November 2020, about 67.4 mil ion Americans had filed for unemployment insurance.279~~
~~On a seasonal y adjusted basis, the number of insured unemployed individuals was 6.8 mil ion in~~
~~late October, down from a peak of 25 mil ion in mid-May. Weekly claims have fal en from the~~
~~sharp increases recorded in April and May, declining to 709,000 in the week ending November 7,~~
~~after totaling 751,00 the previous week, four times higher than the average number of weekly~~
~~claims of about 200,000 recorded prior to the COVID-19 pandemic.~~
~~On November 15, 15 countries, including Brunei, Colombia, Indonesia, Laos, Malaysia,~~
~~Myanmar, the Philippines, Singapore, Thailand, Vietnam. Australia, China, Japan, New Zealand,~~
~~and South Korea, signed the Regional Comprehensive Economic Partnership (RCEP) to create~~
~~potential y one of the largest free trade agreements. The agreement wil need to be ratified by the~~
~~signatory governments.~~
~~On November 19, 2020, the DOL reported that over the 36-week period from mid-March to mid-~~
~~November 2020, about 68.2 mil ion Americans had filed for unemployment insurance. 280 Weekly~~

~~276 Unemployment Insurance Weekly Claims, Department of Labor, October 29, 2020. https://www.dol.gov/; Romm,~~
~~T ony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week T otal to 38.6~~
~~Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-~~
~~claims-coronavirus/~~
~~277 RBI Bulletin – November 2020, Reserve Bank of India, November 2020.~~
~~278 Sharma, Ashok, India Announces $35 Billion Economic Stimulus Package, ABCNews, November 12, 2020.~~
~~https://abcnews.go.com/International/wireStory/india-announces-35-billion-economic-stimulus-package-74165709.~~
~~279 Unemployment Insurance Weekly Claims, Department of Labor, November 12, 2020. https://www.dol.gov/; Romm,~~
~~T ony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week T otal t o 38.6~~
~~Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-~~
~~claims-coronavirus/~~
~~280 Unemployment Insurance Weekly Claims, Department of Labor, November 19, 2020. https://www.dol.gov/.~~
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~~claims rose to 742,000 in the week ending November 14, increasing from 711,000 the previous~~
~~week, marking the first increase in weekly claims since October 10, 2020.~~
~~December 2020~~
~~On December 3, OPEC and Russia agreed to increase oil output by 500,000 barrels per day~~
~~starting in January 2021, below a previously discussed increase of 2 mil ion barrels per day, as~~
~~pandemic-related lags in global economic recovery curtail global oil demand.~~
~~On December 4, the BLS indicated that the U.S. economy added 245,000 jobs in November,~~
~~nearly half the 610,000 jobs added in October, raising concerns that the U.S. economic recovery~~
~~had stal ed.281~~
~~The DOL reported on December 10 that over the 39-week period from mid-March to the~~
~~beginning of December 2020, over 70 mil ion Americans had filed for unemployment~~
~~insurance.282 Week-over-week new claims totaled 863,000 in the week ending December 5,~~
~~increasing by 146,000 from the previous week’s total of 716,00, four times higher than the~~
~~average number of weekly claims of about 200,000 recorded prior to the COVID-19 pandemic.~~
~~Also, in trading December 10, the price of Brent crude oil breached the $50 per barrel mark for~~
~~the first time since March 2020.~~
~~On December 14, the United States began administering the COVID-19 vaccine. U.S. equity~~
~~market values fel as investors reportedly debated the prospects for a new stimulus package in the~~
~~United States and a resurgence in COVID-19 cases in New York, Boston, and London raised~~
~~concerns over a resumption of lockdowns.283~~
~~On December 17, the DOL announced that on a week-over-week basis, new claims for~~
~~unemployment insurance totaled 885,000 in the week ending December 12, increasing by 23,000~~
~~from the previous week’s total of 862,00. In the week ending November 28, 20.6 mil ion people~~
~~claimed benefits in al programs. The insured unemployment rate for the week ending December~~
~~5 was 3.8%.~~
~~On December 22, BEA released updated data on U.S. GDP growth for the third quarter,~~
~~indicating the economy grew by 33.4%, outpacing the 31.4% decline recorded in the second~~
~~quarter.~~
~~January 2021~~
~~On January 8, 2021, BLS reported that U.S. nonfarm employment fel by 140,000 in December,~~
~~down from the previous month’s increase of 336,000: the total number of unemployed Americans~~

~~281 The Employment Situation-December 2020, Bureau of Labor Statistics, January 8, 2021, https://www.bls.gov/. BLS~~
~~282 Unemployment Insurance Weekly Claims, Department of Labor, January 21, 2021. https://www.dol.gov/; Romm,~~
~~T ony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week T otal to 38.6~~
~~Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-~~
~~claims-coronavirus/~~
~~283 Platt, Eric, Naomi Rovnick, and Camilla Hodgson, S&P Slides for Fourth Straight Day, Financial Times, December~~
~~14, 2020. https://www.ft.com/content/898ca316-9bbf-3c20-b137-2dbdba93c800; Rovnick, Naomi, and Camilla~~
~~Hodgson, Equities and Sterling Lifted by Extension to EU-UK T rade T alks, Financial Tim es, December 14, 2020,~~
~~https://www.ft.com/content/4f65ee35-9957-4bab-91c4-9f76c0a44a2b; Cameron-Chileshe, Jasmine, Alice Hancock,~~
~~Sebastian Payne, and George Parker, London to Enter Toughest Coronavirus Restrictions, Financial Tim es, December~~
~~14, 2020, https://www.ft.com/content/626f2e3a-ac8f-401d-818a-01120cab3284.~~
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~~was unchanged from the previous month at 10.7 mil ion,284 the unemployment rate stayed~~
~~constant at 6.7%.~~
~~On January 13, the House of Representatives impeached President Donald Trump.~~
~~On January 15, the global number of deaths associated with COVID-19 surpassed two mil ion.~~
~~On January 19, deaths in the United States associated with COVID-19 surpassed 400,000.~~
~~On January 28, the DOL indicated that during the 46-week period from mid-March 2020 to end-~~
~~January 2021, over 76 mil ion Americans had filed for unemployment insurance. On a seasonal y~~
~~adjusted basis, the number of insured unemployed individuals was 4.8 mil ion in mid-January~~
~~2021, down from a peak of 25 mil ion in mid-May. On a week-over-week basis, new claims~~
~~totaled 847,000 in the week ending January 23, 2021, decreasing by 67,000 from the previous~~
~~week’s total of 914,000; in the week ending January 9, 18.3 mil ion people claimed benefits in al~~
~~programs.~~
~~The Bureau of Economic Analysis (BEA) announced that during the fourth quarter of 2020, the~~
~~U.S. economy grew by 4.0% at an annual rate; the overal rate of growth for 2020 was estimated~~
~~at -3.5%, reflecting negative rates of growth in personal consumption (-3.9%), investment (-5.3),~~
~~and exports (-13.0%) and imports (-9.3); government consumption and investment (federal, state,~~
~~and local) grew by 1.1%.~~
~~February 2021~~
~~On February 4, 2021, the Department of Labor reported that new claims for unemployment~~
~~insurance totaled 779,000 in the week ending January 30, 2021, raising the total claims filed~~
~~during the 47-week period from mid-March 2020 to end-January 2021 to over 77 mil ion~~
~~Americans. In the week ending January 16, 2021, 17.8 mil ion people claimed benefits in al~~
~~programs; the insured unemployment rate was 3.2%.~~
~~On February 5, 2021, BLS reported that the total number of unemployed Americans in January~~
~~2021 declined to 10.1 mil ion and that the unemployment rate had fal en to 6.3%.~~
~~The DOL reported on February 18 that during the 49-week period from mid-March 2020 to mid-~~
~~February 2021, nearly 79 mil ion Americans had filed for unemployment insurance. On a~~
~~seasonal y adjusted basis, the number of insured unemployed individuals was 4.5 mil ion in early-~~
~~February 2021, down from a peak of 25 mil ion in mid-May.~~
~~On February 22, 2021, the United States announced that it had surpassed 500,000 deaths caused~~
~~by COVID-19.~~
~~March 2021~~
~~On March 3, 2021, UK Chancel or of the Exchequer Sunak announced a £65 bil ion stimulus~~
~~package over two years to revive the UK economy, to be followed by tax increases starting in~~
~~2023. In the United States, the House of Representatives was set to pass a Senate-amended $1.9~~
~~tril ion COVID-related economic stimulus bil during the week of March 8, 2021, with President~~
~~Biden prepared to sign the legislation.~~
~~On March 4, 2021, the Labor Department reported that over 80 mil ion Americans (half of the~~
~~160 mil ion civilian work force) had filed for unemployment insurance since mid-March 2020.~~

~~284 T his total does not include 6.2 million workers who were working part time not by choice and 7.3 million~~
~~individuals who were seeking employment.~~
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~~On a seasonal y adjusted basis, the number of insured unemployed individuals was 4.3 mil ion;~~
~~and by the end of February 2021, 18 mil ion people claimed benefits in al programs.~~
~~Developed economies, including Britain, Switzerland, the EU, and the United States, blocked a~~
~~proposal by over 80 developing countries at the World Trade Organization to suspend intel ectual~~
~~property rights restrictions on production of COVID-19 vaccines.~~
~~On March 26, 2021, Germany’s highest court stopped a law that would have ratified the EU~~
~~Pandemic Emergency Purchase Program (PEPP) bond-buying program. The program requires~~
~~ratification by each of the EU member’s national parliaments. The legislation had been passed by~~
~~both of Germany’s houses of Parliament and was expected to be signed by German president,~~
~~Frank-Walter Steinmeier, when the court intervened.~~
~~April 2021~~
~~On April 25, India reported a single-day total of 350,000 new cases. Brazil reportedly has had~~
~~over 350,000 viral-related deaths: in some cities in Brazil, COVID-related daily deaths have~~
~~outnumbered daily births. A group of 175 former world leaders and Nobel laureates cal ed on the~~
~~United States to suspend intel ectual property rights for COVID-19 vaccines to facilitate the~~
~~international production and distribution by al owing developing countries the ability to~~
~~manufacture their own vaccines. The group warned that, “….inequitable vaccine access would~~
~~impact the global economy and prevent it from recovering.”~~
~~May 2021~~
~~On May 5, the Biden administration announced it would support international discussions to~~
~~waive intel ectual property restrictions on COVID-19 vaccines.~~

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~~Comparing the Current Crisis and the 2008 Crisis~~
~~Sharp declines in the stock market and broader financial sector turbulence; interest rate cuts and large-scale~~
~~Federal Reserve intervention; and discussions of massive government stimulus packages have led some observers~~
~~to compare the current market reaction to that experienced a little over a decade ago. There are similarities and~~
~~important differences between the current economic crisis and the global financial crisis of 2008/2009. Foremost,~~
~~the earlier crisis was rooted in structural weakness in the U.S. financial sector. Fol owing the col apse of the U.S.~~
~~housing bubble, it became impossible for firms to identify demand and hold inventories across many sectors~~
~~(construction, retail, etc.). This led to massive oversupply and sharp retail losses which extended to other sectors~~
~~of the U.S. economy and eventual y the global economy. Moreover, financial markets across countries were linked~~
~~together by credit default swaps. As the crisis unfolded, large numbers of banks and other financial institutions~~
~~were negatively affected, raising questions about capital sufficiency and reserves. The crisis then quickly engulfed~~
~~credit-rating agencies, mortgage lending companies, and the real estate industry broadly. Market resolution came~~
~~gradual y with a range of monetary and fiscal policy measures that were closely coordinated at the global level.~~
~~These were focused on putting a floor under the fal ing markets, stabilizing banks, and shoring up investor~~
~~confidence to get spending started again. Starting in September 2007, the Federal Reserve cut interest rates from~~
~~over 5% in September 2007 to between 0 and 0.25% before the end of the 2008. Once interest rates approached~~
~~zero, the Fed turned to other so-cal ed “unconventional measures,” including targeted assistance to financial~~
~~institutions, encouraging Congress to pass the Troubled Asset Relief Program (TARP) to prevent the col apse of~~
~~the financial sector and boost consumer spending. Other measures included swap arrangements between the~~
~~Federal Reserve and the European Central Bank and smal er central banks, and so-cal ed “quantitative easing” to~~
~~boost the money supply. On a global level, the United States and other countries tripled the resources of the IMF~~
~~(from $250 bil ion to $750 bil ion) and coordinated domestic stimulus efforts.~~
~~Unlike the 2008 crisis, the current crisis began as a supply shock. As the global economy has become more~~
~~interdependent in recent decades, most products are produced as part of a global value chain (GVC), where an~~
~~item such as a car or mobile device consists of parts manufactured al over the world, and involving multiple~~
~~border crossings before final assembly. The earliest implications of the current crisis came in January as plant~~
~~closures in China and other parts of Asia led to interruptions in the supply chain and concerns about dwindling~~
~~inventories. As the virus spread from Asia to Europe, the crisis switched from supply concerns to a broader~~
~~demand crisis as the measures being introduced to contain the spread of the virus (social distancing, travel~~
~~restrictions, cancel ing sporting events, closing shops and restaurants, and mandatory quarantine measures)~~
~~prevent most forms of economic activity from occurring. Thus, unlike the 2008 crisis response, which involved~~
~~liquidity and solvency-related policy measures to get people spending again, the current crisis did not start as a~~
~~financial crisis, but could evolve into one if a recovery in economic activity is delayed. While larger firms may have~~
~~sufficient capital to wait out a crisis, many aspects of the economy (such as restaurants or retail operations)~~
~~operate on very tight margins and would likely not be able to pay employees after closures lasting more than a few~~
~~days. Many people wil also need to balance child care and work during quarantine or social dista ncing measures.~~
~~During this type of crisis, while monetary policy measures play a part—and the Federal Reserve has once again cut~~
~~rates to near zero—they cannot compensate for the physical interaction that the global economy is dependent~~
~~upon. As a result, fiscal stimulus wil likely play a relatively larger role in this crisis in order to prevent personal and~~
~~corporate bankruptcies during the peak crisis period. Efforts to coordinate U.S. and foreign economic policy~~
~~measures wil also have an important role in mitigating the scale and length of any global economic downtown.~~
Source: Prepared by Martin A. Weiss, CRS.
~~Policy Responses~~
~~In response to growing concerns over the global economic impact of the pandemic, G-7 finance~~
~~ministers and central bankers released a statement on March 3, 2020, indicating they would “use~~
~~al appropriate policy tools” to sustain economic growth.285 The Finance Ministers also pledged~~
~~fiscal support to ensure health systems can sustain efforts to fight the outbreak.286 In most cases,~~

~~285 Statement of G-7 Finance Ministers and Central Bank Governors, March 3, 2020. https://home.treasury.gov/news/~~
~~press-releases/sm927. Long, Heather, “ G-7 Leaders Promise to Help Economy as COVID-19 Spreads, But T hey Don’t~~
~~Announce Any New Action,” Washington Post, March 3, 2020. https://www.washingtonpost.com/business/2020/03/~~
~~03/economy-COVID-19-rate-cuts/.~~
~~286 Giles et al., “Finance Ministers Ready to T ake Action.”~~
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~~however, countries pursued their own divergent strategies, in some cases including banning~~
~~exports of medical equipment. Following the G-7 statement, the U.S. Federal Reserve (Fed)~~
~~lowered its federal funds rate by 50 basis points, or 0.5%, to a range of 1.0% to 1.25% due to~~
~~concerns about the “evolving risks to economic activity of the COVID-19.”287 At the time, the cut~~
~~was the largest one-time reduction in the interest rate by the Fed since the 2008-2009 global~~
~~financial crisis.~~
~~After a delayed response, other central banks followed the actions of the G-7 countries. Most~~
~~central banks lowered interest rates and acted to increase liquidity in their financial systems~~
~~through a combination of measures, including lowering capital buffers and reserve requirements,~~
~~creating temporary lending facilities for banks and businesses, and easing loan terms. In addition,~~
~~national governments adopted various fiscal measures to sustain economic activity. In general,~~
~~these measures included making payments directly to households, temporarily deferring tax~~
~~payments, extending unemployment insurance, and increasing guarantees and loans to businesses.~~
~~See Appendix A to this report for detailed information about the policy actions by individual~~
~~governments.288~~
~~The United States~~
~~Recognizing the growing impact the pandemic was having on financial markets and economic~~
~~growth, the Federal Reserve (Fed) took a number of steps to promote economic and financial~~
~~stability involving the Fed’s monetary policy and “lender of last resort” roles. Some of these~~
~~actions were intended to stimulate economic activity by reducing interest rates; other actions were~~
~~intended to provide liquidity to financial markets so firms would have access to needed funding.~~
~~In announcing its decisions, the Fed indicated that “[t]he COVID-19 outbreak has harmed~~
~~communities and disrupted economic activity in many countries, including the United States.~~
~~Global financial conditions have also been significantly affected.289” On March 31, 2020, the~~
~~Trump Administration announced that it was suspending for 90 days tariffs it had placed on~~
~~imports of apparel and light trucks from China, but not on other consumer goods and metals.290 In~~
~~October, Congress and the Trump Administration negotiated over the substance of an additional~~
~~spending package to support the U.S. economy.~~
~~On April 29, 2021, the Bureau of Economic Analysis (BEA) released updated data on U.S. GDP~~
~~growth for the first quarter of 2021 and updated data for 2020 that indicates the economy grew by~~
~~6.4% in the first quarter of 2020, outpacing the 4th quarter 2020 rate of 4.3%. In contrast, U.S.~~
~~GDP fel at an annual rate of 31.4% in the second quarter, after fal ing by 5.0% at an annual rate~~
~~in the first quarter, as indicated in Figure 16.291 On an annual basis, the 2020 rate of growth fel~~
~~by 3.5%, compared with a 2019 rate of 2.9%. In the second quarter, amidst a large decline overal~~
~~in U.S. economic activity in response to business lockdowns, some sectors experienced a decline~~
~~in activity of 80% or more, including recreation, food services and accommodation and~~
~~transportation sectors. In the third quarter, however, al sectors except mining experienced~~

~~287 Federal Reserve Releases FOMC Statement, March 3, 2020, https://www.federalreserve.gov/newsevents/~~
~~pressreleases/monetary20200303a.htm.~~
~~288 Stage Three Proposal, U.S. Department of the T reasury, March 17, 2020. https://www.washingtonpost.com/context/~~
~~department -of-treasury-proposal-for-COVID-19-response/6c2d2ed5-a18b-43d2-8124-28d394fa51ff/?itid=~~
~~lk_inline_manual_3.~~
~~289 Federal Reserve Issues FOMC Statement, March 15, 2020. https://www.federalreserve.gov/newsevents/~~
~~pressreleases/monetary20200315a.htm.~~
~~290 Politi, James and Aime Williams, “T rump to Suspend Some T ariffs for 90 Days,” Financial Times, March 31, 2020.~~
~~https://www.ft.com/content/46add447-2048-4348-bd34-2088ad0e3bc8.~~
~~291 Gross Domestic Product, First Quarter 2021 (Advance Estimate), Bureau of Economic Analysis, April 29, 2021.~~
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~~positive rate of growth. Personal consumption increased by 41% in the third quarter, after fal ing~~
~~by 31.4% in the second quarter.~~
~~Figure 16. U.S. GDP, Percentage Change From Preceding Quarter~~
~~Seasonal y adjusted at annual rate~~

Source: Bureau of Economic Analysis. Created by CRS.
Notes: Exports and imports represent the combination of goods and services.
~~On May 4, 2021, the U.S. Census Bureau reported an increase in the overal U.S. goods and~~
~~services trade deficit in March 2021, compared with February 2021, of $4 bil ion to reach a~~
~~monthly record $74.4 bil ion. The increase in the monthly deficit in goods and services primarily~~
~~reflected a larger increase in the nominal value of goods exports relative to the value of imported~~
~~goods. Nominal values for services trade rose in smal percentage terms for exports and imports,~~
~~as indicated in Figure 17.292 According to BEA data, goods exports increased from $131.2 bil ion~~
~~in February 2021 to $142.9 bil ion in March 2021 and goods imports increased from $219.2~~
~~bil ion to $234.4 bil ion. On a year-over-basis, the overal goods and services trade deficit in 2020~~
~~increased by $105 bil ion, or 18.2%, compared with 2019 and demonstrates the impact that~~

~~292 Monthly U.S. International Trade in Goods and Services, March 2021, Census Bureau, May 4, 2021.~~
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business lockdowns had on U.S. and global trade in the first quarter of 2020. Relative to 2019, business lockdowns had on U.S. and global trade in the first quarter of 2020. Relative to 2019,
U.S. goods exports in 2020 U.S. goods exports in 2020 ~~fel~~ fell by 13.2%, while goods imports by 13.2%, while goods imports ~~fel~~ fell by 6.6%, accounting for the by 6.6%, accounting for the
largest part of the increase in the annual U.S. trade balance. Services exports declined by 21% in largest part of the increase in the annual U.S. trade balance. Services exports declined by 21% in
2020 relative to 2019, while services imports 2020 relative to 2019, while services imports ~~fel~~ fell by 22%, reflecting the drop by 22%, reflecting the drop ~~overal~~ overall in services in services
activities as a result of quarantines and business lockdowns. activities as a result of quarantines and business lockdowns.
Figure 17. Monthly U.S. Exports and Imports of Goods and Services 2020, -2021

Source: Census Bureau,Census Bureau, Bureau of Economic Analysis.Bureau of Economic Analysis. Created by CRS. Created by CRS.
On On ~~April 2~~May 7, 2021, the BLS released data on the employment situation in , 2021, the BLS released data on the employment situation in ~~March~~April, which indicated , which indicated
that nonfarm payroll rose by that nonfarm payroll rose by ~~916~~266,000, ,000, updown from the from the ~~468~~770,000 jobs gained in ,000 jobs gained in ~~February and pushed~~
March and kept the rate of unemployment the rate of unemployment ~~down to 6.0%.293~~at 6.1%.220 The data also indicate that The data also indicate that ~~11.4 mil ion~~9.4 million persons persons
reported in reported in ~~March~~ April they did not work at they did not work at al all or worked fewer hours at some point in the previous 4 or worked fewer hours at some point in the previous 4
weeks because their employer closed or lost business due to the pandemic. weeks because their employer closed or lost business due to the pandemic.
As indicated in As indicated in Figure 18, with the exception of December, the U.S. economy experienced , with the exception of December, the U.S. economy experienced
monthly gains in jobs since the loss of more than 20 monthly gains in jobs since the loss of more than 20 ~~mil ion~~ million jobs in April, 2020. In general, the jobs in April, 2020. In general, the
monthly gains in jobs has varied and by March 2021 had not equaled the number of jobs lost. The monthly gains in jobs has varied and by March 2021 had not equaled the number of jobs lost. The
number of unemployed workers was 9.7 number of unemployed workers was 9.7 ~~mil ion~~million in March 2021, down from the previous month’s in March 2021, down from the previous month’s
total of 10.0 total of 10.0 ~~mil ion~~million. Over the eleven–month period from May 2020 through March 2021, job . Over the eleven–month period from May 2020 through March 2021, job
gains were notable in the leisure and hospitality industry (particularly in food services and gains were notable in the leisure and hospitality industry (particularly in food services and
drinking establishments), retail trade, public-sector education and health services, health care and drinking establishments), retail trade, public-sector education and health services, health care and
social assistance, professional and business services, and other services, while employment in social assistance, professional and business services, and other services, while employment in
government (mostly state and local governments) government (mostly state and local governments) ~~fel .~~

~~293~~fell. 220 The Employment Situation-~~March~~April 2021, Bureau of Labor Statistics, , Bureau of Labor Statistics, ~~April 2~~May 7, 2021. https://www.bls.gov/., 2021. https://www.bls.gov/. ~~T he~~ The
unemployment number does not include 5.unemployment number does not include 5.82 million workers who were million workers who were working part time not by choice and 6.working part time not by choice and 6.96 million million
individualsindividuals seeking employment. In addition, BLS indicated that some workers had been misclassifiedseeking employment. In addition, BLS indicated that some workers had been misclassified as employed, as employed,
but shouldbut should have been classifiedhave been classified as as unemployed, which wouldunemployed, which would have raisedhave raised ~~the rat e~~ the rate of unemployment by 0.4 percentage of unemployment by 0.4 percentage
points. points.
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Figure 18. Change in Total Monthly U.S. Nonfarm Employment

Source: Bureau of Labor Statistics.Bureau of Labor Statistics. Created by CRS. Created by CRS.
In the first stages of the pandemic, the Department of Labor reported on May 8, 2020, that the In the first stages of the pandemic, the Department of Labor reported on May 8, 2020, that the
U.S. nonfarm unemployment rate in April, 2020, increased by 20 U.S. nonfarm unemployment rate in April, 2020, increased by 20 ~~mil ion,~~ million, which raised the total which raised the total
number of unemployed Americans 23 number of unemployed Americans 23 ~~mil ion,~~ million, or an unemployment rate of 14% of a total civilian or an unemployment rate of 14% of a total civilian
labor force of labor force of ~~156 mil ion~~about 160 million. The unemployment rate did not include approximately 10 . The unemployment rate did not include approximately 10 ~~mil ion~~
million workers who were involuntarily working part-time and another 9 workers who were involuntarily working part-time and another 9 ~~mil ion individuals~~ million individuals who were who were
seeking employment. As indicated in seeking employment. As indicated in Figure 19, the number of unemployed individuals increased , the number of unemployed individuals increased
the most in the leisure and hospitalitythe most in the leisure and hospitality sector, reflecting national quarantining policies to reduce sector, reflecting national quarantining policies to reduce
the spread of COVID-19 through social contact. The employment losses were widely spread the spread of COVID-19 through social contact. The employment losses were widely spread
across the economy, affecting every nonfarm sector and across the economy, affecting every nonfarm sector and al all labor groups. Between March and Aril 2020, the number of U.S. non-farm civilian workers dropped from 150 million to 130 million. By May 2021, however, the non-farm civilian labor force had increased by 15 million to reach 145 million. ~~labor groups.~~
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Figure 19. Change in U.S. Employment by Major Industrial Sector

Source: The Employment Situation,, Bureau of Labor Statistics,Bureau of Labor Statistics, various months 2020 and 2021. Created by CRS. various months 2020 and 2021. Created by CRS.
In a speech on May 13, 2020, Federal Reserve Chairman Jerome In a speech on May 13, 2020, Federal Reserve Chairman Jerome ~~Powel~~ Powell reported that Federal reported that Federal
Reserve analyses indicated that of individuals working in February, 2020, “almost 40 percent of Reserve analyses indicated that of individuals working in February, 2020, “almost 40 percent of
those in households making less than $40,000 a year had lost a job in March.”those in households making less than $40,000 a year had lost a job in March.”~~294~~221 Chairman Chairman
~~Powel~~ Powell also indicated that given the extraordinary nature of the current economic downturn the also indicated that given the extraordinary nature of the current economic downturn the
Fed would, “continue to use our tools to their fullest until the crisis has passed and the economic Fed would, “continue to use our tools to their fullest until the crisis has passed and the economic
recovery is recovery is ~~wel~~ well under way.”under way.”
In characterizing the monetary and fiscal response to the economic downturn, Chairman In characterizing the monetary and fiscal response to the economic downturn, Chairman ~~Powel~~
Powell said in a speech on October 6, the monetary response included, “the full range of tools at our said in a speech on October 6, the monetary response included, “the full range of tools at our
disposal,” including cutting key interest rates, “unprecedented” asset purchases, establishing disposal,” including cutting key interest rates, “unprecedented” asset purchases, establishing
emergency lending facilities to support households, businesses and state and local governments, emergency lending facilities to support households, businesses and state and local governments,
and implementing targeted and temporary measures for banks to support their customers.and implementing targeted and temporary measures for banks to support their customers.~~295~~222 In In
addition, the fiscal response accomplished three objectives, it provided support to households, addition, the fiscal response accomplished three objectives, it provided support to households,
businesses through the Paycheck Protection Program, and financial markets. Chairman businesses through the Paycheck Protection Program, and financial markets. Chairman ~~Powel~~
Powell concluded his remarks arguing the necessity of continued fiscal support for the economy: concluded his remarks arguing the necessity of continued fiscal support for the economy:
The expansion is still far from complete. At this early stage, I would argue that the risks of The expansion is still far from complete. At this early stage, I would argue that the risks of
policy intervention are still asymmetric. Too little support would lead to a weak recovery, policy intervention are still asymmetric. Too little support would lead to a weak recovery,
creatingcreating ~~unnecessary hardship~~ unnecessary hardship for households and businesses.for households and businesses. Over time, household Over time, household

~~294~~ 221 Current Economic Issues; Speech; Speech at the Peterson Institute for International Economics, Jerome H. Powell, May 13, at the Peterson Institute for International Economics, Jerome H. Powell, May 13,
2020. 2020.
~~295~~222 Recent Economic Developments and the Challenges Ahead , Jerome H Powell, Remarks at the National Association Jerome H Powell, Remarks at the National Association
for Businessfor Business Economists, October 6, 2020. Economists, October 6, 2020.
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insolvencies and business bankruptcies would rise, harming the productive capacity of the insolvencies and business bankruptcies would rise, harming the productive capacity of the
economy, and holding back wage growth. By contrast, the risks of overdoing it seem, for economy, and holding back wage growth. By contrast, the risks of overdoing it seem, for
now, to be smaller. Even if policy actions ultimately prove to be greater than needed, they now, to be smaller. Even if policy actions ultimately prove to be greater than needed, they
willwill not go to waste.not go to waste.~~296~~223
Monetary ~~Policy297~~Policy224
Forward Guidance
Forward guidance refers to Fed public communications on its future plans for short-term interest refers to Fed public communications on its future plans for short-term interest
rates, and it took many forms following the 2008 financial crisis. As monetary policy returned to rates, and it took many forms following the 2008 financial crisis. As monetary policy returned to
normal in recent years, forward guidance was phased out. It is being used again today. For normal in recent years, forward guidance was phased out. It is being used again today. For
example, when the Fed reduced short-term rates to zero on March 15, it announced that it example, when the Fed reduced short-term rates to zero on March 15, it announced that it
“expects to maintain this target range until it is confident that the economy has weathered recent “expects to maintain this target range until it is confident that the economy has weathered recent
events and is on track to achieve its maximum employment and price stability goals.” events and is on track to achieve its maximum employment and price stability goals.”
Quantitative Easing
Large-scale asset purchases, popularly referred to as Large-scale asset purchases, popularly referred to as quantitative easing or or QE, were also used , were also used
during the financial crisis. Under QE, the Fed expanded its balance sheet by purchasing during the financial crisis. Under QE, the Fed expanded its balance sheet by purchasing
securities. Three rounds of QE from 2009 to 2014 increased the Fed’s securities holdings by $3.7 securities. Three rounds of QE from 2009 to 2014 increased the Fed’s securities holdings by $3.7
~~tril ion~~trillion. .
On March 23, the Fed announced that it would increase its purchases of Treasury securities and On March 23, the Fed announced that it would increase its purchases of Treasury securities and
mortgage-backed securities (MBS)—including commercial MBS—issued by government mortgage-backed securities (MBS)—including commercial MBS—issued by government
agencies or government-sponsored enterprises to “the amounts needed to support smooth market agencies or government-sponsored enterprises to “the amounts needed to support smooth market
functioning and effective transmission of monetary policy...functioning and effective transmission of monetary policy... . ” These would be undertaken at the ” These would be undertaken at the
unprecedented rate of up to $125 unprecedented rate of up to $125 ~~bil ion~~billion daily during the week of March 23. As a result, the value daily during the week of March 23. As a result, the value
of the Fed’s balance sheet is projected to exceed its post-financial crisis peak of $4.5 of the Fed’s balance sheet is projected to exceed its post-financial crisis peak of $4.5 ~~tril ion~~trillion. One . One
notable difference from previous rounds of QE is that the Fed is purchasing securities of different notable difference from previous rounds of QE is that the Fed is purchasing securities of different
maturities, so the effect likely maturities, so the effect likely ~~wil~~ will not be concentrated on long-term rates. not be concentrated on long-term rates.
Actions to Provide Liquidity
Reserve Requirements
On March 15, the Fed announced that it was reducing reserve requirements—the amount of vault On March 15, the Fed announced that it was reducing reserve requirements—the amount of vault
cash or deposits at the Fed that banks must hold against deposits—to zero for the first time ever. cash or deposits at the Fed that banks must hold against deposits—to zero for the first time ever.
As the Fed noted in its announcement, because bank reserves are currently so abundant, reserve As the Fed noted in its announcement, because bank reserves are currently so abundant, reserve
requirements “do not play a significant role” in monetary policy. requirements “do not play a significant role” in monetary policy.
Term Repos
The Fed can temporarily provide liquidityThe Fed can temporarily provide liquidity to financial markets by lending cash through to financial markets by lending cash through
repurchase agreements (repos) with primary dealers (i.e., large government securities dealers who repurchase agreements (repos) with primary dealers (i.e., large government securities dealers who
are market makers). Before the financial crisis, this was the Fed’s routine method for targeting the are market makers). Before the financial crisis, this was the Fed’s routine method for targeting the
federal funds rate. Following the financial crisis, the Fed’s large balance sheet meant that repos federal funds rate. Following the financial crisis, the Fed’s large balance sheet meant that repos
were no longer needed, until they were revived in September 2019. On March 12, the Fed were no longer needed, until they were revived in September 2019. On March 12, the Fed

~~296 Ibid., p. 7.~~
~~297 T his section was~~ 223 Ibid., p. 7. 224 This section was prepared by Marc Labonte, Specialist in Macroeconomic Policy, Government and Finance prepared by Marc Labonte, Specialist in Macroeconomic Policy, Government and Finance
Division, CRS.Division, CRS. ~~CRS~~ CRS Insight IN11259, Insight IN11259, Federal Reserve: Recent Actions in Response to COVID-19, by Marc Labonte. , by Marc Labonte.
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announced it would offer a three-month repo of $500 announced it would offer a three-month repo of $500 ~~bil ion~~billion and a one-month repo of $500 and a one-month repo of $500
~~bil ion~~ billion on a weekly basis through the end of the month in addition to the shorter-term repos it had on a weekly basis through the end of the month in addition to the shorter-term repos it had
already been offering. These repos would be larger and longer than those offered since already been offering. These repos would be larger and longer than those offered since
September. On March 31, the Fed announced the Foreign and International Monetary Authorities September. On March 31, the Fed announced the Foreign and International Monetary Authorities
(FIMA) Repo Facility, which works like the foreign repo pool in reverse. This facility (FIMA) Repo Facility, which works like the foreign repo pool in reverse. This facility ~~al ows~~
allows foreign central banks to convert their U.S. Treasury holdings into U.S. dollars on an overnight foreign central banks to convert their U.S. Treasury holdings into U.S. dollars on an overnight
basis. The Fed basis. The Fed ~~wil~~ will charge a (charge a (~~typical y~~typically) above market interest rate of 0.25 percentage points above ) above market interest rate of 0.25 percentage points above
the interest rate paid on bank reserves. The facility is intended to work in tandem with currency the interest rate paid on bank reserves. The facility is intended to work in tandem with currency
swap lines to provide additional dollars to meet global demand and is availableswap lines to provide additional dollars to meet global demand and is available to a broader group to a broader group
of central banks than the swap lines.of central banks than the swap lines.
Discount Window
In its March 15 announcement, the Fed encouraged banks (insured depository institutions) to In its March 15 announcement, the Fed encouraged banks (insured depository institutions) to
borrow from the Fed’s discount window to meet their liquidity needs. This is the Fed’s traditional borrow from the Fed’s discount window to meet their liquidity needs. This is the Fed’s traditional
tool in its “lender of last resort” function. The Fed also encouraged banks to use intraday credit tool in its “lender of last resort” function. The Fed also encouraged banks to use intraday credit
~~available~~ available through the Fed’s payment systems as a source of liquidity. through the Fed’s payment systems as a source of liquidity.
Foreign Central Bank Swap Lines
Both domestic and foreign commercial banks rely on short-term borrowing markets to access Both domestic and foreign commercial banks rely on short-term borrowing markets to access
U.S. dollars needed to fund their operations and meet their cash flow needs. But in an U.S. dollars needed to fund their operations and meet their cash flow needs. But in an
environment of strained liquidity, only banks operating in the United States can access the environment of strained liquidity, only banks operating in the United States can access the
discount window. Therefore, the Fed has standing “swap lines” with major foreign central banks discount window. Therefore, the Fed has standing “swap lines” with major foreign central banks
to provide central banks with U.S. dollar funding that they can in turn lend to private banks in to provide central banks with U.S. dollar funding that they can in turn lend to private banks in
their jurisdictions. On March 15, the Fed reduced the cost of using those swap lines and on March their jurisdictions. On March 15, the Fed reduced the cost of using those swap lines and on March
19 it extended swap lines to nine more central banks. On March 31, 2020, the Fed set up a new 19 it extended swap lines to nine more central banks. On March 31, 2020, the Fed set up a new
temporary facility to work in tandem with the swap lines to provide additionaltemporary facility to work in tandem with the swap lines to provide additional dollars to meet dollars to meet
global demand. The new facility global demand. The new facility ~~al ows~~allows central banks and international monetary authorities to central banks and international monetary authorities to
exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can
then be made availablethen be made available to institutions in their jurisdictions.to institutions in their jurisdictions.~~298~~225
Emergency Credit Facilities for the Nonbank Financial System
In 2008, the Fed created a series of emergency credit facilities to support liquidity in the nonbank In 2008, the Fed created a series of emergency credit facilities to support liquidity in the nonbank
financial system. This extended the Fed’s traditional role as lender of last resort from the banking financial system. This extended the Fed’s traditional role as lender of last resort from the banking
system to the system to the ~~overal~~ overall financial system for the first time since the Great Depression. To create financial system for the first time since the Great Depression. To create
these facilities, the Fed relied on its emergency lending authority (Section 13(3) of the Federal these facilities, the Fed relied on its emergency lending authority (Section 13(3) of the Federal
Reserve Act). To date, the Fed has created six facilities—some new, and some reviving 2008 Reserve Act). To date, the Fed has created six facilities—some new, and some reviving 2008
facilities—in response to COVID-19. facilities—in response to COVID-19.
 On March 17, the Fed revived the commercial paper funding facility to purchase  On March 17, the Fed revived the commercial paper funding facility to purchase
commercial paper, which is an important source of short-term funding for commercial paper, which is an important source of short-term funding for
financial firms, nonfinancial firms, and asset-backed securities (ABS). financial firms, nonfinancial firms, and asset-backed securities (ABS).
 Like banks, primary dealers are heavily reliant on short-term lending markets in  Like banks, primary dealers are heavily reliant on short-term lending markets in
their role as securities market makers. Unlike banks, they cannot access the their role as securities market makers. Unlike banks, they cannot access the
discount window. On March 17, the Fed revived the primary dealer credit facility, discount window. On March 17, the Fed revived the primary dealer credit facility,

~~298~~ 225 For additional information about swap lines, see CRS For additional information about swap lines, see CRS In FocusIn Focus IF11489, IF11489, Federal Executive Agencies: Selected Pay
Flexibilities for COVID-19 Response, by Barbara L. Schwemle. , by Barbara L. Schwemle.
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which is akin to a discount window for primary dealers. Like the discount which is akin to a discount window for primary dealers. Like the discount
window, it provides short-term, fully collateralized loans to primary dealers. window, it provides short-term, fully collateralized loans to primary dealers.
 On March 19, the Fed created the Money Market Mutual Fund Liquidity Facility  On March 19, the Fed created the Money Market Mutual Fund Liquidity Facility
(MMLF), similar to a facility created during the 2008 financial crisis. The (MMLF), similar to a facility created during the 2008 financial crisis. The
MMLF makes loans to financial institutions to purchase assets that money MMLF makes loans to financial institutions to purchase assets that money
market funds are market funds are ~~sel ing~~selling to meet redemptions. to meet redemptions.
 On March 23, the Fed created two facilities to support corporate bond markets—  On March 23, the Fed created two facilities to support corporate bond markets—
the Primary Market Corporate Credit Facility to purchase newly issued corporate the Primary Market Corporate Credit Facility to purchase newly issued corporate
debt and the Secondary Market Corporate Credit Facility to purchase existing debt and the Secondary Market Corporate Credit Facility to purchase existing
corporate debt on secondary markets. corporate debt on secondary markets.
 On March 23, the Fed revived the Term Asset-Backed Securities Loan Facility to  On March 23, the Fed revived the Term Asset-Backed Securities Loan Facility to
make nonrecourse loans to private investors to purchase ABS backed by various make nonrecourse loans to private investors to purchase ABS backed by various
nonmortgage consumer loans. nonmortgage consumer loans.
 On April  On April 6, the Fed announced the Payroll Protection Program Lending Facility 6, the Fed announced the Payroll Protection Program Lending Facility
(PPPLF) to provide credit to depository institutions (e.g., banks) making loans (PPPLF) to provide credit to depository institutions (e.g., banks) making loans
under the CARES Act (H.R. 748/P.L. 116-136) Payroll Protection Program. under the CARES Act (H.R. 748/P.L. 116-136) Payroll Protection Program.
Because banks are not required to hold capital against these loans, this facility Because banks are not required to hold capital against these loans, this facility
increases lending capacity for banks facing high demand to originate these loans. increases lending capacity for banks facing high demand to originate these loans.
The PPP provides low-cost loans to The PPP provides low-cost loans to ~~smal~~ small businesses to pay employees. These businesses to pay employees. These
loans do not pose credit risk to the Fed because they are guaranteed by the loans do not pose credit risk to the Fed because they are guaranteed by the ~~Smal~~
Small Business Administration. Business Administration.
 On April  On April 9, the Fed announced the Main Street Lending Program (MSLP), which 9, the Fed announced the Main Street Lending Program (MSLP), which
purchases loans from depository institutions to businesses with up to 10,000 purchases loans from depository institutions to businesses with up to 10,000
employees or up to $2.5 employees or up to $2.5 ~~bil ion~~ billion in revenues. The loans to businesses would defer in revenues. The loans to businesses would defer
principal and interest repayment for one year, and the businesses would have to principal and interest repayment for one year, and the businesses would have to
make a “reasonable effort” to retain employees. make a “reasonable effort” to retain employees.
 On April  On April 9, the Fed announced the Municipal Liquidity9, the Fed announced the Municipal Liquidity Facility (MLF) to Facility (MLF) to
purchase state and municipal debt in response to higher yields and reduced purchase state and municipal debt in response to higher yields and reduced
liquidityliquidity in that market. The facility in that market. The facility ~~wil~~ will only purchase debt of larger counties only purchase debt of larger counties
and cities. and cities.
Many of these facilities are structured as special purpose vehicles controlled by the Fed because Many of these facilities are structured as special purpose vehicles controlled by the Fed because
of restrictions on the types of securities that the Fed can purchase. Although there were no losses of restrictions on the types of securities that the Fed can purchase. Although there were no losses
from these facilities during the financial crisis, assets of the Treasury’s Exchange Stabilization from these facilities during the financial crisis, assets of the Treasury’s Exchange Stabilization
Fund have been pledged to backstop any losses on several of the facilities today. Fund have been pledged to backstop any losses on several of the facilities today.
Fiscal Policy
In terms of a fiscal stimulus, Congress adopted H.R. 6074 on March 5, 2020 (P.L. 116-123), to In terms of a fiscal stimulus, Congress adopted H.R. 6074 on March 5, 2020 (P.L. 116-123), to
appropriate $8.3 appropriate $8.3 ~~bil ion~~ billion in emergency funding to support efforts to fight COVID-19; President in emergency funding to support efforts to fight COVID-19; President
Trump signed the measure on March 6, 2020. President Trump also signed on March 18, H.R. Trump signed the measure on March 6, 2020. President Trump also signed on March 18, H.R.
6201 (P.L. 116-127), the Families First COVID-19 Response Act, that provides paid sick leave 6201 (P.L. 116-127), the Families First COVID-19 Response Act, that provides paid sick leave
and free COVID-19 testing, expands food assistance and unemployment benefits, and requires and free COVID-19 testing, expands food assistance and unemployment benefits, and requires
employers to provide additionalemployers to provide additional protections for health care workers. Other countries have protections for health care workers. Other countries have
indicated they indicated they ~~wil~~ will also provide assistance to workers and to some businesses. Congress also also provide assistance to workers and to some businesses. Congress also
considered other possible measures, including contingency plans for agencies to implement considered other possible measures, including contingency plans for agencies to implement
offsite telework for employees, financial assistance to the shale oil industry, a reduction in the offsite telework for employees, financial assistance to the shale oil industry, a reduction in the
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payroll tax, payroll tax,~~299~~226 and extended of the tax filing deadline. and extended of the tax filing deadline.~~300~~227 President Trump took additional actions, President Trump took additional actions,
including including
 Announcing on March 11, 2020, restrictions on  Announcing on March 11, 2020, restrictions on al all travel from Europe to the travel from Europe to the
United States for 30 days, directing the United States for 30 days, directing the ~~Smal~~ Small Business Administration (SBA) to Business Administration (SBA) to
offer low-interest loans to offer low-interest loans to ~~smal~~ small businesses, and directing the Treasury businesses, and directing the Treasury
Department to defer tax payments penalty-free for affected businesses.Department to defer tax payments penalty-free for affected businesses.~~301~~
228  Declaring on March 13, a state of emergency that  Declaring on March 13, a state of emergency that ~~frees~~freed up disaster relief funding up disaster relief funding
to assist state and local governments to address the effects of the pandemic. The to assist state and local governments to address the effects of the pandemic. The
President also announced additional testing for the virus, a website to help President also announced additional testing for the virus, a website to help
individualsindividuals identify symptoms, increased oil purchases for the Strategic Oil identify symptoms, increased oil purchases for the Strategic Oil
Reserve, and a waiver on interest payments on student loans.Reserve, and a waiver on interest payments on student loans.~~302~~
229  Invoking on March 18, 2020, the Defense Production Act (DPA) that  Invoking on March 18, 2020, the Defense Production Act (DPA) that ~~gives~~gave him him
the authority to require some U.S. businesses to increase production of medical the authority to require some U.S. businesses to increase production of medical
equipment and supplies that equipment and supplies that ~~are~~were in short supply. in short supply.~~303~~230
On March 25, 2020, the Senate adopted the COVID-19 Aid, Relief, and Economic Security Act On March 25, 2020, the Senate adopted the COVID-19 Aid, Relief, and Economic Security Act
(S. 3548) to (S. 3548) to ~~formal y~~formally implement President Trump’s proposal by providing direct payments to implement President Trump’s proposal by providing direct payments to
taxpayers, loans and guarantees to airlines and other industries, and assistance for taxpayers, loans and guarantees to airlines and other industries, and assistance for ~~smal~~
small businesses, actions similar to those of various foreign governments. The House adopted the businesses, actions similar to those of various foreign governments. The House adopted the
measure as H.R. 748 on March 27, and President Trump signed the measure (P.L. 116-136) on measure as H.R. 748 on March 27, and President Trump signed the measure (P.L. 116-136) on
March 27. The law March 27. The law
 Provided funding for $1,200 tax rebates to individuals, with additional $500  Provided funding for $1,200 tax rebates to individuals, with additional $500
payments per qualifying child. The rebate begins phasing out when incomes payments per qualifying child. The rebate begins phasing out when incomes
exceed $75,000 (or $150,000 for joint filers). exceed $75,000 (or $150,000 for joint filers).
 Assisted  Assisted ~~smal~~ small businesses by providing funding forgivable bridge loans; and businesses by providing funding forgivable bridge loans; and
additional funding for grants and technical assistance; authorized emergency additional funding for grants and technical assistance; authorized emergency
loans to distressed businesses, including air carriers; and suspended certain loans to distressed businesses, including air carriers; and suspended certain
aviation excise taxes. aviation excise taxes.
 Created a $367  Created a $367 ~~bil ion~~ billion loan program for loan program for ~~smal~~ small businesses, established a $500 businesses, established a $500
~~bil ion~~ billion lending fund for industries, cities and states, $150 lending fund for industries, cities and states, $150 ~~bil ion~~billion for state and for state and
local stimulus funds, and $130 local stimulus funds, and $130 ~~bil ion~~billion for hospitals. for hospitals.

~~299 Armus, T heo~~ 226 Armus, Theo, “Federal, State Officials Attempt to Fight Virus , “Federal, State Officials Attempt to Fight Virus ~~T hrough Social~~ Through Social Distancing, StimulusDistancing, Stimulus Package,” Package,”
Washington Post, March 11, 2020. https://www.washingtonpost.com/world/2020/03/11/Covid-19-live-updates/. , March 11, 2020. https://www.washingtonpost.com/world/2020/03/11/Covid-19-live-updates/.
~~300~~227 Sevastopulo, Demetri, “US Sevastopulo, Demetri, “US ~~T reasury Considers T ax~~Treasury Considers Tax Filing Extension to Ease Virus Filing Extension to Ease Virus Impact,” Impact,” Financial Times, ,
March 11, 2020. https://www.ft.com/content/c65a6e40-639f-11ea-b3f3-fe4680ea68b5. March 11, 2020. https://www.ft.com/content/c65a6e40-639f-11ea-b3f3-fe4680ea68b5.
~~301~~228 McAuley, James, and Michael Birnbaum, “Europe Blindsided McAuley, James, and Michael Birnbaum, “Europe Blindsided ~~by T rump’s T ravel~~ by Trump’s Travel Restrictions, with Many Seeing Restrictions, with Many Seeing
Political Motive,” Political Motive,” Washington Post, March 12, 2020. https://www.washingtonpost.com/world/europe/europe-, March 12, 2020. https://www.washingtonpost.com/world/europe/europe-
blindsided-by-trumps-travel-restrictions-with-many-seeing-political-motive/2020/03/12/42a279d0-6412-11ea-8a8e-blindsided-by-trumps-travel-restrictions-with-many-seeing-political-motive/2020/03/12/42a279d0-6412-11ea-8a8e-
5c5336b32760_story.html. 5c5336b32760_story.html.
~~302~~229 Fritz, Angela and Meryl Kornfield, “President Fritz, Angela and Meryl Kornfield, “President ~~T rump~~Trump Declares a National Emergency, Freeing $50 Billion in Declares a National Emergency, Freeing $50 Billion in
Funding,”Funding,” Washington Post, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/Covid-19-latest-, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/Covid-19-latest-
news/. news/.
~~303~~230 Hellmann, Jessie, Hellmann, Jessie, ~~“T rump~~ “Trump Invokes Defense Production Act as Covid-19 Response,” Invokes Defense Production Act as Covid-19 Response,” The Hill, March 18, 2020. , March 18, 2020.
https://thehill.com/policy/healthcare/488226-trump-invokes-defense-production-act-as-Covid-19-response. https://thehill.com/policy/healthcare/488226-trump-invokes-defense-production-act-as-Covid-19-response.
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 Increased unemployment insurance benefits, expanded eligibility  Increased unemployment insurance benefits, expanded eligibility and offered and offered
workers an additional $600 a week for four month, in addition to state workers an additional $600 a week for four month, in addition to state
unemployment programs.unemployment programs.~~304~~231
 Established special rules for certain tax-favored withdrawals from retirement  Established special rules for certain tax-favored withdrawals from retirement
plans; delayed due dates for employer payroll taxes and estimated tax payments plans; delayed due dates for employer payroll taxes and estimated tax payments
for corporations; and revised other provisions, including those related to losses, for corporations; and revised other provisions, including those related to losses,
charitable deductions, and business interest. charitable deductions, and business interest.
 Provided additional  Provided additional funding for the prevention, diagnosis, and treatment of funding for the prevention, diagnosis, and treatment of
COVID-19; limited COVID-19; limited ~~liability~~ liability for volunteer health care professionals; prioritized for volunteer health care professionals; prioritized
Food and Drug Administration (FDA) review of certain drugs; Food and Drug Administration (FDA) review of certain drugs; ~~al ow ed~~allowed
emergency use of certain diagnostic tests that had not been approved by the FDA; emergency use of certain diagnostic tests that had not been approved by the FDA;
expanded health-insurance coverage for diagnostic testing and required coverage expanded health-insurance coverage for diagnostic testing and required coverage
for preventative services and vaccines; and revised other provisions, including for preventative services and vaccines; and revised other provisions, including
those regarding the medical supply chain, the national stockpile, the health care those regarding the medical supply chain, the national stockpile, the health care
workforce, the Healthy Start program, telehealth services, nutrition services, workforce, the Healthy Start program, telehealth services, nutrition services,
Medicare, and Medicaid. Medicare, and Medicaid.
 Temporarily suspended payments for federal student loans and revised provisions  Temporarily suspended payments for federal student loans and revised provisions
related to campus-based aid, supplemental educational-opportunity grants, related to campus-based aid, supplemental educational-opportunity grants,
federal work-study, subsidized loans, federal work-study, subsidized loans, ~~Pel~~ Pell grants, and foreign institutions. grants, and foreign institutions.
 Authorized the Department of the Treasury temporarily to guarantee money-  Authorized the Department of the Treasury temporarily to guarantee money-
market funds. market funds.
On April On April 23, 2020, the House 23, 2020, the House of Representatives passed H.R. 266 (P.L. 116-139), the Paycheck Protection Program passed H.R. 266 (P.L. 116-139), the Paycheck Protection Program
and Health Care Enhancement Act, following similar actions by the Senate the previous day. The and Health Care Enhancement Act, following similar actions by the Senate the previous day. The
measure provided $484 measure provided $484 ~~bil ion for smal~~ billion for small business loans, health care providers, and COVID-19 business loans, health care providers, and COVID-19
testing. In particular, the law testing. In particular, the law
 Provided additional  Provided additional lending authority for certain lending authority for certain ~~Smal~~ Small Business Administration Business Administration
(SBA) programs in response to COVID-19, increased the authority for: (1) the (SBA) programs in response to COVID-19, increased the authority for: (1) the
Paycheck Protection Program, under which the SBA may guarantee certain loans Paycheck Protection Program, under which the SBA may guarantee certain loans
to to ~~smal~~ small businesses during the COVID-19 pandemic; and (2) advanced on businesses during the COVID-19 pandemic; and (2) advanced on
emergency economic injury disaster loans made in response to COVID-19. The emergency economic injury disaster loans made in response to COVID-19. The
provision also expanded eligibilityprovision also expanded eligibility for disaster loans and advances to include for disaster loans and advances to include
agricultural enterprises. agricultural enterprises.
 Provided $100  Provided $100 ~~bil ion~~ billion in FY2020 supplemental appropriations to HHS for the in FY2020 supplemental appropriations to HHS for the
Public Health and Social Services Emergency Fund, including $75 Public Health and Social Services Emergency Fund, including $75 ~~bil ion~~ billion to to
reimburse health care providers for health care related expenses or lost revenues reimburse health care providers for health care related expenses or lost revenues
that were attributable to the coronavirus outbreak; and $25 that were attributable to the coronavirus outbreak; and $25 ~~bil ion~~billion for expenses to for expenses to
research, develop, validate, manufacture, purchase, administer, and expand research, develop, validate, manufacture, purchase, administer, and expand
capacity for COVID-19 tests to effectively monitor and suppress COVID-19. capacity for COVID-19 tests to effectively monitor and suppress COVID-19.
  ~~Al ocated~~Allocated specified portions of the $25 specified portions of the $25 ~~bil ion~~ billion for COVID-19 testing to states, for COVID-19 testing to states,
localities, territories, and tribes; the Centers for Diseases Control and Prevention; localities, territories, and tribes; the Centers for Diseases Control and Prevention;
the National Institutes of Health; the Biomedical Advanced Research and the National Institutes of Health; the Biomedical Advanced Research and
Development Authority; the Food and Drug Administration; community health Development Authority; the Food and Drug Administration; community health
centers; rural health clinics; and testing for the uninsured. centers; rural health clinics; and testing for the uninsured.

~~304~~ 231 For additional information about unemployment and sick leave provisions, see CRS For additional information about unemployment and sick leave provisions, see CRS Insight IN11249, Insight IN11249, H.R. 6201:
Paid Leave and ~~Unem ploym ent~~Unemployment Insurance Responses to COVID-19, by Sarah, by Sarah A. Donovan, Katelin P. Isaacs, and Julie A. Donovan, Katelin P. Isaacs, and Julie
M. Whittaker, and CRSM. Whittaker, and CRS In Focus IF11487, In Focus IF11487, The ~~Fam ilies~~Families First Coronavirus Response Act Leave Provisions, by Sarah , by Sarah
A. Donovan and Jon O. ShimabukuroA. Donovan and Jon O. Shimabukuro.
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On May 12, House Democrats introduced H.R. 6800, the Heroes Act, to provide a $3 On May 12, House Democrats introduced H.R. 6800, the Heroes Act, to provide a $3 ~~tril ion~~trillion
supplemental spending supplemental spending ~~bil~~ bill for additional financial resources to state and local governments. The for additional financial resources to state and local governments. The
measure passed the House on May 15 and was sent to the Senate for consideration. Among other measure passed the House on May 15 and was sent to the Senate for consideration. Among other
provisions, the provisions, the ~~bil~~ bill would have: would have:
 Appropriated $200  Appropriated $200 ~~bil ion~~ billion in hazard pay to essential workers. in hazard pay to essential workers.
 Extended additional Extended additional payments to individuals, for nutrition and housing payments to individuals, for nutrition and housing
assistance, and provide funding for additional testing and contact tracing. assistance, and provide funding for additional testing and contact tracing.
 Restored the tax deduction for state and local taxes.  Restored the tax deduction for state and local taxes.
 Provided FY2020 emergency supplemental appropriations to federal agencies.  Provided FY2020 emergency supplemental appropriations to federal agencies.
 Provided payments and other assistance to state, local, tribal, and territorial  Provided payments and other assistance to state, local, tribal, and territorial
governments. governments.
 Provided additional  Provided additional direct payments of up to $1,200 per individual. direct payments of up to $1,200 per individual.
 Expanded paid sick days, family and medical leave, unemployment  Expanded paid sick days, family and medical leave, unemployment
compensation, nutrition and food assistance programs, housing assistance, and compensation, nutrition and food assistance programs, housing assistance, and
payments to farmers. payments to farmers.
 Modified and expanded the Paycheck Protection Program, which provides loans  Modified and expanded the Paycheck Protection Program, which provides loans
and grants to and grants to ~~smal~~ small businesses and nonprofit organizations.businesses and nonprofit organizations.
 Expanded several tax credits and deductions.  Expanded several tax credits and deductions.
 Provided funding and establish requirements for COVID-19 testing and contact  Provided funding and establish requirements for COVID-19 testing and contact
tracing. tracing.
 Eliminated  Eliminated cost-sharing for COVID-19 treatments; cost-sharing for COVID-19 treatments;
 Extended and expanded the moratorium on certain evictions and foreclosures;  Extended and expanded the moratorium on certain evictions and foreclosures;
and and
 Required employers to develop and implement infectious disease exposure  Required employers to develop and implement infectious disease exposure
control plans. control plans.
On December 2, the Federal Reserve released its “Beige On December 2, the Federal Reserve released its “Beige Book”—a mostly qualitativeBook”—a mostly qualitative assessment assessment
of the U.S. economy produced 8 times a year by the 12 regional Federal Reserve banks—that of the U.S. economy produced 8 times a year by the 12 regional Federal Reserve banks—that
provides an assessment of economic activity across the various regions of the country. The provides an assessment of economic activity across the various regions of the country. The
assessment indicated that economic activity in November had improved modestly, although was assessment indicated that economic activity in November had improved modestly, although was
~~negligible~~ negligible in some Districts.in some Districts.~~305~~
232 On December 27, 2020, President Trump signed the Consolidated Appropriations Act of 2021 On December 27, 2020, President Trump signed the Consolidated Appropriations Act of 2021
(P.L. 116-260) that provided funding for government operations and $900 (P.L. 116-260) that provided funding for government operations and $900 ~~bil ion~~billion in additional in additional
funding for COVID-19 related programs and a $1.4 funding for COVID-19 related programs and a $1.4 ~~tril ion~~trillion budget that comprised 12 budget that comprised 12
appropriations appropriations ~~bil s~~bills. In general, the measure provided: . In general, the measure provided:
 $600 in stimulus checks to qualifying individuals, including adults and children.  $600 in stimulus checks to qualifying individuals, including adults and children.
 Extended unemployment benefits of up to $300 per week through at least March  Extended unemployment benefits of up to $300 per week through at least March
14, 2021, and Pandemic Unemployment Assistance for qualifying individuals 14, 2021, and Pandemic Unemployment Assistance for qualifying individuals up up
to 11 weeks. to 11 weeks.
 Financial assistance to businesses, including forgivable Paycheck Protection  Financial assistance to businesses, including forgivable Paycheck Protection
Program loans, extensions of the PPP program to churches and the entertainment Program loans, extensions of the PPP program to churches and the entertainment
industry, and grants through the Economic Injury Disaster Loans program. industry, and grants through the Economic Injury Disaster Loans program.

~~305~~ 232 The Beige Book: Summary of Commentary on Current Economic Conditions by Federal Reserve District,, December December
2, 2020, the Federal Reserve2, 2020, the Federal Reserve System. System.
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 A moratorium on rental evictions through January 31, 2021, and emergency  A moratorium on rental evictions through January 31, 2021, and emergency
funding for renters. funding for renters.
 Funds to support vaccine production, distribution, and testing.  Funds to support vaccine production, distribution, and testing.
 Funds for schools, colleges, and child-care assistance.  Funds for schools, colleges, and child-care assistance.
 Assistance to the transportation industry through funds for busses, roads, airports,  Assistance to the transportation industry through funds for busses, roads, airports,
and Amtrak and assistance to the airline and Amtrak and assistance to the airline workers through the Payroll Support workers through the Payroll Support
Program. Program.
 On March 11, 2021, President Biden signed the American Rescue Plan Act (P.L. On March 11, 2021, President Biden signed the American Rescue Plan Act (P.L.
117-2) that appropriated $1.9 117-2) that appropriated $1.9 ~~tril ion~~trillion to stimulating the U.S. economy. The major to stimulating the U.S. economy. The major
features of the Act include: features of the Act include:
 Extended expanded unemployment benefits with a $300 weekly supplement  Extended expanded unemployment benefits with a $300 weekly supplement
through September 6, 2021. through September 6, 2021.
 Provided $1,400 in direct payments to individuals  Provided $1,400 in direct payments to individuals making up to $75,000, making up to $75,000,
$112,500 for single parents, and $150,000 for couples. $112,500 for single parents, and $150,000 for couples.
 Provided emergency paid leave, expanded child tax credit up to $3,600 per child,  Provided emergency paid leave, expanded child tax credit up to $3,600 per child,
expanded child and dependent care credit, and earned income tax credit. expanded child and dependent care credit, and earned income tax credit.
 Provided over $50  Provided over $50 ~~bil ion~~ billion in grants and other payments to in grants and other payments to ~~smal~~ small businesses. businesses.
 $350  $350 ~~bil ion~~ billion in assistance to state, local, and tribal governments. in assistance to state, local, and tribal governments.
 Education funding: $130  Education funding: $130 ~~bil ion~~ billion for schools; $40 for schools; $40 ~~bil ion~~billion to colleges and to colleges and
universities. universities.
 Nearly $50  Nearly $50 ~~bil ion~~ billion in housing assistance, emergency rental assistance, in housing assistance, emergency rental assistance,
homeowner assistance, and other housing programs. homeowner assistance, and other housing programs.
 Over $160  Over $160 ~~bil ion~~ billion in health care-related programs, including COVID-19 in health care-related programs, including COVID-19
vaccines, testing, contact tracing and other health-care related funding. vaccines, testing, contact tracing and other health-care related funding.
 $50  $50 ~~bil ion~~ billion for transportation provisions, including funding for airports, airlines, for transportation provisions, including funding for airports, airlines,
Amtrak and other commuter rail services. Amtrak and other commuter rail services.
 $10.4  $10.4 ~~bil ion~~ billion for agriculture, including debt relief for farmers. for agriculture, including debt relief for farmers.
 $1.9  $1.9 ~~bil ion~~ billion to improve cybersecurity. to improve cybersecurity.
 Changes to other health care provisions.  Changes to other health care provisions.
Personal Income and Outlays
Another metric for assessing the impact of the pandemic on the U.S. economy is provided Another metric for assessing the impact of the pandemic on the U.S. economy is provided
through changes in personal income, consumption, and saving. Also, given the role transfer through changes in personal income, consumption, and saving. Also, given the role transfer
payments from the federal government to individualspayments from the federal government to individuals ~~have~~ played in supporting household played in supporting household
income, these transfers income, these transfers ~~have~~ provided an additional measure of the impact of lockdowns on provided an additional measure of the impact of lockdowns on
business and consumer activity. On May 29, 2020, the Bureau of Economic Analysis (BEA) business and consumer activity. On May 29, 2020, the Bureau of Economic Analysis (BEA)
reported that U.S. personal income rose by 12.0% in April, primarily reflecting a 100% increase reported that U.S. personal income rose by 12.0% in April, primarily reflecting a 100% increase
in government transfer payments to individuals from federal economic recovery programs, as in government transfer payments to individuals from federal economic recovery programs, as
indicated in indicated in Figure 20..~~306~~233 During the same period, personal consumption During the same period, personal consumption ~~fel~~ fell by 13% as by 13% as
consumers curtailed spending. The lower level of spending combined with income transfers, a consumers curtailed spending. The lower level of spending combined with income transfers, a
portion of which households apparently deposited into saving accounts, raised the personal portion of which households apparently deposited into saving accounts, raised the personal

~~306~~savings rate to 33.7% in April at an annual rate, compared to an annual rate of 8.2% in February 2020. 233 Personal Income and Outlays, April 2020, Bureau, Bureau of Economic Analysis, May 29, 2020. of Economic Analysis, May 29, 2020.
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~~savings rate to 33.7% in April at an annual rate, compared to an annual rate of 8.2% in February~~
~~2020.~~
~~On April 30, 2021, BEA reported that personal~~On May 28, 2021, BEA reported that personal income and consumption in March and April 2021 followed a pattern similar to that of the previous year, again demonstrating the role that transfer payments played during the pandemic-related economic recession. Personal income rose by 21% income rose by 21% in March 2021 to reach $24.4 trillion, but then fell by 13% in April to $21 trillion. The change in income reflected little change in wages and salaries, generally one of the major sources of income. On the other hand, government transfer payments increased by 95% in March to reach $8.2 trillion, while such payments fell by 41% in April to $4.8 trillion.234 Household consumption increased by 4.7% in March, likely reflecting the increase in transfer payments, but increased by 0.5% in April. Household consumption apparently was sustained by a drop in personal saving, which increased by 133% in March, but fell by 54% in April. The use of saving reduced the personal saving rate from 28% in March to 15% in April. ~~in March, after fal ing by~~
~~7.0% in February.307 The rise in personal income similarly reflected an increase of 95% in~~
~~government transfer payments to $8.2 tril ion, compared with the previous month and exceeded~~
~~the previous high of $6.6 tril ion set in April 2020. The increase in personal income supported an~~
~~increase in personal consumption of 4.2%. During March, however, personal saving rose by~~
~~144% and nearly doubled the personal saving rate from 13.9% in February to 27.6% in March.~~
~~For 2020, the annual personal saving rate reached 16.3%, more than double the 2019 rate of~~
~~7.5%.~~
Figure 20. U.S. Personal Income, Consumption, and Saving

Source: Personal Income and Outlays, ~~February~~ April 2021, Bureau of Economic Analysis,, Bureau of Economic Analysis, ~~March 26~~ May 28, 2021. Created by , 2021. Created by
CRS. CRS.
GDP Output “Gap”
Another measure of the economic impact of the COVID-19 pandemic on the global economy is Another measure of the economic impact of the COVID-19 pandemic on the global economy is
represented by the difference between actual economic performance, measured by gross domestic represented by the difference between actual economic performance, measured by gross domestic
product (GDP), and potential output, or the maximum amount an economy can produce at full product (GDP), and potential output, or the maximum amount an economy can produce at full

~~307~~ 234 Personal Income and Outlays, ~~March 2020~~April 2021, Bureau, Bureau of Economic Analysis, of Economic Analysis, ~~April 30, 2020~~May 28, 2021. .
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employment, referred to as the output gap. employment, referred to as the output gap.~~308~~235 The IMF estimated that the loss in economic output The IMF estimated that the loss in economic output
represented by the GDP output gap among major advanced economies, which as a group account represented by the GDP output gap among major advanced economies, which as a group account
for about 60% of global GDP, would be -3.6% in 2020, or that the economies operated at a rate for about 60% of global GDP, would be -3.6% in 2020, or that the economies operated at a rate
that was 3.6% below their combined potential, as indicated in that was 3.6% below their combined potential, as indicated in Table 11..~~309~~236 According to the According to the
IMF’s assessment, not only would the major advanced economies as a group operate below their IMF’s assessment, not only would the major advanced economies as a group operate below their
full potential through 2025, but none of the individual economies was projected to operate above full potential through 2025, but none of the individual economies was projected to operate above
potential during the 2020-2025 forecasting period. The Euro are as a whole, and France and Italy potential during the 2020-2025 forecasting period. The Euro are as a whole, and France and Italy
in particular, were projected to experience the largest output gap through 2022. At 3.2% the U.S. in particular, were projected to experience the largest output gap through 2022. At 3.2% the U.S.
output gap was among the output gap was among the ~~smal est~~smallest of the major advanced economies. of the major advanced economies.
Table 1113. IMF Forecast of Major Advanced Economy GDP Output Gap
(in percentage terms) (in percentage terms)

Projected Projected

2017 2017
2018 2018
2019 2019
2020 2020
2021 2021
2022 2022
2023 2023
2024 2024
2025 2025
Major Advanced Major Advanced
–0.5% –0.5%
0.2% 0.2%
0.4% 0.4%
-3.6% -3.6%
-2.2% -2.2%
-1.0% -1.0%
-0.4% -0.4%
-0.2% -0.2%
-0.1% -0.1%
Economies Economies
United States United States
–1.0 –1.0
0.4 0.4
1.0 1.0
-3.2 -3.2
-1.5 -1.5
-0.5 -0.5
-0.2 -0.2
-0.1 -0.1
-0.1 -0.1
Euro Area Euro Area
–0.4 –0.4
0.2 0.2
0.1 0.1
-5.1 -5.1
-3.2 -3.2
-1.6 -1.6
-0.6 -0.6
-0.2 -0.2
0.0 0.0
Germany Germany
1.0 1.0
1.2 1.2
0.4 0.4
-3.5 -3.5
-1.8 -1.8
-0.7 -0.7
-0.2 -0.2
-0.1 -0.1
0.0 0.0
France France
–1.3 –1.3
–0.5 –0.5
0.0 0.0
-5.6 -5.6
-4.0 -4.0
-2.5 -2.5
-1.4 -1.4
-0.6 -0.6
0.0 0.0
Italy Italy
–1.2 –1.2
–0.7 –0.7
–0.7 –0.7
-5.4 -5.4
-5.4 -5.4
-2.6 -2.6
-0.9 -0.9
-0.6 -0.6
-0.5 -0.5
Japan Japan
–0.3 –0.3
–0.8 –0.8
–0.7 –0.7
-3.0 -3.0
-2.1 -2.1
-1.0 -1.0
-0.4 -0.4
0.0 0.0
0.0 0.0
United Kingdom United Kingdom
0.3 0.3
0.0 0.0
0.0 0.0
-3.9 -3.9
-3.5 -3.5
-1.7 -1.7
-1.0 -1.0
-0.5 -0.5
0.0 0.0
Canada Canada
0.4 0.4
0.6 0.6
0.4 0.4
-3.8 -3.8
-1.4 -1.4
-0.3 -0.3
-0.1 -0.1
0.0 0.0
0.0 0.0
Source: International Monetary Fund. International Monetary Fund.
Notes: The output gap is the difference between GDP and potential GDP, expressed The output gap is the difference between GDP and potential GDP, expressed as a percentage of as a percentage of
potential GDP. A positive value indicates that GDP exceeds potential GDP; a negative value indicates that GDP potential GDP. A positive value indicates that GDP exceeds potential GDP; a negative value indicates that GDP
~~fal s~~falls short of potential GDP. short of potential GDP.
On February 1, 2021, the Congressional Budget Office (CBO) issued an estimate of the impact of On February 1, 2021, the Congressional Budget Office (CBO) issued an estimate of the impact of
the COVID-19 pandemic on the U.S. GDP output gap and on other major indicators. the COVID-19 pandemic on the U.S. GDP output gap and on other major indicators. ~~310~~237 In the In the
forecast, the U.S. output gap in 2020 was estimated at 3.3%, the largest difference between the forecast, the U.S. output gap in 2020 was estimated at 3.3%, the largest difference between the
actual and potential output in the U.S. economy since the period following the 2008-2009 actual and potential output in the U.S. economy since the period following the 2008-2009
financial crisis, as indicated in financial crisis, as indicated in Figure 21. The CBO also estimated that the output gap following . The CBO also estimated that the output gap following
the financial crisis persisted from 2009-2016, reflecting the lengthy period of the recovery. In the the financial crisis persisted from 2009-2016, reflecting the lengthy period of the recovery. In the
current context, the CBO estimates that current context, the CBO estimates that
 a rise in vaccinations  a rise in vaccinations ~~wil~~ will lead to reductions in social distancing and an economic lead to reductions in social distancing and an economic
recovery; recovery;
 real GDP  real GDP ~~wil~~ will expand in 2021 and reach its pre-pandemic peak in mid-2021; expand in 2021 and reach its pre-pandemic peak in mid-2021;

~~308~~ 235 According to the Congressional Budget According to the Congressional Budget Office, Office, ~~T he~~The output gap is the difference between output gap is the difference between GDP and potential GDP, GDP and potential GDP,
expressed as a percentage of potential GDP. A positive value indicates that GDP exceeds potential GDP; a negative expressed as a percentage of potential GDP. A positive value indicates that GDP exceeds potential GDP; a negative
value indicates that GDP falls short of potential GDP. Valuesvalue indicates that GDP falls short of potential GDP. Values for the output gap are for the fourth quarter of each year.for the output gap are for the fourth quarter of each year.
~~309~~ 236 World Economic Outlook, International Monetary Fund, October 2020, , International Monetary Fund, October 2020, ~~T able~~Table A.8. A.8.
~~310~~237 An Overview of the Economic Outlook: 2021 to 2031, Congressional Budget Office, February 2021. , Congressional Budget Office, February 2021.
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 the labor force participation rate  the labor force participation rate ~~wil~~ will recover, but lag behind the pre-pandemic recover, but lag behind the pre-pandemic
rate through the estimation period. rate through the estimation period.~~311~~238
Figure 21. Real and Potential U.S. GDP and the Output Gap

Source: CongressionalCongressional Budget Office, February 2021. Created by CRS. Budget Office, February 2021. Created by CRS.
Notes: The output gap is the difference between GDP and potential GDP, expressed The output gap is the difference between GDP and potential GDP, expressed as a percentage of as a percentage of
potential GDP. A positive value indicates that GDP exceeds potential GDP; a negative value indicates that GDP potential GDP. A positive value indicates that GDP exceeds potential GDP; a negative value indicates that GDP
~~fal s~~falls short of potential GDP. Values for the output gap are for the fourth quarter of each year. short of potential GDP. Values for the output gap are for the fourth quarter of each year.
CBO also estimated that U.S. GDP would grow at an annual rate of 4.6% in 2021, but then CBO also estimated that U.S. GDP would grow at an annual rate of 4.6% in 2021, but then
~~general y~~generally trend downward to pre-pandemic rates in the 2024-2031 period, as indicated in trend downward to pre-pandemic rates in the 2024-2031 period, as indicated in Table
12. The unemployment rate was also projected to peak in 2020 at 8.1%, but trend downward and . The unemployment rate was also projected to peak in 2020 at 8.1%, but trend downward and
reach the pre-pandemic rate in the 2024 to 2025 period. Similarly, the growth rates of exports and reach the pre-pandemic rate in the 2024 to 2025 period. Similarly, the growth rates of exports and
imports were projected imports were projected ~~fal~~ fall by 13% and 10%, respectively, in 2020, before growing at positive by 13% and 10%, respectively, in 2020, before growing at positive
rates through the forecast period. The CBO indicated, however, that its forecast was subject to a rates through the forecast period. The CBO indicated, however, that its forecast was subject to a
“high degree of uncertainty,” due to the uncertain course of the pandemic, the effectiveness of “high degree of uncertainty,” due to the uncertain course of the pandemic, the effectiveness of
monetary and fiscal policies, and the response of global financial markets to increases in public monetary and fiscal policies, and the response of global financial markets to increases in public
deficits and debt.deficits and debt.~~312~~239
Table 1214. Congressional Budget Office Projection of Major U.S. Economic Indicators,
2020 to 2031
(annual percentage changes) (annual percentage changes)

Average annual

2024-
2026-
2017 2017
2018 2018
2019 2019
2020
2021
2022
2023
2025
2031

Projected
Gross Gross Domestic Domestic
2.3% 2.3%
3.0% 3.0%
2.2% 2.2%
-3.4% -3.4%
4.6% 4.6%
2.9% 2.9%
2.2% 2.2%
2.1% 2.1%
1.6% 1.6%
Product (GDP) Product (GDP)
Potential GDP Potential GDP
1.6 1.6
1.8 1.8
1.9 1.9
1.9 1.9
1.9 1.9
1.9 1.9
1.9 1.9
1.8 1.8
1.7 1.7

~~311 Ibid, p. 2.~~
~~312 Ibid,~~ 238 Ibid, p. 2. 239 Ibid, p. 4. p. 4.
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Average annual

2024-
2026-
2017 2017
2018 2018
2019 2019
2020
2021
2022
2023
2025
2031

Projected
Output Gap Output Gap
0.0 0.0
0.6 0.6
1.0 1.0
-3.3 -3.3
-1.3 -1.3
-0.8 -0.8
-0.4 -0.4
0.4 0.4
-0.1 -0.1
Civilian Unemp. Civilian Unemp.
4.4 4.4
3.9 3.9
3.7 3.7
8.1 8.1
5.7 5.7
5.0 5.0
4.7 4.7
4.0 4.0
4.1 4.1
Rate Rate
Labor Force Labor Force
62.9 62.9
62.9 62.9
63.1 63.1
61.7 61.7
61.9 61.9
62.1 62.1
62.0 62.0
61.7 61.7
61.1 61.1
Participation Rate Participation Rate
Exports Exports
3.9 3.9
3.0 3.0
-0.1 -0.1
-13.1 -13.1
11.3 11.3
5.4 5.4
2.5 2.5
2.0 2.0
1.6 1.6
Imports Imports
4.7 4.7
4.1 4.1
1.1 1.1
-10.0 -10.0
13.9 13.9
1.6 1.6
0.5 0.5
2.9 2.9
2.1 2.1
Source: An Overview An Overview of the Economic Outlook:of the Economic Outlook: 2021 to 20312021 to 2031, CongressionalCongressional Budget Office, February 2021. Budget Office, February 2021.
Federal Reserve Forecast
On March 17, 2021, the Federal Open Market Committee released a statement reiterating On March 17, 2021, the Federal Open Market Committee released a statement reiterating
previous assessments that, “The path of the economy previous assessments that, “The path of the economy ~~wil~~ will depend significantly on the course of depend significantly on the course of
the virus, including vaccinations. The ongoing public health crisis the virus, including vaccinations. The ongoing public health crisis ~~wil~~ will continue to weigh on continue to weigh on
economic activity, employment, and inflation in the near term, and poses considerable risks to the economic activity, employment, and inflation in the near term, and poses considerable risks to the
economic outlook over the medium term.”economic outlook over the medium term.”~~313~~240 The statement also indicated that, “Following a The statement also indicated that, “Following a
moderation in the pace of the recovery, indicators of economic activity and employment have moderation in the pace of the recovery, indicators of economic activity and employment have
turned up recently, although the sectors most adversely affected by the pandemic remain weak.” turned up recently, although the sectors most adversely affected by the pandemic remain weak.”
The Fed’s March 2021 forecast was more positive than that released in December 2020 with the The Fed’s March 2021 forecast was more positive than that released in December 2020 with the
annual rate of growth for 2021 forecasted at 6.5% compared with the December forecast of 4.2%, annual rate of growth for 2021 forecasted at 6.5% compared with the December forecast of 4.2%,
as indicated ias indicated in Table 1315.
In its forecast, the Federal Open Market Committee made three projections for such major In its forecast, the Federal Open Market Committee made three projections for such major
economic variables as GDP, the unemployment rate, and the personal consumption expenditure economic variables as GDP, the unemployment rate, and the personal consumption expenditure
(PCE) measure of inflation compared with its December 2020 projections of the same variables. (PCE) measure of inflation compared with its December 2020 projections of the same variables.
The three measures include (1) the median projected change; (2) the central tendency, which The three measures include (1) the median projected change; (2) the central tendency, which
excludes the highest and lowest three projections; and (3) the range, which indicates forecasts excludes the highest and lowest three projections; and (3) the range, which indicates forecasts
from the highest to the lowest values. from the highest to the lowest values.
According to the March median forecast, U.S. GDP between 2021 and 2023 was projected grow According to the March median forecast, U.S. GDP between 2021 and 2023 was projected grow
at a faster rate than in the previous forecast; the unemployment rate could at a faster rate than in the previous forecast; the unemployment rate could ~~fal~~ fall to 4.5%, compared to 4.5%, compared
with a rate of 5.0%; the rate of inflation could rise by 0.6% above the rate forecasted in with a rate of 5.0%; the rate of inflation could rise by 0.6% above the rate forecasted in
December. The possible range for GDP, however could vary between 5.0% and 7.3% in 2021, December. The possible range for GDP, however could vary between 5.0% and 7.3% in 2021,
with a possible rate of unemployment between 4.0% and 6.8%. The Fed also indicated its with a possible rate of unemployment between 4.0% and 6.8%. The Fed also indicated its
intentions to continue purchasing Treasury securities at $80 intentions to continue purchasing Treasury securities at $80 ~~bil ion~~billion per month and its purchases of per month and its purchases of
mortgage-backed securities of at least $40 mortgage-backed securities of at least $40 ~~bil ion~~ billion a month, “until substantial further progress has a month, “until substantial further progress has
been made toward the Committee's (Federal Open Market Committee) maximum employment been made toward the Committee's (Federal Open Market Committee) maximum employment
and price stabilityand price stability goals.goals.~~314~~241
In previous statements, the FOMC has stated that the range of estimates is necessary to represent In previous statements, the FOMC has stated that the range of estimates is necessary to represent
the “extremely elevated” uncertainty related to the economic effects of the pandemic and the the “extremely elevated” uncertainty related to the economic effects of the pandemic and the

~~313~~ 240 Summary of Economic Projections, Board of Governors of the Federal Reserve System, March 17, 2020. Board of Governors of the Federal Reserve System, March 17, 2020.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20201216a.htm https://www.federalreserve.gov/newsevents/pressreleases/monetary20201216a.htm
~~314~~ 241 Federal Reserve Issues Federal Reserve Issues FOMC Statement, Board of Governors of the Federal System,FOMC Statement, Board of Governors of the Federal System, March 17, 2021. March 17, 2021.
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limited historical response of the U.S. economy to past economic shocks. As a result of the limited historical response of the U.S. economy to past economic shocks. As a result of the
“significant uncertainty and downside risks associated with the pandemic, including how much “significant uncertainty and downside risks associated with the pandemic, including how much
the economy would weaken and how long it would take to recover,” the assessment of a more the economy would weaken and how long it would take to recover,” the assessment of a more
pessimistic projection was judged to be no less pessimistic than the baseline scenario (median). pessimistic projection was judged to be no less pessimistic than the baseline scenario (median).
Another member of the Fed recently stated the pandemic-related economic crisis should be used Another member of the Fed recently stated the pandemic-related economic crisis should be used
~~to distil~~ to distill lessons and “institute reforms so our system is more resilient and better able to withstand lessons and “institute reforms so our system is more resilient and better able to withstand
a variety of possible shocks in the future, including those emanating from outside the financial a variety of possible shocks in the future, including those emanating from outside the financial
system.system.~~315~~242
Table 1315. Federal Reserve Economic Projections, March 2021
Percentage change, fourth quarter over previous year fourth quarter Percentage change, fourth quarter over previous year fourth quarter

Core Core
Change in Change in
~~December~~
December Unemploy-Unemploy-
December December
PCE PCE
December December
PCE PCE
December December
real GDP real GDP
projection projection
ment rate ment rate
projection projection
inflation projection inflation projection
inflation inflation
projection projection
Median1 Median1
2021 2021
6.5 6.5
4.2 4.2
4.5 4.5
5.0 5.0
2.4 2.4
1.8 1.8
2.2 2.2
1.8 1.8
2022 2022
3.3 3.3
3.2 3.2
3.9 3.9
4.2 4.2
2.0 2.0
1.9 1.9
2.0 2.0
1.9 1.9
2023 2023
2.2 2.2
2.4 2.4
3.5 3.5
3.7 3.7
2.1 2.1
2.0 2.0
2.1 2.1
2.0 2.0
Longer Longer
1.8 1.8
1.8 1.8
4 4
4.1 4.1
2.0 2.0
2.0 2.0

run run
Central Tendency2 Central Tendency2
2021 2021
5.8-6.6 5.8-6.6
3.7-5.0 3.7-5.0
4.2-4.7 4.2-4.7
4.7-5.4 4.7-5.4
2.2-2.4 2.2-2.4
1.7-1.9 1.7-1.9
2.0-2.3 2.0-2.3
1.7-1.8 1.7-1.8
2022 2022
3.0-3.8 3.0-3.8
3.0-3.5 3.0-3.5
3.6-4.0 3.6-4.0
3.8-4.6 3.8-4.6
1.8-2.1 1.8-2.1
1.8-2.0 1.8-2.0
1.9-2.1 1.9-2.1
1.8-2.0 1.8-2.0
2023 2023
2.0-2.5 2.0-2.5
2.2-2.7 2.2-2.7
3.2-3.8 3.2-3.8
3.5-4.3 3.5-4.3
2.0-2.2 2.0-2.2
1.9-2.1 1.9-2.1
2.0-2.2 2.0-2.2
1.9-2.1 1.9-2.1
Longer Longer
1.8-2.0 1.8-2.0
1.7-2.0 1.7-2.0
3.8-4.3 3.8-4.3
3.9-4.3 3.9-4.3
2.0 2.0
2.0 2.0

run run
Range3 Range3
2021 2021
5.0-7.3 5.0-7.3
0.5-5.5 0.5-5.5
4.0-5.5 4.0-5.5
4.0-6.8 4.0-6.8
2.1-2.6 2.1-2.6
1.2-2.3 1.2-2.3
1.9-2.5 1.9-2.5
1.5-2.3 1.5-2.3
2022 2022
2.5-4.4 2.5-4.4
2.5-4.0 2.5-4.0
3.2-4.2 3.2-4.2
3.5-5.8 3.5-5.8
1.8-2.3 1.8-2.3
1.5-2.2 1.5-2.2
1.8-2.3 1.8-2.3
1.6-2.2 1.6-2.2
2023 2023
1.7-2.6 1.7-2.6
2.0-3.5 2.0-3.5
3.0-4.0 3.0-4.0
3.3-5.0 3.3-5.0
1.9-2.3 1.9-2.3
1.7-2.2 1.7-2.2
1.9-2.3 1.9-2.3
1.7-2.2 1.7-2.2
Source: SummarySummary of Economic Projections,of Economic Projections, March 17, 2021.March 17, 2021.
Notes: (1) For each period, the median is the middle projection (1) For each period, the median is the middle projection when the projectionswhen the projections are arranged from lowest are arranged from lowest
to highest. (2) The central tendency excludes the three highest and three lowest projectionsto highest. (2) The central tendency excludes the three highest and three lowest projections for each variable in for each variable in
each year. (3) The range for a variable in a given year includes each year. (3) The range for a variable in a given year includes al all participants’ projections,participants’ projections, from lowest to from lowest to
highest, for that variable in that year. Projections for the unemployment rate representhighest, for that variable in that year. Projections for the unemployment rate represent the average civilian the average civilian
unemployment rate in the fourth quarter of the year indicated. unemployment rate in the fourth quarter of the year indicated.
On June 25, the Federal Reserve (Fed) announced the result of stress tests on 33 U.S. banks under On June 25, the Federal Reserve (Fed) announced the result of stress tests on 33 U.S. banks under
~~three scenarios316~~three scenarios243 to ascertain their capital sufficiency given the strains to the financial system to ascertain their capital sufficiency given the strains to the financial system

~~315~~ 242 Brainard, Lael, Some Brainard, Lael, Some Preliminary Financial Stability Lessons From the COVIDPreliminary Financial Stability Lessons From the COVID -19 Shock, At the 2021 Annual -19 Shock, At the 2021 Annual
Washington Conference, Institute of International Bankers March 1, 2021. Washington Conference, Institute of International Bankers March 1, 2021.
~~316 T he~~243 The three scenarios include (1) a rapid, or “V”-shaped recovery; (2) a slower, or “U”-shaped recovery; and (3) a three scenarios include (1) a rapid, or “V”-shaped recovery; (2) a slower, or “U”-shaped recovery; and (3) a
“W”-shaped or double-dip“W”-shaped or double-dip recession with a shortrecession with a short -lived recovery followed by a severe drop in activity later this year due -lived recovery followed by a severe drop in activity later this year due
to a second COVIDto a second COVID event. event. ~~Assessm ent~~Assessment of Bank Capital During the Recent Coronavirus Event, Board of Governors of , Board of Governors of
the Federal Reserve System, June 2020, p. 2. the Federal Reserve System, June 2020, p. 2.
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caused by COVID-19. caused by COVID-19.~~317~~244 The Fed reported that The Fed reported that al all large U.S. banks were “sufficiently large U.S. banks were “sufficiently
capitalized” to survive the three scenarios, but it determined that there is “material uncertainty” capitalized” to survive the three scenarios, but it determined that there is “material uncertainty”
about the trajectory for the economic recovery and corresponding uncertainty related to its effects about the trajectory for the economic recovery and corresponding uncertainty related to its effects
on the financial health of banking organizations. In addition, the Fed concluded that under the on the financial health of banking organizations. In addition, the Fed concluded that under the
first and second scenarios, first and second scenarios, al all of the banks would remain of the banks would remain ~~wel~~ well above their minimum capital ratios, above their minimum capital ratios,
but under the third scenario (a double-dip recession), several banks would approach their but under the third scenario (a double-dip recession), several banks would approach their
minimum capital ratios.minimum capital ratios.~~318~~245 As a result, the Fed announced that it As a result, the Fed announced that it ~~wil~~
will  suspend share repurchases;  suspend share repurchases;
 cap the growth of dividends and impose a limit that does not exceed recent  cap the growth of dividends and impose a limit that does not exceed recent
income; income;
 require banks to reassess their capital needs and resubmit their capital plans later  require banks to reassess their capital needs and resubmit their capital plans later
this year; and this year; and
 conduct additional stress analyses later in 2020 as data from banks become  conduct additional stress analyses later in 2020 as data from banks become
available available and economic conditions evolve.and economic conditions evolve.~~319~~246 Other Developments
~~Other Developments~~
~~The Department of Labor announced on July 2 that an additional 1.4 mil ion Americans had filed~~
~~for Unemployment Insurance, raising the total to 48.7 mil ion over the 15-week period from mid-~~
~~March.320 The insured seasonal y adjusted unemployment rate in June was estimated at 13.2%,~~
~~unchanged from the revised rate in the previous week. On July 2, the BLS also released data on~~
~~the employment situation in June, indicating that nonfarm payroll rose by 4.8 mil ion, lowering~~
~~the unemployment rate to 11.5%.321 The unemployment number does not include 9.1 mil ion~~
~~individuals working part time who would prefer to work full time and 8.2 mil ion individuals who~~
~~are seeking employment. In addition, the June unemployment number does not include~~
~~individuals who were misclassified as being employed, but absent due to temporary, pandemic~~
~~closures. Had the individuals been classified as unemployed, the overal unemployment rate~~
~~would have been one percentage point higher. On July 2, the Census Bureau also reported that the~~
~~U.S. goods and services trade deficit in May was $54.6 bil ion, up 9.7% from the April deficit as~~
~~a result of a 4.4% drop in U.S. exports and a 0.9% drop in U.S. imports.322 Through May, U.S.~~
~~exports are down by 14% and imports were down by 13.1% in value terms compared with the~~
~~same five months in 2019.~~
On July 17, the Federal Reserve Board modified its Main Street Lending Program to provide On July 17, the Federal Reserve Board modified its Main Street Lending Program to provide
greater access to credit for nonprofit organizations such as educational institutions, hospitals, and greater access to credit for nonprofit organizations such as educational institutions, hospitals, and
social service organizations.social service organizations.
On August 13, the Department of Labor announced that over the 21-week period from mid-March On August 13, the Department of Labor announced that over the 21-week period from mid-March
to the beginning of August 2020, 56 to the beginning of August 2020, 56 ~~mil ion~~million Americans filed for unemployment insurance. Americans filed for unemployment insurance.~~323 On~~

~~317 Ibid.~~
~~318 Ibid., p. 2.~~
~~319 Ibid., pp. 1-2.~~
~~320 Unemployment Insurance Weekly Claims, July 1, 2020. https://www.dol.gov/ui/data.pdf.~~
~~321 The Employment Situation—June 2020, Bureau of Labor Statistics, July 2, 2020.~~
~~322 Monthly U.S. International Trade in Goods and Services, May 2020 , U.S. Census Bureau, July 2, 2020.~~
~~323 Unemployment Insurance Weekly Claims, Department of Labor, August 13, 2020. https://www.dol.gov/; Romm,~~
~~T ony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week T otal to 38.6~~
~~Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-~~
~~claims-coronavirus/~~
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~~link to page 99~~ ~~Global Economic Effects of COVID-19~~

~~a seasonal y~~247 On a seasonally adjusted basis, the number of insured unemployed workers was 15.5 adjusted basis, the number of insured unemployed workers was 15.5 ~~mil ion~~million in early in early
August, down from a peak of 25 August, down from a peak of 25 ~~mil ion~~million in mid-May. The total number of people claiming in mid-May. The total number of people claiming
benefits in benefits in al all programs in the week ending July 25, totaled 28.3 programs in the week ending July 25, totaled 28.3 ~~mil ion~~million, up from 1.7 , up from 1.7 ~~mil ion~~million in in
the comparable week in 2019. The insured unemployment rate was 10.6%, also down from the the comparable week in 2019. The insured unemployment rate was 10.6%, also down from the
peak reached in early May. peak reached in early May.
On August 20, the European Central, the Bank of England, the Bank of Japan, and the Swiss On August 20, the European Central, the Bank of England, the Bank of Japan, and the Swiss
National Bank jointlyNational Bank jointly announced they would reduce their emergency dollar swap operations with announced they would reduce their emergency dollar swap operations with
the Fed to once a week, down from three, as a result of reduced demand for dollars. On a broad the Fed to once a week, down from three, as a result of reduced demand for dollars. On a broad
dollar trade weighted index for goods and services, the dollar has depreciated by 7.2% since the dollar trade weighted index for goods and services, the dollar has depreciated by 7.2% since the
high value reached on March 23 2020. Reportedly, the shift by the central banks reflects market high value reached on March 23 2020. Reportedly, the shift by the central banks reflects market
sentiment that the global financial system has recovered from the initial negative impact of the sentiment that the global financial system has recovered from the initial negative impact of the
pandemic experienced in the first quarter of 2020.pandemic experienced in the first quarter of 2020.~~324~~
248 On August 27, the DOL announced that over the 23-week period from mid-March to late August On August 27, the DOL announced that over the 23-week period from mid-March to late August
2020, 58.4 2020, 58.4 ~~mil ion~~million Americans filed for unemployment insurance. Americans filed for unemployment insurance.~~325 On a seasonal y adjusted~~
~~basis, the number of insured unemployed workers was 14.5 mil ion in mid-August, down from a~~
~~peak of 25 mil ion in mid-May. The total number of people claiming benefits in al programs in~~
~~the week ending August 8, totaled 27 mil ion, up from 1.6 mil ion in the comparable week in~~
249 On a seasonally adjusted 244 Ibid. 245 Ibid., p. 2. 246 Ibid., pp. 1-2. 247 Unemployment Insurance Weekly Claims, Department of Labor, August 13, 2020. https://www.dol.gov/; Romm, Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-coronavirus/ 248 Arnold, Martin and Eva Szalay, Central Banks Scale Back Dollar Lending Operation as Demand Drops, Financial Times, August 20, 2020. https://www.ft.com/content/210ef737-2628-4431-bd6b-456aa65b2024. 249 Unemployment Insurance Weekly Claims, Department of Labor, August 27, 2020. https://www.dol.gov/; Romm, Congressional Research Service 83 link to page 90 Global Economic Effects of COVID-19 basis, the number of insured unemployed workers was 14.5 million in mid-August, down from a peak of 25 million in mid-May. The total number of people claiming benefits in all programs in the week ending August 8, totaled 27 million, up from 1.6 million in the comparable week in 2019. The insured unemployment rate was 9.9%, also down from the peak reached in early May. 2019. The insured unemployment rate was 9.9%, also down from the peak reached in early May.
For additional information about the impact of COVID-19 on the U.S. economy see CRS Insight For additional information about the impact of COVID-19 on the U.S. economy see CRS Insight
IN11235, IN11235, COVID-19: Potential Economic Effects..~~326~~
250 Europe
In the early stages of the pandemic, European countries did not adopt a synchronized fiscal policy In the early stages of the pandemic, European countries did not adopt a synchronized fiscal policy
response similar to the one they developed during the 2008-2009 global financial crisis. That response similar to the one they developed during the 2008-2009 global financial crisis. That
response changed with the adoption of the €750 response changed with the adoption of the €750 ~~bil ion~~billion pandemic economic recovery package, pandemic economic recovery package,
termed the Next Generation EU (NGEU), in July 2020. For the most part, EU members have used termed the Next Generation EU (NGEU), in July 2020. For the most part, EU members have used
a combination of national fiscal policies and bond buying by the ECB to address the economic a combination of national fiscal policies and bond buying by the ECB to address the economic
impact of the pandemic. Individual countries have adopted quarantines and required business impact of the pandemic. Individual countries have adopted quarantines and required business
closures, travel and border restrictions, tax holidays for businesses, extensions of certain closures, travel and border restrictions, tax holidays for businesses, extensions of certain
payments and loan guarantees, and subsidies for workers and businesses. The European payments and loan guarantees, and subsidies for workers and businesses. The European
Commission has advocated for greater coordination among the EU members in developing and Commission has advocated for greater coordination among the EU members in developing and
implementing monetary and fiscal policies to address the economic implementing monetary and fiscal policies to address the economic ~~fal out~~fallout from the viral from the viral
pandemic.pandemic.
In its February 2021 economic forecast, the European Commission projected that EU GDP In its February 2021 economic forecast, the European Commission projected that EU GDP
growth rate would rise by 3.7% in 2021, after growth rate would rise by 3.7% in 2021, after ~~fal ing~~falling by 6.3% in 2020, nearly a full percentage by 6.3% in 2020, nearly a full percentage
point lower than it had estimated in its Autumn forecast of -7.4%, as indicated ipoint lower than it had estimated in its Autumn forecast of -7.4%, as indicated in Table 1416. The The
Commission indicated the EU economy was weaker in the Commission indicated the EU economy was weaker in the ~~fal~~ fall of 2020 and weaker going into of 2020 and weaker going into
2021 than its earlier forecast had indicated as a result of a resurgence of COVID-19 cases and the 2021 than its earlier forecast had indicated as a result of a resurgence of COVID-19 cases and the
emergence of new, more virulent strains of the virus in the emergence of new, more virulent strains of the virus in the ~~fal~~ fall that led countries to re-impose ~~that led countries to re-impose~~

~~324 Arnold, Martin and Eva Szalay, Central Banks Scale Back Dollar Lending Operation as Demand Drops,~~ ~~Financial~~
~~Tim es, August 20, 2020. https://www.ft.com/content/210ef737-2628-4431-bd6b-456aa65b2024.~~
~~325 Unemployment Insurance Weekly Claims, Department of Labor, August 27, 2020. https://www.dol.gov/; Romm,~~
~~T ony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week T otal to 38.6~~
~~Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-~~
~~claims-coronavirus/~~
~~326 CRS Insight IN11235, COVID-19: Potential Economic Effects, by Marc Labonte.~~
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restrictions. The Commission concluded, however, that the outlook for the EU economy had restrictions. The Commission concluded, however, that the outlook for the EU economy had
improved since its November 2020 forecast due to the development of vaccines and the pace of improved since its November 2020 forecast due to the development of vaccines and the pace of
vaccinations. The economic impact of the renewed lockdowns was projected to be unequal across vaccinations. The economic impact of the renewed lockdowns was projected to be unequal across
EU members due to differences in the stringency of containment measures, the severity of the EU members due to differences in the stringency of containment measures, the severity of the
infections and differences in economic institutions and policy responses.infections and differences in economic institutions and policy responses.~~327~~
251 The Commission forecast assumes that trade activity in the EU and the UK The Commission forecast assumes that trade activity in the EU and the UK ~~wil~~ will be negatively be negatively
affected beginning in January 2021 due to the UK withdrawal from the EU. By country, Spain, affected beginning in January 2021 due to the UK withdrawal from the EU. By country, Spain,
France, Italy, Portugal, and Greece are forecasted to experience the largest declines in GDP in France, Italy, Portugal, and Greece are forecasted to experience the largest declines in GDP in
2020 due to a number of factors, including a dependence on tourism, which is expected to 2020 due to a number of factors, including a dependence on tourism, which is expected to
experience a slow economic recovery. Germany and other Northern European countries are experience a slow economic recovery. Germany and other Northern European countries are
projected to experience a more modest decline in economic activity. Some analysts argue that this projected to experience a more modest decline in economic activity. Some analysts argue that this
disparity in economic effects may complicate efforts to coordinate economic policies.disparity in economic effects may complicate efforts to coordinate economic policies.~~328~~
~~In assessing the chal enge of the crisis, the Commission argued that, “[t]he risk … is that the~~
~~crisis wil~~ 252 Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-coronavirus/ 250 CRS Insight IN11235, COVID-19: Potential Economic Effects, by Marc Labonte. 251 European Economic Forecast Winter 2021, European Commission, February 2021, p. 1. 252 Birnbaum, Michael, European Union Says That Pandemic Recession Will be Worst in its History, Washington Post, May 6, 2020. https://www.washingtonpost.com/world/european-union-says-pandemic-recession-will-be-worst-in-its-history/2020/05/06/e787a70e-8f96-11ea-9322-a29e75effc93_story.html. Congressional Research Service 84 Global Economic Effects of COVID-19 In assessing the challenge of the crisis, the Commission argued that, “[t]he risk … is that the crisis will lead to severe distortions within the Single Market and to entrenched economic, lead to severe distortions within the Single Market and to entrenched economic,
financial and social divergences between euro area Member States that could ultimately threaten financial and social divergences between euro area Member States that could ultimately threaten
the stability of the Economic and Monetary Union.”the stability of the Economic and Monetary Union.”~~329~~253 The Commission estimated that European The Commission estimated that European
countries would emerge from the recession at different rates and different paths, reflecting countries would emerge from the recession at different rates and different paths, reflecting
differences in the timing of when social distancing measures were introduced and removed, differences in the timing of when social distancing measures were introduced and removed,
dependency on tourism, and the magnitude and effectiveness of economic policies. The dependency on tourism, and the magnitude and effectiveness of economic policies. The
Commission also noted the rise in saving among EU households that it argued is mostly Commission also noted the rise in saving among EU households that it argued is mostly
involuntary, rather than precautionary and was projected to revert to pre-crisis levels once involuntary, rather than precautionary and was projected to revert to pre-crisis levels once
consumers resumed their regular spending patterns. consumers resumed their regular spending patterns.
Table 1416. European Commission Economic Forecast
Percentage change, real GDP Percentage change, real GDP

Winter Winter Forecast 2021 Forecast 2021
Autumn Forecast 2020 Autumn Forecast 2020
Summer Summer Forecast 2020 Forecast 2020
2021 2021
2022 2022
2020 2020
2021 2021
2022 2022
2020 2020
2021 2021

EU EU
3.7 3.7
3.9 3.9
-7.4 -7.4
4.1 4.1
3.0 3.0
-7.4 -7.4
6.1 6.1
Euro area Euro area
3.8 3.8
3.8 3.8
-7.8 -7.8
4.2 4.2
3.0 3.0
-7.7 -7.7
6.3 6.3
Belgium Belgium
3.9 3.9
3.1 3.1
-8.4 -8.4
4.1 4.1
3.5 3.5
-7.2 -7.2
6.7 6.7
Germany Germany
3.2 3.2
3.1 3.1
-5.6 -5.6
3.5 3.5
2.6 2.6
-6.5 -6.5
5.9 5.9
Ireland Ireland
3.4 3.4
3.5 3.5
-2.3 -2.3
2.9 2.9
2.6 2.6
-7.9 -7.9
6.1 6.1
Greece Greece
3.5 3.5
5.0 5.0
-9.0 -9.0
5.0 5.0
3.5 3.5
-9.7 -9.7
7.9 7.9
Spain Spain
5.6 5.6
5.3 5.3
-12.4 -12.4
5.4 5.4
4.8 4.8
-9.4 -9.4
7.0 7.0
France France
5.5 5.5
4.4 4.4
-9.4 -9.4
5.8 5.8
3.1 3.1
-8.2 -8.2
7.4 7.4
Italy Italy
3.4 3.4
3.5 3.5
-9.9 -9.9
4.1 4.1
2.8 2.8
-9.5 -9.5
6.5 6.5
Luxembourg Luxembourg
3.2 3.2
4.3 4.3
-4.5 -4.5
3.9 3.9
2.7 2.7
-5.4 -5.4
5.7 5.7
Malta Malta
4.5 4.5
5.4 5.4
-7.3 -7.3
3.0 3.0
6.2 6.2
-5.8 -5.8
6.0 6.0
Netherlands Netherlands
1.8 1.8
3.0 3.0
-5.3 -5.3
2.2 2.2
1.9 1.9
-6.8 -6.8
5.0 5.0

~~327 European Economic Forecast Winter 2021, European Commission, February 2021, p. 1.~~
328 Birnbaum, Michael, European Union Says T hat Pandemic Recession Will be Worst in its History, Washington Post,
~~May 6, 2020. https://www.washingtonpost.com/world/european-union-says-pandemic-recession-will-be-worst-in-its-~~
~~history/2020/05/06/e787a70e-8f96-11ea-9322-a29e75effc93_story.html.~~
~~329 European Economic Forecast Autumn 2020.~~
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~~Winter Forecast 2021~~
~~Autumn Forecast 2020~~
~~Summer Forecast 2020~~
~~2021~~
~~2022~~
~~2020~~
~~2021~~
~~2022~~
~~2020~~
~~2021~~

Austria Austria
2.0 2.0
5.1 5.1
-7.1 -7.1
4.1 4.1
2.5 2.5
-5.5 -5.5
5.0 5.0
Portugal Portugal
4.1 4.1
4.3 4.3
-9.3 -9.3
5.4 5.4
3.5 3.5
-6.8 -6.8
5.8 5.8
Finland Finland
2.8 2.8
2.0 2.0
-4.3 -4.3
2.9 2.9
2.2 2.2
-6.3 -6.3
3.7 3.7
Denmark Denmark
2.9 2.9
3.6 3.6
-3.9 -3.9
3.5 3.5
2.4 2.4
-5.9 -5.9
5.1 5.1
Sweden Sweden
2.7 2.7
4.0 4.0
-3.4 -3.4
3.3 3.3
2.4 2.4
-6.1 -6.1
4.3 4.3
World World
5.2 5.2
3.8 3.8
-3.8 -3.8
4.7 4.7
3.7 3.7
-3.9 -3.9
4.9 4.9
Source: European Economic Forecast Autumn 2020, European Commission,, European Commission, November 2020. November 2020.
Pandemic-related economic effects have had significant negative effects on business activity in Pandemic-related economic effects have had significant negative effects on business activity in
Europe, with some business activity indexes Europe, with some business activity indexes ~~fal ing~~falling farther then they had during the height of the farther then they had during the height of the
financial crisis and others indicating that Europe experienced a deep economic recession in the financial crisis and others indicating that Europe experienced a deep economic recession in the
first half of 2020.first half of 2020.~~330~~254 EU countries issued travel warnings and banned EU countries issued travel warnings and banned al all but essential travel across 253 European Economic Forecast Autumn 2020. 254 Arnold, Martin and Valentina Romei, “Business Activity Crashes to Record Low in Eurozone,” Financial Times, March 24, 2020. https://www.ft.com/content/f5ebabd4-6dad-11ea-89df-41bea055720b. Congressional Research Service 85 Global Economic Effects of COVID-19 ~~but essential travel across~~
borders, which raised concerns that even much-needed medical supplies could borders, which raised concerns that even much-needed medical supplies could ~~stal~~ stall at borders at borders
affected by traffic backups.affected by traffic backups.~~331~~255 The travel bans and border closures reportedly caused temporary The travel bans and border closures reportedly caused temporary
shortages of farm laborers in Germany, the UK, and Spain. In response, farm growers attempted shortages of farm laborers in Germany, the UK, and Spain. In response, farm growers attempted
to recruit students and workers who had been laid off due to the pandemic.to recruit students and workers who had been laid off due to the pandemic.~~332~~256
According to data released by Eurostat in April, 2021, the EU rate of GDP growth during the According to data released by Eurostat in April, 2021, the EU rate of GDP growth during the
second quarter of 2020 contracted by 11.2% in the EU and by 11.6% in the Euro area from the second quarter of 2020 contracted by 11.2% in the EU and by 11.6% in the Euro area from the
previous quarter, reflecting negative rates of growth across previous quarter, reflecting negative rates of growth across al all EU countries, as indicated in EU countries, as indicated in Table
15. In contrast, the EU and the Euro area grew by 11.6% and 12.5%, respectively, in the third . In contrast, the EU and the Euro area grew by 11.6% and 12.5%, respectively, in the third
quarter. Compared with growth during the third quarter in the previous year, however, EU and quarter. Compared with growth during the third quarter in the previous year, however, EU and
Euro area growth rates were down 4.1% and 4.2%, respectively. During the fourth quarter, the Euro area growth rates were down 4.1% and 4.2%, respectively. During the fourth quarter, the
rate of economic growth declined by 0.5% in the EU and by 0.7% in the Euro area as a result of a rate of economic growth declined by 0.5% in the EU and by 0.7% in the Euro area as a result of a
lessening in business lockdowns during the period that raises the prospects of positive rate of lessening in business lockdowns during the period that raises the prospects of positive rate of
growth across most EU countries in the first quarter of 2021. At 18.8%, the United Kingdom growth across most EU countries in the first quarter of 2021. At 18.8%, the United Kingdom
experienced the largest contraction in its GDP growth rate in the second quarter compared with experienced the largest contraction in its GDP growth rate in the second quarter compared with
the previous quarter among European countries, but third quarter growth rate rebounded by the previous quarter among European countries, but third quarter growth rate rebounded by
16.6%, the third fastest rate behind France and Spain. 16.6%, the third fastest rate behind France and Spain.
Table 1517. EU Real GDP Growth Rates 2020
~~Seasonal y~~Seasonally adjusted data adjusted data
Percentage change compared with
Percentage change compared with the same
the previous quarter
quarter of the previous year

2020Q1 2020Q1 2020Q22020Q2 2020Q32020Q3 2020Q42020Q4
2020Q1 2020Q1
2020Q2 2020Q2
2020Q3 2020Q3
2020Q4 2020Q4
EU EU
-3.3 -3.3
-11.2 -11.2
11.6 11.6
-0.5 -0.5
-2.7 -2.7
-13.8 -13.8
-4.1 -4.1
-4.6 -4.6
Euro area Euro area
-3.8 -3.8
-11.6 -11.6
12.5 12.5
-0.7 -0.7
-3.3 -3.3
-14.6 -14.6
-4.2 -4.2
-4.9 -4.9

~~330 Arnold, Martin and Valentina Romei, “Business Activity Crashes to Record Low in Eurozone,” Financial Times,~~
~~March 24, 2020. https://www.ft.com/content/f5ebabd4-6dad-11ea-89df-41bea055720b.~~
~~331 Birnbaum, Michael, “ Europe Is Closing Borders amid Covid-19 Outbreak. T hey May be Hard to Reopen,”~~
Washington Post, March 17, 2020. https://www.washingtonpost.com/world/europe/europe-closing-borders-Covid-19/
~~2020/03/17/131a6f56-67c8-11ea-b199-3a9799c54512_story.html.~~
~~332 Evans, Judith Evans, Emiko T erazono, and Leila Abboud, “Farmers Warn over Food Supply with Harvest Workers~~
~~Shut Out,” Financial Tim es, March 27, 2020. https://www.ft.com/content/e27a9395-db47-4e7b-b054-3ec6ba4cbba3.~~
~~Congressional Research Service~~

95

~~Global Economic Effects of COVID-19~~

~~Percentage change compared with~~
~~Percentage change compared with the same~~
~~the previous quarter~~
~~quarter of the previous year~~

~~2020Q1 2020Q2 2020Q3 2020Q4~~
~~2020Q1~~
~~2020Q2~~
~~2020Q3~~
~~2020Q4~~
Belgium Belgium
-3.4 -3.4
-11.8 -11.8
11.6 11.6
-0.1 -0.1
-2.0 -2.0
-13.9 -13.9
-4.3 -4.3
-5.1 -5.1
Bulgaria Bulgaria
0.4 0.4
-10.1 -10.1
4.3 4.3
2.2 2.2
2.3 2.3
-8.6 -8.6
-5.2 -5.2
-3.8 -3.8
Czechnia Czechnia
-3.1 -3.1
-8.7 -8.7
6.9 6.9
0.6 0.6
-1.8 -1.8
-10.8 -10.8
-5.1 -5.1
-4.8 -4.8
Denmark Denmark
-1.3 -1.3
-6.7 -6.7
6.3 6.3
0.7 0.7
0.2 0.2
-7.5 -7.5
-2.2 -2.2
-1.5 -1.5
Germany Germany
-2.0 -2.0
-9.7 -9.7
8.5 8.5
0.3 0.3
-2.2 -2.2
-11.3 -11.3
-4.0 -4.0
-3.6 -3.6
Estonia Estonia
-1.1 -1.1
-5.2 -5.2
2.5 2.5
2.1 2.1
0.2 0.2
-5.5 -5.5
-3.5 -3.5
-1.9 -1.9
Ireland Ireland
-3.9 -3.9
-2.1 -2.1
11.8 11.8
-5.1 -5.1
4.1 4.1
-2.7 -2.7
8.9 8.9
-0.2 -0.2
Greece Greece
0.4 0.4
-13.4 -13.4
3.1 3.1
2.7 2.7
0.1 0.1
-13.8 -13.8
-10.5 -10.5
-7.9 -7.9
Spain Spain
-5.4 -5.4
-17.8 -17.8
17.1 17.1
0.0 0.0
-4.3 -4.3
-21.6 -21.6
-8.6 -8.6
-8.9 -8.9
France France
-5.9 -5.9
-13.5 -13.5
18.5 18.5
-1.4 -1.4
-5.6 -5.6
-18.6 -18.6
-3.7 -3.7
-4.9 -4.9
Croatia Croatia
-1.1 -1.1
-15.4 -15.4
8.2 8.2
2.7 2.7
0.3 0.3
-15.7 -15.7
-9.8 -9.8
-7.1 -7.1
Italy Italy
-5.5 -5.5
-13.0 -13.0
15.9 15.9
-1.9 -1.9
-5.8 -5.8
-18.2 -18.2
-5.2 -5.2
-6.6 -6.6
Cyprus Cyprus
-0.5 -0.5
-13.1 -13.1
8.9 8.9
1.4 1.4
1.4 1.4
-12.6 -12.6
-4.7 -4.7
-4.5 -4.5
Latvia Latvia
-2.3 -2.3
-7.0 -7.0
6.9 6.9
1.1 1.1
-1.2 -1.2
-8.6 -8.6
-2.8 -2.8
-1.8 -1.8
255 Birnbaum, Michael, “Europe Is Closing Borders amid Covid-19 Outbreak. They May be Hard to Reopen,” Washington Post, March 17, 2020. https://www.washingtonpost.com/world/europe/europe-closing-borders-Covid-19/2020/03/17/131a6f56-67c8-11ea-b199-3a9799c54512_story.html. 256 Evans, Judith Evans, Emiko Terazono, and Leila Abboud, “Farmers Warn over Food Supply with Harvest Workers Shut Out,” Financial Times, March 27, 2020. https://www.ft.com/content/e27a9395-db47-4e7b-b054-3ec6ba4cbba3. Congressional Research Service 86 Global Economic Effects of COVID-19 Percentage change compared with Percentage change compared with the same the previous quarter quarter of the previous year 2020Q1 2020Q2 2020Q3 2020Q4 2020Q1 2020Q2 2020Q3 2020Q4 Lithuania Lithuania
-0.3 -0.3
-6.2 -6.2
6.1 6.1
-0.2 -0.2
2.5 2.5
-4.7 -4.7
0.1 0.1
-1.0 -1.0
Luxem- Luxem-
-1.6 -1.6
-7.3 -7.3
9.3 9.3
1.6 1.6
1.3 1.3
-7.9 -7.9
0.0 0.0
1.4 1.4
bourg bourg
Hungary Hungary
-0.5 -0.5
-14.3 -14.3
11.0 11.0
1.3 1.3
1.8 1.8
-13.4 -13.4
-4.8 -4.8
-4.1 -4.1
Malta Malta
-2.4 -2.4
-14.2 -14.2
8.0 8.0
3.8 3.8
2.1 2.1
-14.6 -14.6
-8.6 -8.6
-6.2 -6.2
Nether- Nether-
-1.6 -1.6
-8.4 -8.4
7.7 7.7
-0.1 -0.1
-0.4 -0.4
-9.1 -9.1
-2.4 -2.4
-3.0 -3.0
lands lands
Austria Austria
-3.0 -3.0
-10.7 -10.7
11.8 11.8
-2.7 -2.7
-3.6 -3.6
-13.6 -13.6
-3.8 -3.8
-5.9 -5.9
Poland Poland
-0.3 -0.3
-9.0 -9.0
7.9 7.9
-0.7 -0.7
1.9 1.9
-8.0 -8.0
-1.8 -1.8
-2.7 -2.7
Portugal Portugal
-4.0 -4.0
-14.0 -14.0
13.4 13.4
0.2 0.2
-2.2 -2.2
-16.4 -16.4
-5.6 -5.6
-6.1 -6.1
Romania Romania
0.6 0.6
-11.8 -11.8
5.6 5.6
4.8 4.8
2.7 2.7
-10.0 -10.0
-5.4 -5.4
-1.8 -1.8
Slovenia Slovenia
-4.8 -4.8
-10.1 -10.1
12.2 12.2
-1.0 -1.0
-3.3 -3.3
-13.0 -13.0
-3.0 -3.0
-5.0 -5.0
Slovakia Slovakia
-5.1 -5.1
-8.3 -8.3
11.6 11.6
0.2 0.2
-3.8 -3.8
-12.1 -12.1
-2.3 -2.3
-2.6 -2.6
Finland Finland
-0.6 -0.6
-4.7 -4.7
3.3 3.3
0.4 0.4
-0.6 -0.6
-6.1 -6.1
-2.7 -2.7
-1.7 -1.7
Sweden Sweden
-0.3 -0.3
-7.6 -7.6
6.4 6.4
-0.2 -0.2
0.1 0.1
-7.7 -7.7
-2.2 -2.2
-2.1 -2.1
Other countries Other countries

United United
-3.0 -3.0
-18.8 -18.8
16.0 16.0
: :
-2.4 -2.4
-20.8 -20.8
-8.6 -8.6
: :
Kingdom Kingdom
Iceland Iceland
: :
: :
: :
: :
: :
: :
: :
: :
Norway Norway
-1.4 -1.4
-4.6 -4.6
4.5 4.5
0.6 0.6
0.4 0.4
-4.4 -4.4
-0.1 -0.1
-1.1 -1.1
Switzer- Switzer-
-1.9 -1.9
-7.2 -7.2
7.6 7.6
0.3 0.3
-0.6 -0.6
-8.1 -8.1
-1.6 -1.6
-1.7 -1.7
land land
Source: Eurostat,, April 13, 2021. ~~April 13, 2021.~~
~~Congressional Research Service~~

96

~~Global Economic Effects of COVID-19~~

In previous actions, the European Commission announced that it would relax rules on In previous actions, the European Commission announced that it would relax rules on
government debt to government debt to ~~al ow~~allow countries more flexibility countries more flexibility in using fiscal policies. Also, the European in using fiscal policies. Also, the European
Central Bank (ECB)Central Bank (ECB) announced that it was ready to take “appropriate and targeted measures,” if announced that it was ready to take “appropriate and targeted measures,” if
needed. France, Italy, Spain and six other Eurozone countries have argued for creating a needed. France, Italy, Spain and six other Eurozone countries have argued for creating a
“coronabond,” a joint common European debt instrument. Similar attempts to create a common “coronabond,” a joint common European debt instrument. Similar attempts to create a common
Eurozone-wide debt instrument have been opposed by Germany and the Netherland, among other Eurozone-wide debt instrument have been opposed by Germany and the Netherland, among other
Eurozone members.Eurozone members.~~333~~257 With interest rates already low, however, it indicated that it would expand With interest rates already low, however, it indicated that it would expand
its program of providing loans to EU banks, or buying debt from EU firms, and possibly lowering its program of providing loans to EU banks, or buying debt from EU firms, and possibly lowering
its deposit rate further into negative territory in an attempt to shore up the Euro’s exchange its deposit rate further into negative territory in an attempt to shore up the Euro’s exchange
rate.rate.~~334~~258 ECB President-designate Christine Lagarde ECB President-designate Christine Lagarde ~~cal ed~~called on EU leaders to take more urgent 257 Dombey, Daniel Dombey, Guy Chazan, and Jim Brunsden, “Nine Eurozone Countries Issue Call for ‘Coronabonds,’” Financial Times, March 26, 2020. https://www.ft.com/content/258308f6-6e94-11ea-89df-41bea055720b. 258 “US Fed’s Covid-19 Rate Cut Is First Move in a Dance with Markets,” Financial Times, March 4, 2020. https://www.ft.com/content/83c07594-5e3a-11ea-b0ab-339c2307bcd4. Giles, Chris, Martin Arnold, Sam Jones, and Jamie Smyth, “Finance Ministers ‘Ready to Take Action’ on Covid-19,” Financial Times, March 3, 2020. https://www.ft.com/content/b86f7d92-5d38-11ea-b0ab-339c2307bcd4. Congressional Research Service 87 Global Economic Effects of COVID-19 ~~on EU leaders to take more urgent~~
action to avoid the spread of COVID-19 from triggering a serious economic slowdown. The action to avoid the spread of COVID-19 from triggering a serious economic slowdown. The
European Commission indicated that it was creating a $30 European Commission indicated that it was creating a $30 ~~bil ion~~ billion investment fund to address investment fund to address
COVID-19 issues.COVID-19 issues.~~335~~259 In other actions In other actions
 On March 12, 2020, the ECB decided to (1) expand its longer-term refinance  On March 12, 2020, the ECB decided to (1) expand its longer-term refinance
operations (LTRO) to provide low-cost loans to Eurozone banks to increase bank operations (LTRO) to provide low-cost loans to Eurozone banks to increase bank
liquidity;liquidity; (2) extend targeted longer-term refinance operations (TLTRO) to (2) extend targeted longer-term refinance operations (TLTRO) to
provide loans at below-market rates to businesses, provide loans at below-market rates to businesses, ~~especial y smal~~ especially small and medium-and medium-
sized businesses, directly affected by COVID-19; (3) provide an additional €120 sized businesses, directly affected by COVID-19; (3) provide an additional €120
~~bil ion~~ billion (about $130 (about $130 ~~bil ion)~~ billion) for the Bank’s asset purchase program to provide for the Bank’s asset purchase program to provide
~~liquidity~~ liquidity to firms that was in addition to €20 to firms that was in addition to €20 ~~bil ion~~ billion a month it previously had a month it previously had
committed to purchasing.committed to purchasing.~~336~~
260  On March 13, 2020, financial market regulators in the UK, Italy, and Spain  On March 13, 2020, financial market regulators in the UK, Italy, and Spain
intervened in stock and bond markets to stabilize prices after historic swings in intervened in stock and bond markets to stabilize prices after historic swings in
indexes on March 12, 2020.indexes on March 12, 2020.~~337~~261 In addition, the ECB announced that it would do In addition, the ECB announced that it would do
more to assist financial markets in distress, including altering self-imposed rules more to assist financial markets in distress, including altering self-imposed rules
on purchases of sovereign debt.on purchases of sovereign debt.~~338~~
262  Germany’s Economic Minister announced on March 13, 2020, that Germany  Germany’s Economic Minister announced on March 13, 2020, that Germany
would provide unlimited loans to businesses experiencing negative economic would provide unlimited loans to businesses experiencing negative economic
activity (activity (~~initial y~~ initially providing $555 providing $555 ~~bil ion),~~ billion), tax breaks for businesses,tax breaks for businesses,~~339~~263 and export credits and guarantees.264  On March 18, the ECB indicated that it would: create a €750 billion (about $800 billion) Pandemic Emergency Purchase Program to purchase public and private securities; expand the securities it will purchase to include nonfinancial commercial paper; and ease some collateral standards.265 In announcing the program, President-designate Lagarde indicated that the ECB would, “do everything necessary.” In creating the program, the ECB removed or significantly loosened almost all constraints that applied to previous asset-purchase programs, including a self-imposed limit of buying no more than one-third of any one country’s eligible bonds, a move that was expected to benefit Italy.  The ECB also indicated that it would make available up to €3 trillion in liquidity through refinancing operations.266 Britain ($400 billion) and France ($50 billion) 259 Arnold, Martin and Guy Chazan, “Christine Lagarde Calls on EU Leaders to Ramp up Covid-19 Response,” Financial Times, March 11, 2020. https://www.ft.com/content/44eac1f2-6386-11ea-a6cd-df28cc3c6a68. 260 Monetary Policy Decisions, The ~~and export~~
~~credits and guarantees.340~~

~~333 Dombey, Daniel Dombey, Guy Chazan, and Jim Brunsden, “Nine Eurozone Countries Issue Call for~~
~~‘Coronabonds,’” Financial Times, March 26, 2020. https://www.ft.com/content/258308f6-6e94-11ea-89df-~~
~~41bea055720b.~~
~~334 “US Fed’s Covid-19 Rate Cut Is First Move in a Dance with Markets,” Financial Times, March 4, 2020.~~
~~https://www.ft.com/content/83c07594-5e3a-11ea-b0ab-339c2307bcd4. Giles, Chris, Martin Arnold, Sam Jones, and~~
~~Jamie Smyth, “Finance Ministers ‘Ready to T ake Action’ on Covid-19,” Financial Tim es, March 3, 2020.~~
~~https://www.ft.com/content/b86f7d92-5d38-11ea-b0ab-339c2307bcd4.~~
~~335 Arnold, Martin and Guy Chazan, “Christine Lagarde Calls on EU Leaders to Ramp up Covid-19 Response,”~~
Financial Tim es, March 11, 2020. https://www.ft.com/content/44eac1f2-6386-11ea-a6cd-df28cc3c6a68.
336 Monetary Policy Decisions~~, T he~~ European Central Bank, March 12, 2020. https://www.ecb.europa.eu/press/pr/date/ European Central Bank, March 12, 2020. https://www.ecb.europa.eu/press/pr/date/
2020/html/ecb.mp200312~8d3aec3ff2.en.htm. 2020/html/ecb.mp200312~8d3aec3ff2.en.htm.
~~337~~261 Stafford, Philip and Adam Samson, Stafford, Philip and Adam Samson, “European Regulators Intervene in Bid to Stabilize“European Regulators Intervene in Bid to Stabilize Stock and Bond Prices,” Stock and Bond Prices,”
Financial ~~Tim es~~Times, March 13, 2020. https://www.ft.com/content/77f57d4c-6509-11ea-a6cd-df28cc3c6a68. , March 13, 2020. https://www.ft.com/content/77f57d4c-6509-11ea-a6cd-df28cc3c6a68.
~~338~~ 262 Arnold, Martin, “ECB Enters Damage-Limitation Mode with Pledge Arnold, Martin, “ECB Enters Damage-Limitation Mode with Pledge of More Action,” of More Action,” Financial Times, March 13, , March 13,
2020. https://www.ft.com/content/f1cbd4f8-650f-11ea-b3f3-fe4680ea68b5. 2020. https://www.ft.com/content/f1cbd4f8-650f-11ea-b3f3-fe4680ea68b5.
~~339~~263 Loveday, Morris and Louisa Loveday, Morris and Louisa Beck, “Germany Announces ‘Bazooka’ Economic Plan to Mitigate Covid-19 Hit,” Beck, “Germany Announces ‘Bazooka’ Economic Plan to Mitigate Covid-19 Hit,”
Washington Post, March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/Covid-19-latest-news/. , March 13, 2020. https://www.washingtonpost.com/world/2020/03/13/Covid-19-latest-news/.
~~340~~ 264 Arnold, Martin, Guy Arnold, Martin, Guy Chazan, Victor Mallet, Miles Johnson, and Daniel Dombey, “How European Economies Are Chazan, Victor Mallet, Miles Johnson, and Daniel Dombey, “How European Economies Are
~~T rying~~Trying to Mitigate the Covid-19 Shock,” to Mitigate the Covid-19 Shock,” Financial ~~Tim es~~Times, March 17, 2020. https://www.ft.com/content/26af5520- March 17, 2020. https://www.ft.com/content/26af5520-
~~Congressional Research Service~~

97

~~Global Economic Effects of COVID-19~~

~~ On March 18, the ECB indicated that it would: create a €750 bil ion (about $800~~
~~bil ion) Pandemic Emergency Purchase Program to purchase public and private~~
~~securities; expand the securities it wil purchase to include nonfinancial~~
~~commercial paper; and ease some collateral standards.341 In announcing the~~
~~program, President-designate Lagarde indicated that the ECB would, “do~~
~~everything necessary.” In creating the program, the ECB removed or significantly~~
~~loosened almost al constraints that applied to previous asset-purchase programs,~~
~~including a self-imposed limit of buying no more than one-third of any one~~
~~country’s eligible bonds, a move that was expected to benefit Italy.~~
~~ The ECB also indicated that it would make available up to €3 tril ion in liquidity~~
~~through refinancing operations.342 Britain ($400 bil ion) and France ($50 bil ion)~~
6793-11ea-800d-da70cff6e4d3. 265 ECB Announces €759 Billion Pandemic Emergency Purchase Program, the European Central Bank, March 18, 2020. https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html. 266 Lagarde, Christine, “The ECB Will Do Everything Necessary to Counter the Virus,” Financial Times, March 20, 2020. https://www.ft.com/content/281d600c-69f8-11ea-a6ac-9122541af204. Congressional Research Service 88 Global Economic Effects of COVID-19 also announced plans to increase spending to blunt the economic effects of the also announced plans to increase spending to blunt the economic effects of the
virus. Recent forecasts indicate that the economic effect of COVID-19 could virus. Recent forecasts indicate that the economic effect of COVID-19 could
push the Eurozone into an economic recession in 2020.push the Eurozone into an economic recession in 2020.~~343~~
267  On March 23, 2020, Germany announced that it would adopt a €750  On March 23, 2020, Germany announced that it would adopt a €750 ~~bil ion~~billion (over (over
$800 $800 ~~bil ion)~~ billion) package in economic stimulus funding. package in economic stimulus funding.
 On April  On April 15, Eurozone finance ministers announced a €500 15, Eurozone finance ministers announced a €500 ~~bil ion~~billion (about $550 (about $550
~~bil ion)~~ billion) emergency spending package to support governments, businesses, and emergency spending package to support governments, businesses, and
workers and workers and ~~wil~~ will provide funds to the European Stability Mechanism, the provide funds to the European Stability Mechanism, the
European Investment Bank, and for unemployment insurance.European Investment Bank, and for unemployment insurance.~~344~~268
On May 5, 2020, Germany’s Constitutional Court issued a ruling On May 5, 2020, Germany’s Constitutional Court issued a ruling ~~chal enging~~challenging the legality the legality of a of a
bond-buying program conducted by the ECB since 2015, the Public Sector Purchase Program bond-buying program conducted by the ECB since 2015, the Public Sector Purchase Program
(PSPP). In its ruling, the court directed the German government to request clarification from the (PSPP). In its ruling, the court directed the German government to request clarification from the
ECB about various aspects of the PSPP program that the court argued might exceed the ECB’s ECB about various aspects of the PSPP program that the court argued might exceed the ECB’s
legal mandate. The German government has not yet indicated how it legal mandate. The German government has not yet indicated how it ~~wil formal y~~will formally respond to the respond to the
ruling, but many analysts contend that the ruling—and the ruling, but many analysts contend that the ruling—and the ~~chal enge~~challenge to the authority of the ECB to the authority of the ECB
and the European Court of Justice—could have far-reaching implications for future ECB and the European Court of Justice—could have far-reaching implications for future ECB
activities. This could activities. This could ~~potential y include chal enges~~potentially include challenges to the ECB’s Pandemic Emergency Purchase to the ECB’s Pandemic Emergency Purchase
Program (PEPP) initiated in March. The PEPP is a temporary program that authorizes the ECB to Program (PEPP) initiated in March. The PEPP is a temporary program that authorizes the ECB to
acquire up to €750 acquire up to €750 ~~bil ion~~ billion (about $820 (about $820 ~~bil ion)~~ billion) in private and public sector securities to address in private and public sector securities to address
the economic effects of the pandemic crisis. the economic effects of the pandemic crisis.
The German court’s ruling has heightened tensions between the court and the European Court of The German court’s ruling has heightened tensions between the court and the European Court of
Justice. Following the 2008-2009 financial crisis and the subsequent Eurozone financial crisis, the Justice. Following the 2008-2009 financial crisis and the subsequent Eurozone financial crisis, the
ECB launched four asset purchase programs in 2014 to provide assistance to ECB launched four asset purchase programs in 2014 to provide assistance to ~~financial y~~financially strapped strapped
Eurozone governments and to sustain financial liquidityEurozone governments and to sustain financial liquidity in Eurozone banks. Those programs in Eurozone banks. Those programs
included the Corporate Sector Purchase Program (CSPP), the Public Sector Purchase Program included the Corporate Sector Purchase Program (CSPP), the Public Sector Purchase Program
(PSPP), the Asset-Backed Securities Purchase Program (ABSPP), and the Third Covered Bond (PSPP), the Asset-Backed Securities Purchase Program (ABSPP), and the Third Covered Bond
Purchase Program (CBPP3). The programs operated from 2014 to 2018; the PSPP was restarted Purchase Program (CBPP3). The programs operated from 2014 to 2018; the PSPP was restarted

~~6793-11ea-800d-da70cff6e4d3.~~
~~341 ECB Announces €759 Billion Pandemic Emergency Purchase Program , the European Central Bank, March 18,~~
~~2020. https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html.~~
~~342 Lagarde, Christine, “T he ECB Will Do Everything Necessary to Counter the Virus,” Financial Times, March 20,~~
~~2020. https://www.ft.com/content/281d600c-69f8-11ea-a6ac-9122541af204.~~
~~343 “Lagarde to Confront Covid-19 Crisis at ECB Policy Meeting,” Financial Times, March 8, 2020.~~
~~https://www.ft.com/content/79a280c6-5fb5-11ea-b0ab-339c2307bcd4.~~
~~344 Fleming, Sam and Mehreen Khan, “Eurozone Countries Strike Emergency Deal on Coronavirus Rescue,”~~ ~~Financial~~
~~Tim es, April 9, 2020. https://www.ft.com/content/b984101a-42b8-40db-9a92-6786aec2ba5c.~~
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~~in November 2019. As of May 8, the PSPP program held €2.2 tril ion (about $2.5 tril ion) with~~
~~another €600 bil ion (about $700 bil ion~~in November 2019. As of May 8, the PSPP program held €2.2 trillion (about $2.5 trillion) with another €600 billion (about $700 billion) held under other asset purchase programs.) held under other asset purchase programs.~~345~~269 Various Various
groups in Germany groups in Germany ~~chal enged~~challenged the legality of the ECB bond-buying programs before the German the legality of the ECB bond-buying programs before the German
Constitutional Court arguing that the programs exceeded the ECB’s legal mandate. In turn, the Constitutional Court arguing that the programs exceeded the ECB’s legal mandate. In turn, the
German court referred the case to the European Court of Justice, which ruled in December 2019 German court referred the case to the European Court of Justice, which ruled in December 2019
that the ECB’s actions were fully within the ECB’s authority. that the ECB’s actions were fully within the ECB’s authority.
In the German Constitutional Court’s May 5 ruling, the German judges characterized the ECJ’s In the German Constitutional Court’s May 5 ruling, the German judges characterized the ECJ’s
ruling as “incomprehensible,” and directly ruling as “incomprehensible,” and directly ~~chal enged~~challenged the ECB and the European Court of Justice the ECB and the European Court of Justice
and the primacy of the European Court of Justice ruling over national law. The German justices and the primacy of the European Court of Justice ruling over national law. The German justices
argued that the ECB had exceeded its authority by not fully evaluating the economic costs and argued that the ECB had exceeded its authority by not fully evaluating the economic costs and
benefits of previous bond-buying activities, including the impact on national budgets, property benefits of previous bond-buying activities, including the impact on national budgets, property
values, stock markets, life insurance and other economic effects. The German court also argued values, stock markets, life insurance and other economic effects. The German court also argued
that the ECB’s lack of a strategy for reducing its holdings of sovereign debt of Eurozone that the ECB’s lack of a strategy for reducing its holdings of sovereign debt of Eurozone
members increased risks for national governments that back up the ECB, and it members increased risks for national governments that back up the ECB, and it ~~chal enged the~~
challenged the 267 “Lagarde to Confront Covid-19 Crisis at ECB Policy Meeting,” Financial Times, March 8, 2020. https://www.ft.com/content/79a280c6-5fb5-11ea-b0ab-339c2307bcd4. 268 Fleming, Sam and Mehreen Khan, “Eurozone Countries Strike Emergency Deal on Coronavirus Rescue,” Financial Times, April 9, 2020. https://www.ft.com/content/b984101a-42b8-40db-9a92-6786aec2ba5c. 269 European Central Bank. https://www.ecb.europa.eu/mopo/implement/pepp/html/pepp-qa.en.html. Congressional Research Service 89 Global Economic Effects of COVID-19 ECB’s strategy for reducing its holdings of sovereign debt. By the end of June, however, the ECB’s strategy for reducing its holdings of sovereign debt. By the end of June, however, the
standoff appeared to be reaching a resolution. The ECB reportedly agreed to provide the German standoff appeared to be reaching a resolution. The ECB reportedly agreed to provide the German
court with the Bank’s analysis of the economic and fiscal policy impact of the ECB bond-buying court with the Bank’s analysis of the economic and fiscal policy impact of the ECB bond-buying
programs. The ECB reportedly programs. The ECB reportedly ~~wil~~ will also provide the unpublished full minutes of the central also provide the unpublished full minutes of the central
bank’s governing council monetary policy meetings, including the ECB’s discussions in March bank’s governing council monetary policy meetings, including the ECB’s discussions in March
2015 of its purchases of sovereign bonds.2015 of its purchases of sovereign bonds.~~346~~270
On March 26, 2021, Germany’s highest court stopped a law that would have ratified the PEPP On March 26, 2021, Germany’s highest court stopped a law that would have ratified the PEPP
bond-buying program. The program requires ratification by each of the EU member’s national bond-buying program. The program requires ratification by each of the EU member’s national
parliaments. The legislation had been passed by both of Germany’s houses of Parliament and was parliaments. The legislation had been passed by both of Germany’s houses of Parliament and was
expected to be signed by German president, Frank-Walter Steinmeier when the court expected to be signed by German president, Frank-Walter Steinmeier when the court
intervened.intervened.~~347~~
271 On May 18, German On May 18, German ~~Chancel or~~Chancellor Angela Merkel and French President Emmanuel Macron Angela Merkel and French President Emmanuel Macron
proposed a €500 proposed a €500 ~~bil ion~~ billion (about $620 (about $620 ~~bil ion~~billion) EU recovery fund in an effort to gain a coordinated ) EU recovery fund in an effort to gain a coordinated
EU fiscal response to the pandemic.EU fiscal response to the pandemic.~~348~~272 Reportedly, the funds would be raised by the European Reportedly, the funds would be raised by the European
Commission and used to fund EU spending through grants to individual members to ease the Commission and used to fund EU spending through grants to individual members to ease the
economic strain in some of the southern EU members that have been the most negatively economic strain in some of the southern EU members that have been the most negatively
affected. Austria, the Netherland, Denmark, and Sweden indicated they would only support affected. Austria, the Netherland, Denmark, and Sweden indicated they would only support
proposals that provided funds to members through loans that would be required to be repaid.proposals that provided funds to members through loans that would be required to be repaid.
On May 27, ECB President Lagarde indicated that the ECB projected a drop in the EU On May 27, ECB President Lagarde indicated that the ECB projected a drop in the EU economy economy
of 8% to 12% in 2020, twice as severe as the recession following the 2008 financial crisis, and of 8% to 12% in 2020, twice as severe as the recession following the 2008 financial crisis, and
~~cal ed~~called for a €500 for a €500 ~~bil ion~~ billion (about $620 (about $620 ~~bil ion)~~ billion) stimulus package.stimulus package.~~349~~273 In addition, European In addition, European
Commission President Ursula von der Leyen proposed a €750 Commission President Ursula von der Leyen proposed a €750 ~~bil ion~~ billion (about $820 (about $820 ~~bil ion)~~ billion) EU EU
recovery fund, termed the “Next Generation Fund,” that would provide €500 recovery fund, termed the “Next Generation Fund,” that would provide €500 ~~bil ion ($550~~
~~bil ion)~~ billion ($550 billion) in grants in a Recovery and Resilience Facility and €250 in grants in a Recovery and Resilience Facility and €250 ~~bil ion ($270 bil ion) in loans.~~

~~345 European Central Bank. https://www.ecb.europa.eu/mopo/implement/pepp/html/pepp-qa.en.html.~~
~~346 Arnold, Martin, Berlin and ECB Signal End to Legal Impasse Over Bond-Buying,~~ billion ($270 billion) in loans. The proposal would take the unprecedented step of allowing the EU to issues bonds independently from the other EU central banks.274 Questions remain over the source and distribution of the funds. The program may have limited appeal given various restrictions: reportedly, the funds must be used to achieve certain EU goals, including increasing competitiveness, shifting away from declining heavy industry, supporting a green economy, and building the digital economy.275 Proposals for raising funds include issuing 30-year bonds and raising taxes on large technology firms, such as Google and Facebook. In addition to the recovery fund, von der Leyen proposed a revised EC seven-year budget, the Multiannual Financial Framework (MFF), of €1.1trillion for 2021 to 2027. 270 Arnold, Martin, Berlin and ECB Signal End to Legal Impasse Over Bond-Buying, Financial Times, June 25, 2020. , June 25, 2020.
https://www.ft.com/content/5f000a25-3d54-4610-8579-cab9b21759ee. https://www.ft.com/content/5f000a25-3d54-4610-8579-cab9b21759ee.
~~347~~ 271 Chazan, Guy, Chazan, Guy, Germany’s Highest Court Blocks Ratification of EU Recovery Fund,Germany’s Highest Court Blocks Ratification of EU Recovery Fund, Financial Times, March 26, , March 26,
2021. https://www.ft.com/content/74841ea6-4fbf-4c7a-b015-66ba191ffc9b. 2021. https://www.ft.com/content/74841ea6-4fbf-4c7a-b015-66ba191ffc9b.
~~348~~272 Fleming, Sam, Fleming, Sam, Victor Mallet, and GuyVictor Mallet, and Guy Chazan, Germany and France Unite in CallChazan, Germany and France Unite in Call for €500 Billion Europe for €500 Billion Europe
Recovery Fund,Recovery Fund, Financial ~~Tim es~~Times, May 18, 2020. https://www.ft.com/content/c23ebc5e-cbf3-4ad8-85aa-032b574d0562. , May 18, 2020. https://www.ft.com/content/c23ebc5e-cbf3-4ad8-85aa-032b574d0562.
~~349~~273 Arnold, Martin, Coronavirus Hit to Eurozone Economy Set to Dwarf Financial Crisis, Arnold, Martin, Coronavirus Hit to Eurozone Economy Set to Dwarf Financial Crisis, Financial Times, May 27, May 27,
2020. https://www.ft.com/content/a01424e8-089d-4618-babe-72f88184ac57. 2020. https://www.ft.com/content/a01424e8-089d-4618-babe-72f88184ac57.
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~~The proposal would take the unprecedented step of al owing the EU to issues bonds~~
~~independently from the other EU central banks.350 Questions remain over the source and~~
~~distribution of the funds. The program may have limited appeal given various restrictions:~~
~~reportedly, the funds must be used to achieve certain EU goals, including increasing~~
~~competitiveness, shifting away from declining heavy industry, supporting a green economy, and~~
~~building the digital economy.351 Proposals for raising funds include issuing 30-year bonds and~~
~~raising taxes on large technology firms, such as Google and Facebook. In addition to the recovery~~
~~fund, von der Leyen proposed a revised EC seven-year budget, the Multiannual Financial~~
~~Framework (MFF), of €1.1tril ion for 2021 to 2027.~~
~~On May 28, several key political~~ 274 Birnbaum, Michael, and Loveday Morris, E.U. Proposes $825 Billion Coronavirus Rescue Plan Giving Brussels Power to Raise Money for First Time, Washington Post, May 27, 2020. https://www.washingtonpost.com/world/europe/angela-merkel-economic-rescue/2020/05/27/9d21b998-9f7c-11ea-be06-af5514ee0385_story.html. 275 Brunsden, Jim and Sam Fleming, How Would Ursula von der Leyen’s Coronavirus Recovery Fund Work?, Financial Times, May 27, 2020. https://www.ft.com/content/ebaa7dcd-b6f7-418f-802b-7a8dbc9668f1. Congressional Research Service 90 Global Economic Effects of COVID-19 On May 28, several key political groups within the EU Parliament voiced their support for new groups within the EU Parliament voiced their support for new
rules that would rules that would ~~al ow~~allow the EU to retaliate the EU to retaliate in such trade areas as services and in such trade areas as services and ~~intel ectual~~intellectual property property
protection without waiting for a WTO ruling. Some Parliamentarians reportedly argued that such protection without waiting for a WTO ruling. Some Parliamentarians reportedly argued that such
expanded authority, termed a “trade bazooka,” was necessary to respond to trade disputes, expanded authority, termed a “trade bazooka,” was necessary to respond to trade disputes,
because the United States had blocked the appointment of judges to the WTO’s because the United States had blocked the appointment of judges to the WTO’s ~~appel ate body.352~~appellate body.276
European leaders, reportedly interested in finalizingEuropean leaders, reportedly interested in finalizing an investment agreement with China, an investment agreement with China,
announced they would not follow President Trump in applying trade restrictions on China for announced they would not follow President Trump in applying trade restrictions on China for
positioning itself to limitpositioning itself to limit Hong Kong’s autonomy granted by the “one country two systems” Hong Kong’s autonomy granted by the “one country two systems”
principle after the end of British rule in 1997.principle after the end of British rule in 1997.~~353~~277
The European Central Bank announced on June 4 that it would double to $1.5 The European Central Bank announced on June 4 that it would double to $1.5 ~~tril ion~~ trillion its its
Pandemic Emergency Purchase Program to stimulate the European economy; it also extended the Pandemic Emergency Purchase Program to stimulate the European economy; it also extended the
program to at least June 2021.program to at least June 2021.~~354~~278 At the same time, the German government announced a package At the same time, the German government announced a package
of fiscal measures, including tax cuts, aid to of fiscal measures, including tax cuts, aid to ~~smal~~ small businesses, cash payments to parent, and other businesses, cash payments to parent, and other
measures totaling €135 measures totaling €135 ~~bil ion~~ billion (about $150 (about $150 ~~bil ion~~billion). Austria, Denmark, the Netherland, and ). Austria, Denmark, the Netherland, and
Sweden have resisted payouts in grants instead of loans that require repayment. The German plan Sweden have resisted payouts in grants instead of loans that require repayment. The German plan
reportedly would give households $336 per child, reduce value added taxes on daily items, and reportedly would give households $336 per child, reduce value added taxes on daily items, and
reduce households’ utility reduce households’ utility ~~bil s~~bills. The plan also includes about $6 . The plan also includes about $6 ~~bil ion~~ billion for the social security for the social security
system, $11 system, $11 ~~bil ion~~billion to assist cities cover housing and other costs, about $2 to assist cities cover housing and other costs, about $2 ~~bil ion~~billion for cultural for cultural
institutions and nonprofit groups and incentives for purchases of electric vehicles.institutions and nonprofit groups and incentives for purchases of electric vehicles.~~355~~279
On June 25, Germany’s Minister for Economic Affairs and Energy announced that the German On June 25, Germany’s Minister for Economic Affairs and Energy announced that the German
government would provide more than €300 government would provide more than €300 ~~mil ion~~million (about $330 (about $330 ~~mil ion~~million), to acquire a 25% stake ), to acquire a 25% stake
in a privately owned German drug company that is conducting trials on a possible COVID-19 in a privately owned German drug company that is conducting trials on a possible COVID-19
vaccine. Reportedly, the U.S. Government had attempted to acquire part of the company to secure vaccine. Reportedly, the U.S. Government had attempted to acquire part of the company to secure
supplies of a potential vaccine. Germany has in place legal restrictions on foreign investments in supplies of a potential vaccine. Germany has in place legal restrictions on foreign investments in
critical industries such as energy and telecoms, but the German Parliament amended Germany’s critical industries such as energy and telecoms, but the German Parliament amended Germany’s

~~350 Birnbaum, Michael, and Loveday Morris, E.U. Proposes $825 Billion Coronavirus Rescue Plan Giving Brussels~~
~~Power to Raise Money for First T ime, Washington Post, May 27, 2020. https://www.washingtonpost.com/world/~~
~~europe/angela-merkel-economic-rescue/2020/05/27/9d21b998-9f7c-11ea-be06-af5514ee0385_story.html.~~
~~351 Brunsden, Jim and Sam Fleming, How Would Ursula von der Leyen’s Coronavirus Recovery Fund Work?,~~
Financial Tim es, May 27, 2020. https://www.ft.com/content/ebaa7dcd-b6f7-418f-802b-7a8dbc9668f1.
~~352 Vela, Jakob Hanke, T rade Bazooka Gets Backing From Main Political Groups~~ Foreign Trade Act, set to become law in 2020, that broadens the scope of transactions that must be approved by the Federal government to include “critical” technologies, including robotics, biotech, and quantum computing.280 On July 17, the European Commission met to approve the proposed €750 billion support fund to assist European countries address the economic effects of the pandemic. Initially, the Commission was unable to agree on various aspects of the program, but talks continued over the weekend and resumed on July 20. European leaders announced on July 21 they had approved a €750 billion (about $859 billion) pandemic relief package and a multi-year EU budget, referred to as the Multiannual Financial Framework (MFF), with a combined value of over €2 trillion. The pandemic plan is aimed at funding post-pandemic economic recovery with the European Commission set to borrow an unprecedented amount of funds on European capital markets.281 276 Vela, Jakob Hanke, Trade Bazooka Gets Backing From Main Political Groups in EU Parliament, in EU Parliament, Politico Pro, May , May
28, 2020; 28, 2020; Draft Report, 2019/10273(COD), European Parliament, Committee on International , 2019/10273(COD), European Parliament, Committee on International ~~T rade~~Trade, May 6, 2020., May 6, 2020.
~~353~~ 277 Lau, Stuart Lau, Jakob Hanke Vela, Lau, Stuart Lau, Jakob Hanke Vela, Jacopo Barigazzi,Jacopo Barigazzi, and Finbarr Bermingham, EU Won't Follow and Finbarr Bermingham, EU Won't Follow ~~T rump~~Trump Into a Into a
~~T rade~~Trade War Over Hong Kong, Politico Pro, May 28, 2020. War Over Hong Kong, Politico Pro, May 28, 2020.
~~354~~ 278 Arnold, Martin, ECB Boosts Bond-Buying Arnold, Martin, ECB Boosts Bond-Buying ~~Stimulus~~ Stimulus Package by €600, Package by €600, Financial Times, June 4, 2020. , June 4, 2020.
https://www.ft.com/content/c59ab92d-e614-4284-a028-46ee3bcf92f9. https://www.ft.com/content/c59ab92d-e614-4284-a028-46ee3bcf92f9.
~~355~~279 Ewing, Ewing, Jack, and MelissaJack, and Melissa Eddy,Eddy, ‘Europe Finally Got the Message’:‘Europe Finally Got the Message’: Leaders Act Leaders Act ~~T ogether~~Together on Message, on Message, The New
York ~~Tim es~~Times, June 4, 2020. https://www.nytimes.com/2020/06/04/business/europe-coronavirus-economic-support.html?, June 4, 2020. https://www.nytimes.com/2020/06/04/business/europe-coronavirus-economic-support.html?
action=click&module=action=click&module=~~T op~~Top%20Stories&pgtype=Homepage. 280 Miller, Joe, Germany Flexes its Muscles on Foreign Investment, Financial Times, June 25, 2020. https://www.ft.com/content/54f92ca5-5380-466b-95f8-3e98b40ebc82. 281 Special Meeting of the European Council-Conclusions, EUCP 10/20, July 21, 2020. Congressional Research Service 91 Global Economic Effects of COVID-19 The €750 billion relief fund reportedly includes a Recovery and Resilience Facility of €672.5 billion, which includes €360 billion in loans and €312.5 billion in grants and half a dozen other initiatives to assist economically weakened member states. The relief fund was coupled with rebates on EU budget contributions for so-called “frugal” states, or EU members with stronger fiscal balances. Austria, the Netherlands, Denmark, and Sweden reportedly will receive such budget rebates.282 On September 3, 2020, French Prime Minister Jean Castex announced that France would implement a €100 billion (about $130 billion~~%20Stories&pgtype=Homepage.~~
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~~Foreign Trade Act, set to become law in 2020, that broadens the scope of transactions that must~~
~~be approved by the Federal government to include “critical” technologies, including robotics,~~
~~biotech, and quantum computing.356~~
~~On July 17, the European Commission met to approve the proposed €750 bil ion support fund to~~
~~assist European countries address the economic effects of the pandemic. Initial y, the Commission~~
~~was unable to agree on various aspects of the program, but talks continued over the weekend and~~
~~resumed on July 20. European leaders announced on July 21 they had approved a €750 bil ion~~
~~(about $859 bil ion) pandemic relief package and a multi-year EU budget, referred to as the~~
~~Multiannual Financial Framework (MFF), with a combined value of over €2 tril ion. The~~
~~pandemic plan is aimed at funding post-pandemic economic recovery with the European~~
~~Commission set to borrow an unprecedented amount of funds on European capital markets.357~~
~~The €750 bil ion relief fund reportedly includes a Recovery and Resilience Facility of €672.5~~
~~bil ion, which includes €360 bil ion in loans and €312.5 bil ion in grants and half a dozen other~~
~~initiatives to assist economical y weakened member states. The relief fund was coupled with~~
~~rebates on EU budget contributions for so-cal ed “frugal” states, or EU members with stronger~~
~~fiscal balances. Austria, the Netherlands, Denmark, and Sweden reportedly wil receive such~~
~~budget rebates.358~~
~~On September 3, 2020, French Prime Minister Jean Castex announced that France would~~
~~implement a €100 bil ion (about $130 bil ion~~) spending plan to speed the economy’s recovery ) spending plan to speed the economy’s recovery
from the economic effects of the COVID-19 pandemic. Reportedly, the plan includes funding for from the economic effects of the COVID-19 pandemic. Reportedly, the plan includes funding for
green energy (including hydrogen energy), transportation (state railways), and industrial green energy (including hydrogen energy), transportation (state railways), and industrial
innovation.innovation.~~359~~283
The United Kingdom
The United Kingdom has taken a number of steps to support economic activity. These steps are The United Kingdom has taken a number of steps to support economic activity. These steps are
expected to limit the damage to the UK economy. The Bank of England (BOE)expected to limit the damage to the UK economy. The Bank of England (BOE) forecasted in May forecasted in May
2020 that the UK2020 that the UK economy would contract by 30% in the first half of 2020, but then rebound economy would contract by 30% in the first half of 2020, but then rebound
sharply in the second half of the year, exhibiting a “V” shaped recovery. The Bank of England has sharply in the second half of the year, exhibiting a “V” shaped recovery. The Bank of England has
announced a number of policy initiativesannounced a number of policy initiatives including including
 On March 11, the BOE adopted a package of four measures to deal with any  On March 11, the BOE adopted a package of four measures to deal with any
economic disruptions associated with COVID-19. The measures included an economic disruptions associated with COVID-19. The measures included an
unscheduled cut in the benchmark interest rate by 50 basis points (0.5%) to a unscheduled cut in the benchmark interest rate by 50 basis points (0.5%) to a
historic low of 0.25%; the reintroduction of the Term Funding Scheme for historic low of 0.25%; the reintroduction of the Term Funding Scheme for ~~Smal~~
Small and Medium-sized Enterprises (TFSME) that provides banks with over $110 and Medium-sized Enterprises (TFSME) that provides banks with over $110
~~bil ion~~ billion for loans at low interest rates; a lowering of banks’ countercyclical capital for loans at low interest rates; a lowering of banks’ countercyclical capital
buffer from 1% to zero, which is estimated to support over $200 buffer from 1% to zero, which is estimated to support over $200 ~~bil ion~~billion of bank of bank
lending to businesses; and a freeze in banks’ dividend payments.lending to businesses; and a freeze in banks’ dividend payments.~~360~~

~~356 Miller, Joe, Germany Flexes its Muscles on Foreign Investment, Financial Times, June 25, 2020.~~
~~https://www.ft.com/content/54f92ca5-5380-466b-95f8-3e98b40ebc82.~~
~~357 Special Meeting of the European Council-Conclusions, EUCP 10/20, July 21, 2020.~~
~~358 Fleming, Sam, Mehreen Khan and Jim Brunsden, EU Leaders Strike Deal on €750bn Recovery Fund After~~
~~Marathon Summit , Financial Tim es, July 21, 2020. https://www.ft.com/content/713be467-ed19-4663-95ff-~~
~~66f775af55cc.~~
~~359 Mallet, Victor, France Launches €100 Billion Coronavirus Recovery~~ 284  On March 15, the BOE reinstituted U.S. dollar swap lines with the Federal Reserve.  On March 17, the BOE and the UK Treasury introduced the COVID Corporate Financing Facility (CCFF) to provide assistance to UK firms to bridge through Covid-19-related disruptions to their cash flow.  On March 19, during a Special Monetary Policy Meeting, the Bank of England reduced its main interest rate to 0.1%, increased the size of its TFSME fund, and increased the stock of asset purchases by £200 billion to a total of £645 billion financed by issuing UK government bonds and some additional nonfinancial investment-grade corporate bonds.285 282 Fleming, Sam, Mehreen Khan and Jim Brunsden, EU Leaders Strike Deal on €750bn Recovery Fund After Marathon Summit, Financial Times, July 21, 2020. https://www.ft.com/content/713be467-ed19-4663-95ff-66f775af55cc. 283 Mallet, Victor, France Launches €100 Billion Coronavirus Recovery Plan, Plan, Financial Times, September 3, 2020. , September 3, 2020.
https://www.ft.com/content/0921c871-17b5-4e2e-bdea-aab78c2d0090. https://www.ft.com/content/0921c871-17b5-4e2e-bdea-aab78c2d0090.
~~360~~ 284 Romei, Valentina, “Covid-19 Fallout: Bank of England Launches 4 Key Measures,” Romei, Valentina, “Covid-19 Fallout: Bank of England Launches 4 Key Measures,” Financial Times. https://www.ft.com/content/4e60c08e-6380-11ea-b3f3-fe4680ea68b5. 285 Johnson, Miles, Chris Giles, Martin Arnold, and James Politi, “Italy’s PM Urges Brussels to Unleash €500bn Rescue Fund,” Financial Times, March 18, 2020. https://www.ft.com/content/5b8205ac-6a06-11ea-800d-da70cff6e4d3. Congressional Research Service 92 Global Economic Effects of COVID-19  On March 20, the BOE participated in an internationally coordinated central bank expansion of liquidity through U.S. standing dollar liquidity ~~Financial Times~~.
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~~ On March 15, the BOE reinstituted U.S. dollar swap lines with the Federal~~
~~Reserve.~~
~~ On March 17, the BOE and the UK Treasury introduced the COVID Corporate~~
~~Financing Facility (CCFF) to provide assistance to UK firms to bridge through~~
~~Covid-19-related disruptions to their cash flow.~~
~~ On March 19, during a Special Monetary Policy Meeting, the Bank of England~~
~~reduced its main interest rate to 0.1%, increased the size of its TFSME fund, and~~
~~increased the stock of asset purchases by £200 bil ion to a total of £645 bil ion~~
~~financed by issuing UK government bonds and some additional nonfinancial~~
~~investment-grade corporate bonds.361~~
~~ On March 20, the BOE participated in an international y coordinated central bank~~
~~expansion of liquidity through U.S. standing dollar liquidity~~ swap line swap line
arrangements. arrangements.
 On March, the BOE activated the Contingent Term Repo Facility (CTRF).  On March, the BOE activated the Contingent Term Repo Facility (CTRF).
 On April On April 6, announced the activation of the TFSME ahead of schedule. 6, announced the activation of the TFSME ahead of schedule.
 On April On April 23, the Bank of England indicated it would quadruple its borrowing 23, the Bank of England indicated it would quadruple its borrowing
over the second quarter of 2020, reflecting a contraction in the UK economy, over the second quarter of 2020, reflecting a contraction in the UK economy,
lower tax revenues, and increased financial demands to support fiscal policy lower tax revenues, and increased financial demands to support fiscal policy
measures.measures.~~362~~
286 In terms of fiscal policy, UK In terms of fiscal policy, UK ~~Chancel or~~Chancellor of the Exchequer Rishi Sunak proposed a national of the Exchequer Rishi Sunak proposed a national
budget on March 11, 2020, that included nearly $3.5 budget on March 11, 2020, that included nearly $3.5 ~~bil ion~~ billion in fiscal spending to counter adverse in fiscal spending to counter adverse
economic effects of the pandemic and increased in statutory sick leave by about $2.5 economic effects of the pandemic and increased in statutory sick leave by about $2.5 ~~bil ion~~billion in in
funds to funds to ~~smal~~ small and medium businesses to provide up to 14 days of sick leave for affected and medium businesses to provide up to 14 days of sick leave for affected
employees. The plan provides affected workers up to 80% of their salary, or up to £2,500 a month employees. The plan provides affected workers up to 80% of their salary, or up to £2,500 a month
(about $2,800) if they are laid off. Some estimates indicate that UK spending to support its (about $2,800) if they are laid off. Some estimates indicate that UK spending to support its
economy could rise to about $60 economy could rise to about $60 ~~bil ion~~ billion in 2020.in 2020.~~363~~287 Identified as the Coronavirus Job Retention Identified as the Coronavirus Job Retention
Scheme (CJRS), the program was backdated to start on March 1 and had been expected to run Scheme (CJRS), the program was backdated to start on March 1 and had been expected to run
through May, but was extended to expire the end of June 2020. Prime Minister Johnson also through May, but was extended to expire the end of June 2020. Prime Minister Johnson also
announced that announced that al all pubs, cafés, restaurants, theatres, cinemas, nightclubs, gyms and leisure centers pubs, cafés, restaurants, theatres, cinemas, nightclubs, gyms and leisure centers
would be closed.would be closed.~~364~~288 Part of the fiscal spending package includes open-ended funding for the Part of the fiscal spending package includes open-ended funding for the
National Health Service (NHS), $6 National Health Service (NHS), $6 ~~bil ion~~ billion in emergency funds to the NHS, $600 in emergency funds to the NHS, $600 ~~mil ion~~million hardship hardship
fund to assist vulnerable people, and tax cuts and tax holidays for fund to assist vulnerable people, and tax cuts and tax holidays for ~~smal~~ small businesses in certain businesses in certain
~~affected sectors.365~~

~~https://www.ft.com/content/4e60c08e-6380-11ea-b3f3-fe4680ea68b5.~~
~~361 Johnson, Miles, Chris Giles, Martin Arnold, and James Politi, “Italy’s PM Urges Brussels to Unleash €500bn~~
~~Rescue Fund,” Financial Tim es, March 18, 2020. https://www.ft.com/content/5b8205ac-6a06-11ea-800d-~~
~~da70cff6e4d3.~~
~~362 Giles, Chris, and T ommy Stubbington, UK T reasury to Quadruple Borrowing to £180bn Over Next Quarter,~~
Financial Tim es, April 23, 2020. https://www.ft.com/content/8886e002-c260-4daa-8b7b-509b3f7e6edb.
~~363 Parker, George, Chris Giles, and Sebastian Payne, “Sunak T urns on Financial Firepower to Help Workers,”~~
Financial Tim es, March 20, 2020. https://www.ft.com/content/826d465a-6ac3-11ea-a3c9-1fe6fedcca75.
~~364 Ibid.~~
~~365 Payne, Sebastian and Chris Giles, “Budget 2020: Sunak Unveils £30bn Stimulus to Counter UK Covid-19 Shock,”~~
Financial Tim es. https://www.ft.com/content/f7b27264-6384-11ea-a6cd-df28cc3c6a68.
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~~On July 8, Chancel or Sunak proposed additional fiscal measures to support the UK economy.366~~
~~The measures include raising threshold tax levels on home purchases, reducing taxes for the~~
~~hospitality industry, and a “job retention bonus” of £1.000 (around $1,200) per worker to~~
~~companies that bring employees out of furlough, estimated at around 9 mil ion workers, and a~~
~~subsidy of £2.000 for firms that hire new apprentices. In addition, the proposed plan includes a~~
~~50% discount on meals and nonalcoholic drinks eaten at restaurants and cafes during August,~~
~~with some restrictions.~~
~~On March 31, 2021, the UK Government announced that UK GDP in the fourth quarter of 2020~~
~~grew by 1.3%, after contracting by 19.5% (revised) in the second quarter and growing by 16.9%~~
~~in the third quarter based on market prices, as indicated in Figure 22.367~~
~~Figure 22. UK Month Over Month Quarterly Percentage Change in GDP~~

~~Source:~~ ~~GDP Quarterly National Accounts,~~ affected sectors.289 On July 8, Chancellor Sunak proposed additional fiscal measures to support the UK economy.290 The measures include raising threshold tax levels on home purchases, reducing taxes for the hospitality industry, and a “job retention bonus” of £1.000 (around $1,200) per worker to companies that bring employees out of furlough, estimated at around 9 million workers, and a subsidy of £2.000 for firms that hire new apprentices. In addition, the proposed plan includes a 50% discount on meals and nonalcoholic drinks eaten at restaurants and cafes during August, with some restrictions. On March 31, 2021, the UK Government announced that UK GDP in the fourth quarter of 2020 grew by 1.3%, after contracting by 19.5% (revised) in the second quarter and growing by 16.9% in the third quarter based on market prices, as indicated in Figure 22.291 286 Giles, Chris, and Tommy Stubbington, UK Treasury to Quadruple Borrowing to £180bn Over Next Quarter, Financial Times, April 23, 2020. https://www.ft.com/content/8886e002-c260-4daa-8b7b-509b3f7e6edb. 287 Parker, George, Chris Giles, and Sebastian Payne, “Sunak Turns on Financial Firepower to Help Workers,” Financial Times, March 20, 2020. https://www.ft.com/content/826d465a-6ac3-11ea-a3c9-1fe6fedcca75. 288 Ibid. 289 Payne, Sebastian and Chris Giles, “Budget 2020: Sunak Unveils £30bn Stimulus to Counter UK Covid-19 Shock,” Financial Times. https://www.ft.com/content/f7b27264-6384-11ea-a6cd-df28cc3c6a68. 290 Pickard, Jim and Chris Giles, Sunak’s Summer Statement: UK Government to Pay Companies to Bring Workers Back From Furlough, Financial Times, July 7, 2020. https://www.ft.com/content/ad1688ee-3d8d-4e52-9b16-a3632eed8be9. 291 Giles, Chris and Valentina Romei, BoE Economist Warns Against Pessimism After Record Drop in GDP, Financial Times, September 30, 2020. https://www.ft.com/content/fed4fe06-8c6a-4272-b0b3-a0759805eb64. Congressional Research Service 93 Global Economic Effects of COVID-19 Figure 22. UK Month Over Month Quarterly Percentage Change in GDP Source: GDP Quarterly National Accounts, UK: October to December 2020, Office for National Statistics, March 31, Office for National Statistics, March 31,
2021. Created by CRS. 2021. Created by CRS.
Despite the growth in the 3rd and 4th quarters, the UK economy remained 7.3% below where it Despite the growth in the 3rd and 4th quarters, the UK economy remained 7.3% below where it
was at the end of 2019. For the year as a whole, the rate of growth of the UK economic contracted was at the end of 2019. For the year as a whole, the rate of growth of the UK economic contracted
by 9.8%, as indicated in by 9.8%, as indicated in Table 16. The Q2 decline was driven by lower levels of activity in . The Q2 decline was driven by lower levels of activity in
services (-19.9%), production (16.9%)-primarily manufacturing, and construction (35%) and services (-19.9%), production (16.9%)-primarily manufacturing, and construction (35%) and
constituted the largest quarterly decline since 1955.constituted the largest quarterly decline since 1955.~~368~~292 In contrast, the Q3 and Q4 expansion In contrast, the Q3 and Q4 expansion
occurred in services, industrial production, and construction. occurred in services, industrial production, and construction.
In other areas In other areas
 Household consumption  Household consumption ~~fel~~ fell by 10.6% in 2020, primarily as a result of large by 10.6% in 2020, primarily as a result of large
declines in the first and second quarters. declines in the first and second quarters.
 Business investment (gross fixed capital formation)  Business investment (gross fixed capital formation) ~~fel~~ fell by 8.8% over the year, despite growing by 19.0% in the third quarter;  Government spending fell ~~by 8.8% over the year,~~
~~despite growing by 19.0% in the third quarter;~~

~~366 Pickard, Jim and Chris Giles, Sunak’s Summer Statement: UK Government to Pay Companies to Bring Workers~~
~~Back From Furlough, Financial Tim es, July 7, 2020. https://www.ft.com/content/ad1688ee-3d8d-4e52-9b16-~~
~~a3632eed8be9.~~
~~367 Giles, Chris and Valentina Romei, BoE Economist Warns Against Pessimism After Record Drop in GDP,~~ ~~Financial~~
~~Tim es,~~ ~~September 30, 2020. https://www.ft.com/content/fed4fe06-8c6a-4272-b0b3-a0759805eb64.~~
~~368 GDP Quarterly National Accounts, UK: October to December 2020, Office for National Statistics, March 31, 2021.~~
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~~ Government spending fel~~ by 6.5% during the year, despite growing by 19.0% in by 6.5% during the year, despite growing by 19.0% in
the third quarter and 4.4% in the fourth quarter reflecting increased spending on the third quarter and 4.4% in the fourth quarter reflecting increased spending on
health care;health care;
 Imports (-11.8%) and exports (-15.8%)  Imports (-11.8%) and exports (-15.8%) ~~fel~~ fell in 2020 compared with 2019, in 2020 compared with 2019,
reflecting large declines in the first and second quarters of 2020. reflecting large declines in the first and second quarters of 2020.
Table 1618. UK Major GDP Aggregates 2019-2020
Percent change from preceding period Percent change from preceding period

GDP GDP
Households Households
Gross Gross Fixed Fixed
Government Government
Exports Exports
Imports Imports
Capital Capital
Formation Formation
2019 2019
1.4% 1.4%
1.1% 1.1%
1.5% 1.5%
4.0% 4.0%
2.7% 2.7%
1.9% 1.9%
Q1 Q1
0.6 0.6
0.0 0.0
2.1 2.1
1.4 1.4
-1.2 -1.2
6.5 6.5
Q2 Q2
0.1 0.1
0.6 0.6
-1.1 -1.1
2.3 2.3
-0.8 -0.8
-9.0 -9.0
Q3 Q3
0.5 0.5
0.1 0.1
1.3 1.3
-0.9 -0.9
5.3 5.3
1.5 1.5 292 GDP Quarterly National Accounts, UK: October to December 2020, Office for National Statistics, March 31, 2021. Congressional Research Service 94 Global Economic Effects of COVID-19 GDP Households Gross Fixed Government Exports Imports Capital Formation
Q4 Q4
0.0 0.0
-0.3 -0.3
-1.6 -1.6
0.0 0.0
3.8 3.8
-3.1 -3.1
2020 2020
-9.8 -9.8
-10.6 -10.6
-8.8 -8.8
-6.5 -6.5
-15.8 -15.8
-11.8 -11.8
Q1 Q1
-2.8 -2.8
-2.6 -2.6
-1.2 -1.2
-1.8 -1.8
-14.5 -14.5
-7.4 -7.4
Q2 Q2
-19.5 -19.5
-20.8 -20.8
-20.7 -20.7
-17.3 -17.3
-10.1 -10.1
-21.1 -21.1
Q3 Q3
16.9 16.9
19.7 19.7
19.0 19.0
15.8 15.8
-0.5 -0.5
14.6 14.6
Q4 Q4
1.3 1.3
-1.7 -1.7
4.4 4.4
6.7 6.7
6.1 6.1
11.0 11.0
Source: Office of National Statistics, GDP Quarterly National Accounts, UK; October to December Office of National Statistics, GDP Quarterly National Accounts, UK; October to December 2020. 2020.
Notes: Chained volume measures. Chained volume measures.
The Bank of England’s February 2021 The Bank of England’s February 2021 Monetary Policy Report indicated that its GDP forecast indicated that its GDP forecast
remained “remained “~~unusual y~~unusually” uncertain and depended on the evolving nature of the pandemic, the ” uncertain and depended on the evolving nature of the pandemic, the
measure that are taken to protect public health, and how households, businesses and financial measure that are taken to protect public health, and how households, businesses and financial
markets respond to these developments.markets respond to these developments.~~369The~~293The forecast projected that UK GDP growth rate could forecast projected that UK GDP growth rate could
~~fal~~ fall by 4% in the first quarter of 2021, or to about 12% below the level of the fourth quarter of by 4% in the first quarter of 2021, or to about 12% below the level of the fourth quarter of
2019.2019.~~370~~294 The Bank assumed that social and business restrictions in January 2021 remained in The Bank assumed that social and business restrictions in January 2021 remained in
place through the first quarter. place through the first quarter.
The UK-EU The UK-EU trade arrangement, the Trade and Cooperation Agreement, which became effective trade arrangement, the Trade and Cooperation Agreement, which became effective
on December 24, 2020, is projected to raise some barriers on UK-EU trade and increase on December 24, 2020, is projected to raise some barriers on UK-EU trade and increase
administrative costs, which could reduce UK trade and GDP by 10.5% and 3.25%, respectively, administrative costs, which could reduce UK trade and GDP by 10.5% and 3.25%, respectively,
over the long run, compared with earlier forecasts. Trade during the first quarter was also over the long run, compared with earlier forecasts. Trade during the first quarter was also
projected to be dampened as a consequence of UK firms adjusting to the new trade rules.projected to be dampened as a consequence of UK firms adjusting to the new trade rules.~~371~~295 As As
lockdowns and restrictions are lessened or removed in the second half of 2021, the Bank forested lockdowns and restrictions are lessened or removed in the second half of 2021, the Bank forested
that consumer spending would revive with households spending the extra 5% of savings they that consumer spending would revive with households spending the extra 5% of savings they
accumulated during 2020. As indicated inaccumulated during 2020. As indicated in Table 17, the growth catch-up period is projected to , the growth catch-up period is projected to
last through 2022, before slowing in 2023. The Bank of England also conducted stress tests on last through 2022, before slowing in 2023. The Bank of England also conducted stress tests on
UK banks in 2020 and concluded the banks had sufficient capital buffers to absorb the losses that UK banks in 2020 and concluded the banks had sufficient capital buffers to absorb the losses that

~~369 Monetary Policy Report, Bank of England, February 2021, p. ii.~~
~~370 Ibid, p. 3.~~
~~371 Ibid, p. 4.~~
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could arise under the Bank’s main projections.could arise under the Bank’s main projections.~~372~~296 The Bank also concluded that UK businesses The Bank also concluded that UK businesses
had successfully raised the funds they needed to satisfy their cash-flow requirements. In addition, had successfully raised the funds they needed to satisfy their cash-flow requirements. In addition,
the government extended three financing facilities for businesses – the Bounce Back Loan the government extended three financing facilities for businesses – the Bounce Back Loan
Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large
Business Interruption Loan Scheme -through to the end of January 2021.Business Interruption Loan Scheme -through to the end of January 2021.~~373~~297 The forecast also The forecast also
projects an increase in unemployment and business insolvencies in 2021. projects an increase in unemployment and business insolvencies in 2021.
Table 1719. UK Forecast of Major Aggregate National Accounts, 2020-2023
Percent change from the preceding period Percent change from the preceding period

Averages Averages
Projection Projection

2010-2019 2010-2019
2021 2021
2022 2022
2023 2023
GDP GDP
1.75% 1.75%
5.00% 5.00%
7.25% 7.25%
1.25% 1.25%
293 Monetary Policy Report, Bank of England, February 2021, p. ii. 294 Ibid, p. 3. 295 Ibid, p. 4. 296 Financial Stability Report, Bank of England, December 2020, p. ii. 297 Ibid, p. 3. Congressional Research Service 95 Global Economic Effects of COVID-19 Households Households
1.75 1.75
4.25 4.25
11.75 11.75
1.00 1.00
Business Business
3.75 3.75
4.00 4.00
12.00 12.00
4.50 4.50
Exports Exports
3.25 3.25
-3.00 -3.00
5.25 5.25
4.25 4.25
Imports Imports
3.50 3.50
5.25 5.25
12.75 12.75
3.50 3.50
Source: GDP Quarterly National Accounts, UK: October to December 2020, Office of National Statistics,, Office of National Statistics, March 31, March 31,
2021. 2021.
On November 5, 2020, the Bank of England announced that it anticipated the UK economy On November 5, 2020, the Bank of England announced that it anticipated the UK economy
would would ~~fal~~ fall back into recession in the fourth quarter of 2020 as a result of a decline in consumer back into recession in the fourth quarter of 2020 as a result of a decline in consumer
spending and businesses investment due to social distancing requirements and business spending and businesses investment due to social distancing requirements and business
lockdowns imposed in response to a resurgence of COVID-19 cases in October and November. lockdowns imposed in response to a resurgence of COVID-19 cases in October and November.
The Bank also announced an additional £150 The Bank also announced an additional £150 ~~bil ion~~ billion in government bond purchases and increase in government bond purchases and increase
in quantities easing, or additional bond purchases, to provide monetary stimulus in 2021.in quantities easing, or additional bond purchases, to provide monetary stimulus in 2021.~~374~~298 In In
addition, the Bank indicated that it estimated the pandemic would reduce UK GDP by 1.75 addition, the Bank indicated that it estimated the pandemic would reduce UK GDP by 1.75
percentage points below where it had forecasted at the beginning of 2020. percentage points below where it had forecasted at the beginning of 2020.
On March 3, 2021, On March 3, 2021, ~~Chancel or~~Chancellor of the Exchequer Sunak proposed a £65 of the Exchequer Sunak proposed a £65 ~~bil ion~~billion financial assistance financial assistance
package spread out over two-years to assist UK businesses and households recover from the package spread out over two-years to assist UK businesses and households recover from the
economic effects of the pandemic. The economic effects of the pandemic. The ~~Chancel or~~Chancellor argued the spending was necessary, because argued the spending was necessary, because
the UKthe UK economy was projected to not fully recover for at least five years. With a continuation of economy was projected to not fully recover for at least five years. With a continuation of
state supported measures into the summer, the total cost to the UK economy of addressing the state supported measures into the summer, the total cost to the UK economy of addressing the
pandemic-related economic recession was estimated at £407 pandemic-related economic recession was estimated at £407 ~~bil ion~~billion over two years. The spending over two years. The spending
initiativeinitiative is expected to be followed by large increases in corporate and individual taxes starting is expected to be followed by large increases in corporate and individual taxes starting
in 2023.in 2023.~~375~~299 Given the announced planned tax increases in subsequent years, some economists Given the announced planned tax increases in subsequent years, some economists
could argue the spending initiativecould argue the spending initiative could could ~~fal~~ fall short of the estimated stimulative effects. Japan The Bank of Japan, with already-low interest rates, injected $4.6 billion in liquidity into Japanese ~~short of the estimated stimulative effects.~~

~~372 Financial Stability Report, Bank of England, December 2020, p. ii.~~
~~373 Ibid, p. 3.~~
~~374 Giles, Chris, Bank of England Launches £150bn Stimulus to Boost Consumer Spending, Financial T imes,~~
~~November 5, 2020. https://www.ft.com/content/18ade542-d2a9-438a-ba5c-37b51475993b.~~
~~375 Pickard, Jim, Chris Giles and George Parker, Rishi Sunak Delivers Spend Now, T ax Later Budget to Kickstart UK~~
~~Economy, Financial Tim es, March 3, 2021. https://www.ft.com/content/da66ce9a-6dfc-4a3a-bde7-d4f4faed6c4a.~~
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~~Japan~~
~~The Bank of Japan, with already-low interest rates, injected $4.6 bil ion in liquidity into Japanese~~
banks to provide short-term loans for purchases of corporate bonds and commercial paper and banks to provide short-term loans for purchases of corporate bonds and commercial paper and
twice that amount into exchange traded funds to aid Japanese businesses. The Japanese twice that amount into exchange traded funds to aid Japanese businesses. The Japanese
government also pledged to provide wage subsidies for parents forced to take time off due to government also pledged to provide wage subsidies for parents forced to take time off due to
school closures.school closures.~~376~~300 On March 24, 2020, Japan announced that the Summer Olympics set to take On March 24, 2020, Japan announced that the Summer Olympics set to take
place in Tokyo would be postponed by a year, delaying a projected boost to the Japanese place in Tokyo would be postponed by a year, delaying a projected boost to the Japanese
economy that was expected from the event. Japan adopted an emergency fiscal package of about economy that was expected from the event. Japan adopted an emergency fiscal package of about
$1.1 $1.1 ~~tril ion~~trillion, roughly equivalent to 10% of Japan’s annual gross domestic product (GDP). On , roughly equivalent to 10% of Japan’s annual gross domestic product (GDP). On
April 27, 2020, the Bank of Japan announced it would purchase unlimited amounts of April 27, 2020, the Bank of Japan announced it would purchase unlimited amounts of
government bonds and quadruple its purchases of corporate debt to keep interest rates low and government bonds and quadruple its purchases of corporate debt to keep interest rates low and
stimulate the Japanese economy.stimulate the Japanese economy.~~377~~
~~The Japanese Cabinet proposed a second supplemental appropriation measure that included $296~~
~~bil ion in spending and a total value of about $1.1 tril ion~~ 301 298 Giles, Chris, Bank of England Launches £150bn Stimulus to Boost Consumer Spending, Financial Times, November 5, 2020. https://www.ft.com/content/18ade542-d2a9-438a-ba5c-37b51475993b. 299 Pickard, Jim, Chris Giles and George Parker, Rishi Sunak Delivers Spend Now, Tax Later Budget to Kickstart UK Economy, Financial Times, March 3, 2021. https://www.ft.com/content/da66ce9a-6dfc-4a3a-bde7-d4f4faed6c4a. 300 Harding, Robin and Hudson Lockett, “BoJ Spurs Asia Markets Rebound with Vow to Fight Covid-19,” Financial Times, March 2, 2020. https://www.ft.com/content/9fa91e06-5c3b-11ea-b0ab-339c2307bcd4. 301 Harding, Robin, Bank of Japan Steps up Coronavirus Stimulus With Bond-buying Pledge, Financial Times, April 27, 2020. https://www.ft.com/content/7ba5c507-df9e-4107-87eb-73afa2c13e91. Congressional Research Service 96 Global Economic Effects of COVID-19 The Japanese Cabinet proposed a second supplemental appropriation measure that included $296 billion in spending and a total value of about $1.1 trillion in loans and guarantees, funded through in loans and guarantees, funded through
new bonds. This and a previous set of spending measures reportedly were comparable to 40% of new bonds. This and a previous set of spending measures reportedly were comparable to 40% of
Japan’s GDP and included grants for businesses to pay rents through the Development Bank of Japan’s GDP and included grants for businesses to pay rents through the Development Bank of
Japan and funds to Japan and funds to ~~smal~~ small and medium-sized businesses through the Regional Economy and medium-sized businesses through the Regional Economy
VitalizationVitalization Corporation of Japan, payments to assist furloughed workers, and a reserve fund to Corporation of Japan, payments to assist furloughed workers, and a reserve fund to
provide capital injections to struggling firms through the Japan Investment Corporation.provide capital injections to struggling firms through the Japan Investment Corporation.~~378~~302
In terms of monetary policy, the Bank of Japan (BOJ) maintained its low interest rates policy of - In terms of monetary policy, the Bank of Japan (BOJ) maintained its low interest rates policy of -
0.1%, even as it increased its coronavirus lending facility from $700 0.1%, even as it increased its coronavirus lending facility from $700 ~~bil ion to $1 tril ion~~ billion to $1 trillion and and
stated it would continue purchasing commercial paper, corporate bonds, and exchange traded stated it would continue purchasing commercial paper, corporate bonds, and exchange traded
funds at the rate of $12 funds at the rate of $12 ~~tril ion~~trillion a year. a year.~~379~~303 The COVID-19 lending facility assisted banks in The COVID-19 lending facility assisted banks in
providing zero interest rate loans to businesses. In a separate program, the BOJ provided about providing zero interest rate loans to businesses. In a separate program, the BOJ provided about
$110 $110 ~~tril ion~~ trillion to buy commercial paper and corporate bonds and provided dollars through swap to buy commercial paper and corporate bonds and provided dollars through swap
arrangements with the U.S. Federal Reserve. Japan reported on August 17 that its economy had arrangements with the U.S. Federal Reserve. Japan reported on August 17 that its economy had
contracted by 7.8% in the second quarter of 2020, compared with the previous quarter, or at an contracted by 7.8% in the second quarter of 2020, compared with the previous quarter, or at an
annual a rate of 27.8%. This drop in economic activity was precipitated by a drop in exports of annual a rate of 27.8%. This drop in economic activity was precipitated by a drop in exports of
18.5% from the preceding quarter (56.0% at an annual rate) and a decline in personal 18.5% from the preceding quarter (56.0% at an annual rate) and a decline in personal
consumption of 8.6% (30.1% at an annual rate).consumption of 8.6% (30.1% at an annual rate).~~380~~304
On October 29, the Bank of Japan issued a revised forecast that indicated Japan’s GDP would On October 29, the Bank of Japan issued a revised forecast that indicated Japan’s GDP would
contract by 5.5% in the fiscal year ending March 2021. The economy was projected to grow by contract by 5.5% in the fiscal year ending March 2021. The economy was projected to grow by
3.6% in 2021 and by 1.6% the following year. The Bank indicated, however, that the outlook 3.6% in 2021 and by 1.6% the following year. The Bank indicated, however, that the outlook
remained, “highly uncertain,” with big downside risks.remained, “highly uncertain,” with big downside risks.~~381~~305
Japan also indicated on November 25 that its GDP grew by 4.7% in the third quarter, reportedly Japan also indicated on November 25 that its GDP grew by 4.7% in the third quarter, reportedly
better than government Ministers and economists had projected, but they remained cautious over better than government Ministers and economists had projected, but they remained cautious over

~~376 Harding, Robin and Hudson Lockett, “ BoJ Spurs Asia Markets Rebound with Vow to Fight Covid-19,”~~ ~~Financial~~
~~Tim es,~~ ~~March 2, 2020. https://www.ft.com/content/9fa91e06-5c3b-11ea-b0ab-339c2307bcd4.~~
~~377 Harding, Robin, Bank of Japan Steps up Coronavirus Stimulus With Bond-buying Pledge, Financial Times, April~~
~~27, 2020. https://www.ft.com/content/7ba5c507-df9e-4107-87eb-73afa2c13e91.~~
~~378 Harding, Robin, Japan’s Cabinet Approves Extra $1.1 T rillion~~prospects for the fourth quarter rate of growth.306 The Bank of Japan announced on January 20, 2021, that the Japanese economy could grow at a slightly faster pace of 3.9% in 2021. An increase in viral cases in January 2021, however, led to a renewed effort at quarantines and lockdowns and raised questions about the timing of an economic recovery.307 China According to a recent CRS In Focus,308 China emerged in June 2020 as the first major country to announce a return to economic growth since the outbreak of the COVID-19 pandemic. The government reported 3.2% gross domestic product (GDP) growth in the second quarter and 4.9% GDP growth in the third quarter of 2020. China is still grappling with the economic effects of the COVID-19 pandemic, however, including sluggish domestic consumption, slow recovery in its 302 Harding, Robin, Japan’s Cabinet Approves Extra $1.1 Trillion Budget to Counter Recession, Budget to Counter Recession, Financial Times, May , May
27, 2020. https://www.ft.com/content/ce7f3564-c997-339c-ad3d-c6d092fb7f1e. 27, 2020. https://www.ft.com/content/ce7f3564-c997-339c-ad3d-c6d092fb7f1e.
~~379~~ 303 Harding, Bank of Japan Pledges Harding, Bank of Japan Pledges $1 trillion in Coronavirus Lending. $1 trillion in Coronavirus Lending.
~~380~~304 Quarterly ~~Estim ates~~Estimates of GDP for April - June 2020 (First Preliminary Estimates), Cabinet Office, August Cabinet Office, August 17, 2020. 17, 2020.
~~381~~305 Bank of Japan Bank of Japan ~~T rims~~Trims Growth Forecasts But Predicts Stronger Rebound Growth Forecasts But Predicts Stronger Rebound in 2021, in 2021, Financial ~~Tim es~~Times, October 29, 2020. https://www.ft.com/content/6d01dee6-7de4-48bb-8d27-50d3d4e11d16. 306 Harding, Robin, Japan’s Economy Rebounds 5% in the Third Quarter, Financial Times, November 24, 2020. https://www.ft.com/content/2ec0b9b3-ecc4-4056-bacf-cb45c83e4629. 307 Kihara, Leika, Tetsushi Kajimoto, Bank of Japan Lifts Next Year’s Growth Forecast, Saves Ammunition as Virus Risks Linger, Reuters, January 20, 2021. 308 CRS In Focus IF11667, China’s Economy: Current Trends and Issues, by Karen M. Sutter and Michael D. Sutherland. Congressional Research Service 97 Global Economic Effects of COVID-19 ~~, October 29,~~
~~2020. https://www.ft.com/content/6d01dee6-7de4-48bb-8d27-50d3d4e11d16.~~
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~~prospects for the fourth quarter rate of growth.382 The Bank of Japan announced on January 20,~~
~~2021, that the Japanese economy could grow at a slightly faster pace of 3.9% in 2021. An~~
~~increase in viral cases in January 2021, however, led to a renewed effort at quarantines and~~
~~lockdowns and raised questions about the timing of an economic recovery.383~~
~~China~~
~~According to a recent CRS In Focus,384 China emerged in June 2020 as the first major country to~~
~~announce a return to economic growth since the outbreak of the COVID-19 pandemic. The~~
~~government reported 3.2% gross domestic product (GDP) growth in the second quarter and 4.9%~~
~~GDP growth in the third quarter of 2020. China is stil grappling with the economic effects of the~~
~~COVID-19 pandemic, however, including sluggish domestic consumption, slow recovery in its~~
top export markets, and reliance on government spending and exports to boost initial growth. top export markets, and reliance on government spending and exports to boost initial growth.
China also is facing growing restrictions on its overseas commercial activities and access to China also is facing growing restrictions on its overseas commercial activities and access to
foreign technology and pressures for firms to diversify China-based supply chains. Against this foreign technology and pressures for firms to diversify China-based supply chains. Against this
backdrop, China’s leadership is deliberating the country’s economic direction and national backdrop, China’s leadership is deliberating the country’s economic direction and national
industrial plans for the next 5 to 15 years. industrial plans for the next 5 to 15 years.
To boost economic growth, China has provided an estimated $506 To boost economic growth, China has provided an estimated $506 ~~bil ion~~ billion in stimulus since in stimulus since
February 2020 and increased the government’s budget deficit target to a record high of 3.6% of February 2020 and increased the government’s budget deficit target to a record high of 3.6% of
GDP, up from 2.8% in 2019. China reduced the value-added tax (VAT) rate and introduced VAT GDP, up from 2.8% in 2019. China reduced the value-added tax (VAT) rate and introduced VAT
exemptions for certain goods and services. China’s central bank extended monetary support with exemptions for certain goods and services. China’s central bank extended monetary support with
interest rate cuts, eased loan terms, and injected liquidity into banks. Shifting from efforts to interest rate cuts, eased loan terms, and injected liquidity into banks. Shifting from efforts to
reduce debt, the government announced the issuance of $142.9 reduce debt, the government announced the issuance of $142.9 ~~bil ion~~billion of special treasury bonds of special treasury bonds
for the first time since 2007; increased the quota for local government special bonds (a source of for the first time since 2007; increased the quota for local government special bonds (a source of
infrastructure funding); and fast-tracked issuance of corporate bonds to cover pandemic costs but infrastructure funding); and fast-tracked issuance of corporate bonds to cover pandemic costs but
with potential broader uses. The IMF estimates that the fiscal measures and financing plans with potential broader uses. The IMF estimates that the fiscal measures and financing plans
announced amounted to 4.1% of the China’s GDP, as of July 2020. The government says it seeks announced amounted to 4.1% of the China’s GDP, as of July 2020. The government says it seeks
to control credit risk but the need for additional fiscal and monetary support to boost growth may to control credit risk but the need for additional fiscal and monetary support to boost growth may
undermine this goal. undermine this goal.
Multilateral ~~Response385~~Response309
International Monetary Fund
Created in the aftermath of World War II, the IMF’s fundamental mission is to promote Created in the aftermath of World War II, the IMF’s fundamental mission is to promote
international monetary stability. To advance this goal, one of the key functions of the IMF is international monetary stability. To advance this goal, one of the key functions of the IMF is
providing emergency loans to countries facing economic crises. The COVID-19 pandemic has providing emergency loans to countries facing economic crises. The COVID-19 pandemic has
resulted in an unprecedented demand for IMF financial assistance. More than 100 of the IMF’s resulted in an unprecedented demand for IMF financial assistance. More than 100 of the IMF’s
189 member countries have requested IMF programs,189 member countries have requested IMF programs,~~386~~310 and IMF Managing Director Kristalina ~~and IMF Managing Director Kristalina~~

~~382 Harding, Robin, Japan’s Economy Rebounds 5% in the T hird Quarter, Financial Times, November 24, 2020.~~
~~https://www.ft.com/content/2ec0b9b3-ecc4-4056-bacf-cb45c83e4629.~~
~~383 Kihara, Leika, T etsushi Kajimoto, Bank of Japan Lifts Next Year’s Growth Forecast, Saves Ammunition as Virus~~
~~Risks Linger, Reuters, January 20, 2021.~~
~~384 CRS In Focus IF11667, China’s Economy: Current Trends and Issues, by Karen M. Sutter and Michael D.~~
~~Sutherland.~~
~~385 For more information, see CRS Report R46342, COVID-19: Role of the International Financial Institutions, by~~
~~Rebecca M. Nelson and Martin A. Weiss.~~
~~386 Remarks by IMF Managing Director Kristalina Georgieva During the G20 Finance Ministers and Central Bank~~
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Georgieva stated the IMF stands ready to deploy the entirety of its current lending capacity—Georgieva stated the IMF stands ready to deploy the entirety of its current lending capacity—
approximately $1 approximately $1 ~~tril ion—in~~ trillion—in response to the pandemic and resulting economic crises.response to the pandemic and resulting economic crises.~~387~~311 The The
IMF has already approved several COVID-related programs, including for Bolivia, Chad, the IMF has already approved several COVID-related programs, including for Bolivia, Chad, the
Democratic Republic of Congo, Kyrgyz Republic, Nigeria, Niger, Rwanda, Madagascar, Democratic Republic of Congo, Kyrgyz Republic, Nigeria, Niger, Rwanda, Madagascar,
Mozambique, Pakistan, and Togo, among others, and additional programs are expected.Mozambique, Pakistan, and Togo, among others, and additional programs are expected.~~388~~312
In addition to loans, the IMF has taken a number of other policy steps to bolster its COVID-19 In addition to loans, the IMF has taken a number of other policy steps to bolster its COVID-19
response. The IMF is tapping its Catastrophe Containment and Relief Trust (CCRT), a donor response. The IMF is tapping its Catastrophe Containment and Relief Trust (CCRT), a donor
country trust fund at the IMF, to cover six months of debt payments owed by 29 lowcountry trust fund at the IMF, to cover six months of debt payments owed by 29 low -income -income
countries to the IMF. The IMF also created a new a new Short-term Liquidity Line.countries to the IMF. The IMF also created a new a new Short-term Liquidity Line.~~389~~313 It is a It is a
revolving and renewable backstop for member countries with very strong economic policies in revolving and renewable backstop for member countries with very strong economic policies in
need of short-term and moderate financial support, and intends to support a country’s liquidity need of short-term and moderate financial support, and intends to support a country’s liquidity
309 For more information, see CRS Report R46342, COVID-19: Role of the International Financial Institutions, by Rebecca M. Nelson and Martin A. Weiss. 310 Remarks by IMF Managing Director Kristalina Georgieva During the G20 Finance Ministers and Central Bank Governors Meeting, International Monetary Fund, April 15, 2020. 311 IMF Managing Director Kristalina Georgieva’s Statement Following a G20 Ministerial Call on the Coronavirus Emergency, March 23, 2020. Some policy experts estimate the IMF’s current maximum lending capacity is about $787 billion. 312 IMF Lending Tracker, https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker. 313 “IMF Adds Liquidity Line to Strengthen COVID-19 Response,” International Monetary Fund, April 15, 2020. Congressional Research Service 98 Global Economic Effects of COVID-19 buffers. The IMF also adopted proposals to accelerate Board consideration of member financing buffers. The IMF also adopted proposals to accelerate Board consideration of member financing
requests for emergency financing and doubled (to about $100 requests for emergency financing and doubled (to about $100 ~~bil ion~~billion) access to IMF emergency ) access to IMF emergency
assistance. The International Monetary Fund (IMF) is providing funding to poor and emerging assistance. The International Monetary Fund (IMF) is providing funding to poor and emerging
market economies that are short on financial resources.market economies that are short on financial resources.~~390~~314 If the economic effects of the virus If the economic effects of the virus
persist, countries may need to be proactive in coordinating fiscal and monetary policy responses, persist, countries may need to be proactive in coordinating fiscal and monetary policy responses,
similar to actions taken by of the G-20 following the 2008-2009 global financial crisis. similar to actions taken by of the G-20 following the 2008-2009 global financial crisis.
For FY2021, the Administration had requested authorization for about $38 For FY2021, the Administration had requested authorization for about $38 ~~bil ion~~ billion for a for a
supplemental fund at the IMF (the New Arrangements to Borrow [NAB]). In March 2020, supplemental fund at the IMF (the New Arrangements to Borrow [NAB]). In March 2020,
Congress enacted this authorization in the Coronavirus Aid, Relief, and Economic Security Act Congress enacted this authorization in the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act, P.L. 116-136) as a way to bolster IMF resources available to support countries (CARES Act, P.L. 116-136) as a way to bolster IMF resources available to support countries
during the pandemic. There is ongoing debate about whether member countries should contribute during the pandemic. There is ongoing debate about whether member countries should contribute
additional resources to the IMF, whether the IMF should raise funds by additional resources to the IMF, whether the IMF should raise funds by ~~sel ing~~selling a portion of its a portion of its
gold holdings, and whether the IMF should enact policies to buffer member state reserves, gold holdings, and whether the IMF should enact policies to buffer member state reserves,
through a process through a process ~~cal ed~~called an SDR an SDR ~~al ocation~~allocation. .
World Bank and Regional Development Banks
The World Bank, which finances economic development projects in middle- and low-income The World Bank, which finances economic development projects in middle- and low-income
countries, among other activities, is mobilizing its resources to support developing countries countries, among other activities, is mobilizing its resources to support developing countries
during the COVID-19 pandemic.during the COVID-19 pandemic.~~391~~315 As of June 1, 2020, the World Bank had approved, or was in As of June 1, 2020, the World Bank had approved, or was in
the process of approving, 150 COVID-19 projects, totaling $15 the process of approving, 150 COVID-19 projects, totaling $15 ~~bil ion~~billion, in 99 countries., in 99 countries.~~392~~316
Examples of approved projects include $47 Examples of approved projects include $47 ~~mil ion~~million for the Democratic Republic of Congo to for the Democratic Republic of Congo to
support containment strategies, train medical staff, and provide equipment for diagnostic testing support containment strategies, train medical staff, and provide equipment for diagnostic testing
to ensure rapid case detection; $11.3 to ensure rapid case detection; $11.3 ~~mil ion~~million for Tajikistan to expand intensive care capacity; $20 for Tajikistan to expand intensive care capacity; $20
~~mil ion~~ million for Haitifor Haiti to support diagnostic testing, rapid response teams, and outbreak containment; and $1 billion for India to support screening, contract tracing, and laboratory diagnostics, procure personal protective equipment, and set up new isolation wards, among other projects.317 Over the next 15 months, the World Bank Group estimates it could deploy as much as $160 billion to respond to the COVID-19 pandemic, more than double the amount it committed in FY2019. In April ~~to support diagnostic testing, rapid response teams, and outbreak containment;~~

~~Governors Meeting, International Monetary Fund, April 15, 2020.~~
~~387 IMF Managing Director Kristalina Georgieva’s Statement Following a G20 Ministerial Call on the Coronavirus~~
~~Emergency, March 23, 2020. Some policy experts estimate the IMF’s current maximum lending capacity is about $787~~
~~billion.~~
~~388 IMF Lending T racker, https://www.imf.org/en/T opics/imf-and-covid19/COVID-Lending-T racker.~~
~~389 “IMF Adds Liquidity Line to Strengthen COVID-19 Response,” International Monetary Fund, April 15, 2020.~~
~~390 Politi, James, “ IMF Sets Aside $50bn for Covid-19-Hit Countries,” Financial Times, March 4, 2020,~~
~~https://www.ft.com/content/83c07594-5e3a-11ea-b0ab-339c2307bcd4.~~
~~391 Remarks by World Bank Group President David Malpass on G20 Finance Ministers Conference Call on COVID -19,~~
~~March 23, 2020.~~
~~392 https://maps.worldbank.org/. Accessed on June 1, 2020.~~
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~~and $1 bil ion for India to support screening, contract tracing, and laboratory diagnostics, procure~~
~~personal protective equipment, and set up new isolation wards, among other projects.393~~
~~Over the next 15 months, the World Bank Group estimates it could deploy as much as $160~~
~~bil ion to respond to the COVID-19 pandemic, more than double the amount it committed in~~
~~FY2019. In April~~ 2020, the World Bank also announced its plans to establish a new multi-donor 2020, the World Bank also announced its plans to establish a new multi-donor
trust fund to help countries prepare for disease outbreaks, the Health Emergency Preparedness trust fund to help countries prepare for disease outbreaks, the Health Emergency Preparedness
and Response Multi-Donor Fund (HEPRF).and Response Multi-Donor Fund (HEPRF).~~394~~318 The new fund is to complement, and augment, the The new fund is to complement, and augment, the
~~$160 bil ion~~ $160 billion of financing provided by the World Bank. of financing provided by the World Bank.
In addition to the World Bank, which has a near-global membership and operates in many sectors In addition to the World Bank, which has a near-global membership and operates in many sectors
in developing countries worldwide, a number of in developing countries worldwide, a number of ~~smal er~~smaller and more specialized multilateral and more specialized multilateral
development banks (MDBs) are also mobilizingdevelopment banks (MDBs) are also mobilizing resources in response to the COVID-19 resources in response to the COVID-19
pandemic. The United States is a member of a number of pandemic. The United States is a member of a number of ~~regional y~~ regionally focused MDBs, including the focused MDBs, including the
African Development Bank, the Asian Development Bank, the European Bank for Reconstruction African Development Bank, the Asian Development Bank, the European Bank for Reconstruction
314 Politi, James, “IMF Sets Aside $50bn for Covid-19-Hit Countries,” Financial Times, March 4, 2020, https://www.ft.com/content/83c07594-5e3a-11ea-b0ab-339c2307bcd4. 315 Remarks by World Bank Group President David Malpass on G20 Finance Ministers Conference Call on COVID-19, March 23, 2020. 316 https://maps.worldbank.org/. Accessed on June 1, 2020. 317 World Bank, “World Bank Group Launches First Operations for COVID-19 (Coronavirus) Emergency Health Support, Strengthening Developing Country Response,” Press Release, April 2, 2020. 318 World Bank, “World Bank Group to Launch New Multi-donor Trust Fund to help Countries Prepare for Disease Outbreaks,” Press Release, April 17, 2020. Congressional Research Service 99 Global Economic Effects of COVID-19 and Development, and the Inter-American Development Bank, as well as the functionally~~and Development, and the Inter-American Development Bank, as wel as the functional y~~ focused focused
International Fund for Agricultural Development. The United States does not belong to some International Fund for Agricultural Development. The United States does not belong to some
MDBs, including the Chinese-led Asian Infrastructure Investment Bank and the New MDBs, including the Chinese-led Asian Infrastructure Investment Bank and the New
Development Bank created by the BRICS countries (Brazil, Russia, India, China, and South Development Bank created by the BRICS countries (Brazil, Russia, India, China, and South
Africa), the European Investment Bank, or the Islamic Development Bank. Africa), the European Investment Bank, or the Islamic Development Bank.
In response to COVID-19, MDBs are reprogramming existing projects, establishing and funding In response to COVID-19, MDBs are reprogramming existing projects, establishing and funding
with existing resources lending facilities dedicated to the COVID-19 response, and streamlining with existing resources lending facilities dedicated to the COVID-19 response, and streamlining
approval procedures. According to the President of the World Bank, other multilateral approval procedures. According to the President of the World Bank, other multilateral
development banks have committed roughly $80 development banks have committed roughly $80 ~~bil ion~~ billion over the next 15 months to respond to over the next 15 months to respond to
COVID-19.COVID-19.~~395~~319 Together with the World Bank’s commitment of $160 Together with the World Bank’s commitment of $160 ~~bil ion, $240 bil ion~~ billion, $240 billion in in
financing is to be made availablefinancing is to be made available to developing countries from the MDBs during this time to developing countries from the MDBs during this time
period.period.~~396~~320
To support the MDB response to COVID-19, Congress accelerated authorizations requested by To support the MDB response to COVID-19, Congress accelerated authorizations requested by
the Administration for FY2021 for two lending facilities at the World Bank and two lending the Administration for FY2021 for two lending facilities at the World Bank and two lending
facilities at the African Development Bank in the CARES Act (P.L. 116-136). Given the facilities at the African Development Bank in the CARES Act (P.L. 116-136). Given the
unprecedented demand for MDB resources, discussions are underway about whether the MDBs unprecedented demand for MDB resources, discussions are underway about whether the MDBs
should pursue fiduciary reforms that would should pursue fiduciary reforms that would ~~al ow~~allow them to expand their lending based on existing them to expand their lending based on existing
resources, particularly lending against donor country guarantees to the institutions (resources, particularly lending against donor country guarantees to the institutions (~~cal ed~~
~~“cal able~~called “callable” capital). ” capital).
International Economic Cooperation
On March 16, 2020, the leaders of the G-7 countries (Canada, France, Germany, Italy, Japan, the On March 16, 2020, the leaders of the G-7 countries (Canada, France, Germany, Italy, Japan, the
United Kingdom, and the United States) held an emergency summit by teleconference to discuss United Kingdom, and the United States) held an emergency summit by teleconference to discuss
and coordinate their policy responses to the economic and coordinate their policy responses to the economic ~~fal out~~fallout from the global spread of COVID- from the global spread of COVID-
19. In the joint statement released by the G-7 leaders after the emergency teleconference summit, 19. In the joint statement released by the G-7 leaders after the emergency teleconference summit,
the leaders stressed they are committed to doing “whatever is necessary to ensure a strong global the leaders stressed they are committed to doing “whatever is necessary to ensure a strong global

~~393 World Bank, “World Bank Group Launches First Operations for COVID-19 (Coronavirus) Emergency Health~~
~~Support, Strengthening Developing Country Response,” Press Release, April 2, 2020.~~
~~394 World Bank, “World Bank Group to Launch New Multi-donor T rust Fund to help Countries Prepare for Disease~~
~~Outbreaks,” Press Release, April 17, 2020.~~
~~395 David Malpass, “ Remarks to G20 Finance Ministers,” World Bank, April 15, 2020.~~
~~396 World Bank Group President David Malpass: Remarks to G20 Finance Ministers, April 15, 2020.~~
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~~response through closer cooperation and enhanced cooperation of efforts.”397~~response through closer cooperation and enhanced cooperation of efforts.”321 The countries The countries
pledged to coordinate research efforts, increase the availability of medical equipment; mobilize pledged to coordinate research efforts, increase the availability of medical equipment; mobilize
“the full range” of policy instruments, including monetary and fiscal measures as “the full range” of policy instruments, including monetary and fiscal measures as ~~wel~~ well as targeted as targeted
actions, to support workers, companies, and sectors most affected by the spread of COVID-19; actions, to support workers, companies, and sectors most affected by the spread of COVID-19;
task the finance ministers to coordinate on a weekly basis, and direct the IMF and the World Bank task the finance ministers to coordinate on a weekly basis, and direct the IMF and the World Bank
Group, as Group, as ~~wel~~ well as other international organizations, to support countries worldwide as part of a as other international organizations, to support countries worldwide as part of a
coordinated global response.coordinated global response.~~398~~
322 Saudi Arabia, the 2020 chair of the G-20, Saudi Arabia, the 2020 chair of the G-20, ~~cal ed~~called an emergency G-20 summit on March 25 to an emergency G-20 summit on March 25 to
discuss a response to the pandemic.discuss a response to the pandemic.~~399~~323 The G-20 is a broader group of economies, including the The G-20 is a broader group of economies, including the
G-7 countries and several major emerging markets.G-7 countries and several major emerging markets.~~400~~324 During the global financial crisis, world During the global financial crisis, world
leaders decided that henceforth the G-20 would be the premiere forum for international economic leaders decided that henceforth the G-20 would be the premiere forum for international economic
cooperation. Some analysts have been surprised that the G-7 has been in front of the G-20 in cooperation. Some analysts have been surprised that the G-7 has been in front of the G-20 in
319 David Malpass, “Remarks to G20 Finance Ministers,” World Bank, April 15, 2020. 320 World Bank Group President David Malpass: Remarks to G20 Finance Ministers, April 15, 2020. 321 White House, G-7 Leaders’ Statement, March 16, 2020, https://www.whitehouse.gov/briefings-statements/g7-leaders-statement/. 322 Ibid. 323 “Spain Says Saudi Arabia to Cal G-20 to Meet on Covid-19 in Coming Days,” Reuters, March 16, 2020. 324 The G-20 includes the G-7 countries plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, and the European Union (EU). Congressional Research Service 100 Global Economic Effects of COVID-19 responding to COVID-19, while other analysts have questioned whether the larger size and responding to COVID-19, while other analysts have questioned whether the larger size and
diversity of economies in the G-20 can make coordination more difficult.diversity of economies in the G-20 can make coordination more difficult.~~401~~325
Analysts are hopeful that the recent G-7 summit, and a G-20 summit, Analysts are hopeful that the recent G-7 summit, and a G-20 summit, ~~wil~~ will mark a shift towards mark a shift towards
greater international cooperation at the highest (leader) levels in combatting the economic greater international cooperation at the highest (leader) levels in combatting the economic ~~fal out~~
fallout from the spread of COVID-19.from the spread of COVID-19.~~402~~326 An emergency meeting of G-7 finance ministers on March 3, An emergency meeting of G-7 finance ministers on March 3,
2020, 2020, ~~fel~~ fell short of the aggressive and concrete coordinated action that investors and economists short of the aggressive and concrete coordinated action that investors and economists
had been hoping for, and U.S. and European stock markets had been hoping for, and U.S. and European stock markets ~~fel~~ fell after the meeting.after the meeting.~~403~~327 More More
~~general y~~generally, governments have been divided over the appropriate response and in some cases have , governments have been divided over the appropriate response and in some cases have
acted acted ~~unilateral y~~unilaterally, particularly when closing borders and imposing export restrictions on medical , particularly when closing borders and imposing export restrictions on medical
equipment and medicine. Some experts argue that a large, early, and coordinated response is equipment and medicine. Some experts argue that a large, early, and coordinated response is
needed to address the economic needed to address the economic ~~fal out~~fallout from COVID-19, but several concerns loom about the G- from COVID-19, but several concerns loom about the G-
20’s ability to deliver.20’s ability to deliver.~~404~~328 Their concerns focus on the Trump Administration’s prioritization of an Their concerns focus on the Trump Administration’s prioritization of an
“America First” foreign policy over one committed to multilateralism; the 2020 chair of the G-20, “America First” foreign policy over one committed to multilateralism; the 2020 chair of the G-20,
Saudi Arabia, is embroiled in its own domestic political issues and oil price war; and U.S.-China Saudi Arabia, is embroiled in its own domestic political issues and oil price war; and U.S.-China
tensions make G-20 consensus more difficult. tensions make G-20 consensus more difficult.
Meanwhile, international organizations including the IMF and multilateral Meanwhile, international organizations including the IMF and multilateral development banks, development banks,
have tried to forge ahead with economic support given their current resources. have tried to forge ahead with economic support given their current resources. ~~Additional y~~Additionally, the , the
Financial Stability Board (FSB), an international body including the United States that monitors Financial Stability Board (FSB), an international body including the United States that monitors
the global financial system and makes regulations to ensure stability, released a statement on the global financial system and makes regulations to ensure stability, released a statement on
March 20, 2020, that its members are actively cooperating to maintain financial stability during March 20, 2020, that its members are actively cooperating to maintain financial stability during
market stress related to COVID-19.market stress related to COVID-19.~~405~~329 The FSB is encouraging governments to use flexibility The FSB is encouraging governments to use flexibility

~~397 White House, G-7 Leaders’ Statement, March 16, 2020, https://www.whitehouse.gov/briefings-statements/g7-~~
~~leaders-statement/.~~
~~398 Ibid.~~
~~399 “Spain Says Saudi Arabia to Cal G-20 to Meet on Covid-19 in Coming Days,” Reuters, March 16, 2020.~~
~~400 T he G-20 includes the G-7 countries plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia,~~
~~Saudi Arabia, South Africa, South Korea, T urkey, and the European Union (EU).~~
~~401 For more information about the G-20, see CRS Report R40977,~~ ~~International Economic Policy Coordination at the~~
~~G-7 and the G-20, by Rebecca M. Nelson.~~
~~402 See for example, Jennifer Rankin, “EU Leaders Divided on How to Protect Economies after Covid-19,”~~ ~~The~~
~~Guardian, March 14, 2020.~~
~~403 Jack Ewing and Jeanna Smialek, “Economic Powers Vow to Fight Crisis,” New York Times, March 3, 2020.~~
~~404 Matthew Goodman and Mark Sobel, “T ime to Pull the G-20 Fire Bell,” Center for Strategic and International~~
~~Studies, March 18, 2020.~~
~~405 “FSB Coordinates Financial Sector Work to Buttress the Economy in Response to Covid-19,” Financial Stability~~
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~~within existing international standards to provide continued access to funding for market~~
~~participants and for businesses and households facing temporary difficulties from COVID-19,~~
~~while noting that many FSB members have already taken action to release available c apital and~~
~~liquidity buffers.~~
~~Estimated Effects on Developed and Major~~
~~Economies~~
~~Among most developed and major developing economies, economic growth at the beginning of~~
~~2020 was tepid, but stil was estimated to be positive. Countries highly dependent on trade—~~
~~Canada, Germany, Italy, Japan, Mexico, and South Korea—and commodity exporters are now~~
~~projected to be the most negatively affected by the slowdown in economic activity associated~~
~~with the pandemic.406 In addition, travel bans and quarantines continue to take heavy economic~~
~~toll on a broad range of countries. The OECD notes that production declines in China have~~
~~spil over effects around the world given China’s role in producing computers, electronics,~~
~~pharmaceuticals and transport equipment, and as a primary source of demand for many~~
~~commodities.407 Across Asia, some forecasters argue that recent data indicate that Japan, South~~
~~Korea, Thailand, the Philippines, Indonesia, Malaysia, and Vietnam could experience an~~
~~economic recession in 2020.408~~within existing international standards to provide continued access to funding for market participants and for businesses and households facing temporary difficulties from COVID-19, while noting that many FSB members have already taken action to release available capital and liquidity buffers. Estimated Effects on Developed and Major Economies Among most developed and major developing economies, economic growth at the beginning of 2020 was tepid, but still was estimated to be positive. Countries highly dependent on trade—Canada, Germany, Italy, Japan, Mexico, and South Korea—and commodity exporters are now projected to be the most negatively affected by the slowdown in economic activity associated with the pandemic.330 In addition, travel bans and quarantines continue to take heavy economic toll on a broad range of countries. The OECD notes that production declines in China have spillover effects around the world given China’s role in producing computers, electronics, 325 For more information about the G-20, see CRS Report R40977, International Economic Policy Coordination at the G-7 and the G-20, by Rebecca M. Nelson. 326 See for example, Jennifer Rankin, “EU Leaders Divided on How to Protect Economies after Covid-19,” The Guardian, March 14, 2020. 327 Jack Ewing and Jeanna Smialek, “Economic Powers Vow to Fight Crisis,” New York Times, March 3, 2020. 328 Matthew Goodman and Mark Sobel, “Time to Pull the G-20 Fire Bell,” Center for Strategic and International Studies, March 18, 2020. 329 “FSB Coordinates Financial Sector Work to Buttress the Economy in Response to Covid-19,” Financial Stability Board, Press Release 6/2020, March 20, 2020. 330 OECD Interim Economic Assessment, p. 7. Congressional Research Service 101 Global Economic Effects of COVID-19 pharmaceuticals and transport equipment, and as a primary source of demand for many commodities.331 Across Asia, some forecasters argue that recent data indicate that Japan, South Korea, Thailand, the Philippines, Indonesia, Malaysia, and Vietnam could experience an economic recession in 2020.332
In early January 2020, before the COVID-19 outbreak, economic growth in developing In early January 2020, before the COVID-19 outbreak, economic growth in developing
economies as a whole was projected by the International Monetary Fund (IMF) to be slightly economies as a whole was projected by the International Monetary Fund (IMF) to be slightly
more positive than in 2019. This outlook was based on progress being made in U.S.-China trade more positive than in 2019. This outlook was based on progress being made in U.S.-China trade
talks that were expected to roll back some tariffs and an increase in India’s rate of growth. talks that were expected to roll back some tariffs and an increase in India’s rate of growth.
Growth rates in Latin America and the Middle East were also projected to be positive in 2020.Growth rates in Latin America and the Middle East were also projected to be positive in 2020.~~409~~
333 These projections likely These projections likely ~~wil~~ will be revised downward due to the slowdown in global trade associated be revised downward due to the slowdown in global trade associated
with COVID-19, lower energy and commodity prices, an increase in the foreign exchange value with COVID-19, lower energy and commodity prices, an increase in the foreign exchange value
of the dollar, and other secondary effects that could curtail growth. Commodity exporting of the dollar, and other secondary effects that could curtail growth. Commodity exporting
countries, in particular, likely countries, in particular, likely ~~wil~~ will experience a greater slowdown in growth than forecasted in experience a greater slowdown in growth than forecasted in
earlier projections as a result of a slowdown on trade with China and lower commodity prices. earlier projections as a result of a slowdown on trade with China and lower commodity prices.
Asian Development Bank 2020 Forecast
According to the Asian Development Bank’s (ADB) September 2020 forecast, GDP growth for According to the Asian Development Bank’s (ADB) September 2020 forecast, GDP growth for
developing Asia is projected to contract by 0.7% in 2020, reportedly the first decline in economic developing Asia is projected to contract by 0.7% in 2020, reportedly the first decline in economic
activity in the region in six decades, reflecting the slowdown in global trade and national activity in the region in six decades, reflecting the slowdown in global trade and national
quarantines.quarantines.~~410~~334 Similar to other groups, the ADB’s forecasts indicate progressively more negative Similar to other groups, the ADB’s forecasts indicate progressively more negative
rates of growth over the April through September period, while also forecasting a rebound in rates of growth over the April through September period, while also forecasting a rebound in
growth rates in 2021, including a growth rate of 6.8% in developing Asia. Annual rates of growth growth rates in 2021, including a growth rate of 6.8% in developing Asia. Annual rates of growth
~~in three-fourths of the region’s economies are projected to decline in 2020.~~

~~Board, Press Release 6/2020, March 20, 2020.~~
~~406 OECD Interim Economic Assessment, p. 7.~~
~~407 Ibid., p. 5.~~
~~408 Arnold, Martin Arnold and Valentina Romei, “European Factory Output Plummets as Covid-19 Shutdown Bites,”~~
Financial Tim es, April 1, 2020. https://www.ft.com/content/8646c0ee-8fba-4e4c-a047-cf445ff41cf6.
~~409 Tentative Stabilization, Sluggish Recovery? World Economic Outlook Update, January 20, 2020, T he International~~
~~Monetary Fund. https://www.imf.org/en/Publications/WEO/Issues/2020/01/20/weo-update-january2020.~~
~~410 Asian Development Outlook 2020 Update, Asian Development Bank, September 2020.~~
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in three-fourths of the region’s economies are projected to decline in 2020. ADB sub-regional forecasts indicate that East Asia is projected to experience an ADB sub-regional forecasts indicate that East Asia is projected to experience an ~~overal~~ overall positive positive
rate of growth in 2020, primarily reflecting the dominating influence of the Chinese economy, rate of growth in 2020, primarily reflecting the dominating influence of the Chinese economy,
which is projected to grow by nearly 2% in 2020 and 7% in 2021 as indicated inwhich is projected to grow by nearly 2% in 2020 and 7% in 2021 as indicated in Figure 23. In . In
contrast, Hong Kong, which had already experienced a slowing rate of growth primarily as a contrast, Hong Kong, which had already experienced a slowing rate of growth primarily as a
result of domestic political turmoil and trade issues between the United States and China, was result of domestic political turmoil and trade issues between the United States and China, was
projected to experience a 6.5% decline in economic growth in 2020, but rebound by 5.1% in projected to experience a 6.5% decline in economic growth in 2020, but rebound by 5.1% in
2021. South Asia, which includes India, is projected to experience a decline in its annual GDP 2021. South Asia, which includes India, is projected to experience a decline in its annual GDP
growth rate of 6.8% in 2020, but a positive rate of growth in 2021 by 7.1%, driven in part by a growth rate of 6.8% in 2020, but a positive rate of growth in 2021 by 7.1%, driven in part by a
turn-around in India’s growth rate from -9.0 in 2020 to a positive 8.0% in 2021. Countries in the turn-around in India’s growth rate from -9.0 in 2020 to a positive 8.0% in 2021. Countries in the
region have implemented different measures to contain the spread of the virus, reflecting region have implemented different measures to contain the spread of the virus, reflecting
differences in the extent of viral infections. Across governments within the region, total fiscal differences in the extent of viral infections. Across governments within the region, total fiscal
support totaled $3.6 support totaled $3.6 ~~tril ion~~trillion by the end of August 2020, divided between income support measures by the end of August 2020, divided between income support measures
and measures intended to support liquidity. Similar to other regions and countries, growth and measures intended to support liquidity. Similar to other regions and countries, growth
prospects in developing Asia depend on the length and depth of the health crisis and the prospects in developing Asia depend on the length and depth of the health crisis and the
~~protracted nature of trade tensions between the United States and China.~~
protracted nature of trade tensions between the United States and China. 331 Ibid., p. 5. 332 Arnold, Martin Arnold and Valentina Romei, “European Factory Output Plummets as Covid-19 Shutdown Bites,” Financial Times, April 1, 2020. https://www.ft.com/content/8646c0ee-8fba-4e4c-a047-cf445ff41cf6. 333 Tentative Stabilization, Sluggish Recovery? World Economic Outlook Update, January 20, 2020, The International Monetary Fund. https://www.imf.org/en/Publications/WEO/Issues/2020/01/20/weo-update-january2020. 334 Asian Development Outlook 2020 Update, Asian Development Bank, September 2020. Congressional Research Service 102 Global Economic Effects of COVID-19 Figure 23. Asian Development Bank 2020 and 2021 GDP Forecasts
In percentage change In percentage change

Source: Asian DevelopmentAsian Development Bank. Created by CRS. Bank. Created by CRS.
Emerging Markets
The combined impact of COVID-19, an increase in the value of the dollar, and an oil price war The combined impact of COVID-19, an increase in the value of the dollar, and an oil price war
between Saudi Arabia and Russia are hitting developing and emerging economies hard. Not between Saudi Arabia and Russia are hitting developing and emerging economies hard. Not al all of of
these countries have the resources or policy flexibility to respond effectively. According to figures these countries have the resources or policy flexibility to respond effectively. According to figures
compiled by the Institute for International Finance (IIF), cumulative capital outflows from compiled by the Institute for International Finance (IIF), cumulative capital outflows from
developing countries since January 2020 are double the level experienced during the 2008/2009 developing countries since January 2020 are double the level experienced during the 2008/2009
crisis and crisis and ~~substantial y~~substantially higher than recent market events ( higher than recent market events (Figure 24).).~~411~~

~~411 T hese~~335 335 These include concerns in 2015 over China’s renminbi devaluation and the so include concerns in 2015 over China’s renminbi devaluation and the so -called “-called “~~T aper T antrum~~Taper Tantrum” in 2013 when ” in 2013 when
the Federal Reserve announced that it would slowthe Federal Reserve announced that it would slow ~~down~~ down the pace of its post global financial crisis asset the pace of its post global financial crisis asset ~~purchase s~~purchases. .
SergeiSergei Lanau andLanau and Jonathan Fortun, “Economic Views—Jonathan Fortun, “Economic Views—~~T he~~The COVID-19 Shock to EM Flows,” COVID-19 Shock to EM Flows,” Institute for Institute for
International Finance, March 17, 2020. International Finance, March 17, 2020.
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Figure 24. Capital Flows to Emerging Markets in Global Shocks

Source: OriginalOriginal graphic and data fromgraphic and data from International Institute for Finance using data from Haver. Edited by CRS International Institute for Finance using data from Haver. Edited by CRS
for clarification. for clarification.
The impact of the price war and lower energy demand associated with a COVID-19-related The impact of the price war and lower energy demand associated with a COVID-19-related
economic slowdown is economic slowdown is ~~especial y~~especially hard on oil and gas exporters, some of whose currencies are at hard on oil and gas exporters, some of whose currencies are at
record lows (record lows (Figure 25). Oil importers, such as South Africa and Turkey, have also been hit hard; ). Oil importers, such as South Africa and Turkey, have also been hit hard;
South Africa’s rand has South Africa’s rand has ~~fal en 18%412~~fallen 18%336 against the dollar since the beginning of 2020 and the against the dollar since the beginning of 2020 and the
Turkish lira has lost 8.5%.Turkish lira has lost 8.5%.~~413~~337 Some economists are concerned that the depreciation in currencies Some economists are concerned that the depreciation in currencies
could lead to rising rates of inflation by pushing up the prices of imports and negatively economic could lead to rising rates of inflation by pushing up the prices of imports and negatively economic
growth rates in 2020.growth rates in 2020.~~414~~338
Depending on individual Depending on individual levels of foreign exchange reserves and the duration of the capital flow levels of foreign exchange reserves and the duration of the capital flow
slowdown, some countries may have sufficient buffers to weather the slowdown, while others slowdown, some countries may have sufficient buffers to weather the slowdown, while others
~~wil likely~~ will likely need to make some form of current account adjustment (reduce spending, raise taxes, need to make some form of current account adjustment (reduce spending, raise taxes,
etc.). Several countries, such as Iran and Venezuela, have already asked the IMF for financial etc.). Several countries, such as Iran and Venezuela, have already asked the IMF for financial
assistance and others are likely to follow.assistance and others are likely to follow.~~415~~339 (Venezuela’s request was quickly rebuffed due to (Venezuela’s request was quickly rebuffed due to

~~412~~ 336 Paul Wallace, “Here’s How Paul Wallace, “Here’s How the Oil Crash isthe Oil Crash is Hitting Emerging Market Currencies,” Hitting Emerging Market Currencies,” Bloomberg, March 17, 2020, , March 17, 2020,
https://www.bloomberg.com/news/articles/2020-03-17/here-s-how-the-oil-crash-is-hitting-emerging-market-currencies. https://www.bloomberg.com/news/articles/2020-03-17/here-s-how-the-oil-crash-is-hitting-emerging-market-currencies.
~~413~~337 Nevzat Devranoglu, “ Nevzat Devranoglu, “~~T urkish~~Turkish Lira Hits Weakest Level Since Lira Hits Weakest Level Since 2018 Currency Crisis2018 Currency Crisis ~~Due~~ Due to Covid-19,” to Covid-19,” Nasdaq, ,
March 17, 2020, https://www.nasdaq.com/articles/turkish-lira-hits-weakestMarch 17, 2020, https://www.nasdaq.com/articles/turkish-lira-hits-weakest -level-since-2018-currency-crisis-due-to--level-since-2018-currency-crisis-due-to-
Covid-19-2020-03-17. Covid-19-2020-03-17.
~~414~~ 338 Johnson, Steve, “Currency Sell-Off Johnson, Steve, “Currency Sell-Off ~~T hreatens~~Threatens Emerging Market Response to Covid-19,” Emerging Market Response to Covid-19,” Financial Times, March 3, , March 3,
2020. https://www.ft.com/content/94ad9d70-2ca2-4490-96fb-5b01b509ed37. 2020. https://www.ft.com/content/94ad9d70-2ca2-4490-96fb-5b01b509ed37.
~~415~~339 “COVID-19-Hit Iran Asks IMF for Aid “COVID-19-Hit Iran Asks IMF for Aid amid USamid US Sanctions,” Sanctions,” Deutsche Walle, March 13, 2020, , March 13, 2020,
https://www.dw.com/en/covid-19-hit-iran-asks-imf-for-aid-amid-us-sanctions/a-52763114. Iran is currently under U.S. https://www.dw.com/en/covid-19-hit-iran-asks-imf-for-aid-amid-us-sanctions/a-52763114. Iran is currently under U.S.
sanctions, which include,sanctions, which include, among other things, among other things, ~~prohibitio ns~~prohibitions on the ability of the United States to vote in favor of lending on the ability of the United States to vote in favor of lending
IMF or World Bank assistance to Iran. IMF or World Bank assistance to Iran. ~~T he~~The United States, however, cannot unilaterally block lending to a particular United States, however, cannot unilaterally block lending to a particular
country. Approving an IMF or World Bank loan requirescountry. Approving an IMF or World Bank loan requires a majority of the a majority of the ~~t otal~~total voting power and the U.S. voting power and the U.S. voting voting
power is 16.5% of the total voting power at the IMF and 15.4% at the World Bank. Iran has not borrowed from the IMF power is 16.5% of the total voting power at the IMF and 15.4% at the World Bank. Iran has not borrowed from the IMF
since 1962, but didsince 1962, but did ~~borrow~~ borrow from the World Bank between 2003 and 2005 over U.S. opposition. from the World Bank between 2003 and 2005 over U.S. opposition.
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disagreement among the IMF membership over who is recognized as Venezuela’s legitimate disagreement among the IMF membership over who is recognized as Venezuela’s legitimate
leader: Nicolás Maduro or Juan Guaidó.leader: Nicolás Maduro or Juan Guaidó.~~416~~340) )
Figure 25.Depreciation Against the Dollar Since January 1, 2020

Source: Created by CRS. Data from Bloomberg. Created by CRS. Data from Bloomberg.
International Economic Cooperation
InitialInitial efforts at coordinating the economic response to the COVID-19 pandemic across countries efforts at coordinating the economic response to the COVID-19 pandemic across countries
have been uneven. Governments are divided over the appropriate response and in some cases have been uneven. Governments are divided over the appropriate response and in some cases
have acted have acted ~~unilateral y~~unilaterally, particularly when closing borders and imposing export restrictions on , particularly when closing borders and imposing export restrictions on
medical equipment and medicine. An emergency meeting of G-7 (Canada, France, Germany, medical equipment and medicine. An emergency meeting of G-7 (Canada, France, Germany,
Italy, Japan, the United Kingdom, and the United States) finance ministers on March 3, 2020, Italy, Japan, the United Kingdom, and the United States) finance ministers on March 3, 2020, ~~fel~~
fell short of the aggressive and concrete coordinated action that investors and economists had been short of the aggressive and concrete coordinated action that investors and economists had been
hoping for, and U.S. and European stock markets hoping for, and U.S. and European stock markets ~~fel~~ fell sharply after the meeting.sharply after the meeting.~~417~~341 However, on However, on
March 16, 2020, the leaders of the G-7 countries held an emergency summit by teleconference to March 16, 2020, the leaders of the G-7 countries held an emergency summit by teleconference to
discuss and coordinate their policy responses to the economic discuss and coordinate their policy responses to the economic ~~fal out~~fallout from the global spread of from the global spread of
COVID-19. In the joint statement released by the G-7 leaders after the emergency teleconference COVID-19. In the joint statement released by the G-7 leaders after the emergency teleconference
summit, the leaders stressed they are committed to doing “whatever is necessary to ensure a summit, the leaders stressed they are committed to doing “whatever is necessary to ensure a
strong global response through closer cooperation and enhanced cooperation of efforts.”strong global response through closer cooperation and enhanced cooperation of efforts.”~~418~~342 The The
countries pledged to coordinate research efforts, increase the availability of medical equipment; countries pledged to coordinate research efforts, increase the availability of medical equipment;
mobilizemobilize “the full range” of policy instruments, including monetary and fiscal measures as “the full range” of policy instruments, including monetary and fiscal measures as ~~wel~~ well as as
targeted actions, to support workers, companies, and sectors most affected by the spread of targeted actions, to support workers, companies, and sectors most affected by the spread of
COVID-19; task the finance ministers to coordinate on a weekly basis, and direct the IMF and the COVID-19; task the finance ministers to coordinate on a weekly basis, and direct the IMF and the
World Bank Group, as World Bank Group, as ~~wel~~ well as other international organizations, to support countries worldwide as other international organizations, to support countries worldwide
as part of a coordinated global response.as part of a coordinated global response.~~419~~343 G-7 coordination has not been unproblematic G-7 coordination has not been unproblematic
however, including disagreement among G-7 foreign affairs ministers about how to refer to the however, including disagreement among G-7 foreign affairs ministers about how to refer to the
virus (coronavirus or the “Wuhan virus”) and concerns about collaboration on vaccine research.virus (coronavirus or the “Wuhan virus”) and concerns about collaboration on vaccine research.~~420~~

~~416~~344 340 Joshua Goodman, “ Joshua Goodman, “ IMF Rejects Maduro’sIMF Rejects Maduro’s ~~Bid~~ Bid for Emergency Loan to Fight Virus,”for Emergency Loan to Fight Virus,” StarTribune, ,
http://www.startribune.com/venezuela-seeks-emergency-5-billion-imf-loan-to-fight-virus/568868442/. http://www.startribune.com/venezuela-seeks-emergency-5-billion-imf-loan-to-fight-virus/568868442/.
~~417~~ 341 Jack Ewing Jack Ewing and Jeanna Smialek,and Jeanna Smialek, “Economic Powers Vow“Economic Powers Vow to Fight Crisis,”to Fight Crisis,” New York Times, March 3, 2020. , March 3, 2020.
~~418~~342 White House, G-7 White House, G-7 Leaders’ Statement, March 16, 2020, https://www.whitehouse.gov/briefings-statements/g7-Leaders’ Statement, March 16, 2020, https://www.whitehouse.gov/briefings-statements/g7-
leaders-statement/. leaders-statement/.
~~419~~343 Ibid. Ibid.
~~420~~344 “Pompeo, G-7 Foreign Ministers Spar over ‘Wuhan Virus’,” “Pompeo, G-7 Foreign Ministers Spar over ‘Wuhan Virus’,” Politico, March 25, 2020; Katrin Bennhold and David , March 25, 2020; Katrin Bennhold and David
E. Sanger,E. Sanger, “U.S. Offered ‘Large Sum’“U.S. Offered ‘Large Sum’ to German Company for Access to Coronavirus Vaccine Research, German to German Company for Access to Coronavirus Vaccine Research, German
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link to page link to page ~~120~~111 link to page link to page ~~120~~111 Global Economic Effects of COVID-19

The United States is chairing the G-7 in 2020, and while the June summit at Camp David had The United States is chairing the G-7 in 2020, and while the June summit at Camp David had
been canceled due to concerns about COVID-19, on May 20, President Trump indicated that the been canceled due to concerns about COVID-19, on May 20, President Trump indicated that the
summit may be held after summit may be held after al all. .
The G-20, which has a broader membership of major advanced and emerging-market economies The G-20, which has a broader membership of major advanced and emerging-market economies
representing 85% of world GDP, was slower to respond to the pandemic.representing 85% of world GDP, was slower to respond to the pandemic.~~421~~345 Even though G-20 Even though G-20
coordination is widely viewed as critical in the response to the global financial crisis of 2008-coordination is widely viewed as critical in the response to the global financial crisis of 2008-
2009, several factors may have complicated G-20 coordination in the current context: the Trump 2009, several factors may have complicated G-20 coordination in the current context: the Trump
Administration’s prioritization of an “America First” foreign policy over one committed to Administration’s prioritization of an “America First” foreign policy over one committed to
multilateralism;multilateralism; the 2020 chair of the G-20, Saudi Arabia, is embroiled in its own domestic the 2020 chair of the G-20, Saudi Arabia, is embroiled in its own domestic
political issues and oil price war; and U.S.-China tensions make G-20 consensus more difficult.political issues and oil price war; and U.S.-China tensions make G-20 consensus more difficult.~~422~~346
The G-20 held a summit by teleconference on March 26, 2020, but the resulting communique was The G-20 held a summit by teleconference on March 26, 2020, but the resulting communique was
criticized for failing to include concrete action items beyond what national governments were criticized for failing to include concrete action items beyond what national governments were
already doing.already doing.~~423~~347 However, G-20 coordination appears to be gaining momentum, most notably However, G-20 coordination appears to be gaining momentum, most notably
with the G-20 agreement on debt relief for low-income countries (seewith the G-20 agreement on debt relief for low-income countries (see “Looming Debt Crises and
Debt Relief Efforts”). ).
Meanwhile, international organizations including the IMF and multilateral Meanwhile, international organizations including the IMF and multilateral development banks, development banks,
have tried to forge ahead with economic support given their current resources. have tried to forge ahead with economic support given their current resources. ~~Additional y~~Additionally, the , the
Financial Stability Board (FSB), an international body including the United States that monitors Financial Stability Board (FSB), an international body including the United States that monitors
the global financial system and makes regulations to ensure stability, released a statement on the global financial system and makes regulations to ensure stability, released a statement on
March 20, 2020, that its members are actively cooperating to maintain financial stability during March 20, 2020, that its members are actively cooperating to maintain financial stability during
market stress related to COVID-19.market stress related to COVID-19.~~424~~348 The FSB is encouraging governments to use flexibility The FSB is encouraging governments to use flexibility
within existing international standards to provide continued access to funding for market within existing international standards to provide continued access to funding for market
participants and for businesses and households facing temporary difficulties from COVID-19, participants and for businesses and households facing temporary difficulties from COVID-19,
while noting that many FSB members have already taken action to release availablewhile noting that many FSB members have already taken action to release available capital and capital and
~~liquidity~~ liquidity buffers. buffers.
Looming Debt Crises and Debt Relief Efforts
COVID-19 could trigger a wave of defaults around the world.COVID-19 could trigger a wave of defaults around the world.~~425~~349 In Q3 2019—before the In Q3 2019—before the
outbreak of COVID-19—global debt levels reached an outbreak of COVID-19—global debt levels reached an al all-time high of nearly $253 -time high of nearly $253 ~~tril ion~~trillion, about , about
320% of global GDP.320% of global GDP.~~426~~350 About 70% of global debt is held by advanced economies and about 30% About 70% of global debt is held by advanced economies and about 30%
is held by emerging markets. is held by emerging markets. ~~Global y~~Globally, most debt is held by nonfinancial corporations (29%), , most debt is held by nonfinancial corporations (29%),
governments (27%) and financial corporations (24%), followed by households (19%). Debt in governments (27%) and financial corporations (24%), followed by households (19%). Debt in

~~Officials Say,” New York T imes, March 15, 2020.~~
~~421 T he G-20 includes the G-7 countries plus~~ Officials Say,” New York Times, March 15, 2020. 345 The G-20 includes the G-7 countries plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia,
SaudiSaudi Arabia,Arabia, South Africa, South Korea, South Africa, South Korea, ~~T urkey~~Turkey, and the European Union (EU)., and the European Union (EU).
~~422~~ 346 Matthew Goodman and Mark Sobel, Matthew Goodman and Mark Sobel, ~~“T ime~~ “Time to Pull the G-20 Fire Bell,” Center for Strategic and International to Pull the G-20 Fire Bell,” Center for Strategic and International
Studies,Studies, March 18, 2020. March 18, 2020.
~~423~~347 Matthew Goodman, Stephanie Segal, Matthew Goodman, Stephanie Segal, and Mark Sobel,and Mark Sobel, “Assessing“Assessing the G20 Virtualthe G20 Virtual Summit,” Center for Strategic Summit,” Center for Strategic
and International Studies, March 27, 2020. and International Studies, March 27, 2020.
~~424~~ 348 “FSB “FSB Coordinates Financial Sector Work to Buttress the Economy in Response to Covid-19,” Financial Stability Coordinates Financial Sector Work to Buttress the Economy in Response to Covid-19,” Financial Stability
Board, Press Release 6/2020, March 20, 2020. Board, Press Release 6/2020, March 20, 2020.
~~425~~349 John Plender, “ John Plender, “~~T he~~The Seeds of the Next Debt Crisis,” Seeds of the Next Debt Crisis,” Financial Times, March 4, 2020. , March 4, 2020.
~~426~~350 Emre Emre ~~T iftik~~Tiftik, Khadija Mahmood, Jadranka Poljak, and Sonja Gibbs,, Khadija Mahmood, Jadranka Poljak, and Sonja Gibbs, “Global Debt Monitor: Sustainability Matters,” “Global Debt Monitor: Sustainability Matters,”
Institute for International Finance, January 13, 2020.This includes debt heldInstitute for International Finance, January 13, 2020.This includes debt held by governments, financial institutions, by governments, financial institutions,
nonfinancial institutions, and households. nonfinancial institutions, and households.
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emerging markets has nearly doubled since 2010, primarily driven by borrowing from state- emerging markets has nearly doubled since 2010, primarily driven by borrowing from state-
owned enterprises. owned enterprises.
High debt levels make borrowers vulnerable to shocks that disrupt revenue and inflows of new High debt levels make borrowers vulnerable to shocks that disrupt revenue and inflows of new
financing. The disruption in economic activity associated with COVID-19 is a wide-scale financing. The disruption in economic activity associated with COVID-19 is a wide-scale
exogenous shock that exogenous shock that ~~wil~~ will make it significantly more difficult for many private borrowers make it significantly more difficult for many private borrowers
(corporations and households) and public borrowers (governments) around the world to repay (corporations and households) and public borrowers (governments) around the world to repay
their debts. COVID-19 has hit the revenue of corporations in a range of industries: factories are their debts. COVID-19 has hit the revenue of corporations in a range of industries: factories are
ceasing production, brick-and-mortar retail stores and restaurants are closing, commodity prices ceasing production, brick-and-mortar retail stores and restaurants are closing, commodity prices
have plunged (Bloomberg commodity price index—a basket of oil, metals, and food prices—has have plunged (Bloomberg commodity price index—a basket of oil, metals, and food prices—has
dropped 27% since the start of the year and is now at its lowest level since 1986), and overseas dropped 27% since the start of the year and is now at its lowest level since 1986), and overseas
and in some cases domestic travel is being curtailed.and in some cases domestic travel is being curtailed.~~427~~351 Some governments, including Argentina Some governments, including Argentina
and Lebanon, were already experiencing debt pressures, which have been exacerbated by the and Lebanon, were already experiencing debt pressures, which have been exacerbated by the
pandemic. Other countries are facing new debt pressures created by the pandemic, while some pandemic. Other countries are facing new debt pressures created by the pandemic, while some
countries, such as Abu Dhabi and Egypt, have completed successful sovereign bond sales since countries, such as Abu Dhabi and Egypt, have completed successful sovereign bond sales since
the outbreak of the pandemic.the outbreak of the pandemic.~~428~~352
Households are facing a rapid increase in unemployment and, in many developing countries, a Households are facing a rapid increase in unemployment and, in many developing countries, a
decline in remittances. With fewer resources, corporations and households may default on their decline in remittances. With fewer resources, corporations and households may default on their
debts, absent government intervention. These defaults debts, absent government intervention. These defaults ~~wil~~ will result in a decline in bank assets, result in a decline in bank assets,
making it difficult for banks to extend new loans during the crisis or, more severely, creating making it difficult for banks to extend new loans during the crisis or, more severely, creating
solvency problems for banks. Meanwhile, many governments are solvency problems for banks. Meanwhile, many governments are ~~dramatical y~~dramatically increasing increasing
spending to combat the pandemic, and are likely to face sharp reductions in revenue, putting spending to combat the pandemic, and are likely to face sharp reductions in revenue, putting
pressure on public finances and raising the likelihoodpressure on public finances and raising the likelihood of sovereign (government) defaults. Debt of sovereign (government) defaults. Debt
dynamics are particularly problematic in emerging economies, where debt obligations dynamics are particularly problematic in emerging economies, where debt obligations
denominated in foreign currencies (denominated in foreign currencies (~~usual y~~usually U.S. dollars). Many emerging market currencies have U.S. dollars). Many emerging market currencies have
depreciated since the outbreak of the pandemic, raising the value of their debts in terms of local depreciated since the outbreak of the pandemic, raising the value of their debts in terms of local
currency. currency.
Governments Governments ~~wil~~ will face difficult choices if there is a widespread wave of defaults. Most face difficult choices if there is a widespread wave of defaults. Most
governments have signaled a commitment to or already implemented policies to support those governments have signaled a commitment to or already implemented policies to support those
~~economical y~~economically impacted by the pandemic. These governments face decisions about the type of impacted by the pandemic. These governments face decisions about the type of
assistance to provide (loans versus direct payments), the amount of assistance to provide, how to assistance to provide (loans versus direct payments), the amount of assistance to provide, how to
~~al ocate~~allocate rescue funds, and what conditions if any to attach to funds. Governments have rescue funds, and what conditions if any to attach to funds. Governments have
undertaken extraordinary fiscal and monetary measures to combat the crisis. However, undertaken extraordinary fiscal and monetary measures to combat the crisis. However,
developing countries that are constrained by limited financial resources and where health systems developing countries that are constrained by limited financial resources and where health systems
could quickly become overloaded are particularly vulnerable. could quickly become overloaded are particularly vulnerable.
In terms of defaults by governments (sovereign defaults), emergency assistance is In terms of defaults by governments (sovereign defaults), emergency assistance is ~~general y~~generally
provided by the IMF, and sometimes paired with additional rescue funds from other governments provided by the IMF, and sometimes paired with additional rescue funds from other governments
on a bilateral basis. The IMF and other potential donor countries on a bilateral basis. The IMF and other potential donor countries ~~wil~~ will need to consider whether need to consider whether
the IMF has adequate resources to respond to the crisis, how to the IMF has adequate resources to respond to the crisis, how to ~~al ocate~~allocate funding if the demand for funding if the demand for
funding exceeds the amount available, what conditions should be attached to rescue funding, and funding exceeds the amount available, what conditions should be attached to rescue funding, and
whether IMF programs should be paired with a restructuring of the government’s debt (“burden whether IMF programs should be paired with a restructuring of the government’s debt (“burden
sharing” with private investors). sharing” with private investors).
International efforts are underway to help the most vulnerable developing countries grapple with International efforts are underway to help the most vulnerable developing countries grapple with
debt pressures. In mid-April 2020, the IMF tapped its Catastrophe Containment and Relief Trust debt pressures. In mid-April 2020, the IMF tapped its Catastrophe Containment and Relief Trust
(CRRT), funded by donor countries, to provide grants to cover the debt payments of 25 poor and (CRRT), funded by donor countries, to provide grants to cover the debt payments of 25 poor and

~~427~~ 351 “Covid-19 Worsens Debt Crisis “Covid-19 Worsens Debt Crisis in Poor Countries,” Jubileein Poor Countries,” Jubilee Debt Campaign, March 22, 2020.Debt Campaign, March 22, 2020.
~~428 T rieu~~ 352 Trieu Pham, “EM Sovereign Debt Issuance: Pham, “EM Sovereign Debt Issuance: Encouraging SignsEncouraging Signs but Not Yet Back to Businessbut Not Yet Back to Business as Usual,”as Usual,” ING, May , May
26, 2020. 26, 2020.
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vulnerable countries to the IMF for six months. The IMF hopes that additional donor vulnerable countries to the IMF for six months. The IMF hopes that additional donor
contributions contributions ~~wil al ow~~will allow this debt service relief to be extended for two years. this debt service relief to be extended for two years. ~~Additional y~~Additionally, the G-, the G-
20 finance ministers agreed to suspend debt service payments for the world’s poorest countries 20 finance ministers agreed to suspend debt service payments for the world’s poorest countries
through the end of 2020. The Institute for International Finance (IIF), which represents 450 through the end of 2020. The Institute for International Finance (IIF), which represents 450
banks, hedge funds, and other global financial funds, also announced that private creditors banks, hedge funds, and other global financial funds, also announced that private creditors ~~wil~~
will join the debt relief effort on a voluntary basis. This debt join the debt relief effort on a voluntary basis. This debt ~~standstil wil~~ standstill will free up more than $20 free up more than $20
~~bil ion~~ billion for these countries to spend on improving their health systems and fighting the for these countries to spend on improving their health systems and fighting the
pandemic.pandemic.~~429~~353 Private sector commitments were critical for official creditors, so that developing Private sector commitments were critical for official creditors, so that developing
countries could redirect funds to improving health systems rather than repaying private creditors. countries could redirect funds to improving health systems rather than repaying private creditors.
However, the debt However, the debt ~~standstil~~ standstill is complicated. There is debate among creditor governments about is complicated. There is debate among creditor governments about
what debts should be included in the what debts should be included in the ~~standstil~~ standstill, and how it can be enforced. On May 1, the IIF in a , and how it can be enforced. On May 1, the IIF in a
letter laid out some of the obstacles facing private sector participation in the debt letter laid out some of the obstacles facing private sector participation in the debt ~~stil~~ still, including , including
reliance on “voluntary” participation, each participating creditor reliance on “voluntary” participation, each participating creditor ~~wil~~ will need to make its own need to make its own
assessments, the assessments, the ~~standstil~~ standstill could require a lengthy contract-by-contract approach, and the could require a lengthy contract-by-contract approach, and the
participating borrowing countries may face risks, such as rating downgrades and inability to participating borrowing countries may face risks, such as rating downgrades and inability to
borrow from financial markets (often referred to as “loss of market access”). Some economists borrow from financial markets (often referred to as “loss of market access”). Some economists
have characterized the letter as a list of reasons private creditors may cite as justification for their have characterized the letter as a list of reasons private creditors may cite as justification for their
refusal to participate in the debt refusal to participate in the debt ~~standstil .430~~standstill.354 Reportedly, some African countries are opting to Reportedly, some African countries are opting to
negotiate debt relief negotiate debt relief ~~individual y~~ individually with China and other creditor nations because of concerns they with China and other creditor nations because of concerns they
~~wil~~ will be blocked from financial markets if they participate in the G-20 debt be blocked from financial markets if they participate in the G-20 debt ~~standstil .431~~standstill.355
Other Affected Sectors
Public concerns over the spread of the virus Public concerns over the spread of the virus ~~have~~ led to self-quarantines, reductions in airline and led to self-quarantines, reductions in airline and
cruise liner travel, the closing of such institutions as the Louvre, and the rescheduling of theatrical cruise liner travel, the closing of such institutions as the Louvre, and the rescheduling of theatrical
releases of movies, including the sequel in the iconic James Bond series (titled, “No Time to releases of movies, including the sequel in the iconic James Bond series (titled, “No Time to
Die”).Die”).~~432~~356 School closures have affected 1.5 School closures have affected 1.5 ~~bil ion~~billion children worldwide, children worldwide, ~~chal enging~~challenging parental leave parental leave
policies.policies.~~433~~357 Other countries Other countries ~~have~~ limited the size of public gatherings. limited the size of public gatherings.
Some businesses are considering new approaches to managing their workforces and work Some businesses are considering new approaches to managing their workforces and work
methods. These techniques build on, or in some places replace, such standard techniques as self-methods. These techniques build on, or in some places replace, such standard techniques as self-
quarantines and travel bans. Some firms are adopting an open-leave policy to ensure employees quarantines and travel bans. Some firms are adopting an open-leave policy to ensure employees
receive sick pay if they are, or suspect they are, infected. Other firms are adopting paid sick leave receive sick pay if they are, or suspect they are, infected. Other firms are adopting paid sick leave
policies to encourage sick employees to stay home and are adopting remote working policies.policies to encourage sick employees to stay home and are adopting remote working policies.~~434~~

~~429~~358 353 Davide Barbuscia, Davide Barbuscia, Marwa Rashad,Marwa Rashad, and Andrea Shalal,and Andrea Shalal, “G20 Countries Agree Debt Freeze for World’s Poorest “G20 Countries Agree Debt Freeze for World’s Poorest
Countries,” Countries,” Reuters, April 15, 2020 , April 15, 2020
~~430~~354 Patrick Bolton, Lee Buchheit, Pierre-Olivier Gourinchas, et. al, “Sovereign Debt Standstills: Patrick Bolton, Lee Buchheit, Pierre-Olivier Gourinchas, et. al, “Sovereign Debt Standstills: An Update” An Update” VoxEU, ,
May 28, 2020. May 28, 2020.
~~431~~355 Jevans Nyabiage, “All Eyes on China as Africa Spurns Jevans Nyabiage, “All Eyes on China as Africa Spurns G20 Debt Relief Plan,” G20 Debt Relief Plan,” South China Morning Post, May 26, , May 26,
2020. 2020.
~~432~~ 356 Rosenberg, Rosenberg, Alyssa, “Covid-19 Shut Down Mona Lisa and James Bond. We Can’t Let it Isolate Us,” Alyssa, “Covid-19 Shut Down Mona Lisa and James Bond. We Can’t Let it Isolate Us,” Washington
Post, March 4, 2020. https://www.washingtonpost.com/opinions/2020/03/04/Covid-19-shut-down-mona-lisa-james- March 4, 2020. https://www.washingtonpost.com/opinions/2020/03/04/Covid-19-shut-down-mona-lisa-james-
bond-we-cantbond-we-cant -let-it-isolate-us/. -let-it-isolate-us/.
~~433 T aylor~~357 Taylor, Adam, , Adam, ~~T eo~~Teo Armus, Rick Noak, “Covid-19 Armus, Rick Noak, “Covid-19 ~~T urmoil~~Turmoil Widens as U.S. Widens as U.S. ~~Death T oll~~ Death Toll Mounts; Xi Cancels Japan Mounts; Xi Cancels Japan
~~T rip~~Trip,” ,” Washington Post, March 5, 2020; Strauss, Valerie,, March 5, 2020; Strauss, Valerie, “ “1.5 Billion Children Around Globe1.5 Billion Children Around Globe Affected by School Affected by School
Closure.Closure. What Countries Are Doing to Keep KidsWhat Countries Are Doing to Keep Kids Learning During Pandemic,” Learning During Pandemic,” Washington Post, March 27, 2020. , March 27, 2020.
https://www.washingtonpost.com/education/2020/03/26/nearly-14-billion-children-around-globe-are-out-school-heres-https://www.washingtonpost.com/education/2020/03/26/nearly-14-billion-children-around-globe-are-out-school-heres-
whatwhat -countries-are-doing-keep-kids-learning-during-pandemic/. -countries-are-doing-keep-kids-learning-during-pandemic/.
~~434~~ 358 Hill, Andrew Hill, Andrew and Emma Jacobs,and Emma Jacobs, “Covid-19 May Create Lasting Workplace Change,” “Covid-19 May Create Lasting Workplace Change,” Financial Times, February 27, , February 27,
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Microsoft and Amazon Microsoft and Amazon ~~initial y instructed al~~ initially instructed all of their Seattle-based employees to work from of their Seattle-based employees to work from
home until the end of March 2020, but Microsoft indicated in October it would home until the end of March 2020, but Microsoft indicated in October it would ~~al ow~~allow a large a large
share of its employees to work from home permanently.share of its employees to work from home permanently.~~435~~359
The drop in business and tourist travel caused a sharp drop in scheduled airline flights by as much The drop in business and tourist travel caused a sharp drop in scheduled airline flights by as much
as 10%; airlines estimated they lost $113 as 10%; airlines estimated they lost $113 ~~bil ion~~ billion in 2020 (an estimate that could prove optimistic in 2020 (an estimate that could prove optimistic
given the Trump Administration’s announced restrictions on flights from Europe to the United given the Trump Administration’s announced restrictions on flights from Europe to the United
States and the growing list of countries that are similarly restricting flights),States and the growing list of countries that are similarly restricting flights),~~436~~360 while airports in while airports in
Europe estimated they lost $4.3 Europe estimated they lost $4.3 ~~bil ion~~ billion in revenue due to fewer flights.in revenue due to fewer flights.~~437~~361 Industry experts Industry experts
estimated that many airlinesestimated that many airlines could face bankruptcy in 2020 under current conditions as a result of could face bankruptcy in 2020 under current conditions as a result of
travel restrictions imposed by a growing number of countries.travel restrictions imposed by a growing number of countries.~~438~~362 The loss of Chinese tourists was The loss of Chinese tourists was
another economic blow to countries in Asia and elsewhere that benefitted from the growing another economic blow to countries in Asia and elsewhere that benefitted from the growing
market for Chinese tourists and the stimulus such tourism provided. market for Chinese tourists and the stimulus such tourism provided.
The decline in industrial activity reduced demand for energy products such as crude oil, causing The decline in industrial activity reduced demand for energy products such as crude oil, causing
prices to drop sharply, which negatively affects energy producers, renewable energy producers, prices to drop sharply, which negatively affects energy producers, renewable energy producers,
and electric vehicle manufacturers, but and electric vehicle manufacturers, but ~~general y~~generally is positive for consumers and businesses. Saudi is positive for consumers and businesses. Saudi
Arabia pushed other OPEC (Organization of the Petroleum Exporting Countries) members Arabia pushed other OPEC (Organization of the Petroleum Exporting Countries) members
collectively to reduce output by 1.5 collectively to reduce output by 1.5 ~~mil ion~~million barrels a day to raise market prices. U.S. shale oil barrels a day to raise market prices. U.S. shale oil
producers, who are not represented by OPEC, support the move to raise prices.producers, who are not represented by OPEC, support the move to raise prices.~~439 An~~
~~unwil ingness~~363 An unwillingness by Russia to agree to output reductions added to other downward pressures on oil by Russia to agree to output reductions added to other downward pressures on oil
prices and caused Saudi Arabia to engage in a price war with Russia that drove oil prices below prices and caused Saudi Arabia to engage in a price war with Russia that drove oil prices below
$25 per barrel at times, half the estimated $50 per barrel break-even point for most oil producing $25 per barrel at times, half the estimated $50 per barrel break-even point for most oil producing
countries.countries.~~440~~364 Rising oil supplies and Rising oil supplies and ~~fal ing~~ falling demand combined to create an estimated surplus of 25 demand combined to create an estimated surplus of 25
~~mil ion~~ million barrels a day and overwhelmed storage capacity at times and barrels a day and overwhelmed storage capacity at times and ~~chal enged~~challenged the viability the viability of of
U.S. shale oil production.U.S. shale oil production.~~441~~365 In 2019, low energy prices combined with high debt levels reportedly In 2019, low energy prices combined with high debt levels reportedly
caused U.S. energy producers to reduce their spending on capital equipment, reduced their profits caused U.S. energy producers to reduce their spending on capital equipment, reduced their profits
and, in some cases, led to bankruptcies.and, in some cases, led to bankruptcies.~~442~~366 Reportedly, in late 2019 and early 2020, bond and Reportedly, in late 2019 and early 2020, bond and

2020. https://www.ft.com/content/5801a710-597c-11ea-abe5-8e03987b7b20. 2020. https://www.ft.com/content/5801a710-597c-11ea-abe5-8e03987b7b20.
~~435~~ 359 Armus, Armus, ~~T eo, “~~ Teo, “Live Updates: Covid-19 Live Updates: Covid-19 ~~T urmoil~~Turmoil Widens as U.S. Widens as U.S. Death Death ~~T oll~~Toll Mounts; Xi Cancels Mounts; Xi Cancels ~~Japan T rip~~ Japan Trip,”,”
Washington Post, March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/Covid-19-live-updates/. , March 5, 2020, https://www.washingtonpost.com/world/2020/03/05/Covid-19-live-updates/.
~~436 T aylor~~360 Taylor, Adam, “Airlines Could, Adam, “Airlines Could ~~Suffer~~ Suffer up to $113 Billion in Lost Revenue Dueup to $113 Billion in Lost Revenue Due to Covid-19 Crisis,to Covid-19 Crisis, ~~IAT A~~ IATA Says,” Says,”
Washington Post, March 5, 2020. https://www.washingtonpost.com/world/2020/03/05/Covid-19-live-updates/. , March 5, 2020. https://www.washingtonpost.com/world/2020/03/05/Covid-19-live-updates/.
~~437~~361 “Airlines Slash “Airlines Slash Flights to Cut Costs as Covid-19 Hits Flights to Cut Costs as Covid-19 Hits ~~T ravel~~Travel Demand,” Demand,” Financial Times. https://www.ft.com/. https://www.ft.com/
content/c28b5790-62c6-11ea-a6cd-df28cc3c6a68. content/c28b5790-62c6-11ea-a6cd-df28cc3c6a68.
~~438~~ 362 Smyth, Jamie Smyth, Andrew Smyth, Jamie Smyth, Andrew Edgecliffe-Johnson, Peggy Hollinger, Myles McCormick, David Keohane, and Edgecliffe-Johnson, Peggy Hollinger, Myles McCormick, David Keohane, and
Richard Milne, “Richard Milne, “ Most Airlines Face Bankruptcy by End of May, Industry Body Warns,Most Airlines Face Bankruptcy by End of May, Industry Body Warns, ” ” Financial ~~Tim es~~Times, March 16, March 16,
2020. 2020.
~~439~~363 Brower, Derek, “ Brower, Derek, “ Cash-Strapped USCash-Strapped US Shale Producers Pray for OPEC Aid,”Shale Producers Pray for OPEC Aid,” Financial Times, March 3, 2020. , March 3, 2020.
https://www.ft.com/content/9161e62c-5cb1-11ea-b0ab-339c2307bcd4. https://www.ft.com/content/9161e62c-5cb1-11ea-b0ab-339c2307bcd4.
~~440~~364 Strauss, Strauss, Delphine, “Why Delphine, “Why ~~T here~~There Are No Winners from the Oil Price Plunge Are No Winners from the Oil Price Plunge ~~T his T ime~~This Time,” ,” Financial Times, March 10, March 10,
2020. https://www.ft.com/content/da2b0700-622c-11ea-b3f3-fe4680ea68b5; Mufson, Steve and Will Englund,2020. https://www.ft.com/content/da2b0700-622c-11ea-b3f3-fe4680ea68b5; Mufson, Steve and Will Englund, “ “Oil Oil
Price War Price War ~~T hreatens~~Threatens Widespread Collateral Damage,” Widespread Collateral Damage,” Washington Post, March 10, 2020. , March 10, 2020.
https://www.washingtonpost.com/climate-environment/oil-price-war-threatens-widespread-collateral-damage/2020/03/https://www.washingtonpost.com/climate-environment/oil-price-war-threatens-widespread-collateral-damage/2020/03/
09/3e42c9e2-6207-11ea-acca-80c22bbee96f_story.html. 09/3e42c9e2-6207-11ea-acca-80c22bbee96f_story.html.
~~441~~365 Sheppard, David and Derek Brower, “U.S. Crude Sheppard, David and Derek Brower, “U.S. Crude Oil Price Drops BelowOil Price Drops Below $20,” $20,” Financial Times, March 29, 2020. , March 29, 2020.
https://www.ft.com/content/bc938195-82d3-43eb-b031-740028451382. https://www.ft.com/content/bc938195-82d3-43eb-b031-740028451382.
~~442 “T exas~~366 “Texas Oil Groups: Oil Groups: Panhandling Ahead,” Panhandling Ahead,” The Financial Times, January 20, 2020. , January 20, 2020.
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equity investors, as equity investors, as ~~wel~~ well as banks, reduced their lending to shale oil producers and other energy as banks, reduced their lending to shale oil producers and other energy
producers that producers that ~~typical y~~typically use oil and gas reserves as collateral. use oil and gas reserves as collateral.~~443~~367
Disruptions to industrial activity in China reportedly caused delays in shipments of computers, Disruptions to industrial activity in China reportedly caused delays in shipments of computers,
~~cel~~ cell phones, toys, and medical equipment.phones, toys, and medical equipment.~~444~~368 Factory output in China, the United States, Japan, Factory output in China, the United States, Japan,
and South Korea and South Korea al all declined in the first months of 2020.declined in the first months of 2020.~~445~~369 Reduced Chinese agricultural exports, Reduced Chinese agricultural exports,
including to Japan, are leading to shortages in some commodities. In addition, numerous auto including to Japan, are leading to shortages in some commodities. In addition, numerous auto
producers have faced shortages in parts and other supplies that have been sourced in China. producers have faced shortages in parts and other supplies that have been sourced in China.
Reductions in international trade have also affected ocean freight prices. Some freight companies Reductions in international trade have also affected ocean freight prices. Some freight companies
argue they could be forced to shutter if prices did not rebound quickly.argue they could be forced to shutter if prices did not rebound quickly.~~446~~370 Disruptions in the Disruptions in the
movements of goods and people reportedly caused some companies to reassess how international movements of goods and people reportedly caused some companies to reassess how international
they want their supply chains to be.they want their supply chains to be.~~447~~371 According to some estimates, nearly every member of the According to some estimates, nearly every member of the
Fortune 1000 has been affected by disruptions in production in China.Fortune 1000 has been affected by disruptions in production in China.~~448~~372
Conclusions
The quickly evolving nature of the COVID-19 crisis continues to raise a number of issues that The quickly evolving nature of the COVID-19 crisis continues to raise a number of issues that
make it difficult to estimate the full cost to global economic activity. These issues include, but are make it difficult to estimate the full cost to global economic activity. These issues include, but are
not limited to the following: not limited to the following:
 How long  How long ~~wil~~ will the crisis last? the crisis last?
 How many workers  How many workers ~~wil~~ will be affected both temporarily and permanently? be affected both temporarily and permanently?
 How many countries  How many countries ~~wil~~ will be infected and how much economic activity be infected and how much economic activity ~~wil~~ will be be
reduced? reduced?
 When  When ~~wil~~ will the economic effects peak? the economic effects peak?
 How much economic activity  How much economic activity ~~wil~~ will be lost in the short run and over the long term be lost in the short run and over the long term
as a result of the viral outbreak? as a result of the viral outbreak?
 What have been the most effective monetary and fiscal policies at the national  What have been the most effective monetary and fiscal policies at the national
and global level to address the crisis? and global level to address the crisis?
  ~~Wil~~ Will the crisis have temporary or permanent effects on how businesses organize the crisis have temporary or permanent effects on how businesses organize
their work forces? their work forces?
 Many of the public health measures taken by countries such as Italy, Taiwan,  Many of the public health measures taken by countries such as Italy, Taiwan,
South Korea, Hong Kong, and China have sharply impacted their economies South Korea, Hong Kong, and China have sharply impacted their economies
(with plant closures, travel restrictions, and so forth). How are government and (with plant closures, travel restrictions, and so forth). How are government and
policymakers weighing the tradeoffs between public health and the economic policymakers weighing the tradeoffs between public health and the economic
impact of policies to contain the spread of the virus? impact of policies to contain the spread of the virus?

~~443 Ibid.~~
~~444~~ 367 Ibid. 368 Hille, Kathrin, Alistair Gray, and Patrick McGee, “Covid-19 Delays PC and Smartphone Shipments for Weeks,” Hille, Kathrin, Alistair Gray, and Patrick McGee, “Covid-19 Delays PC and Smartphone Shipments for Weeks,”
Financial ~~Tim es~~Times, March3, 2020. https://www.ft.com/content/72742872-5c31-11ea-b0ab-339c2307bcd4. March3, 2020. https://www.ft.com/content/72742872-5c31-11ea-b0ab-339c2307bcd4.
~~445~~369 Newmyer, Newmyer, ~~T ory, “~~ Tory, “The Finance 202: Stocks Stage Major Comeback, butThe Finance 202: Stocks Stage Major Comeback, but Manufacturing Report Points to Continued Manufacturing Report Points to Continued
Covid-19 Pain,” Covid-19 Pain,” Washington Post, March 3, 2020. https://www.washingtonpost.com/news/powerpost/paloma/the-, March 3, 2020. https://www.washingtonpost.com/news/powerpost/paloma/the-
finance-202/2020/03/03/the-finance-202-stocks-stage-major-comeback-but-manufacturing-reportfinance-202/2020/03/03/the-finance-202-stocks-stage-major-comeback-but-manufacturing-report -points-to-continued--points-to-continued-
Covid-19-pain/5e5d84a6602ff10d49ac081f/?itid=hp_hp-cards_hp-card-politics%3Ahomepage%2Fcard-ans. Covid-19-pain/5e5d84a6602ff10d49ac081f/?itid=hp_hp-cards_hp-card-politics%3Ahomepage%2Fcard-ans.
~~446~~370 Lynch, David J., “ Lynch, David J., “ Economic Fallout from China’s Covid-19 Mounts AroundEconomic Fallout from China’s Covid-19 Mounts Around the World,” the World,” Washington Post,
February 13, 2020. https://www.washingtonpost.com/business/economy/economic-falloutFebruary 13, 2020. https://www.washingtonpost.com/business/economy/economic-fallout -from-chinas-Covid-19--from-chinas-Covid-19-
mounts-across-the-globe/2020/02/13/7bb69a12-4e8c-11ea-9b5c-eac5b16dafaa_story.html?itid=lk_inline_manual_12 mounts-across-the-globe/2020/02/13/7bb69a12-4e8c-11ea-9b5c-eac5b16dafaa_story.html?itid=lk_inline_manual_12
~~447 Ibid.~~
~~448 Ibid.~~
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~~Appendix. Table A-1. Select Measures Implemented~~
~~and Announced by Major Economies in Response~~
~~to COVID-19~~
~~United States~~
~~U.S. Federal Reserve~~
March 3: Cut the target range for the federal funds rate by 0.5 percentage point.
March 12: Expanded reverse repo operations, adding $1.5 tril ion of liquidity to the
~~banking system.~~
March 15: Cut the target range for the federal funds rate by a ful percentage point
~~to a range of 0.00% to 0.25% and restarted quantitative easing with the purchase of at~~
~~least $500 bil ion in Treasury securities and $200 bil ion in mortgage-backed~~
~~securities.~~
March 16: Increased reverse repo operations by another $500 bil ion.
March 17: U.S. Treasury Secretary Mnuchin approved the Federal Reserve’s creation
~~of a “Commercial Paper Funding Facility," (CPFF) through March 17, 2021, wh ich wil~~
~~al ows the Fed to create a corporation which can purchase commercial paper, short-~~
~~term, unsecured loans made by businesses for everyday expenses and authorized up~~
~~to $10 bil ion from the Treasury to help cover loan losses incurred under this~~
~~program.~~
March 17: Relaunched the Primary Dealer Credit Facility (PDCF) for at least six
~~months. Starting March 20, the PDCF wil offer short-term loans to banks secured by~~
~~col ateral such as municipal bonds or investment-grade corporate debt.~~
March 18: Launched the Money Market Mutual Fund Liquidity Facility (MMLF)
~~through the end of September, a new program to lend money to banks so they can~~
~~purchase assets from money market funds. Treasury is offering up to $10 bil ion to~~
~~cover loan losses the Fed incurs from the program.~~
March 23: Announced a series of measures designed to stabilize markets, enhance
~~liquidity and stimulate growth. The measures included the rol out of 2 new facilities,~~
~~the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan~~
~~issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide~~
~~liquidity for outstanding corporate bonds. The FOMC removed its caps on planned~~
~~QE purchases and wil now purchase Treasuries and agency mortgage-backed~~
~~securities “in the amounts needed to support smooth market functioning and~~
~~effective transmission of monetary policy to broader financial conditions and the~~
~~economy.”~~

~~U.S. Congress~~
March 5: Passed, and the President signed, a bil providing $8.3 bil ion in emergency
~~funding for federal agencies to respond to the COVID-19 outbreak (H.R. 6074:~~
~~COVID-19 Preparedness and Response Supplemental Appropriations Act 2020).~~
March 13: The House of Representatives passed a COVID-19 response package
~~(H.R. 6201; P.L. 116-127, Families First COVID-19 Response Act); measure was~~
~~signed by President Trump on March 18, 2020. The measure appropriates about $100~~
~~bil ion and includes tax credits for employers offering paid sick leave and increases to~~
~~unemployment benefits and food assistance.~~
March 19: The Senate introduced the COVID-19 Aid, Relief, and Economic Security
~~Act (S. 3548) to provide $2.0 tril ion in assistance to businesses and workers.~~
March 27: Passed, and the President signed, the COVID-19 Aid, Relief, and
~~Economic Security Act (CARES Act, H.R. 748, P.L. 116-136), a $2.1 tril ion fiscal~~
~~stimulus package. It includes $454 bil ion in loans for businesses, $349 bil ion in loans~~
~~for smal businesses, $300 bil ion for direct payments of $1,200 each for lower- and~~
~~middle-income individual taxpayers (and $500 for each child), $250 bil ion for~~
~~unemployment insurance, and $221 bil ion in tax deferrals, among other measures.~~
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March 30: Some Members of the House of Representatives announced they had
~~begun work on a fourth COVID-19 bil targeting a number of issues, including short~~
~~supplies of medical equipment and protective gear to enhance worker protections,~~
~~infrastructure needs, and additional payments to individuals.~~

~~Trump Administration~~
March 13: President Trump declared a state of emergency, al owing the Federal
~~Government to distribute up to $50 bil ion in aid to states, cities, and territories.~~
March 17: The Internal Revenue Service postponed the April 15 tax-payment
~~deadline for 90 days and wil waive interest and penalties. (The extension and waiver~~
~~is available only to individuals and corporations that owe $1 mil ion or $10 mil ion or~~
~~less, respectively.)~~
March 17: Administration officials begin negotiations with Members of Congress on
~~a third stimulus package.~~
March 31: President Trump cal s for $2 tril ion infrastructure spending, possibly as
~~part of fourth COVID-19 stimulus bil .~~
~~Albania~~
~~The Bank of Albania~~
March 25: Cut its benchmark interest rate to a record-low 0.5% and its one-day
~~lending rate to 0.9% on to help lending in the economy affected by the COVID-19~~
~~outbreak. It also announced that it would inject unlimited liquidity into the banking~~
~~sector, ensure the normal functioning of the electronic payments system, and that,~~
~~together with the government, it had agreed to postpone until the end of May al loan~~
~~repayments by businesses and individuals facing difficulties due to the outbreak.~~

~~Government of Albania~~
March 20: Passed measures totaling $370 mil ion in its budget to soften the impact
~~from the COVID-19 crisis, including $25 mil ion for the health sector; guarantees~~
~~worth $100 mil ion to companies unable to pay their employees; and $65 mil ion to~~
~~help the needy, smal businesses, and those unable to work because of stay-at-home~~
~~orders. It also announced that it would write off penalties on delayed electricity bil~~
~~payments worth some $150 mil ion, postpone taxes on company profits, and cut the~~
~~wages of government ministers and lawmakers by half for the duration of the crisis.~~
~~Argentina~~
~~Central Bank of Argentina~~
March 19: Indicated that it would lower reserve requirements for banks that
~~extended special credit lines to smal and medium-sized enterprises at a maximum~~
~~annual interest rate of 24% in a bid to offset the impact of COVID-19.~~

~~Government of Argentina~~
March 19: Announced a fiscal stimulus package of 700 bil ion pesos ($11.3 bil ion) to
~~mitigate the impact of the COVID-19 and support the economy. The main measures~~
~~include providing credit to productive activities (350 bil ion pesos), increasing public~~
~~investments (100 bil ion pesos), and waiving payrol taxes for firms affected by the~~
~~COVID-19.~~
~~Armenia~~
March 17: The Central Bank of Armenia cut its key refinancing rate by 25 basis
~~points to 5.25% from 5.5% due to the effects of the COVID-19 outbreak on the~~
~~economy.~~
~~Australia~~
~~Reserve Bank of Australia~~
March 3: Cut its benchmark interest rate by 25 basis points to 0.5% due to the
~~significant effect of the COVID-19 outbreak on the Australian economy.~~
March 19: Cut its cash rate by 25 basis points to 0.25% and and introduced a series
~~of measures: (1) targeting the 3-year government bond yield at 0.25% via purchases in~~
~~the secondary market, (2) providing a three-year term funding facility to authorized~~
~~deposit-taking institutions worth at least AU$90 bil ion at a fixed rate of 0.25%,~~
~~aiming to support credit to smal and medium-sized enterprises, (3) fixing the~~
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~~exchange settle balances at the central bank at 10 basis points. It wil also continue to~~
~~provide liquidity by conducting one-month and three-month repo operations until~~
~~further notice. Longer-term repo operations of six-month maturity or longer would~~
~~be undertaken at least weekly. The central bank also set out forward guidance, saying~~
~~that it wil not increase the cash rate until progress is made towards ful employment~~
~~and confident that inflation is sustainably within its target band.~~
March 19: Through its daily money market operation, it has injected cash into the
~~banking system (through repurchasing agreements), aiming to ease liquidity~~
~~constraints in the stressed bond market: AU$12.7 bil ion (March 19), AU$10.7 bil ion~~
~~(March 18), AU$8.8 (March 17), AU$5.9 bil ion (March 16), and AU$8.8 (March 13).~~

~~Government of Australia~~
March 12: Announced a AU$17.6 bil ion ($11.4 bil ion) stimulus package that
~~includes support for business investment, cash flow assistance for smal and medium~~
~~sized business and employees, and household stimulus payments.~~
March 16: The Australian Securities and Investments Commission ordered large
~~equity market participants to reduce their number of executed trades by 25% from~~
~~the levels executed on March 13, 2020, until further notice.~~
March 19: Announced that the Australian Office of Financial Management (AOFM)
~~wil be provided with an investment capacity of $15 bil ion to enable smal er lenders~~
~~to continue supporting Australian consumers and smal businesses. (AOFM wil be~~
~~able to purchase residential mortgage backed securities and invest in a range of other~~
~~asset backed securities and warehouse facilities over the next 12 months.)~~
March 22: Announced an additional AU$66.4 bil ion ($38.5 bil ion) fiscal package,
~~which extends income support measures for existing welfare and newly unemployed~~
~~workers, and boosted previously announced measures for businesses such as cash~~
~~flow and wage subsidies. The government is also expected to give local businesses~~
~~AU$100,000 if the company has a turnover of less than AU$50 mil ion each year and~~
~~underwrite 50% of up AU$40 bil ion in loans offered by local lenders to smal and~~
~~medium sized companies.~~
March 30: Unveiled an economic package of AU$130 bil ion ($79.85 bil ion) to
~~subsidize the wages of an estimated 6 mil ion people, marking a third tranche of~~
~~stimulus designed to limit the fal out of the COVID-19 pandemic on the country’s~~
~~economy. The “job keeper” al owance, which would bring the country’s COVID-19-~~
~~related stimulus so far to A$320 bil ion (about 15% of Australia’s gross domestic~~
~~product), wil provide eligible companies with AU$1,500 every fortnight for six~~
~~months for each employee. Any company that lost 30% of its revenue can apply for~~
~~the funds.~~
~~Austria~~
~~Government of Austria~~
March 14: Set up an initial 4 bil ion euro ($4.4 bil ion) “corona crisis fund” to cover,
~~among other things, benefits for affected workers, as wel as bridge loans and credit~~
~~guarantees to shore up businesses’ liquidity.~~
March 18: Announced that it wil spend up to 38 bil ion euros ($42 bil ion) to secure
~~jobs and keep companies afloat, and it wil provide another 9 bil ion euros in~~
~~guarantees and warranties, 15 bil ion euros in emergency aid, and 10 bil ion euros in~~
~~tax deferrals.~~
~~Bosnia and~~
March 17: The prime minister met with the IMF Resident Representative in Bosnia
~~Herzegovina~~
~~to request assistance from the IMF. The IMF indicated that it may extend a 165~~
~~mil ion euros ($181 mil ion) loan to Bosnia under a Rapid Financing Instrument (RFI)~~
~~to finance the increasing costs sustained by the country’s health system in combating~~
~~COVID-19.~~
~~Brazil~~
~~Central Bank of Brazil~~
March 18: Cut its benchmark interest rate by 50 basis points to 3.75% to cushion
~~the economic blow of the COVID-19 pandemic. It also sold $830 mil ion in two~~
~~rounds of spot foreign exchange intervention and announced a repurchase program~~
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~~for dol ar-denominated sovereign bonds held by Brazilian banks, which wil be carried~~
~~out in conjunction with the Treasury.~~
March 23: Announced that it planned to inject 1.2 tril ion reais ($233.81 bil ion) into
~~the country’s financial system to counteract the effects of the COVID-19 outbreak,~~
~~with more than half that amount comprising loans to banks. Under the program,~~
~~lenders wil be able to package their loan portfolios into long-term deposits to be~~
~~acquired by the central bank in a move aimed at freeing up 670 bil ion reais for fresh~~
~~loans. It also (1) cut long-term reserve requirements to 17% from 25%, freeing up 68~~
~~bil ion reais currently in compulsory deposits with the central bank to banks, (2)~~
~~announced measures al owing smal and mid-sized lenders to issue up to 2 bil ion~~
~~reais in special long-term bonds guaranteed by a privately held deposit insurance fund,~~
~~limited to an amount equivalent to its shareholders’ equity, and (3) wil extend loans~~
~~backed by corporate bonds to financial institutions between March 23 and April 30 to~~
~~add liquidity to their investment funds.~~

~~Government of Brazil~~
March 16: Announced a fiscal stimulus package of 147.1 bil ion reais ($28.6 bil ion)
~~to mitigate the impact of the COVID-19 and boost the economy. It does not contain~~
~~new money, but is a range of measures that aim to protect the most vulnerable~~
~~population through social assistance payments (83.4 bil ion reais), support domestic~~
~~companies and defer business taxes (59.4 bil ion reais), and increase investments in~~
~~healthcare to combat the COVID-19 (4.5 bil ion reais). The government also~~
~~announced a 3.1 bil ion reais boost to the “Bolsa Família” assistance for some of~~
~~Brazil’s poorest families.~~
March 16: The National Monetary Council (CMN) approved the measures that wil
~~al ow banks to (1) increase loans and offer better terms to firms and households over~~
~~the next six months and (2) extend certain loan maturities for the next six months. It~~
~~also lowered capital requirements for banks.~~
April 1: Announced that it wil cut the IOF financial tax for 90 days. It wil be
~~temporary and cost 7 bil ion reais. It wil also extend the deadline for submitting the~~
~~2019 base year net income report to June 30 from April 30 and al ow companies to~~
~~postpone payment of certain tax contributions for two months and reduce wages by~~
~~up to 70% (or the minimum wage) for three months, among other measures.~~
~~Bulgaria~~
~~Government of Bulgaria~~
March 30: Announced it wil spend more than 1 bil ion levs ($566 mil ion) to pay
~~part of workers’ salaries in companies whose operations have been hit by the~~
~~COVID-19 crisis, part of part of an overal 4.5 bil ion-lev package.~~
March 31: Announced plans to raise the ceiling on new debt it can raise to 10 bil ion
~~levs due to the COVID-19 pandemic.~~
~~Cambodia~~
~~Government of Cambodia~~
March 5: Announced that it would al ocate $30 mil ion to finance Cambodia’s
~~COVID-19 screening and monitoring efforts.~~
March 10: Al ocated between $800 mil ion to $2 bil ion to address the economic
~~impacts of the novel COVID-19 outbreak.~~
~~Canada~~
~~Bank of Canada~~
March 4: Lowered its target for the overnight rate by 50 basis points to 1.25%
~~(setting the bank rate to 1.5% and the deposit rate to 1%).~~
March 12: Announced that it wil broaden the scope of the current Government of
~~Canada bond buyback program and temporarily add new Term Repo operations.~~
March 13: Lowered its benchmark overnight rate to 1.25% from 1.75% in response
~~to the epidemic.~~
March 13: Announced its intention to launch the Bankers’ Acceptance Purchase
~~Facility (BAPF), starting the week of March 23, 2020, in an effort to support the~~
~~continuous functioning of financial markets; it wil conduct secondary market~~
~~purchases of one-month Bankers’ Acceptances issued and guaranteed by any~~
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~~Canadian bank and of sufficiently high quality. BAPF operations wil be conducted~~
~~weekly with the purchase amount and reserve rate being adjusted to reflect market~~
~~conditions. (For the first operation, the Bank of Canada wil purchase up to $10~~
~~bil ion of one-month Bankers’ Acceptances with a reserve rate of the overnight index~~
~~swap rate plus 20 basis points.)~~
March 16: Announced that it wil broaden eligible col ateral for its term repo facility
~~and increase purchases of mortgage-backed securities (Canada Mortgage Bonds).~~
March 27: Cut its overnight interest rate by 50 basis points to 0.25%, its lowest level
~~since June 2010 and the third cut in March, to support an economy hit hard by the~~
~~outbreak of COVID-19. It also announced that it would begin purchases of CA$5~~
~~bil ion per week of Government of Canada securities in the secondary market.~~

~~Canadian Government~~
March 6: Announced an investment of CA$27 mil ion to fund COVID-19 research
~~and accelerate the development, testing, and implementation of measures to deal~~
~~with the COVID-19 outbreak.~~
March 11: Unveiled CA$1 bil ion ($750 mil ion) in funding for vaccine research and
~~health measures.~~
March 13: Established a Business Credit Availability Program (BCAP) to support
~~financing in the private sector through the Business Development Bank of Canada~~
~~(BDC) and Export Development Canada (EDC); it wil al ow BDC and EDC to~~
~~provide more than $10 bil ion of additional support to businesses.~~
March 13: The Office of the Superintendent of Financial Institutions (OSFI) lowered
~~the Domestic Stability Buffer requirement for domestic systemical y important banks~~
~~by 1.25% of risk weighted assets; it wil increase the lending capacity of Canada’s large~~
~~banks and support the supply of credit to the economy by more than CA$300 bil ion.~~
March 25: Almost doubled the value of an aid package previously announced to help
~~people and businesses deal with losses from the COVID-19 outbreak, from CA$27~~
~~bil ion to CA$52 bil ion ($36.6 bil ion). It wil give people affected by the outbreak~~
~~CA$2,000 a month, delay student loan repayments, and defer tax payments, among~~
~~other measures to boost the economy.~~
~~Chile~~
~~Central Bank of Chile~~
March 16: Cut its benchmark rate by 75 basis points to 1% and announced measures
~~to inject liquidity, including al ocating $4 bil ion to purchase inflation-linked bank~~
~~bonds and providing additional credit to banks.~~
March 31: Cut its benchmark interest rate by 50 basis points to 0.50% amid the
~~COVID-19 pandemic.~~

~~Government of Chile~~
March 19: Announced a stimulus package of $11.75 bn to mitigate the negative
~~economic impact of the outbreak of COVID-19 and civil unrest. The measures~~
~~include extending unemployment insurance to those who are sick or unable to work~~
~~from home, delaying tax payments for smal businesses, a cash bonus for~~
~~approximately 2 mil ion workers who lack formal employment, and emergency funds~~
~~for municipalities.~~
~~China~~
~~People’s Bank of China (PBOC)~~
February 3: Expanded reverse repo operations by $174 bil ion; added another $71
~~bil ion on February 4.~~
February 16: Cut the one-year medium-term lending facility rate by 10 basis points.
February 20: Cut the one-year and five-year prime rates by 10 and 5 basis points,
~~respectively.~~
March 13: Lowered bank reserve requirements, freeing up about $79 bil ion to be
~~loaned out.~~
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March 30: Lowered the interest rate on reverse repurchase agreements to 2.20%
~~from 2.40%, as authorities stepped up easing measures to relieve pressure on the~~
~~economy that has been hit hard by the epidemic.~~

~~PRC Government~~
February: Asked banks to extend the terms of business loans and commercial
~~landlords to reduce rents.~~
February 24: The Asian Infrastructure Investment Bank (AIIB) contributed $1
~~mil ion in medical equipment to help China control the spread of COVID-19.~~
February 27: Announced a number of tax relief measures to tackle COVID-19
~~disruption, including a temporary reduction its value-added tax (VAT) and the~~
~~elimination of VAT on medical, catering, accommodation, hairdressing, and laundry~~
~~services as wel as on masks and protective clothing.~~
March: Earmarked $15.9 bil ion to fight the epidemic.
March 21: Announced that it would cut fees on a large scale to stimulate private-
~~sector investment and also accelerate the development of “new infrastructure” to~~
~~help spur the economy.~~
March 19: Reportedly is considering a fiscal stimulus package worth tril ions of yuan
~~to revive the economy amid the COVID-19 pandemic. The ramped-up spending wil~~
~~aim to spur infrastructure investment, backed by as much as 2.8 tril ion yuan ($394~~
~~bil ion) of local government special bonds.~~
March 27: The Communist Party’s Politburo announced that it would step up
~~macroeconomic policy changes and pursue more proactive fiscal policy. It cal ed for~~
~~expanding the budget deficit, issuing more local and national bonds, guiding interest~~
~~rates lower, delaying loan repayments, reducing supply-chain bottlenecks and~~
~~boosting consumption.~~
~~Colombia~~
~~Central Bank of Colombia~~
March 18: Announced a $400 mil ion dol ar to peso swap to take place on March
~~19, and that it would increase the resources available to financial institutions and ease~~
~~rules on which institutions can have access to funds.~~
March 27: Cut its benchmark interest rate by 50 basis points to 3.75% in an effort to
~~boost economic growth amid fal -out from COVID-19.~~

~~Government of Colombia~~
March 18: Announced that it has 14.8 tril ion pesos ($3.65 bil ion) to spend on
~~emergency measures to ease the economic fal out from COVID-19, but it wil not~~
~~take on additional debt to finance the efforts (12.1 tril ion pesos wil come from the~~
~~country’s savings programs). It wil initial y spend 1 tril ion pesos on the healthcare~~
~~system and 500 bil ion pesos on additional payments to social welfare programs for~~
~~families, young people and the elderly, accelerate a plan to return value added tax to~~
~~the neediest Colombians from April, and make 48 tril ion pesos available to give~~
~~credit guarantees to smal and medium-sized businesses and households.~~
~~Congo-Kinshasa~~
March 24: The Central Bank of the Congo cut its base interest rate to 7.5% from
~~(Democratic Republic~~
~~9.0% in order to cushion the economic impact of the COVID-19 outbreak. It wil also~~
~~of the Congo)~~
~~cut mandatory reserve requirements and provide liquidity to banks.~~
~~Cyprus~~
~~Government of Cyprus~~
March 15: Unveiled a 700 mil ion euro support package for companies and workers
~~to deal with the impact of the spread of COVID-19, which includes a temporary VAT~~
~~reduction, support for individuals and companies affected, additional paid sick leave,~~
~~and 100 mil ion euro for the public health sector.~~
March 23: Announced that it is revising the economic package announced on March
~~15. It wil amount to at least 1.5 bil ion euro and include direct support, deferred~~
~~government income in the form of payment suspension of direct and indirect taxes~~
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~~and other fees, as wel as government guarantees (which would not incur a fiscal~~
~~impact unless they materialize).~~
~~Czech Republic~~
~~Czech National Bank~~
March 16: The Czech National Bank lowered its main two-week repo rate by 50
~~basis points to 1.75%, reversing its February rate hike to combat the hit from the~~
~~virus outbreak. It also raised the number of repo operations that provide liquidity to~~
~~banks to three times a week from once, noting that bids would be met with zero~~
~~spread to the repo rate.~~
March 17: Revised the countercyclical capital buffer for exposures located in the
~~Czech Republic to 1.75 %.~~
March 26: Cut its main two-week repo rate by 75 basis points to 1.00% and
~~announced that it was ready to cut interest rates further if needed.~~

~~Government of the Czech Republic~~
March 9: Adopted a number of economic measures, which wil include providing 100
~~bil ion CZK ($3.9 bil ion) in direct support and 900 bil ion CZK ($34.8 bil ion) in~~
~~indirect in the form of guarantees to maintain the employment rate, paying out~~
~~(through the respective employers) 60% of the average contribution base to~~
~~employees affected by the quarantine, supporting employers who continue, despite~~
~~their businesses being shut down, to pay out 100% of the salary to affected~~
~~employees by covering 80% of salary costs (up to 1.2 bil ion CZK), and al ocating 10~~
~~bil ion CZK ($390 mil ion) to the Czech-Moravian Guarantee and Development Bank~~
~~for immediate granting of interest-free loans with a one-year deferral with the~~
~~possibility of a two-year extension for businesses affected by the COVID-19~~
~~(“COVID Loans Program”). (On March 16, the government earmarked another 1~~
~~bil ion CZK to the COVID Loans Program.)~~
March 13: Extended the deadline for the filing of tax returns until 1 July and waived
~~fines stemming from the late submission of tax declarations or reports.~~
March 13: The Czech Banking Association (ČBA) wil al ow banks to voluntarily
~~extend the deadlines on loan and mortgage payments.~~
March 23: Approved a five-fold rise in this year’s budget deficit, as it offers help to
~~businesses hit hard by the COVID-19 outbreak.~~
April 1: Announced that it had approved a scheme for a moratorium of up to six
~~months on consumer, company, and mortgage loan payments to help the country~~
~~through the COVID-19 crisis.~~
~~Denmark~~
~~Danmarks Nationalbank~~
March 12: Released banks’ emergency buffer and wil be offering low interest rate
~~loans to banks.~~
March 26: Injected $2.85 bil ion in loans to Danish banks and financial institutions by
~~auctioning off U.S. dol ars in two loans with a maturity date on April 8 and June 19~~
~~and a cut-off rate of 0.32 and 0.34, respectively.~~
April 1: Sold $750 mil ion worth of its mint 30-year government bonds in an auction
~~that was held a month early to expedite funding of aid packages due to COVID-19~~
~~that is expected to cost the state more than 60 bil ion Danish crowns ($8.8 bil ion).~~

~~Government of Denmark~~
March 10: Wil grant tax breaks to businesses affected by the COVID-19 as part of a
~~series of measures worth $20 bil ion. Large businesses wil be given an additional 30~~
~~days to pay value added tax, while al companies wil be granted four additional~~
~~months to pay their labor contributions. The government is also lifting the ceiling on~~
~~businesses’ tax accounts, so that corporations can avoid paying the negative interest~~
~~rates they are charged when placing cash in the bank.~~
March 12: Indicated that it would release banks’ counter-cyclical capital buffer,
~~freeing about 200 bil ion Danish crowns ($30 bil ion) for lending. Other fiscal~~
~~measures, worth 2.8 bil ion Danish crowns ($416 mil ion), include compensation to~~
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~~companies for salary payments to employees who have fal en il or been quarantined~~
~~due to the COVID-19.~~
March 18: Proposed an economic aid package worth 40 bil ion kroner ($5.8 bil ion)
~~to help smal businesses cover (for three months) most of the losses in revenue and~~
~~some of their fixed expenses as a result of the COVID-19 outbreak. Under the~~
~~program, companies who have seen their revenues decline by 40% or more wil~~
~~receive government grants to help cover between 25% to 80% of their fixed costs,~~
~~and self-employed and smal firms who see their revenues fal more than 30% wil also~~
~~be offered government compensation worth 75% of their normal monthly income.~~
March 31: Announced that it wil postpone by three months around 200,000
~~companies’ deadline of end-May to submit their annual reports in an effort to help~~
~~companies affected by the COVID-19 outbreak.~~
~~Egypt~~
~~Central Bank of Egypt~~
March 16: Cut by 300 basis points both the overnight lending rate (from 13.25% to
~~10.25%) and the overnight deposit rate (from 12.25% to 9.25%) in what it described~~
~~as a “preemptive” move to support the economy in the face of the COVID-19~~
~~outbreak.~~
March 23: Told commercial banks to cut interest on dol ar deposits to 1% above the
~~London Interbank Offered Rate (Libor) instead of 1.5% above Libor, starting March~~
~~23, in order to control the exchange market and reduce the expected dol arization~~
~~operations after cutting interest rates on March 16.~~
March 29: Instructed Egyptian banks to apply temporary limits on daily withdrawals
~~and deposits in a move seemingly designed to control inflation and hoarding during~~
~~the coronavirus’ spread, after 30 bil ion Egyptian pounds ($1.91 bil ion) were~~
~~withdrawn from banks in the past three weeks. The daily limit for individuals would~~
~~be 10,000 Egyptian pounds ($635) and 50,000 pounds for companies.~~

~~Government of Egypt~~
March 14: Indicated that the government wil al ocate 100 bil ion Egyptian pounds
~~($6.4 bil ion) to finance a “comprehensive” state plan for combating the COVID-19~~
~~outbreak.~~
March 22: Announced that the government would al ocate 20 bil ion Egyptian
~~pounds ($1.27 bil ion) to support the stock exchange.~~
March 30: Ordered relevant authorities to boost strategic reserves of staple goods,
~~as global concerns about food security rise amid the COVID-19 crisis.~~
~~Eswatini (Swaziland)~~
March 21: The Central Bank of Eswatini cut its main lending rate by 100 basis points
~~to 5.5%, citing global and domestic economic developments and the impact of~~
~~COVID-19. The reduction was to ensure the equal pegging of the local currency with~~
~~the South African rand after the South African Reserve Bank (SARB) cut its main~~
~~lending rate by 100 basis points to 5.25% on March 19.~~
~~European Union~~
~~European Central Bank (ECB)~~
March 12: Announced that it would provide banks with loans at a rate as low as
~~minus 0.75%, below the-0.5% deposit rate, increase bond purchases by 120 bil ion~~
~~euros ($135.28 bil ion) this year (with a focus on corporate debt), and al ow euro~~
~~zone banks to fal short of some key capital and cash requirements (in order to keep~~
~~credit flowing to the economy).~~
March 18: Launched a new, 750 bil ion euro ($818 bil ion) temporary asset purchase
~~program of private and public sector securities to counter the risks posed by the~~
~~outbreak and escalating diffusion of COVID-19 (the Pandemic Emergency Purchase~~
~~Programme). Purchases wil be conducted until the end of 2020 and wil include al~~
~~the asset categories eligible under the existing asset purchase program. It wil also~~
~~support commercial debt markets by expanding the range of eligible assets under the~~
~~corporate sector purchase program to nonfinancial commercial paper of sufficient~~
~~credit quality, and by easing col ateral standards by expanding the scope of Additional~~
~~Credit Claims to include claims related to the financing of the corporate sector.~~
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March 26: Announced that under the new 750 bil ion euro ($818 bil ion) temporary
~~bond purchase Pandemic Emergency Purchase Program (PEPP), it would not apply~~
~~self-imposed limits on how many bonds it could buy from any single euro zone~~
~~country. Under its long-running asset purchase scheme, the ECB has capped bond~~
~~buys at 33% of each euro zone state’s debt.~~

~~European Commission~~
March 11: Announced a 37 bil ion euro ($41 bil ion) “Corona Investment Fund” that
~~would use “spare” money from the EU budget to help businesses, health-care~~
~~systems, and sectors in need; additional y, the EU’s own investment fund wil~~
~~guarantee 8 bil ion euros ($8.9 bil ion) of loans to 100,000 smal - and medium-sized~~
~~enterprises and affected companies may be able to delay the payment of their existing~~
~~loans.~~
March 19: Adopted a Temporary Framework to enable Member States to use the
~~ful flexibility foreseen under state aid rules to support the economy in the context of~~
~~the COVID-19 outbreak. It provides for five types of aid: (1) direct grants, selective~~
~~tax advantages and advance payments (Member States wil be able to set up schemes~~
~~to grant up to 800,000 euros to a company to address its urgent liquidity needs); (2)~~
~~state guarantees for loans taken by companies from banks; (3) subsidized public loans~~
~~to companies; (4) safeguards for banks that channel state aid to the real economy;~~
~~and (5) short-term export credit insurance.~~
~~Fiji~~
March 18: The Reserve Bank of Fiji cut its Overnight Policy Rate by 25 basis points
~~to 0.25% in order to stimulate demand and cushion the blow to its important tourism~~
~~industry from the global spread of COVID-19.~~
~~France~~
~~Government of France~~
March 12: Pledged more generous guarantees on loans made to smal businesses,
~~more cash for firms struggling to hold on to workers, and a solidarity fund to help~~
~~companies cushion the blow from the COVID-19 outbreak; it also announced that~~
~~the government would be ready to increase funds available to help companies reduce~~
~~workers’ hours, instead of laying them off.~~
March 16: Announced that the government would guarantee 300 bil ion euros in
~~bank loans for smal and medium-sized businesses.~~
March 17: The Autorité des Marchés Financiers (AMF), France’s financial-markets
~~authority, stated that it would forbid short sel ing of stock in 92 companies during the~~
~~March 17 session.~~
March 17: Announced that it would spend 45 bil ion euros ($50 bil ion) to help smal
~~businesses and employees struggling with the COVID-19 outbreak, including through~~
~~an expanded partial-unemployment package in which the state pays the salaries of~~
~~employees who are not needed during the crisis.~~
~~Gambia~~
February 28: The Central Bank of The Gambia lowered its policy rate by 50 basis
~~points to 12.0% amid risks from the COVID-19 outbreak and uncertainty surrounding~~
~~global food prices.~~
~~Georgia~~
April 1: The government announced that it wil put 2 bil ion lari ($606 mil ion) from
~~its state budget toward helping the economy through the COVID-19 pandemic, in~~
~~addition to 351 mil ion lari that wil be al ocated for the healthcare system from the~~
~~state budget. The government wil fund three months’ payments for electricity and~~
~~gas consumption to Georgians who used less than 200 kilowatts of electricity and 200~~
~~cubic meters of gas a month in March, April, and May.~~
~~Germany~~
~~Government of Germany~~
March 13: Pledged to provide unlimited liquidity assistance to German companies hit
~~by the pandemic. (The measure envisages an expansion of loans provided by KfW, the~~
~~state development bank, and wil al ow companies to defer bil ions of euros in tax~~
~~payments.) The Bundestag also expanded the Kurzarbeit or short-time work scheme,~~
~~under which companies that put their workers on reduced hours can receive state~~
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~~support. The government also indicated that it would boost investments by €3.1~~
~~bil ion per year (about $3.5 bil ion) between 2021 and 2024.~~
March 23: Agreed to a package worth more than 750 bil ion euros ($808 bil ion) to
~~mitigate the damage of the COVID-19 outbreak. It includes 156 bil ion euros in debt~~
~~to finance higher social spending, 50 bil ion-euro liquidity fund for self-employed~~
~~people, 600 bil ion-euro rescue fund (400 bil ion euros in guarantees,100 bil ion euros~~
~~in loans through state-run development bank KfW, and 100 bil ion euros earmarked~~
~~for equity stakes in companies). Additional y, the state’s KfW bank has 500 bil ion~~
~~euros available to boost liquidity of German companies.~~
March 30: Announced that, in response to COVID-19, it would expand export loan
~~guarantees on short-term payments to include transactions within the EU and with~~
~~Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, Britain, and the~~
~~United States.~~
~~Ghana~~
March 18: The Bank of Ghana (Ghana’s central bank) cut its interest rate to 14.5%
~~from 16% due to the negative economic impacts it anticipates from the spread of the~~
~~COVID-19.~~
~~Greece~~
~~Government of Greece~~
March 9: Wil suspend the payment of sales taxes due at the end of March (for four
~~months) of social security contributions by companies (until June 30).~~
March 17: Announced a package of up to 2 bil ion euros ($2.20 bil ion) to support
~~businesses fol owing the COVID-19 outbreak~~
March 17: The Hel enic Bank Association wil offer businesses hit by the COVID-19
~~crisis a six-month freeze on loan payments as part of relief efforts to help borrowers~~
~~deal with the economic shutdown.~~
March 30: Announced new tax breaks and economic assistance to thousands of
~~businesses and workers to buffer its economy from a national lockdown triggered by~~
~~the COVID-19 pandemic. The support measures include a one-off benefit for 1.7~~
~~mil ion, or 81% of private sector workers whose jobs are temporarily suspended and~~
~~payment of their social security contributions for 45 days, extend financial aid for the~~
~~self-employed, and suspend VAT and tax arrear payments for 800,000 businesses.~~
~~Guatemala~~
March 29: The government announced that it would use nearly $26 mil ion from an
~~emergency fund to help the country’s neediest families, as measures to combat the~~
~~spread of a COVID-19 impact on the economy and jobs, It plans to withdraw 200~~
~~mil ion quetzals ($25.8 mil ion) from the emergency fund and give families 1,000~~
~~quetzals ($129) to help pay for electricity, water and supplies.~~
~~Hong Kong~~
~~Hong Kong Monetary Authority~~
March 3: Lowered its base rate charged through the overnight discount window by
~~50 basis points to 1.5% after the U.S. Federal Reserve delivered a rate cut of the same~~
~~margin.~~
March 16: Lowered its base rate charged through the overnight discount window to
~~0.86%, after the U.S. Federal Reserve delivered a rate cut. It also cut the level of~~
~~capital buffers it requires financial institutions to hold to 1% from 2% of their risk-~~
~~weighted assets to help companies and lenders weather the impact of the COVID-19~~
~~outbreak.~~

~~Government of Hong Kong~~
February 26: Announced a HK$120 bil ion ($15.4 bil ion) relief package as part of
~~its 2020-2021 budget, including a payment of HK$10,000 ($1,200) to each permanent~~
~~resident of the city 18 or older, paying one month’s rent for people living in public~~
~~housing, cutting payrol , income, property, and business taxes, low-interest,~~
~~government-guaranteed loans for businesses, and an extra month’s worth of~~
~~payments to people col ecting old-age or disability benefits.~~
~~Hungary~~
~~Hungarian National Bank~~
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March 16: Announced emergency steps to help businesses, boosting the range of
~~col ateral it accepts from banks and cal ing on lenders to apply a loan repayment~~
~~moratorium for firms hit by the coronavirus economic fal out. (It said in a statement~~
~~that performing corporate loans in domestic banks’ balance sheets totaled close to~~
~~3.6 tril ion forints, and that it would apply a 30% haircut on those, boostin g the range~~
~~of col aterals that can be used and thus also lifting banks’ lending potential by more~~
~~than 2.5 tril ion forints ($8.10 bil ion)). It also offered to inject forint liquidity into the~~
~~banking system via foreign exchange swaps.~~
March 18: Urged domestic banks to introduce a moratorium on household loan
~~repayments considering the “extraordinary situation” due to the coronavirus crisis,~~
~~and that if banks did not bring in the measure, the Bank would ask the government to~~
~~pass a decree enforcing it. It also announced that it was considering restarting its~~
~~mortgage note buying program to provide more long-term liquidity for the banking~~
~~system and reduce the financing costs of household loans.~~
March 24: Launched new measures to boost liquidity and flagged further steps if
~~needed to prevent long-term damage to the economy from the coronavirus~~
~~pandemic. It moved to pump more money into the banking system by introducing a~~
~~massive fixed-rate col ateralized loan instrument. Lending wil be provided to banks at~~
~~a fixed interest rate in unlimited quantity, to support bank lending and also~~
~~government bond purchases. It also released domestic lenders from the requirement~~
~~to hold a certain level of cash as reserves.~~
April 1: Announced its col ateralized loan tenders, offering liquidity to banks at a
~~fixed rate of 0.9% on various maturities, and that it would offer them to domestic~~
~~open-ended investment funds, in order to support the government securities market~~
~~and the real estate market and help offset the fal out from the coronavirus pandemic.~~

~~Government of Hungary~~
April 4: Created a $2 bil ion special fund to aid the fight against COVID-19 and it wil
~~include contributions from banks and foreign retailers. Hungarian banks wil be~~
~~expected to pay 55 bil ion forints ($163 mil ion) in the fund this year, with~~
~~multinational retailers adding 36 bil ion forints. Local governments wil have to divert~~
~~vehicle taxes amounting to a total of 34 bil ion forints to the fund, while political~~
~~parties wil pay half of their central budget revenue to the fund for a total of 1.2~~
~~bil ion forints.~~
April 6: Announced a stimulus package, which includes subsidized loans to Hungarian
~~companies and funds to preserve jobs. It would amount to 18%-20% of gross~~
~~domestic product (GDP), including National Bank of Hungary programs. The prime~~
~~minister said that the government was ready to pay some of the wage costs of~~
~~companies forced to cut working hours, would support investments with 450 bil ion~~
~~forints ($1.3 bil ion), and would provide targeted support for sectors such as tourism,~~
~~the food industry, and construction. Subsidized loans to companies wil total more~~
~~than 2 tril ion forints, while pensioners wil get one month’s extra pension to be~~
~~disbursed in four tranches from early 2021.~~
~~Iceland~~
~~The Central Bank of Iceland~~
March 11: Cut its benchmark interest rate by 50 basis points to 2.25%, as it tries to
~~al eviate the potential impact of the COVID-19 on its tourism-dependent economy. It~~
~~wil also lower deposit institutions’ average reserve requirement to 0% from 1% to~~
~~ease banks’ liquidity positions.~~
March 18: Cut its key interest rate for the second time in a week by 50 basis points
~~to 1.75% and reduced the banks’ countercyclical capital buffer to 0% from 2%.~~
~~March 23: Announced that it would start buying up treasury bonds in order to boost~~
~~liquidity and support government plans to increase spending to help the economy~~
~~weather the COVID-19 outbreak.~~
~~Government of Iceland~~
March 10: Announced an action plan to respond to the economic impact of COVID-
~~19, which includes deferring taxes and levies, providing temporary relief to the~~
~~tourism industry, and accelerating ongoing and planned infrastructure projects.~~
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March 21: Announced a 230-bil ion-krona ($1.6 bil ion) package (8% of gross
~~domestic product) to cushion the impact of COVID-19 on the economy. It includes~~
~~state guarantees on bridge loans to businesses and the payment of as much as 75% of~~
~~an employee’s lost salaries over the next two-and-a-half months. In addition, public~~
~~projects worth 20 bil ion krona wil be moved forward to this year and tax breaks for~~
~~banks wil be implemented sooner than original y planned.~~
~~India~~
~~Reserve Bank of India~~
March 12: Announced a $2 bil ion injection into the foreign-exchange market to
~~support the rupee.~~
March 13: Announced a plan to add liquidity through short-term repurchase
~~operations.~~
March 14: Plans to infuse 250 bil ion rupees ($3.4 bil ion) into the system through
~~short-term repurchase operation.~~
March 19: Announced that it wil buy bonds on the open market for a total of 100
~~bil ion Indian rupees ($1.35 bil ion) due to mature between 2022 and 2025 to try to~~
~~keep al market segments liquid and stable.~~
March 27: Lowered its benchmark repo rate by 75 basis points to 4.40% and
~~announced several other steps to tackle the impact of COVID-19 on various~~
~~industries from the lockdown, some of which include cutting banks’ cash reserve~~
~~ratio and targeted long term repos operations. The reverse repo rate was reduced by~~
~~90 basis points to 4%.~~

~~Government of India~~
March 15: Pledged $10 mil ion towards South Asian Association for Regional
~~Cooperation (SAARC) “COVID-19 emergency fund.”~~
March 15: Is reportedly “pushing” state-run banks to approve new loans amounting
~~to 500 bil ion-600 bil ion rupees by the end of March.~~
March 26: Announced a 1.7-tril ion-rupee ($22.6 bil ion) economic stimulus plan
~~providing direct cash transfers and food security measures to give relief to mil ions of~~
~~poor people hit by a nationwide lockdown over COVID-19. It wil provide direct cash~~
~~transfers to 200 mil ion women and the elderly, hand out free cooking gas cylinders~~
~~to 83 mil ion poor families, and help feed about 800 mil ion poor people over the~~
~~next three months by distributing 5 kilograms of staple food-grains wheat or rice for~~
~~each person free of cost, with a kilogram of pulses for every low-income family. The~~
~~government outlined plans for medical insurance cover of 5 mil ion rupees ($66,000)~~
~~for every frontline health worker, from doctors, nurses and paramedics to those~~
~~involved in sanitary services.~~
~~Indonesia~~
~~Bank Indonesia (Bank Sentral Republik Indonesia)~~
February 20: Cut the seven-day reverse repurchase rate by 25 basis points to
~~4.75%.~~
March 19: Cut the seven-day reverse repurchase rate by 25 basis points to 4.50%
~~and indicated that it wil intensify intervention to ensure market confidence and~~
~~liquidity. It has purchased government bonds to combat capital outflows amid the~~
~~COVID-19 epidemic, including 27 tril ion rupiah ($2 bil ion) on February 20 and 6~~
~~tril ion rupiah ($405 mil ion) on March 13, adding to 8 tril ion rupiah of bonds~~
~~purchased March 12.~~
~~March 25:~~ ~~Announced with the country’s financial regulator that currency market~~
~~and stock trading hours wil be limited next week as part of efforts to contain the~~
~~spread of COVID-19.~~

~~Government of Indonesia~~
February 25: Announced a stimulus package worth 10.3 tril ion rupiah ($742.6
~~mil ion) to protect its economy from the impact of the COVID-19 outbreak. It~~
~~includes 4.6 tril ion rupiah in subsidies for basic needs for poor households, 1.5~~
~~tril ion rupiah for the state property financing program, 443.4 bil ion rupiah for~~
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~~airlines and travel agents, 298.5 bil ion rupiah to bring in foreign tourists, 3.3 tril ion~~
~~rupiah cover for shortfal s in regional budgets, and fiscal transfers (147 bil ion rupiah).~~
March 13: Announced a 120 tril ion rupiah ($8.1 bil ion) stimulus package to support
~~the economy, of which 22.9 tril ion rupiah wil be tax breaks, lasting six months~~
~~starting in April. The government is also exempting companies in 19 manufacturing~~
~~sectors from having to pay import taxes, while giving them a 30% corporate tax~~
~~discount, relaxing rules for exports (e.g., fisheries and forestry products) and imports~~
~~(e.g., steel, sugar, flour and salt), and easing rules on loan restructuring for smal - and~~
~~medium-sized companies.~~
March 17: Ordered the Finance Minister to divert 40 tril ion rupiah ($2.7 bil ion)
~~from the non-urgent government budget to increase spending in programs that could~~
~~provide direct support to household consumption or increase people’s purchasing~~
~~power.~~
March 31: Announced a national public health emergency and that it would spend
~~405.1 tril ion rupiah ($24.85 bil ion) more on COVID-19 response, social welfare~~
~~programs, and economic stimulus, including a 3 percentage point cut in corporate tax~~
~~rates to 22%.~~
~~Iran~~
~~Central Bank of Iran~~
February/March: Indicated that it would help smal businesses affected by the
~~COVID-19 outbreak by providing tax breaks and al owing defaults on bank loans for~~
~~several months.~~
March 12: Requested $5 bil ion emergency funding from the International Monetary
~~Fund’s Rapid Financing Instrument to help Iran fight the COVID-19 outbreak.~~
March 17: Al ocated at least 250 mil ion euro to import medicine and medical
~~equipment required to fight COVID-19.~~

~~Government of Iran~~
March 12: Asked the United Nations to al ocate resources to help it tackle COVID-
~~19 and facilitate imports as a way of boosting the country’s sanctions-hit healthcare~~
~~system.~~
March 15: Announced a series of banking, welfare and tax relief measures to
~~support businesses and families as the COVID-19 outbreak puts severe strain on the~~
~~economy. Employees wil be able to defer health insurance, tax and utility bil~~
~~payments for the next three months, while the 3 mil ion poorest Iranians wil receive~~
~~an additional cash subsidy starting March 17, 2020.~~
March 23: The European Union’s High Representative of the Union for Foreign
~~Affairs and Security Policy (Josep Borrel ) announced that the EU would provide 20~~
~~mil ion euros in humanitarian aid to Iran to help al eviate the COVID-19 and support~~
~~Iran’s request for IMF financial help.~~
March 26: President Hassan Rouhani wrote to Supreme Leader Ayatol ah Ali
~~Khamenei requesting permission to withdraw $1 bil ion from the country’s sovereign~~
~~wealth fund (the National Development Fund) to support the healthcare system,~~
~~which is overstretched by the COVID-19 outbreak.~~
March 28: Announced that it would al ocate 20% of its annual state budget to
~~fighting the pandemic in the country. The budget al ocation, amounting to about 1,000~~
~~tril ion rials, would include grants and low-interest loans to those affected by COVID-~~
~~19, Rouhani said. While the al ocated amount is worth some $6.3 bil ion at the rial’s~~
~~free market exchange rate of about 160,000 rials per dol ar, the government may~~
~~decide to al ocate some of the funds at the official rate of 42,000 (which is used to~~
~~subsidize food and medicine).~~
~~Ireland~~
March 9: The government announced that it wil set aside 3 bil ion euros ($3.44
~~bil ion) to provide additional funding to the health service (435 mil ion euros), b oost~~
~~workers’ sick pay and benefits (2.4 bil ion euros), and offer liquidity assistance to~~
~~businesses affected (200 mil ion euros).~~
~~Israel~~
~~Bank of Israel~~
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March 18: Announced it would al ocate up to $15 bil ion for swap transactions
~~between currencies for domestic banks, part of a move aimed at shoring up the~~
~~Israeli economy amid the COVID-19 pandemic.~~
April 6: Cut its benchmark interest rate to 0.1% from 0.25%, its first rate cut in five
~~years, expanded its repo transactions so that the agreements can include corporate~~
~~bonds—in addition to government bonds—as security, and wil provide loans to~~
~~banks for a term of three years (with a fixed interest rate of 0.1%) with the goal of~~
~~increasing the supply of bank credit to smal businesses. The size of the plan wil be 5~~
~~bil ion shekels.~~

~~Government of Israel~~
March 9: The Finance Ministry announced that it was opening a 4 bil ion-shekel
~~credit line for banks to lend money to smal and medium-sized businesses facing a~~
~~cash crisis with a high-level government guarantee.~~
March 11: Wil expand an aid package (for a second time) to help the country deal
~~with the COVID-19 outbreak by 6 bil ion shekels to a total of 10 bil ion shekels ($2.8~~
~~bil ion). Of that, 8 bil ion shekels wil be in a fund to provide cheap loans to~~
~~businesses, 1 bil ion shekels wil boost the health system by increasing medicine~~
~~stocks and preparing hospitals to receive a larger number of patients, and 1 bil ion wil~~
~~be earmarked for needs such as the police force.~~
March 16: Wil expand its aid package (for a third time) to help businesses hurt by
~~the COVID-19 crisis by another 5 bil ion shekels ($1.3 bil ion).~~
March 30: Announced that it wil spend 80 bil ion shekels ($22 bil ion) to help the
~~economy weather the COVID-19 crisis—70 bil ion shekels in addition to 10 bil ion~~
~~already promised to boost welfare services for those who have lost their jobs or are~~
~~on unpaid leave and to assist the private sector. It includes a 20-bil ion-shekel social~~
~~safety net, with stipends for those who lost income; 40 bil ion shekels earmarked to~~
~~assist businesses with tax breaks, loans, and other services; about 10 bil ion for the~~
~~healthcare system; and nearly 8 bil ion wil be spent to speed up the recovery.~~
~~Italy~~
~~Government of Italy~~
March 11: Announced two packages worth 25 bil ion euros ($28.3 bil ion): A
~~package worth 12 bil ion euros wil provide extra funding for the health system as~~
~~wel as a mix of measures to help companies and households, including freezing tax~~
~~and loan payments and boosting unemployment benefits to ensure no jobs were lost.~~
~~The remainder wil be a reserve to pay for any further measures. The government~~
~~also indicated that payments on mortgages wil be suspended across Italy. ABI, Italy’s~~
~~banking lobby, said lenders would offer debt moratoriums to smal firms and~~
~~households grappling with the economic fal out from the virus.~~
April 6: Announced a new emergency decree aimed at granting liquidity and bank
~~loans worth more than 400 bil ion euros to companies hit by COVID-19. The new~~
~~legislation, combined with a previous stimulus package in March, would al ow banks~~
~~to offer credit totaling over 750 bil ion euros ($809.78 bil ion).~~
~~Japan~~
~~Bank of Japan~~
March 16: Announced that it would (1) double its upper limit of annual purchases of
~~exchange traded funds to 12 tril ion yen ($112.46 bil ion) and of real-estate~~
~~investment trusts to 180 bil ion yen ($1.7 bil ion) per year, (2) expand its upper limit~~
~~of its corporate bond balance and commercial paper balance by 1 tril ion yen ($9.5~~
~~bil ion) each, and (3) start a lending program for commercial banks, providing them~~
~~with one-year loans in exchange for corporate col ateral worth 8 tril ion yen ($75.6~~
~~bil ion).~~
~~Government of Japan~~
February 13: Unveiled a set of measures worth 15.3 bil ion yen ($140 mil ion) to
~~fight the spread of COVID-19; secured 500 bil ion yen ($4.7 bil ion) for emergency~~
~~lending and loan guarantees at the Japan Finance Corporation and other institutions~~
~~for smal businesses hit hard by the virus outbreak.~~
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March 10: Unveiled a second package of measures totaling 430.8 bil ion yen ($4.1
~~bil ion) in spending to cope with the fal out of the COVID-19 outbreak (focusing on~~
~~support to smal and mid-sized firms) and boosted to 1.6 tril ion yen ($15.1 bil ion) its~~
~~special financing for smal - and mid-size firms hit by the virus, up from 500 bil ion yen.~~
March 23: Announced that it is working on a package of measures to combat the
~~widening economic fal out from the COVID-19 that wil involve direct fiscal spending~~
~~exceeding 15 tril ion yen ($137 bil ion). Including loans and other steps that does not~~
~~include direct spending, the size of the package may exceed 30 tril ion yen.~~
April 6: Announced a 108 tril ion yen ($989 bil ion, equivalent to 20% of gross
~~domestic product) stimulus package, Japan’s largest ever, to rescue the COVID-19-hit~~
~~economy. It wil include cash handouts worth 6 tril ion yen for households and smal~~
~~businesses hit by the virus and offers businesses deferrals on tax and social service~~
~~costs worth 26 tril ion yen. The first phase of the package aims to stop job losses and~~
~~bankruptcies, while a second round of aid, after the virus is contained, wil try to~~
~~support a V-shaped economic recovery.~~
~~Kazakhstan~~
~~National Bank of Kazakhstan~~
April 3: Cut its policy rate to 9.5% from 12.0% in an unscheduled move aimed at
~~boosting economic growth.~~

~~Government of Kazakhstan~~
March 23: The president ordered state-owned companies to start sel ing part of
~~their foreign currency revenue on the domestic market to support the local tenge~~
~~currency (and to pay out up to 100% of last year’s profits in dividends) in order to~~
~~soften the impact of the oil price crash and the COVID-19 outbreak on the economy.~~
~~He also ordered a standstil on bank loan repayments by individuals and smal - and~~
~~medium-sized businesses for the duration of the state of emergency, announced that~~
~~the government would pay 42,500 tenge ($95) per month to people who have lost~~
~~their source of income, was delaying tax payments for smal businesses, and stood~~
~~ready to more than triple spending on a program to provide temporary employment~~
~~through infrastructure maintenance and construction projects. Together with soft~~
~~loan program and other spending, the volume of the stimulus package is expected to~~
~~reach $10 bil ion.~~
April 2: Announced that it plans to borrow $3 bil ion on foreign capital markets to
~~finance its budget deficit this year, due to the col apse in energy prices and the~~
~~additional stimulus spending amid the COVID-19 outbreak.~~
~~Kenya~~
~~Central Bank of Kenya~~
March 23: Cut its benchmark lending rate by 100 basis points to 7.25% and lowered
~~the cash reserve ratio for commercial banks to 4.25% from 5.25%. The move to~~
~~lower the cash ratio is expected to release an extra 35.2 bil ion shil ings ($330.83~~
~~mil ion) for banks to lend to customers trying to deal with the outbreak.~~

~~Government of Kenya~~
March 16: The World Bank announced that it is making $60 mil ion available to
~~Kenya’s health sector to help it deal with the COVID-19 outbreak.~~
March 24: Announced that it wil seek emergency assistance from the IMF of up to
~~$350 mil ion, and $750 mil ion from the World Bank, release 49 bil ion shil ings ($460~~
~~mil ion) to pay pending bil s to suppliers, and expedite the payment of close to 10~~
~~bil ion ($94 mil ion) shil ings in value-added tax refunds to businesses in the next two~~
~~to three months.~~
March 25: Announced that the value-added tax rate would be cut to 14% from 16%
~~and corporation tax would be reduced to 25% from 30% under plans scheduled to~~
~~come into force by April, and that there would be 100% tax relief for Kenyans~~
~~earning a monthly income of up to 24,000 Kenyan Shil ings ($226) to increase their~~
~~disposable income.~~
~~Kuwait~~
~~Central Bank of Kuwait~~
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March 16: Cut by 100 basis points its deposit rate to 1.5% and its overnight, one-
~~week, and one-month repo rates to 1%, 1.25%, and 1.75%, respectively.~~
April 2: Announced a stimulus package to support vital sectors and smal and
~~medium enterprises (SMEs) amid the fal out from the COVID-19 pandemic. It cut~~
~~capital adequacy requirements by 2.5%, eased the risk weighting for SMEs to 25%~~
~~from 75%, raised the maximum lending limit to 100% from 90%, and increased the~~
~~maximum financing for residential real estate developments to the value of the~~
~~property or the cost of development. The measures are expected to raise banks’~~
~~lending capacity by 5 bil ion dinars ($16 bil ion).~~

~~Government of Kuwait~~
April 1: Announced measures aimed at shoring up its economy against the pandemic,
~~including soft long-term loans from local banks to provide liquidity for smal and~~
~~medium-sized enterprises and directing government agencies to pay obligations to the~~
~~private sector as soon as possible.~~
~~Malaysia~~
~~Government of Malaysia~~
February 27: Announced the “Economic Stimulus Package 2020” to mitigate the
~~economic impact of COVID-19, improve the cash flow of affected businesses,~~
~~stimulate private consumption, and accelerate domestic investment activities. It~~
~~includes exempting accommodation services from services tax, providing sales tax~~
~~exemptions, and lifting duties on certain imports.~~
March 27: Announced a stimulus package worth 250 bil ion ringgit ($58.28 bil ion),
~~its second in a month, to help cushion the economic blow from the pandemic. It~~
~~includes a 25 bil ion ringgit direct fiscal injection by the government aimed at helping~~
~~families and business owners; one-off payments and discounts on utilities for people~~
~~whose livelihoods have been affected; 1 bil ion ringgit for a food security fund; and a~~
~~50 bil ion ringgit loan scheme for larger companies, which wil offer guarantees of up~~
~~to 80% of the sum borrowed to shore up working capital in the corporate sector.~~
~~Mauritius~~
March 10: The Bank of Mauritius cut its key repo rate by 50 basis points to 2.85%
~~amid the COVID-19 outbreak, which is expected to have a significant impact on the~~
~~domestic economy.~~
~~Mexico~~
~~Banxico (Bank of Mexico)~~
February 13: Cut its key rate by 25 basis points to 7.0%.
March 19: Lowered its benchmark interest rate by 50 basis points to 6.50% in an
~~out-of-cycle cut in a bid to support the country’s financial markets, reduced the rates~~
~~on its additional ordinary liquidity facility, and cut by 50 bil ion pesos ($2.06 bil ion)~~
~~the monetary regulation deposit that private banks must observe.~~
~~Moldova~~
~~National Bank of Moldova~~
March 4: Cut its main interest rate by 100 basis points to 4.50%, citing the domestic
~~disinflationary trend and global economic concerns related to the COVID-19~~
~~outbreak.~~
March 20: Cut its main interest rate for the second time in March to 3.25% from
~~4.50% in order to support banking system amid markets volatility due to the COVID-~~
~~19 spread.~~
~~Mongolia~~
March 11: The Central Bank of Mongolia cut its policy rate 100 basis points to
~~10.0% in response to increased uncertainties in connection with the spread of~~
~~COVID-19. It also lowered the reserve requirement on banks.~~
~~Morocco~~
March 15: Morocco’s King Mohammed VI ordered the creation of a 10 bil ion-
~~dirham ($1 bil ion) fund to upgrade health infrastructure, help vulnerable economic~~
~~sectors such as tourism, maintain jobs, and mitigate the social repercussions of the~~
~~outbreak.~~
March 17: Bank Al-Maghrib (Central Bank of the Kingdom of Morocco) cut its
~~benchmark interest rate by 25 basis points to 2% in order to help shore up economic~~
~~activity fol owing a drought and the outbreak of COVID-19.~~
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~~Netherlands~~
~~Government of the Netherlands~~
March 12: Announced that it would expand loan guarantees for smal and medium
~~sized enterprises, from 50% to 75%.~~
March 12: The Tax Authority wil al ow companies affected by COVID-19 to defer
~~income, corporate, turnover, and wage taxes for the time being.~~
March 17: Announced measures to support companies, ranging from tax
~~exemptions to having up to 90% of wages lost for work hour reductions paid by the~~
~~government.~~
~~New Zealand~~
~~Reserve Bank of New Zealand~~
March 16: Cut the official cash rate by 75 basis points to a record low of 0.25%, and
~~pledged to keep it at this level for at least 12 months.~~
March 22: Announced that it wil purchase up NZ$30 bil ion ($17 bil ion) of
~~government bonds in the secondary market over the next 12 months. It wil seek to~~
~~buy NZ$750 mil ion bonds a week across a range of maturities, via an auction~~
~~process.~~
March 24: Reduced banks’ core funding ratios to 50% from 75% to help banks make
~~credit available.~~
March 30: Announced that it was deploying more tools to provide additional
~~liquidity to the corporate sector and support market functioning to offset the impact~~
~~of the pandemic. A new weekly Open Market Operation—to be held each Tuesday—~~
~~wil provide liquidity in exchange for eligible corporate and asset-backed securities by~~
~~offering up to NZ$500 mil ion ($300 mil ion) for terms out to approximately three~~
~~months, starting on March 31. The bank also wil offer to purchase government bonds~~
~~maturing on May 15, 2021, for liquidity management purposes.~~

~~Government of New Zealand~~
March 16: Announced a spending package of NZ$12.1 bil ion ($7.3 bil ion),
~~equivalent to 4% of GDP in an attempt to fight the effects of COVID-19 on the~~
~~economy; approximately NZ$5 bil ion wil go toward wage subsidies for businesses,~~
~~NZ$2.8 bil ion toward income support, NZ$2.8 bil ion in business tax relief, and~~
~~NZ$600 mil ion toward the airline industry.~~
March 24: Announced that retail banks wil offer a six-month principal and interest
~~payment holiday for mortgage holders and smal business customers whose incomes~~
~~have been affected by the economic disruption from COVID-19. The government and~~
~~the banks wil also implement a NZ$6.25 bil ion ($3.62 bil ion) Business Finance~~
~~Guarantee Scheme for smal and medium-sized businesses. It wil include a limit of~~
~~NZ$500,000 per loan and wil apply to firms with a turnover of between~~
~~NZ$250,000 and NZ$80 mil ion per annum (the government wil carry 80% of the~~
~~credit risk, with the other 20% to be carried by the banks).~~
~~Norway~~
~~Norges Bank~~
March 13: Cut its key interest rate to 1% from 1.5%, as it seeks to counter the
~~economic impact of the COVID-19 pandemic. It indicated that it would offer funding~~
~~to banks to help counter the volatility in financial markets and announced that banks’~~
~~countercyclical capital buffer would be reduced from 2.5% to 1%, to help banks~~
~~continue to lend money.~~
March 20: Cut its key policy rate by 75 basis points to 0.25% from 1.0% in a bid to
~~al eviate the economic impact from the COVID-19 outbreak. It also offered a third~~
~~batch of extraordinary loans to the banking industry to ensure it has enough for the~~
~~months ahead.~~
March 30: Increased its planned issuance of government bonds this year to between
~~70 bil ion and 85 bil ion Norwegian crowns ($6.68 bil ion-$8.11 bil ion) from an~~
~~original plan of 55 bil ion crowns, fol owing the government’s decision to offer loans~~
~~worth tens of bil ions of crowns in emergency funding to companies hurt by the~~
~~coronavirus outbreak.~~
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March 31: Wil increase further its daily purchase of Norwegian currency to 2 bil ion
~~crowns ($190 mil ion) per day from 1.6 bil ion crowns in order to make funds~~
~~available for the government’s fiscal budget. (On March 18, it announced that it would~~
~~increase it to 1.6 bil ion Norwegian crowns per day from 500 mil ion crowns.)~~

~~Government of Norway~~
March 13: Announced that it would pay a greater part of the bil for al companies
~~seeking to make temporary layoffs, suspended al airport fees for the first six months~~
~~of 2020, and lifted for a period of 10 months the tax charged for each passenger.~~
March 15: Announced that it would offer companies at least 100 bil ion Norwegian
~~crowns ($9.7 bil ion) in funding in the form of loan guarantees (50 bil ion crowns to~~
~~smal and medium sized companies seeking bank loans) and bond issues (50 bil ion~~
~~crowns to large firms issuing corporate bonds). In addition, payments of payrol taxes~~
~~wil be postponed.~~
March 20: Presented legislation that would temporarily reduce the value-added tax,
~~postpone tax filing deadlines and add worker and business protections under a 280~~
~~bil ion kroner ($24 bil ion) plan to boost the economy amid the pandemic. Along with~~
~~the tax provisions, the legislative package includes two previously announced lending~~
~~programs that the government said would provide up to 100 bil ion kroner in support~~
~~for Norwegian businesses, improving their access to credit to ensure liquidity.~~
March 27: Proposed new measures to support businesses hit by the viral outbreak
~~and a sharp fal in the price of oil. They include, among other things, covering fixed~~
~~costs for companies affected by the coronavirus outbreak at a cost of 10 bil ion to 20~~
~~bil ion Norwegian crowns ($958 mil ion to $1.92 bil ion) per month for two months.~~
~~Oman~~
March 18: The Central Bank of Oman announced that it wil provide about 8 bil ion
~~Omani rials ($20.8 bil ion) in extra liquidity to banks as one of several measures~~
~~aimed at supporting the economy. It also asked banks to cut banking fees, adjust~~
~~capital and credit ratios, al ow repayment postponements for up to six months, and~~
~~facilitate lending, particularly in sectors affected by the COVID-19, including~~
~~healthcare, travel and tourism.~~
~~Pakistan~~
~~State Bank of Pakistan~~
March 17: Cut its key interest rate by 75 basis points to 12.50% in response to the
~~anticipated slowdown due to COVID-19, provided additional support to investment,~~
~~offering a new package of 100 bil ion rupees ($630.5 mil ion) for investment in the~~
~~manufacturing sector to fund investors at 7% for 10 years., and announced that it~~
~~would refinance banks to provide 5 bil ion rupees ($31.5 mil ion) at a maximum of 3%~~
~~for the purchasing of equipment used to fight the COVID-19.~~
March 24: Cut its benchmark interest rate for the second time in a week, lowering
~~it by 150 basis points to 11% amid considerable uncertainty about how the COVID-~~
~~19 outbreak would impact the global economy and Pakistan.~~

~~Government of Pakistan~~
March 24: Announced a financial-relief package of more than 1 tril ion rupees ($6.3
~~bil ion) to support the economy and poorer workers. It wil include help to the~~
~~export and industry sectors, tax breaks, procurement of medical and other~~
~~equipment required to fight the pandemic, and the distribution of a monthly cash~~
~~stipend among the poor.~~
~~Paraguay~~
~~Central Bank of Paraguay~~
March 13: Cut its benchmark interest rate by 25 basis points to 3.75%, as part of a
~~series of measures aimed at dealing with the impact of the COVID-19 outbreak.~~
~~Banks’ reserve requirements wil also be reduced to help the financial sector~~
~~refinance debts.~~

~~Government of Paraguay~~
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March 13: Announced tax relief measures, as wel as $150 mil ion of credit lines in
~~state banks and loans from multilateral agencies.~~
~~Peru~~
~~Central Reserve Bank of Peru~~
March 19: Cut its benchmark interest rate by 100 basis points to 1.25%, from 2.25%
~~to counter the economic impact of the COVID-19 pandemic and announced that, if~~
~~necessary, could employ other additional liquidity injection instruments to al eviate~~
~~the crisis.~~
March 29: Announced that that as part of the 90 bil ion soles stimulus plan
~~announced on March 29, the Bank would inject 30 bil ion soles into banks for loans to~~
~~mainly smal er companies to help cover their working capital.~~
April 2: Announced that it is preparing a major bond issuance to help underwrite an
~~unprecedented stimulus package to counter the economic impact of the fast-~~
~~spreading pandemic.~~

~~Government of Peru~~
March 29: Announced that it is planning an economic stimulus package worth
~~around 90 bil ion soles ($26.41 bil ion or 12% of gross domestic product) to support~~
~~citizens and the key mining sector that have been impacted by COVID-19. It wil have~~
~~three phases of 30 bil ion soles each: containing the disease, ensuring companies’~~
~~payment chains by granting credit guarantees, and reactivating production, particularly~~
~~in the copper industry.~~
~~Philippines~~
~~Central Bank of the Philippines (Bangko Sentral ng Pilipinas)~~
March 19: Cut the rate on its overnight reverse repurchase facility by 50 basis
~~points to 3.25%, authorized a temporary relaxation of regulations on compliance~~
~~reporting by banks, calculations of penalties on required reserves and single borrower~~
~~limits, and approved a temporary reduction to zero of the term spread on~~
~~rediscounting loans relative to the overnight lending rate.~~
March 23: Revealed it would purchase up to 300 bil ion Philippine peso ($5.9 bil ion)
~~worth of short-term securities under a repurchase agreement with the Bureau of the~~
~~Treasury in a bid to inject a fresh round of liquidity into the market and to keep a lid~~
~~on interest rates in the process.~~
March 24: Announced a 200 basis points reduction in the reserve requirement ratio
~~(RRR) to calm financial markets and boost lending. The cut, effective March 30, wil~~
~~bring the ratio to 12% and ensure there is sufficient liquidity to counter the economic~~
~~impact of the COVID-19 outbreak.~~

~~Government of the Philippines~~
March 13: Instructed the Government Service Insurance System and the Social
~~Security System “to take advantage of the low stock prices" and "support the stock~~
~~market by at least doubling their daily average purchase volumes" from 2019.~~
March 16: The government announced a 27.1-bil ion peso package to help fight the
~~COVID-19 pandemic and provide economic relief to affected sectors.~~
March 17: The Philippine Stock Exchange halted al stock, bond and currency trading
~~until further notice, after President Rodrigo Duterte placed Luzon, the country’s~~
~~economic powerhouse, under “enhanced community quarantine”.~~
March 22: The Philippine Congress is reportedly drafting a stimulus package of at
~~least 200 bil ion pesos ($3.9 bil ion) as part of a supplemental budget to shore up the~~
~~economy from the impact of the COVID-19 outbreak.~~
March 19: The Philippine Stock Exchange reopened with shortened hours.
~~Poland~~
~~National Bank of Poland~~
March 17: Cut its benchmark interest rate by 50 basis points to 1.0% from 1.5% in
~~response to the COVID-19 pandemic; it also lowered its lombard rate to 1.50% from~~
~~2.50% and the rediscount rate to 1.05% from 1.75%, reduced banks’ required reserve~~
~~ratios to 0.5% from 3.5%, announced plans to boost banking sector liquidity (through~~
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~~the extension of repo operations), and offered “large-scale” purchases of government~~
~~bonds as part of its open-market operations.~~

~~Government of Poland~~
March 18: Announced an economic stimulus package of 212 bil ion zloty ($52 bil ion,
~~or approximately 9% of gross domestic product) to assist entrepreneurs and~~
~~employees during the COVID-19 crisis. It consists of 5 pil ars: employee safety,~~
~~company financing, health protection, strengthening the financial system, and a public~~
~~investment program. Specific measures include holidays in debt repayments and social~~
~~contributions, loan guarantees, as wel as payments of salaries to those unable to~~
~~work.~~
March 26: Announced that the state bank BGK wil issue bonds worth around 16
~~bil ion zlotys ($3.9 bil ion) in 2020-2021 as part of a wider plan to combat the~~
~~coronavirus impact on the economy. The state wil buy the bonds back in 2021-2025,~~
~~spending around 2.5 bil ion zlotys a year in the first year and then around 3.7 bil ion~~
~~zlotys annual y.~~
~~Portugal~~
~~Government of Portugal~~
March 13: Announced a 2.3 bil ion-euro package that wil include delaying some tax
~~payments and granting soft loans. Companies wil be al owed to suspend social~~
~~security payments and maintain employees’ contracts with payments equal to two-~~
~~thirds of salaries, funded largely by the state, and workers who have to stay at home~~
~~to care for school children of up to 12 years of age wil receive 66% of their base~~
~~salaries.~~
March 18: Announced a 9.2 bil ion-euro package to support workers and provide
~~liquidity for companies affected by the COVID-19 outbreak. It consists of 5.2 bil ion~~
~~euros in fiscal stimulus, 3 bil ion in state-backed credit guarantees, and 1 bil ion~~
~~related to social security payments. (Just over half of the 3 bil ion euros in credit lines~~
~~announced is aimed at companies working in tourism, hotels and restaurants. The~~
~~other half goes to industries like textiles, clothing and wood. Around a third is set~~
~~aside for micro and smal enterprises.)~~
~~Qatar~~
~~Qatar Central Bank~~
March 16: Cut the deposit rate by 50 basis points to 1%, lending rate by 100 basis
~~points to 2.50%, and repurchase rate (repo) by 50 basis points to 1%.~~

~~Government of Qatar~~
March 15: The Emir of Qatar announced several measures to shield the economic
~~and financial sectors in the country from the impact of the COVID-19, including (1)~~
~~al ocating 75 bil ion Qatari riyals ($20.6 bil ion) to support and provide financial and~~
~~economic incentives in the private sector, (2) directing the Central Bank of Qatar to~~
~~provide additional liquidity to banks operating in the country and putting in place the~~
~~appropriate mechanism to encourage banks to postpone loan instal ments and~~
~~obligations of the private sector with a grace period of six months, (3) directing the~~
~~Qatar Development Bank to postpone the instal ments for al borrowers for a period~~
~~of six months, (4) directing the government to increase its investments in the stock~~
~~exchange by 10 bil ion Qatari riyals ($2.75 bil ion), (5) exempting food and medical~~
~~goods from customs duties for a period of six months, and (6) exempting the various~~
~~sectors of the economy from electricity and water fees for a period of 6 months.~~
~~Romania~~
March 20: The National bank of Romania cut its benchmark interest rate by 50 basis
~~points to 2.0% in order to curb the economic fal out from the COVID-19 outbreak. It~~
~~also cut its lending rate facility to 2.50% from 3.50% and wil provide liquidity to banks~~
~~via repo transactions and purchase leu-denominated debt on the secondary market.~~
~~Saudi Arabia~~
~~Saudi Arabian Monetary Authority~~
March 15: Announced that it had prepared a 50 bil ion riyal ($13.32 bil ion) package
~~to help smal and medium-sized enterprises cope with the economic impacts of~~
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~~COVID-19; it also lowered by 75 basis points both its repo rate to 1%, and its~~
~~reverse repo rate to 0.5%.~~

~~Government of Saudi Arabia~~
March 20: Introduced an additional stimulus package worth 120 bil ion riyals ($32
~~bil ion) to aid businesses, including the postponement of value-added tax (VAT),~~
~~excise tax, and income tax payments for a period of three months and exemptions of~~
~~various government levies and fees.~~
March 30: Announced that it wil finance treatment for anyone infected with
~~COVID-19 in the country, and took steps to boost wheat and livestock supplies amid~~
~~global fears of a food shortage.~~
~~Serbia~~
~~National Bank of Serbia~~
March 11: Cut its reference interest rate by 50 basis points to 1.75% to help
~~minimize economic disruption caused by the COVID-19 outbreak.~~

~~Government of Serbia~~
March 29: Announced that it plans to offer about 5 bil ion euros ($5.54 bil ion) in
~~loans and subsidies to businesses to help them cope with the economic impact of~~
~~COVID-19 and make a one-time payment of 100 euros to every citizen older than~~
~~18. The president indicated that the state would use 700 mil ion euros to pay~~
~~minimum wages of 30,367 dinars ($288.58) and al ow tax delays for micro and smal~~
~~enterprises for the three months after the end of the state of emergency to avoid job~~
~~loss.~~
~~Seychelles~~
March 24: The Central Bank of Seychel es cut its monetary policy rate by 100 basis
~~points to 4.0%, indicating that this was the first phase of its response to the chal enge~~
~~from the spread of the COVID-19, which is expected to lower this year’s earnings~~
~~from tourism by 70% and trigger a double-digit drop in economic growth.~~
~~Singapore~~
~~Monetary Authority of Singapore~~
March 30: Announced that it would adopt a 0% per annum rate of appreciation of
~~the policy band starting at the prevailing level of the Singapore Dol ar Nominal~~
~~Effective Exchange Rate (S$NEER), currently slightly below the mid-point of the~~
~~policy band.~~

~~Government of Singapore~~
February 18: Announced around $4.5 bil ion in financial packages to help contain
~~the COVID-19 outbreak, including $575 mil ion to fight and contain the disease,~~
~~mainly through healthcare funding, and 4 bil ion in economic stimulus measures to~~
~~manage its impact on businesses, jobs and households.~~
March 26: Unveiled stimulus plan worth around S$48 bil ion ($33.7 bil ion) to deal
~~with the economic fal out from COVID-19 (of which S$17 bil ion wil be drawn from~~
~~the national reserves). A key part of the stimulus package involves ramping up a jobs~~
~~support scheme first announced in February. The government wil now offset up to~~
~~25% of the first S$4,600 of workers’ monthly wages for a nine-month period (up from~~
~~the 8% quantum and S$3,600 cap announced in February), while self-employed~~
~~workers wil be eligible to receive monthly payments of S$1,000 for nine months.~~
~~Some hard-hit sectors wil receive additional support: the government would offset~~
~~up to 50% of wages in the food services sector and up to 75% of wages in the aviation~~
~~and tourism sectors. A previously announced cash payout to al adult Singaporeans~~
~~would be tripled and low-income families wil also receive grocery vouchers.~~
~~Slovakia~~
~~Government of the Slovak Republic~~
March 29: Announced plans for an aid package of up to 1 bil ion euros a month to
~~help firms and employees hurt by the pandemic. Under the plan, the state would (1)~~
~~pay 80% of wages for employees at firms forced to shut, (2) help self-employed~~
~~people and employees in firms that suffer fal ing revenue, with payments linked to the~~
~~size of the revenue drop, (3) al ow employers to postpone their contributions to~~
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~~state social and health systems and delay some tax payments if they suffer a 40% drop~~
~~in revenue; (4) al ow firms to offset accumulated losses from past years going back to~~
~~2014 against corporate income tax, and (5) offer firms bank guarantees of up to 500~~
~~mil ion euros a month.~~
~~South Africa~~
~~South African Reserve Bank~~
March 19: Cut its main lending rate by 100 basis points to 5.25% as it sought to
~~offset the drag from the COVID-19 outbreak and the plunge in oil prices.~~
March 20: Announced measures to inject liquidity into local markets, including
~~intraday overnight supplementary repos to provide liquidity support to clearing banks,~~
~~lowering the standing facilities’ borrowing rate by 100 basis points to 200 basis point~~
~~below the benchmark repo rate, and lowering the standing facilities’ lending rate to~~
~~the repo rate from the previous rate of repo plus 100 basis points.~~
March 25: Announced that it would begin buying an unspecified amount of
~~government bonds as part of additional emergency policy measures aimed at easing a~~
~~severe liquidity crunch triggered by the COVID-19.~~
~~South Korea~~
~~Bank of Korea~~
March 16: Cut the seven-day repurchase rate by 50 basis points to 0.75% in an
~~effort to soften the impact of the COVID-19 pandemic on the Korean economy. It~~
~~also lowered borrowing costs for the bank’s low interest rate loan programs and~~
~~relaxed col ateral rules of its repurchasing operations, to ensure companies can easily~~
~~and cheaply access credit.~~
March 19: Announced that it wil buy government bonds worth 1.5 tril ion won
~~($1.2 bil ion) to bolster liquidity in the bond market and back short-term liquidity in~~
~~banks under increased loan demand due to fal out from COVID-19.~~

~~Government of the Republic of Korea~~
March 3: Announced a 11.7 tril ion won ($9.8 bil ion) stimulus package that includes
~~funding for medical institutions and quarantine efforts, assistance to smal - to~~
~~medium-sized businesses struggling to pay wages to their workers, and subsidies for~~
~~child care.~~
March 17: The National Assembly approved a supplementary budget worth 11.7
~~tril ion won ($9.4 bil ion) to help contain COVID-19 and cushion the economic~~
~~fal out. The government has indicated that it plans to execute at least 75% of its~~
~~spending within the next two months.~~
March 18: Pledged 50 tril ion won ($40 bil ion) in emergency financing for smal
~~businesses and other stimulus measures to help the economy. Some highlights of the~~
~~package include 12 tril ion won in low-interest financing for smal firms, 5.5 tril ion~~
~~won in loan guarantees, easing loan terms and suspending interest payments for smal~~
~~businesses. The Bank of Korea reportedly wil actively provide liquidity support for~~
~~around half of the new package.~~
March 20: South Korea’s financial authorities and local banks agreed to set up a
~~bond market stabilization fund worth more than 10 tril ion won ($7.9 bil ion) as part~~
~~of the country’s efforts to calm financial markets roiled by the spread of COVID-19.~~
March 24: Announced that it would double the planned economic rescue package
~~announced on March 18 to 100 tril ion won ($80 bil ion) to save companies hit by the~~
~~COVID-19 and put a floor under crashing stocks and bond markets. It includes 29.1~~
~~tril ion won in loans to smal - and medium-sized companies and 20 tril ion won wil be~~
~~used to buy corporate bonds and commercial paper of companies facing a credit~~
~~crunch. As part of the rescue package, the Financial Services Commission wil~~
~~establish a 10.7 tril ion won facility set up to stabilize stock markets. It wil also~~
~~commence a bond buying facility in April that wil be funded by 84 institutions,~~
~~including the Bank of Korea, commercial banks and insurers.~~
March 29: Announced that an “emergency disaster relief payment” of up to 1 mil ion
~~won ($820) would be made to al households (except the top 30% by income),~~
~~totaling some 9.1 tril ion won ($7.44 bil ion). It is also preparing another extra budget~~
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~~worth 7.1 tril ion won ($5.80 bil ion) for parliamentary approval in April, and wil~~
~~exempt some smal and medium-sized companies from paying utility bil s.~~
~~Spain~~
~~Government of Spain~~
March 12: Approved the creation of a 2.8 bil ion euro ($3 bil ion) aid package to
~~help regional authorities mitigate the economic impact from COVID-19, and~~
~~announced a 1 bil ion euro contribution to the health ministry’s budget and 14 bil ion~~
~~euros ($15.1 bil ion) in liquidity for smal and medium companies (e.g., smal~~
~~businesses affected by the outbreak would be exempt from paying taxes for six~~
~~months). It also announced that it would open a 400 mil ion euro credit line to aid~~
~~the tourism industry.~~
March 17: Unveiled a package of 200 bil ion euros ($219 bil ion) to mitigate the
~~effects of COVID-19 (117 bil ion euros wil be mobilized by the state, with the rest~~
~~coming from private companies). It wil include state-backed credit guarantees for~~
~~companies, loans and aid for vulnerable people, a moratorium on mortgage payments~~
~~and evictions; the government wil also guarantee water, electricity and internet to~~
~~for people adversely affected.~~
~~Sri Lanka~~
March 16: The Central Bank of Sri Lanka cut the Standing Deposit Facility Rate
~~(SDFR) and the Standing Lending Facility Rate (SLFR) by 25 basis points to 6.25% and~~
~~7.25%, respectively, and the Statutory Reserve Ratio (SRR) on al rupee deposit~~
~~liabilities of licensed commercial banks was reduced by 1 percentage point to 4%~~
March 16: The Colombo Stock Exchange was closed until March 19, as the
~~government extended the public holiday in a bid to halt the spread of COVID-19 in~~
~~the country.~~
April 3: The Central Bank of Sri Lanka cut by a further 25 basis points its benchmark
~~interest rates (the Standing Deposit Facility Rate and Standing Lending Facility Rate to~~
~~6.00% and 7.00%, respectively), its second such reduction in three weeks, in a move~~
~~to support the economy amid the coronavirus pandemic.~~
~~Sweden~~
~~Sveriges Riksbank~~
March 13: Stated that it would lend up to 500 bil ion crowns ($51 bil ion) to
~~Swedish companies via banks to shore up credit flows as the epidemic wreaks havoc~~
~~on financial markets.~~
March 16: Announced that it would buy securities for up to an additional 300 bil ion
~~Swedish crowns ($31 bil ion) in 2020 to facilitate credit supply and mitigate the~~
~~downturn in the economy caused by the COVID-19, reduced the overnight lending~~
~~rate to banks to 0.2 percentage point above its repo rate (from 0.75 percentage~~
~~point), and indicated that it would be flexible with the col ateral banks can use when~~
~~they borrow money from the Riksbank, giving lenders more scope to use mortgage~~
~~bonds as col ateral.~~

~~Government of Sweden~~
March 16: Presented a package worth more than 300 bil ion Swedish crowns ($31
~~bil ion) to support the economy in the face of the COVID-19 pandemic. It included~~
~~measures such as the central government assuming the ful cost for sick leave from~~
~~companies through the months of April and May 2020 and for temporary~~
~~redundancies due to the crisis, and al owing companies to put off paying tax and VAT~~
~~for up to a year (retroactive to the start of 2020).~~
~~Switzerland~~
~~Swiss National Bank~~
March 23: Hiked its foreign currency interventions to their highest level since the
~~Brexit referendum in 2016 in an effort to stem the rise in the franc, which has~~
~~appreciated as investors sought safe assets while stock markets have plunged during~~
~~the coronavirus pandemic.~~

~~Government of Switzerland~~
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March 13: Unveiled an emergency economic-aid package of roughly 10 bil ion francs
~~($10.5 bil ion) for workers and smal businesses. It includes 8 bil ion francs for~~
~~“Kurzarbeit,” or short-time work, and 580 mil ion francs in guaranteed bank loans.~~
March 20: Announced a new 32 bil ion franc ($32.56 bil ion) aid package to support
~~companies and workers hit by the widening COVID-19 outbreak. The bulk of the~~
~~cash (20 bil ion francs) wil go into guarantees for bank loans to companies at “very~~
~~modest” interest rates. Firms wil be able to get loans worth up to 10% of their~~
~~revenue, to a maximum of 20 mil ion francs. Amounts of 500,000 francs wil be paid~~
~~out immediately and guaranteed by the government. The government’s short-time~~
~~working scheme would also be extended to fixed-term, temporary workers, and~~
~~trainees. The package fol ows one worth 10 bil ion francs announced on March 13,~~
~~bringing the total stimulus to 42 bil ion francs ($42.8 bil ion).~~
March 31: Announced that it is stepping up its funding plans in response to
~~government measures to cushion the economic impact of the pandemic, doubling the~~
~~volume of outstanding short-term money market instruments. The Federal Finance~~
~~Administration (FFA) wil increase the outstanding volume of short-term money~~
~~market instruments, from around 6 bil ion francs ($6.24 bil ion) to 12 bil ion francs,~~
~~and wil once again step up sales of its own Confederation bond holdings.~~
~~Taiwan~~
~~Central Bank of the Republic of China (Taiwan)~~

March 19: Cut its benchmark rate by 25 basis points to 1.125%, and announced that
~~it would expand the scope of repurchase facility operations and provide banks with~~
~~T$200 bil ion ($6.6 bil ion) of financing to support smal and medium sized companies~~
~~which have been hard hit by the COVID-19 outbreak.~~

~~Government of Taiwan~~
February 25: Approved a T$60 bil ion ($2 bil ion) package to help cushion the
~~impact of the COVID-19 outbreak on its export-reliant economy, including loans for~~
~~smal businesses, subsidies for hard-hit tour agencies, tax cuts for tour bus drivers,~~
~~and vouchers to spend on food in night markets.~~
March 12: Announced that an additional T$40 bil ion ($1.33 bil ion) from the
~~Employment Stabilization Fund and the Tourism Development Fund would be~~
~~available to stimulate Taiwanese economy.~~
March 19: The president said that the government would help its hard-hit airline
~~industry access T$50 bil ion in financing, and did not rule out further economic~~
~~stimulus.~~
March 19: Authorized its National Stabilisation Fund to intervene and buy stocks on
~~the market, as the island’s bourse continues to fal on COVID-19 worries.~~
~~Thailand~~
~~Bank of Thailand~~
March 20: Cut its key interest rate by 25 basis points to 0.75%, as the spread of
~~COVID-19 exerted further pressure on the Thai economy.~~
March 22: Together with the Ministry of Finance and the Securities and Exchange
~~Commission, announced three measures to address liquidity concerns and ensure the~~
~~functioning of local financial markets: (1) setting up a special facility that al ows~~
~~commercial banks that purchase units in high-quality money market funds or daily~~
~~fixed-income funds to use them as col ateral for liquidity support (initial estimate is 1~~
~~tril ion baht); (2) creation of a 70-100 bil ion baht “Corporate Bond Stabilization~~
~~Fund” that invests in high-quality, newly issued bonds by corporates that cannot ful y~~
~~rol over maturing corporate bonds, and (3) Bank of Thailand wil continue to~~
~~purchase government bonds to provide liquidity to the market.~~

~~Government of Thailand~~
March 10: Approved a stimulus package worth an estimated 400 bil ion baht ($12.74
~~bil ion) to help al eviate the impact of the COVID-19 outbreak. It includes 150 bil ion~~
~~baht of soft loans, a 20 bil ion baht fund to help firms and workers affected, and tax~~
~~benefits and support for utilities costs.~~
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March 24: Approved a package of stimulus measures worth at least 117 bil ion baht
~~($3.56 bil ion) to try to mitigate the impact of the coronavirus outbreak. The~~
~~measures include cash handouts worth 45 bil ion baht for 3 mil ion workers outside~~
~~the social security system; soft loans worth 60 bil ion baht; and tax breaks. Separately,~~
~~smal firms wil be offered 10 bil ion baht of loans and business tax payments wil be~~
~~delayed.~~
March 30: Announced that it is preparing a third stimulus package, worth more than
~~500 bil ion baht ($15.3 bil ion), to al eviate the impact of the coronavirus crisis.~~
March 31: Agreed to triple the number of workers receiving cash handouts to nine
~~mil ion to help ease the impact of the spreading coronavirus. It had previously planned~~
~~to provide cash handouts of 15,000 baht ($458) each to 3 mil ion workers, taking the~~
~~total to 45 bil ion baht ($1.38 bil ion). Now its total handout wil reach 135 bil ion~~
~~baht ($4.13 bil ion).~~
~~Tunisia~~
~~Central Bank of Tunisia~~
March 17: Cut its key interest rate by 100 basis points to 6.75%, as it responded to
~~the negative impact of the COVID-19 on the global growth outlook.~~
April 1: Asked banks and financial institutions to suspend the distribution of 2019
~~dividends and al ow customers to defer loan payments for three months as part of a~~
~~package to ease the social and economic effects of the coronavirus.~~

~~Government of Tunisia~~
March 21: Announced that it would al ocate 2.5 bil ion dinars ($850 mil ion) to
~~combat the economic and social effects of the COVID-19 health crisis. Among new~~
~~measures, the government wil delay tax debts, postpone taxes on smal - and~~
~~medium-sized businesses, delay repayment of low-income employee loans, and~~
~~provide financial assistance to poor families and those who have lost their jobs due to~~
~~the crisis and loans and aid to help companies affected.~~
March 23: The finance minister announced that the International Monetary Fund wil
~~disburse $400 mil ion to help the country face the effects of COVID-19.~~
March 28: The European Union granted Tunisia 250 mil ion euros in aid to help it
~~cope with the economic and social effects of the viral outbreak.~~
~~Turkey~~
~~Central Bank of Turkey~~
March 17: Lowered its benchmark one-week repo rate by 100 basis points to 9.75%,
~~as it responded to the negative impact of the COVID-19 on the global growth~~
~~outlook.~~
March 31: Announced emergency measures to stem the fal out from a growing
~~pandemic. It would (1) al ow primary dealers to sel to the Bank (for a temporary~~
~~period) debt they purchased from the Unemployment Insurance Fund, (2) extend 60~~
~~bil ion lira ($9 bil ion) worth of rediscount credits, (3) add more lending options wel~~
~~below its 9.75% policy rate, (4) hold swap auctions with six-month maturities for lira~~
~~against dol ars, euros, or gold at an interest rate 125 basis points lower than the~~
~~policy rate, and (5) al ow lenders to use mortgage- and asset-backed securities as~~
~~col ateral for foreign exchange operations.~~

~~Government of Turkey~~
March 18: Unveiled a 100 bil ion-lira ($15.4 bil ion) plan to help businesses affected
~~by the COVID-19 pandemic. It includes measures from tax cuts and payment~~
~~deferrals for businesses to an increase in minimum pension payouts.~~
~~Ukraine~~
March 19: The government published a new law that wil exempt taxpayers from
~~paying the land and property taxes from March 1 to April 30, introduced a~~
~~moratorium on tax audits from March 18 to May 31, and suspended some tax -related~~
~~penalties from March 1 to May 31.~~
~~Uganda~~
~~Bank of Uganda~~
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~~Global Economic Effects of COVID-19~~

March 24: Sold dol ars in the interbank market to support the local currency, which
~~has been experiencing sharp depreciation due to COVID-19-related disruptions.~~
April 6: Cut its policy rate by 100 basis points to 8.0% to support the economy
~~which has been hit by the impact of COVID-19. It also announced that it had~~
~~“directed” commercial banks to defer al discretionary payments, such as dividends~~
~~and bonus payments, for at least 90 days from March.~~
~~United Arab Emirates~~
~~Central Bank of the UAE~~
~~(UAE)~~
March 15: Announced a 100 bil ion dirham ($27 bil ion) stimulus package to deal
~~with the economic effects of the COVID-19 pandemic; it cut the rate on one-week~~
~~certificates of deposit by 75 basis points and wil also ease regulatory limits on loans.~~
April 5: Announced new measures to guarantee liquidity in the banking system in the
~~face of the pandemic, boosting its stimulus to a total of 256 bil ion dirhams ($70~~
~~bil ion) from a previously announced 100 bil ion dirhams ($27 bil ion) package. It also~~
~~halved banks’ reserve requirements for demand deposits to 7% from 14%, which wil~~
~~inject about 61 bil ion dirhams of liquidity to support banks’ lending and liquidity~~
~~management, extended the duration of a previously announced deferral of loan~~
~~principal and interest payments for customers until the end of the year, and said~~
~~banks participating in the scheme can benefit from a capital buffer relief of 50 bil ion~~
~~dirhams until December 2021, among other measures.~~

~~Government of the UAE~~
March 30: Announced that it would inject funding into state-owned Emirates
~~Airlines to help it deal with the impact of COVID-19 on its business.~~
April 5: Announced that it would reinforce its stockpile of strategic goods and waive
~~residency visa fines for the rest of the year in response to the viral outbreak.~~
~~United Kingdom~~
~~Bank of England~~
March 11: Cut its benchmark interest rate by half a percentage point, to 0.25%,
~~revived a program to support lending to smal and midsize businesses, and reduced~~
~~bank capital requirements to further boost credit.~~
March 19: Cut its benchmark rate by 15 basis points to 0.1% to try to mitigate the
~~impact of COVID-19 on the British economy, added 200 bil ion pounds ($232 bil ion)~~
~~to its asset purchase program (including sovereign and private debt), increased its~~
~~banks’ borrowing al owance under the Term Funding Scheme for Smal and Medium~~
~~Enterprises from 5% to 10% of participants’ stock of real economy lending, and~~
~~cancel ed its 2020 stress test of the 8 major UK banks.~~
April 2: Announced that it wil double the size of its corporate bond purchase
~~program to at least 20 bil ion pounds ($24.7 bil ion), part of a previously announced~~
~~stimulus package to help the economy. It wil begin ramping up its corporate bond~~
~~purchases through a series of reverse auctions starting on April 7, holding three a~~
~~week, and it wil be able to buy 20 mil ion pounds of any single bond—double the~~
~~previous amount.~~
~~UK Government~~
March 11: Announced a stimulus package totaling 30 bil ion pounds ($39 bil ion). It
~~wil include 7 bil ion pounds ($8.6 bil ion) available to support the labor market, 5~~
~~bil ion pounds ($6.1 bil ion) to help the health-care system, and 18 bil ion pounds ($22~~
~~bil ion) to support the UK economy, bringing the total fiscal stimulus to 30 bil ion~~
~~pounds ($39 bil ion). (Among the specific measures, there wil be a tax cut for~~
~~retailers, cash grants to smal businesses, a mandate to provide sick pay for people~~
~~who need to self-isolate, subsidies to cover the costs of sick pay for smal businesses,~~
~~and expanded access to government benefits for the self-employed and unemployed.)~~
March 17: Unveiled a package of 350 bil ion pounds ($424 bil ion) to support the
~~economy; it includes 330 bil ion pounds of guaranteed loans for businesses that need~~
~~cash to pay rent or suppliers, 20 bil ion pounds of tax cuts and grants for businesses~~
~~in 2020, a three-month mortgage payment holiday for borrowers affected by the~~
~~virus, and a one-year “business rates” holiday for businesses in the retail, leisure, and~~
~~hospitality industry.~~
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March 28: Wil ease regulations for affected businesses, including simplifying the
~~insolvency system to keep companies trading, easing administrative requirements and~~
~~barriers to the import of personal protective equipment, and helping new companies~~
~~produce and distribute hand sanitizer within a matter of days.~~
~~Vietnam~~
~~State Bank of Vietnam~~
February 24: Ordered commercial banks to eliminate, cut, or delay interest
~~payments on loans to companies facing losses due to the coronavirus outbreak.~~
March 16: Cut by 100 basis points both its refinance rate (to 5%) and the overnight
~~lending rate in the inter-bank market (to 6%), and by 50 basis points its discount rate~~
~~(to 3.5%).~~

~~Government of Vietnam~~
March 3: Announced measures worth 27 tril ion dong ($1.16 bil ion) to help
~~businesses cope with the coronavirus epidemic and help the economy stick to its~~
~~6.8% growth target this year. They include tax breaks, delayed tax payments, and a~~
~~reduction in land lease fees. The government will also speed up state spending on~~
~~infrastructure projects.~~
~~Zimbabwe~~
~~Reserve Bank of Zimbabwe~~
March 26: Cut its main lending rate to 25% from 35% and set a fixed exchange rate
~~(at 25 Zimbabwe dol ars to the U.S. dol ar) as part of measures to support the~~
~~economy. It indicated that it had suspended the managed floating exchange rate~~
~~system to provide for greater certainty in the pricing of goods and services in the~~
~~economy.~~

~~Government of Zimbabwe~~
March 29: Published new exchange control regulations making it legal for
~~Zimbabweans to use electronic and cash foreign currencies in domestic transactions,~~
~~as the country readies for a 21-day lockdown to prevent the spread of COVID-19.~~
~~Multi-Country and~~
March 4: The International Monetary Fund (IMF) made $50 bil ion in loans
~~International~~
~~available to deal with the COVID-19 through its rapid-disbursing emergency financing~~
~~Institutions’~~
~~facilities, including $10 bil ion of zero-interest loans to the poorest IMF member~~
~~Responses~~
~~countries. On March 16, the IMF announced that it “stands ready to mobilize its $1~~
~~tril ion lending capacity to help our membership" and that it has “40 ongoing~~
~~arrangements—both disbursing and precautionary—with combined commitments of~~
~~about $200 bil ion,” some of which could be used for this crisis, and that it is aiming~~
~~to boost its debt relief fund to $1 bil ion from its current level of $400 mil ion.~~
March 3: The World Bank announced an initial package of up to $12 bil ion in
~~loans for countries to help countries cope with the effects of the COVID-19~~
~~outbreak. Specifical y, it comprises up to $2.7 bil ion new financing from IBRD, $1.3~~
~~bil ion from IDA, complemented by reprioritization of $2 bil ion of the Bank’s existing~~
~~portfolio, and $6 bil ion from IFC, as wel as policy advice and technical assistance ($8~~
~~bil ion is new funding and the remaining $4 bil ion is redirected from current lines of~~
~~credit).~~
March 11: The Inter-American Development Bank (IADB) announced that it
~~has up to $2 bil ion in resources that can be programmed to countries requesting~~
~~support for disease monitoring, testing and public health services, and that it could~~
~~work with countries that have undisbursed loan balances to redirect resources to~~
~~pandemic-response efforts.~~
March 13: The ~~European Bank for Reconstruction and Development~~
~~(EBRD)~~ ~~unveiled an emergency €1 bil ion “Solidarity Package” of measures to help~~
~~companies across its regions deal with the impact of the COVID-19 pandemic. Under~~
~~the emergency program, the EBRD wil set up a “resilience framework” to provide~~
~~financing for existing EBRD clients with strong business fundamentals experiencing~~
~~temporary credit difficulties, comprising emergency liquidity, working capital and~~
~~trade finance.~~
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March 15: The Bank of Canada, the Bank of England, the Bank of Japan, the
~~European Central Bank, the U.S. Federal Reserve, and the Swiss National Bank~~
~~agreed to lower the pricing on the standing US dol ar liquidity swap arrangements by~~
~~25 basis points, so that the new rate wil be the US dol ar overnight index swap ( OIS)~~
~~rate plus 25 basis points.~~
March 16: The European Investment Bank Group (EIBG) proposed a 40
~~bil ion euro financing package consists of dedicated guarantee schemes to banks based~~
~~on existing program for immediate deployment (20 bil ion euros), liquidity lines to~~
~~banks to ensure additional working capital support for SMEs and mid-caps (10 bil ion~~
~~euros), and asset-backed securities purchasing programs to al ow banks to transfer~~
~~risk on portfolios of SME loans (10 bil ion euros).~~
March 16: The Islamic Development Bank (IsDB) Group announced that it is
~~setting-up a special “Strategic Preparedness and Response Facility” of $730 mil ion to~~
~~mitigate the negative health and socio-economic impact of the COVID-19 pandemic.~~
~~It wil include $280 mil ion from the Bank and Islamic Solidarity Fund for~~
~~Development (ISFD) for sovereign projects and programs, $300 mil ion from~~
~~International Islamic Trade finance Corporation (ITFC) for trade finance and $150~~
~~mil ion from the Islamic Corporation for the Insurance of Investment and Export~~
~~Credit (ICIEC) for insurance coverage.~~
~~March 16: The Central American Bank for Economic Integration (CABEI)~~
~~granted a nonreimbursable financial package worth $8 mil ion to the eight countries~~
~~of the Central American Integration System in order to combat the widening~~
~~economic fal out from the COVID-19 (Guatemala, El Salvador, Honduras, Nicaragua,~~
~~Costa Rica, Panama, Belize, and the Dominican Republic wil each receive $1 mil ion).~~
March 18: The Asian Development Bank (ADB) announced a $6.5 bil ion initial
~~package to address the immediate needs of its developing member countries (DMCs)~~
~~as they respond to the COVID-19 pandemic. The initial package includes~~
~~approximately $3.6 bil ion in sovereign operations for a range of responses to the~~
~~health and economic consequences of the pandemic, $1.6 bil ion in non-sovereign~~
~~operations for micro, smal , and medium-sized enterprises, domestic and regional~~
~~trade, and firms directly impacted, about $1 bil ion in concessional resources through~~
~~real ocations from ongoing projects and assessing possible needs for contingencies,~~
~~and $40 mil ion in technical assistance and quick-disbursing grants. (Since February~~
~~2020, ADB has provided more than $225 mil ion to meet urgent needs of both~~
~~governments and businesses in DMCs.)~~
March 19: The U.S. Federal Reserve announced the establishment of temporary
~~U.S. dol ar liquidity arrangements (swap lines) with 9 central banks to help lessen~~
~~strains in global U.S. dol ar funding markets. These new facilities wil support the~~
~~provision of U.S. dol ar liquidity in amounts up to $60 bil ion each for the Reserve~~
~~Bank of Australia, the Banco Central do Brasil, the Bank of Korea, the Banco de~~
~~Mexico, the Monetary Authority of Singapore, and the Sveriges Riksbank, and $30~~
~~bil ion each for the Danmarks Nationalbank, the Norges Bank, and the Reserve Bank~~
~~of New Zealand.~~
March 19: The Board of Directors of the New Development Bank approved
~~RMB 7 bil ion ($1 bil ion) Emergency Assistance Program Loan to the People’s~~
~~Republic of China. The Program wil help finance urgent and unexpected public health~~
~~expenditures in Hubei, Guangdong, and Henan.~~
March 20: The Development Bank of Latin America (CAF) announced that it
~~has opened an additional $2.5 bil ion line of credit to support the measures that~~
~~member countries are taking to mitigate the effects of COVID-19. On March 3, it~~
~~approved a credit line worth $300 mil ion to manage emergencies related to COVID-~~
~~19 and the possibility of granting technical help of up to $5 mil ion for initiatives~~
~~related to the outbreak in countries across the region.~~
March 26: The Group of 20 (G20) announced that it would inject “over $5 tril ion
~~into the global economy, as part of targeted fiscal policy, economic measures, and~~
~~guarantee schemes to counteract the social, economic and financial impacts” of~~
~~COVID-19.~~
Source: Congressional Research Service based on information from news articles and press releases.
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~~Global Economic Effects of COVID-19~~

~~Author Information~~

~~James K. Jackson, Coordinator~~
~~Rebecca M. Nelson~~
~~Specialist in International Trade and Finance~~
~~Specialist in International Trade and Finance~~

~~Martin A. Weiss~~
~~Karen M. Sutter~~
~~Specialist in International Trade and Finance~~
~~Specialist in Asian Trade and Finance~~

~~Andres B. Schwarzenberg~~
~~Michael D. Sutherland~~
~~Analyst in International Trade and Finance~~
~~Analyst in International Trade and Finance~~

~~Acknowledgments~~
~~The authors would like to thank and acknowledge the expert assistance provided by Amber Wilhelm,~~
~~Visual Information Specialist, CRS, in the preparation of this report.~~

~~Disclaimer~~
~~This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan~~
~~shared staff to congressional committees and Members of Congress. It operates solely at the behest of and~~
~~under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other~~
~~than public understanding of information that has been provided by CRS to Members of Congress in~~
~~connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not~~
~~subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in~~
~~its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or~~
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~~copy or otherwise use copyrighted material.~~

~~Congressional Research Service~~
~~R46270 · VERSION 68 · UPDATED~~
~~148~~371 Ibid. 372 Ibid. Congressional Research Service 110 Global Economic Effects of COVID-19 Appendix A. Fiscal and Monetary Policy Actions by National Governments: Monthly Chronology April 2020 The Federal Reserve announced on April 8 that it was establishing a facility to fund small businesses through the Paycheck Protection Program. Japan also announced that it was preparing to declare areas around Tokyo to be in a state of emergency and that it would adopt a $989 billion funding package.373 On April 9, OPEC and Russia agreed to cut oil production by 10 million barrels per day.374 On April 15, G-20 finance ministers and central bank governors announced their support for the proposed agreement by Saudi Arabia and Russia to reduce oil production.375 They also announced an agreement to freeze government loan payments until the end of the year to help low-income developing countries address the pandemic and asked international financial institutions to do likewise.376 G-7 finance ministers and central bank governors agreed to support the G-20 proposal to suspend debt payments by developing countries.377 Eurozone finance ministers announced a €500 billion (about $550 billion) emergency spending package to support governments, businesses, and workers. Reportedly, the measure will provide funds to the European Stability Mechanism, the European Investment Bank, and for unemployment insurance.378 In other policy areas, the IMF announced that it was doubling its emergency lending capability to $100 billion, in response to requests from more than 100 countries for assistance.379 The Bank of England announced that it would take the unprecedented move of temporarily directly financing UK government emergency spending needs through monetary measures rather than through the typical method of issuing securities to fight the effects of COVID-19.380 Secretary-General of the United Nations Guterres declared on April 9, 2020, before the United Nations Security Council that the pandemic posed a significant threat to the maintenance of international peace and security and outlined eight specific risks, including the erosion of trust in public institutions, increased risks from terrorism and bioterrorism, and worsening existing human rights abuses.381 373 Takeo, Yuko and Yoshiaki Nohara, “Japan’s Virus Stimulus Package to Come in Two Phases,” Bloomberg, April 5, 2020. https://www.bloomberg.com/news/articles/2020-04-06/japan-s-virus-stimulus-package-to-come-in-two-phases-documents-k8nuj552. 374 Sheppard, David, Anjli Raval, Derek Brower, and Henry Foy, “G20 Ministers Meet to Endorse OPEC-Russia Deal to Slash Oil Production,” Financial Times, April 10, 2020. https://www.ft.com/content/c7a1e2e6-8c17-48d5-8c16-edce911b5cbb. 375 Sheppard, David, Anjli Raval, Derek Brower. and Henry Foy, G20 Backs Largest Oil Supply Agreement in History, Financial Times, April 15, 2020. https://www.ft.com/content/16ac91d8-42bf-4190-88de-f3d89b2b36f4. 376 England, Andrew, Jonathan Wheatley and James Politi, G20 Agrees Debt Relief for Low Income Nations, Financial Times, April 15, 2020. https://www.ft.com/content/5f296d54-d29e-4e87-ae7d-95ca6c0598d5. 377 Politi, James and Jonathan Wheatley, G7 Countries Back Debt Relief For Poorest Nations, Financial Times, April 14, 2020. https://www.ft.com/content/c384ed59-1ca3-476f-9b89-eaf5cf31e42c. 378 Fleming, Sam and Mehreen Khan, “Eurozone Countries Strike Emergency Deal on Coronavirus Rescue,” Financial Times, April 9, 2020. https://www.ft.com/content/b984101a-42b8-40db-9a92-6786aec2ba5c. 379 Politi, James, “IMF Boosts Emergency Lending Capacity to $100bn,” Financial Times, April 9, 2020. https://www.ft.com/content/e46faadc-456b-4cf8-a2fd-2017702747ab. 380 Giles, Chris and Philip Georgiadis, “Bank of England to Directly Finance UK Government’s Extra Spending,” Financial Times, April 9, 2020. https://www.ft.com/content/664c575b-0f54-44e5-ab78-2fd30ef213cb. 381 Secretary-General’s Remarks to the Security Council on the COVID-19 Pandemic [as delivered], United Nations, Congressional Research Service 111 Global Economic Effects of COVID-19 Federal Reserve Chairman Jerome Powell, stating that the U.S. economy was deteriorating “with alarming speed,” announced on April 10 that the Fed would provide an additional $2.3 trillion in loans, including a new financial facility to assist firms by acquiring shares in exchange traded funds that own the debt of lower-rated, riskier firms that are among the most exposed to deteriorating economic conditions associated with COVID-19 and low oil prices.382 On April 16, the U.S. Labor Department reported that 5.2 million Americans filed for unemployment insurance during the previous week, raising the total claims since mid-March to over 22 million.383 According to Chinese official statistics, the Chinese economy shrank by 6.8% on an annual basis during the first quarter of 2020, reportedly the first such contraction in 40 years.384 Financial market indicators rose on April 17, reportedly on an upbeat sentiment that actions taken by the Federal Reserve and other central banks would stabilize conditions in the corporate credit market.385 The price of futures contracts for oil delivery in May 2020 for the U.S. West Texas Intermediate (WTI) fell to $18 per barrel, the lowest it had been since 2002, reportedly reflecting rising inventories and low global demand.386 Leaders of emerging economies in Latin America and Africa argued that the G-20 call for suspension of interest payments fell short of what is needed. National leaders from Columbia, Brazil, Mexico, and Chile encouraged the World Bank, the InterAmerican Development Bank, and the IMF to double their net lending to Latin America, arguing that, “The Covid-19 pandemic is a shock of unprecedented magnitude, uncertain duration and catastrophic consequences that, if not properly addressed, could lead to one of the most tragic episodes in the history of Latin America and the Caribbean.”387 The price of oil fell to its lowest level in two decades on April 19, reportedly reflecting a significant drop in global demand for energy and rising inventories.388 Some Eurozone members reportedly argued for the ECB to create a Eurozone “bad bank” to remove billions of euros in nonperforming debts from banks’ balance sheets to provide more capacity for Eurozone banks at a potentially critical time when banks could see an increase in nonperforming loans.389 The World Bank confirmed that its “pandemic bonds” would pay out $133 billion to the poorest countries affected by the pandemic.390 April 9, 2020. https://www.un.org/sg/en/content/sg/statement/2020-04-09/secretary-generals-remarks-the-security-council-the-covid-19-pandemic-delivered. 382 Rennison, Joe, Robin Wigglesworth, and Colby Smith, “Federal Reserve Enters New Territory with Support for Risky Debt,” Financial Times, April 10, 2020. https://www.ft.com/content/c0b78bc9-0ea8-461c-a5a2-89067ca94ea4. Heather Long, “Fed Chair Powell Says U.S. Economy Deteriorating ‘With Alarming Speed,’” Washington Post, April 9, 2020. https://www.washingtonpost.com/business/2020/04/09/federal-reserve-unveils-over-2-trillion-new-lending-small-businesses-city-governments-big-firms/. 383 Unemployment Insurance Weekly Claims, Department of Labor, April 16, 2020. https://www.dol.gov/ui/data.pdf. 384 Hale, Thomas, Xinning Liu, and Yuan Yang, China’s Economy Shrinks for First Time in Four Decades, Financial Times, April 17, 2020. https://www.ft.com/content/8f941520-67ad-471a-815a-d6ba649d22ed. 385 Smith, Colby, Myles McCormick, Tommy Stubbington, and Hudson Lockett, US Stocks Extend Rally With Central Bank Safety Net, Financial Times, April 17, 2020. https://www.ft.com/content/5ebbc2d8-ade3-4d5c-86f5-49b9478fe03d. 386 Sheppard, David, US Crude Tumbles to 18-year Low as Supply Overwhelms Demand, Financial Times, April 17, 2020. https://www.ft.com/content/d0a0cfc3-765c-4b55-ada7-11e0d378d406. 387 Wheatley, Jonathan, Michael Stott, and David Pilling, Emerging Economies Call for More Financial Help After G20 Deal, Financial Times, April 17, 2020. https://www.ft.com/content/203ed8f5-6bb2-4016-80a9-dd99269bfa26. 388 Lockett, Hudson Lockett and David Sheppard, US Oil Price Plunges to 20-year Low as Coronavirus Hits Demand, Financial Times, April 19, 2020. https://www.ft.com/content/a5292644-958d-4065-92e8-ace55d766654. 389 Arnold, Martin and Javier Espinoza, ECB Pushes for Eurozone Bad Bank to Clean up Soured Loans, Financial Times, April 19, 2020. https://www.ft.com/content/15d17d1d-8e1b-4f84-97b4-b62e6ae8f962. 390 Gross, Anna, World Bank Pandemic Bonds to Pay $133m to Poorest Virus-hit Nations, Financial Times, April 19, Congressional Research Service 112 Global Economic Effects of COVID-19 On April 21, Agricultural Ministers of the G-20 countries released a joint statement that supported measures to “ensure the health, safety, welfare, and mobility of workers in agriculture and throughout the food supply chain.” The joint statement also indicated that the G-20 countries would adopt measures that are “targeted, proportionate, transparent, and temporary, and that they do not create unnecessary barriers to trade or disruption to global food supply chains.” The statement also indicated that the G-20 would, “guard against any unjustified restrictive measures that could lead to excessive food price volatility in international markets and threaten the food security and nutrition of large proportions of the world population, especially the most vulnerable living in environments of low food security.”391 On April 23, the House passed H.R. 266 (P.L. 116-139), the Paycheck Protection Program and Health Care Enhancement Act, following similar actions by the Senate the previous day. The measure provided $484 billion for small business loans, health care providers, and COVID-19 testing. The U.S. Labor Department reported that 4.4 million Americans filed for unemployment insurance in the previous week, raising the total that have applied to over 26 million.392 Indicators of manufacturing and services activity in Europe dropped to their lowest level since 1990, reflecting the impact of the pandemic on the European economy.393 The Bank of England indicated that it would quadruple its borrowing over the second quarter of 2020, reflecting a contraction in the UK economy, lower tax revenues, and increased financial demands to support fiscal policy measures to fight the pandemic.394 The Saudi Presidency of the G-20 called on international organizations on April 24 to fund an emergency response to the pandemic. The Bank of Japan announced on April 27 that it would purchase unlimited amounts of government bonds and quadruple its purchases of corporate debt to keep interest rates low and stimulate the Japanese economy.395 At its April 29 scheduled meeting, the U.S. Federal Open Market Committee left its main interest rates unchanged, but reiterated its commitment to use “its full range of tools to support the U.S. economy.” The policy statement concluded that, “The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”396 The Federal Reserve also announced a change in its eligibility requirements for a $500 billion lending program for municipalities. The statement followed the release of the preliminary estimate of U.S. first quarter GDP, which indicated that the economy had contracted by an annualized rate of 4.8% (revised to 5.0%).397 On April 30, the Department of Labor released its weekly data on applications for unemployment insurance, which indicated that an additional 3.8 million people had filed for unemployment 2020. https://www.ft.com/content/c8556c9f-72f7-48b4-91bf-c9e32ddab6ff. 391 G20 Extraordinary Agriculture Ministers Meeting: Statement on COVID-19, G-20, April 21, 2020. https://g20.org/en/media/Pages/pressroom.aspx. 392 Unemployment Insurance Weekly Claims, April 23, 2020. https://www.dol.gov/ui/data.pdf. 393 Arnold, Martin and Valentina Romei, European Business Activity Crashes Under Coronavirus Lockdowns, Financial Times, April 23, 2020. https://www.ft.com/content/8520895f-3249-4a8b-b0e5-881a64e77971. 394 Giles, Chris, and Tommy Stubbington, UK Treasury to Quadruple Borrowing to £180bn Over Next Quarter, Financial Times, April 23, 2020. https://www.ft.com/content/8886e002-c260-4daa-8b7b-509b3f7e6edb. 395 Harding, Robin, Bank of Japan Steps up Coronavirus Stimulus With Bond-buying Pledge, Financial Times, April 27, 2020. https://www.ft.com/content/7ba5c507-df9e-4107-87eb-73afa2c13e91. 396 Federal Reserve Issues FOMC Statement, Board of Governors of the Federal Reserve System, April 29, 2020. https://www.federalreserve.gov/newsevents/pressreleases/monetary20200429a.htm. 397 Gross Domestic Product, First Quarter 2020 (Advance Estimate), Bureau of Economic Analysis, April 29, 2020. https://www.bea.gov/. Congressional Research Service 113 Global Economic Effects of COVID-19 insurance during the week, raising the total number who had applied to 30 million.398 The Federal Reserve also announced an expansion in its medium-size business loan program by allowing firms with up to 15,000 employees or with revenues up to $5 billion to access a new $600 billion program. In addition, the Fed lowered the minimum loan amount for small businesses and announced a loan program to assist riskier businesses.399 At the same time, the ECB expanded a record low-interest rate loan program for Eurozone banks to support economic activity, while warning that the Eurozone economy could contract between 5% and 12% in 2020 as it faces, “an economic contraction of a magnitude and speed that are unprecedented in peacetime.”400 The ECB also announced a new nontargeted low-interest rate pandemic emergency longer-term refinancing operation (PELTROs) to complement its Pandemic Emergency Refinance Operations announced in March.401 House Speaker Pelosi stated that House Democrats were considering a $1 trillion spending bill to support state and local governments.402 In a development that seemed incongruous with the broader economic situation, between April 1, 2020, and April 30, 2020, the DJIA rose more than 3,400 points, or 16%, marking the strongest monthly increase since 1987.403 May 2020 On May 5, Germany’s Constitutional court issued a ruling that could prevent the German central bank, the Bundesbank, from making additional bond purchases under the Pandemic Emergency Purchase Program (PEPP). The ECB’s program is intended to ease borrowing costs across the Eurozone to stimulate economic growth. The U.S. Census Bureau reported on May 5 that U.S. exports and imports fell in March; exports fell by a greater amount than imports, thereby increasing the monthly U.S. goods and services trade deficit. The trade balance for March was -$44.5 billion, an increase of about $4.6 billion over the trade deficit in February. The decline in export and import values reflected lower imports and exports of both goods and services. On May 6, the European Commission released its spring economic forecast, which indicated that economic activity in the EU would decline by 7.4% in 2020 as a result of measures to contain the pandemic. The Commission forecast that economic growth would advance by 6.0% in 2021, assuming the containment measures can be lifted gradually, the viral effects remain contained, and that the fiscal and monetary measures implemented by the EU members are effective in blunting the negative effects on economies.404 On May 7, the Labor Department announced that 398 Unemployment Insurance Weekly Claims, April 30, 2020. https://www.dol.gov/ui/data.pdf. 399 Politi, James, Colby Smith and Robert Armstrong, Federal Reserve Extends $600bn Main Street Lending Program. Financial Times, April 30, 2020. https://www.ft.com/content/46fdc853-1d7d-49af-93e8-f12e0d006fc2. 400 Introductory Statement, European Central Bank, April 29, 2020. https://www.ecb.europa.eu/press/pressconf/2020/html/ecb.is200430~ab3058e07f.en.html. 401 Arnold, Martin and Tommy Stubbington, ECB Launches Fresh Push to Lend to Banks at Ultra-low Rates, Financial Times, April 30, 2020. https://www.ft.com/content/cef090d0-97dc-4e75-a4b1-deebfd4afacf. 402 Werner, Erica, Pelosi Points to $1 Trillion Need for State and Local Governments in Next Coronavirus Bill, Washington Post, April 30, 2020. https://www.washingtonpost.com/us-policy/2020/04/30/congress-coronavirus-economy/. 403 Henderson, Richard Henderson, Robin Wigglesworth, and Katie Martin, U.S. Stocks Close Out Best Month Since 1987 in Global Rebound, Financial Times, April 30, 2020. https://www.ft.com/content/88e57ec9-42d4-455d-a045-293a6a54837d. 404 European Economic Forecast Spring 2020, European Commission, May 2020. https://ec.europa.eu/commission/presscorner/detail/en/ip_20_799. Congressional Research Service 114 Global Economic Effects of COVID-19 2.7 million Americans had filed for unemployment insurance during the week, raising the total that had filed over the previous seven weeks to 33 million.405 On May 8, the U.S. Department of Labor announced that 20.5 million Americans had lost their jobs in April, pushing the national unemployment rate to 14.5%. Despite the rise in the unemployment rate, the DJIA rose by 2.0%, reportedly based on optimism that the monetary policy actions the Federal Reserve, the ECB, and the Bank of Japan had taken to support financial markets would stabilize and stimulate the markets and optimism that the health crisis is ebbing.406 On May 12, House Democrats introduced H.R. 6800, the Heroes Act, to provide a $3 trillion supplemental spending bill for additional financial resources to state and local governments and for other purposes. The measure passed the House on May 15 and was sent to the Senate for consideration. On May 13, the UK Office of National Statistics reported that UK GDP contracted by 2.0% in the first quarter, the largest decline in the UK’s GDP since 2008 with all major economic sector affected.407 On May 14, the U.S. Department of Labor announced that an additional 2.4 million Americans had filed for unemployment insurance during the previous week, increasing the total number filing for unemployment insurance over the previous eight weeks to 36 million.408 On May 18, German Chancellor Angela Merkel and French President Emmanuel Macron proposed a €500 billion (about $620 billion) EU recovery fund in an effort to gain a coordinated EU fiscal response to the pandemic.409 The Department of Labor announced on May 21 that an additional 2.4 million Americans had filed for Unemployment Insurance, raising the total to 38.4 million over the previous nine weeks.410 On May 27, European Commission President Ursula von der Leyen proposed a €750 billion (about $825 billion) coronavirus recovery plan to provide loans and grants to the hardest hit EU economies and changes to the EU budget. The Japanese Cabinet proposed a second supplemental appropriation measure that includes $296 billion in spending and a total value of about $1.1 trillion in loans and guarantees, funded through new bonds.411 On May 28, the Department of Labor announced that an additional 1.9 million (revised) Americans filed for Unemployment Insurance, raising the ten-week total to 42.6 million.412 June 2020 On June 4, the U.S. Census Bureau reported that U.S. imports fell by 13.7% and exports fell by 20.5% in April, increasing the monthly current account deficit and registering the largest decline 405 Unemployment Insurance Weekly Claims, May 5, 2020. https://www.dol.gov/ui/data.pdf. 406 Platt, Eric, Colby Smith, Adam Samson, and Hudson Lockett, Wall Street closes higher despite dire US jobs data, Financial Times, May 8, 2020. https://www.ft.com/content/a9999ef1-1373-41b7-8d55-d780fd06825d. 407 GDP Monthly Estimate, UK: March 2020, Office for National Statistics, May 13, 2020. https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/march2020. 408 Unemployment Insurance Weekly Claims, May 14, 2020. https://www.dol.gov/ui/data.pdf. 409 Fleming, Sam, Victor Mallet, and Guy Chazan, Germany and France Unite in Call for €500 Billion Europe Recovery Fund, Financial Times, May 18, 2020. https://www.ft.com/content/c23ebc5e-cbf3-4ad8-85aa-032b574d0562. 410 Unemployment Insurance Weekly Claims, May 21, 2020. https://www.dol.gov/ui/data.pdf. 411 Harding, Robin, Japan’s Cabinet Approves Extra $1.1 Trillion Budget to Counter Recession, Financial Times, May 27, 2020. https://www.ft.com/content/ce7f3564-c997-339c-ad3d-c6d092fb7f1e. 412 Unemployment Insurance Weekly Claims, May 29, 2020. https://www.dol.gov/ui/data.pdf. Congressional Research Service 115 Global Economic Effects of COVID-19 in U.S. trade since the global financial crisis.413 In addition, the Labor Department announced that an additional 1.9 million Americans filed for unemployment insurance, increasing the 11-week total to 44 million.414 The European Central Bank announced that it would double to $1.5 trillion its Pandemic Emergency Purchase Program to stimulate the European economy.415 The DJIA rose by more than 800 points on June 5 as a positive jobs report, apparently signaling to some that the U.S. economy would recover quickly from the pandemic-driven economic downturn.416 OPEC and Russia reportedly agreed on June 7 to maintain their cuts in oil production for one additional month in an effort to raise international oil prices.417 On June 8, the DJIA rose nearly 2% reportedly on positive jobs data, extending gains in the value of the index and rising to its highest level since late February.418 Most foreign markets indices similarly rose. The World Bank forecasted that emerging and developing economies would contract in 2020 for the first time in 60 years.419 On June 11, the DJIA fell by more than 1,800 points, or 6.9% reportedly on fears that a spike in new coronavirus cases signaled the pandemic was not contained and over concerns about U.S. economic growth as a result of projections by the Federal Reserve that were interpreted as gloomy.420 The Labor Department reported that an additional 1.57 million Americans filed for unemployment insurance during the previous week, raising the 12-week total from mid-March to 44 million Americans.421 According to a report by Eurostat on June 12, industrial production in the Eurozone fell by 17.1% in April, reportedly the largest decline in production recorded since records began in 1991. The decline reflects lower levels of economic activity in manufacturing and construction throughout the Eurozone.422 The Federal Reserve released its semi-annual Monetary Policy Report.423 The Institute of International Finance reported on June 15, that capital outflows from developing economies had reversed with funds flowing back into developing economies, primarily by bond issuance through the international bond market, rather than by refinancing existing debt.424 413 Monthly U.S. International Trade in Goods and Services in April 2020, U.S. Census Bureau, June 4, 2020. https://www.census.gov/foreign-trade/data/index.html. 414 Unemployment Insurance Weekly Claims, June 4, 2020. https://www.dol.gov/ui/data.pdf. 415 Arnold, Martin, ECB Boosts Bond-Buying Stimulus Package by €600, Financial Times, June 4, 2020. https://www.ft.com/content/c59ab92d-e614-4284-a028-46ee3bcf92f9. 416 Telford, Taylor, and Thomas Heath, Dow Soars 1,000 Points as Wall Street Closes in on Pre-Pandemic Levels, Washington Post, June 5, 2020. https://www.washingtonpost.com/business/2020/06/05/stocks-market-today-coronavirus-economy/. 417 Sheppard, David, Anjli Raval, and Derek Brower, OPEC and Russia Agree to Extend Record Oil Supply Cuts, Financial Times, June 7, 2020. https://www.ft.com/content/88747416-0fc4-4808-999f-753793589ca7. 418 Dempsey, Harry, Bryce Elder, and Hudson Lockett, U.S. Stocks Erase Losses for the Year, Financial Times, June 8, 2020. https://www.ft.com/content/1dfaeb58-6d65-4f17-b710-b1ebc6622649. 419 Politi, James, Emerging Economies Forecast to Shrink for First Time in 60 Years, Financial Times, June 8, 2020. https://www.ft.com/content/47998ee3-b2d3-4066-a914-edbf60b797b5. 420 Seigel, Rachel and Thomas Heath, Dow Slides More Than 1,800 Points on Fears of Coronavirus Resurgence, More Economic Pain, Washington Post, June 11, 2020. https://www.washingtonpost.com/business/2020/06/11/markets-today-fed-coronavirus/. 421 Unemployment Insurance Weekly Claims, Department of Labor, June 11, 2020. https://www.dol.gov/ui/data.pdf. 422 Arnold, Martin, Eurozone Industrial Production Falls by Record 17.1% in April, Financial Times, June 12, 2020. https://www.ft.com/content/e3301cd6-27ce-35f0-829a-c6613849b378. 423 Board of Governors of the Federal Reserve System, Monetary Policy Report, June 12, 2020. https://www.federalreserve.gov/monetarypolicy/2020-06-mpr-summary.htm 424 Wheatley, Jonathan, Developing Economies Borrow More Despite Debt Relief Initiative, Financial Times, June 15, Congressional Research Service 116 Global Economic Effects of COVID-19 In testimony before the Senate Banking Committee on June 17, Federal Reserve Chairman Powell stressed that although there were positive signs that U.S. economic growth was beginning to rebound, there was “significant uncertainty” about the timing and strength of the recovery.425 On June 17, the Bank of Japan announced that it was maintaining its low interest rates even as it increased its coronavirus lending facility to $1 trillion.426 The U.S. Energy Information Administration reported that U.S. crude oil production fell to its lowest point since March 2018, while stockpiles reached record highs. The price of Brent crude reached $41 per barrel, encouraging some U.S. producers to consider restarting wells that were closed when prices dropped to around $20 per barrel.427 On June 18, the Department of Labor announced that an additional 1.54 million Americans filed for unemployment during the week, raising the 13-week total to 45.7 million Americans.428 During May, U.S. retail sales increased by 17.7% as some businesses began reopening and increasing optimism in financial markets that economic activity was on course for a quick recovery. Concerns over trade disputes and a rise in new coronavirus cases, however, reportedly overcame the optimism of increased sales and were factors in DJIA losses on June 24 of more than 700 points. In addition, the IMF issued its updated economic outlook, forecasting that global economic growth would contract by 4.9% in 2020, compared with an April forecast of a decline of 3.0%.429 On June 25, the ECB and the German government announced they had reached a tentative accord to end the conflict over the ECB’s bond-buying program.430 Elsewhere, the Labor Department reported that an additional 1.48 million Americans filed for unemployment insurance, raising the 14-week total from mid-March to over 47 million.431 Between June 1 and June 26, the DJIA posted 13 days with gains and 7 days of declines, with the DJIA value at the end of the period nearly the same as it was in early March 2020. On June 24 and 26, the DJIA index fell by more than 700 points, reportedly over investors’ concerns over a spike in new coronavirus cases in various U.S. States.432 Also on June 25, the Federal Reserve announced the result of stress tests on 33 U.S. banks under 3 scenarios433 to ascertain their capital sufficiency given the strains to the financial system caused by COVID-19.434 The Fed reported that all large U.S. banks are 2020. https://www.ft.com/content/54c545aa-01b5-4e95-8adc-e680f5d82be1. 425 Powell, Jerome H., Semiannual Monetary Report to the Congress, June 16, 2020. https://www.federalreserve.gov/newsevents/testimony/powell20200616a.htm. 426 Harding, Robin, Bank of Japan Pledges $1 Trillion in Coronavirus Lending, Financial Times, June 17, 2020. https://www.ft.com/content/5d8e5df2-dfb6-44f1-a434-ab8a745d37ba. 427 Brower, Derek, U.S. Oil Production Drops to Lowest Point Since 2018, Financial Times, June 17, 2020. https://www.ft.com/content/6b877160-28e4-4ddf-8959-2a7cd0acd4ba. 428 Unemployment Insurance Weekly Claims, Department of Labor, June 18, 2020. https://www.dol.gov/ui/data.pdf. 429 World Economic Outlook Update, p. 5. 430 Arnold, Martin, Berlin and ECB Signal End to Legal Impasse to Bond-Buying, Financial Times, June 22, 2020. https://www.ft.com/content/5f000a25-3d54-4610-8579-cab9b21759ee. 431 Unemployment Insurance Weekly Claims, Department of Labor, June 25, 2020. https://www.dol.gov/ui/data.pdf. 432 Elder, Bryce, Sarah Provan, and Hudson Lockett, U.S. Stocks End Lower as States Roll Back Reopening Measures, Financial Times, June 26, 2020. https://www.ft.com/content/5013d097-c1bf-4ed9-979a-842749e5956a. 433 The three scenarios include (1) a rapid, or “V”-shaped recovery; (2) a slower, or “U”-shaped recovery; and (3) a “W”-shaped or double-dip recession with a short-lived recovery followed by a severe drop in activity later this year due to a second COVID event. Assessment of Bank Capital During the Recent Coronavirus Event, Board of Governors of the Federal Reserve System, June 2020, p. 2. 434 Ibid. Congressional Research Service 117 Global Economic Effects of COVID-19 “sufficiently capitalized” to survive the three scenarios.435 Both the IMF and the WTO released forecasts indicating that global trade had declined sharply in the first quarter of 2020 and was projected to post similarly sharp declines for the year. By the end of June, the international price of crude had risen slightly above $40 per barrel, regaining about half the value it had lost during the first quarter of 2020. July 2020 The Department of Labor announced on July 2 that an additional 1.4 million Americans had filed for Unemployment Insurance, raising the total to 48.7 million over the 15-week period from mid-March.436 The insured seasonally adjusted unemployment rate in June was estimated at 13.2%, unchanged from the revised rate in the previous week. On July 2, the BLS also released data on the employment situation in June, indicating that nonfarm payroll rose by 4.8 million, lowering the unemployment rate to 11.5%. The Census Bureau also released U.S. trade data for May indicating that the U.S. merchandise trade deficit rose by nearly 10% over that recorded in April as exports fell by more than imports.437 On July 9, the BLS reported that an additional 1.3 million Americans filed for Unemployment Insurance, raising the 16-week total from mid-March to 50 million.438 On July 17, the European Council met to approve a proposed plan to provide an additional €750 billion in pandemic support funds to assist European economies. Negotiations failed to produce an agreement and talks continued over the weekend and resumed on July 20. On July21, however, European leaders announced they had agreed to a €750 billion (about $859 billion) pandemic economic relief package. On July 29, the Federal Open Market Committee (FOMC) announced it was not changing key interest rates. It also announced that it was extending foreign currency swap lines and a number of its lending facilities. Federal Reserve Chairman Powell indicated “The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.” On July 30, second quarter GDP data indicated that U.S. economic output fell by 9.5% from the previous quarter, but at an annualized rate of 33%. The Department of Labor also announced that an additional 1.4 million individuals applied for unemployment insurance during the previous week, raising the 19-week total to 54 million. August 2020 On August 20, the Department of Labor announced that an additional 1.1 million workers filed for unemployment insurance during the previous week, raising the total over the 22-week period from mid-March to mid-August 2020 to 56 million Americans who had filed for unemployment insurance.439 On a seasonally adjusted basis, the number of insured unemployed workers was 14.8 million in mid-August, down from a peak of 25 million in mid-May. The total number of people claiming benefits in all programs in the week ending August 1, totaled 28 million, up from 1.7 435 Ibid., pp. 1-2. 436 Unemployment Insurance Weekly Claims, July 1, 2020. https://www.dol.gov/ui/data.pdf. 437 Monthly U.S. International Trade in Goods and Services, May 2020, U.S. Census Bureau, July 2, 2020. https://www.census.gov/foreign-trade/data/index.html. 438 Unemployment Insurance Weekly Claims, July 9, 2020. https://www.dol.gov/ui/data.pdf. 439 Unemployment Insurance Weekly Claims, Department of Labor, August 20, 2020. https://www.dol.gov/. Congressional Research Service 118 Global Economic Effects of COVID-19 million in the comparable week in 2019. The insured unemployment rate was 10.2%, also down from the peak reached in early May. The Bank of England announced through its standard Monetary Policy Committee meeting that it would maintain its key interest rate at 0.1% and continue its purchases of UK government bond and nonfinancial investment-grade corporate bonds.440 September 2020 On September 17, the Department of Labor announced that over the 26-week period from mid-March to mid-September 2020, 61 million Americans filed for unemployment insurance.441 On a seasonally adjusted basis, the number of insured unemployed workers was 12.6 million in late August, down from a peak of 25 million in mid-May. The total number of people claiming benefits in all programs in the week ending August 29, totaled 29.7 million, up from 1.6 million in the comparable week in 2019. The insured unemployment rate was 8.6%, also down from the peak reached in early May. On September 4, BLS reported that nonfarm employment increased by 1.4 million in August, reducing the total number of unemployed Americans to 13.6 million442 and pushing the unemployment rate down to 8.4%, again with some caveats.443 On September 29, 2021, global deaths from COVID-19 surpassed one million. October 2020 On October 1, IMF Managing Director Kristalina Georgieva warned there was a risk of a rise in sovereign bankruptcies unless temporary debt relief measures adopted early in the year were extended and sovereign debt contracts and processes are overhauled.444 On October 2, BLS reported that nonfarm employment increased by 661,000 in September, reducing the total number of unemployed Americans to 13.6 million445 and pushing the unemployment rate down to 7.9%, again with some caveats.446 President Trump announced that he had tested positive for COVID-19. 440 Monetary Policy Report August 2020, Bank of England, August 6, 2020. 441 Unemployment Insurance Weekly Claims, Department of Labor, September 17, 2020. https://www.dol.gov/; Romm, Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-coronavirus/ 442 This total does not include 7.6 million workers who were working part time not by choice and 7.0 million individuals who were seeking employment. 443 The Employment Situation-August 2020, Bureau of Labor Statistics, September 4, 2020, https://www.bls.gov/. BLS indicated that some individuals were misclassified in previous months. Instead of being classified as unemployed, they were misclassified as employed, but absent from work due to coronavirus-related business closures. If such individuals had been classified as unemployed, the unemployment rate would have been 5 percentage points higher in April. 444 Smith, Colby, IMF Calls for Urgent Action to Prevent Debt Crisis in Emerging Economies, Financial Times, October 1, 2020. https://www.ft.com/content/b61c8dea-58bc-476d-ae9f-c2de104808de. 445 This total does not include 7.6 million workers who were working part time not by choice and 7.0 million individuals who were seeking employment. 446 The Employment Situation-August 2020, Bureau of Labor Statistics, September 4, 2020, https://www.bls.gov/. BLS indicated that some individuals were misclassified in previous months. Instead of being classified as unemployed, they were misclassified as employed, but absent from work due to coronavirus-related business closures. If such individuals had been classified as unemployed, the unemployment rate would have been 5 percentage points higher in April. Congressional Research Service 119 Global Economic Effects of COVID-19 On October 29, DOL reported that over the 32-week period from mid-March to late October 2020, about 66 million Americans filed for unemployment insurance.447 On a seasonally adjusted basis, the number of insured unemployed individuals was 7.8 million in late October, down from a peak of 25 million in mid-May. On October 30, UK Prime Minister Boris Johnson announced the resurgence of coronavirus cases in the UK and called for another countrywide business lockdown. In response the resurgence of coronavirus cases across Europe, financial markets lost value; the Dow Jones Industrial Average lost more than 1.800 points in the last week of October, or more than 4% of its value. November 2020 In the first three days of November, the DJIA regained three-fourths of the value lost during the previous week as congressional leaders and the Trump Administration signaled the possibility of a new stimulus package to support the U.S. economy. Preliminary forecasts indicate that India’s economy contracted by 8.6% in the third quarter of 2020, reportedly reflecting increased consumer activity.448 On November 12, India’s finance minister announced a new package of fiscal measures totaling $35 billion to increase consumer spending and to assist manufacturing, agriculture, and exports. The move followed an announcement by India’s cabinet that it had approved a spending package of $27 billion to provide in incentives over five years to manufacturing firms, including automobiles, auto parts, pharmaceuticals, textiles, and food products.449 On November 12, the DOL reported that over the 35-week period from mid-March to the first week of November 2020, about 67.4 million Americans had filed for unemployment insurance.450 On a seasonally adjusted basis, the number of insured unemployed individuals was 6.8 million in late October, down from a peak of 25 million in mid-May. Weekly claims have fallen from the sharp increases recorded in April and May, declining to 709,000 in the week ending November 7, after totaling 751,00 the previous week, four times higher than the average number of weekly claims of about 200,000 recorded prior to the COVID-19 pandemic. On November 15, 15 countries, including Brunei, Colombia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam. Australia, China, Japan, New Zealand, and South Korea, signed the Regional Comprehensive Economic Partnership (RCEP) to create potentially one of the largest free trade agreements. The agreement will need to be ratified by the signatory governments. On November 19, 2020, the DOL reported that over the 36-week period from mid-March to mid-November 2020, about 68.2 million Americans had filed for unemployment insurance. 451 Weekly 447 Unemployment Insurance Weekly Claims, Department of Labor, October 29, 2020. https://www.dol.gov/; Romm, Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-coronavirus/ 448 RBI Bulletin – November 2020, Reserve Bank of India, November 2020. 449 Sharma, Ashok, India Announces $35 Billion Economic Stimulus Package, ABCNews, November 12, 2020. https://abcnews.go.com/International/wireStory/india-announces-35-billion-economic-stimulus-package-74165709. 450 Unemployment Insurance Weekly Claims, Department of Labor, November 12, 2020. https://www.dol.gov/; Romm, Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-coronavirus/ 451 Unemployment Insurance Weekly Claims, Department of Labor, November 19, 2020. https://www.dol.gov/. Congressional Research Service 120 Global Economic Effects of COVID-19 claims rose to 742,000 in the week ending November 14, increasing from 711,000 the previous week, marking the first increase in weekly claims since October 10, 2020. December 2020 On December 3, OPEC and Russia agreed to increase oil output by 500,000 barrels per day starting in January 2021, below a previously discussed increase of 2 million barrels per day, as pandemic-related lags in global economic recovery curtail global oil demand. On December 4, the BLS indicated that the U.S. economy added 245,000 jobs in November, nearly half the 610,000 jobs added in October, raising concerns that the U.S. economic recovery had stalled.452 The DOL reported on December 10 that over the 39-week period from mid-March to the beginning of December 2020, over 70 million Americans had filed for unemployment insurance.453 Week-over-week new claims totaled 863,000 in the week ending December 5, increasing by 146,000 from the previous week’s total of 716,00, four times higher than the average number of weekly claims of about 200,000 recorded prior to the COVID-19 pandemic. Also, in trading December 10, the price of Brent crude oil breached the $50 per barrel mark for the first time since March 2020. On December 14, the United States began administering the COVID-19 vaccine. U.S. equity market values fell as investors reportedly debated the prospects for a new stimulus package in the United States and a resurgence in COVID-19 cases in New York, Boston, and London raised concerns over a resumption of lockdowns.454 On December 17, the DOL announced that on a week-over-week basis, new claims for unemployment insurance totaled 885,000 in the week ending December 12, increasing by 23,000 from the previous week’s total of 862,00. In the week ending November 28, 20.6 million people claimed benefits in all programs. The insured unemployment rate for the week ending December 5 was 3.8%. On December 22, BEA released updated data on U.S. GDP growth for the third quarter, indicating the economy grew by 33.4%, outpacing the 31.4% decline recorded in the second quarter. January 2021 On January 8, 2021, BLS reported that U.S. nonfarm employment fell by 140,000 in December, down from the previous month’s increase of 336,000: the total number of unemployed Americans 452 The Employment Situation-December 2020, Bureau of Labor Statistics, January 8, 2021, https://www.bls.gov/. BLS 453 Unemployment Insurance Weekly Claims, Department of Labor, January 21, 2021. https://www.dol.gov/; Romm, Tony and Jeff Stein, 2.4 Million Americans Filed Jobless Claims Last Week, Bringing Nine Week Total to 38.6 Million, Washington Post, May 21, 2020. https://www.washingtonpost.com/business/2020/05/21/unemployment-claims-coronavirus/ 454 Platt, Eric, Naomi Rovnick, and Camilla Hodgson, S&P Slides for Fourth Straight Day, Financial Times, December 14, 2020. https://www.ft.com/content/898ca316-9bbf-3c20-b137-2dbdba93c800; Rovnick, Naomi, and Camilla Hodgson, Equities and Sterling Lifted by Extension to EU-UK Trade Talks, Financial Times, December 14, 2020, https://www.ft.com/content/4f65ee35-9957-4bab-91c4-9f76c0a44a2b; Cameron-Chileshe, Jasmine, Alice Hancock, Sebastian Payne, and George Parker, London to Enter Toughest Coronavirus Restrictions, Financial Times, December 14, 2020, https://www.ft.com/content/626f2e3a-ac8f-401d-818a-01120cab3284. Congressional Research Service 121 Global Economic Effects of COVID-19 was unchanged from the previous month at 10.7 million,455 the unemployment rate stayed constant at 6.7%. On January 13, the House of Representatives impeached President Donald Trump. On January 15, the global number of deaths associated with COVID-19 surpassed two million. On January 19, deaths in the United States associated with COVID-19 surpassed 400,000. On January 28, the DOL indicated that during the 46-week period from mid-March 2020 to end-January 2021, over 76 million Americans had filed for unemployment insurance. On a seasonally adjusted basis, the number of insured unemployed individuals was 4.8 million in mid-January 2021, down from a peak of 25 million in mid-May. On a week-over-week basis, new claims totaled 847,000 in the week ending January 23, 2021, decreasing by 67,000 from the previous week’s total of 914,000; in the week ending January 9, 18.3 million people claimed benefits in all programs. The Bureau of Economic Analysis (BEA) announced that during the fourth quarter of 2020, the U.S. economy grew by 4.0% at an annual rate; the overall rate of growth for 2020 was estimated at -3.5%, reflecting negative rates of growth in personal consumption (-3.9%), investment (-5.3), and exports (-13.0%) and imports (-9.3); government consumption and investment (federal, state, and local) grew by 1.1%. February 2021 On February 4, 2021, the Department of Labor reported that new claims for unemployment insurance totaled 779,000 in the week ending January 30, 2021, raising the total claims filed during the 47-week period from mid-March 2020 to end-January 2021 to over 77 million Americans. In the week ending January 16, 2021, 17.8 million people claimed benefits in all programs; the insured unemployment rate was 3.2%. On February 5, 2021, BLS reported that the total number of unemployed Americans in January 2021 declined to 10.1 million and that the unemployment rate had fallen to 6.3%. The DOL reported on February 18 that during the 49-week period from mid-March 2020 to mid-February 2021, nearly 79 million Americans had filed for unemployment insurance. On a seasonally adjusted basis, the number of insured unemployed individuals was 4.5 million in early-February 2021, down from a peak of 25 million in mid-May. On February 22, 2021, the United States announced that it had surpassed 500,000 deaths caused by COVID-19. March 2021 On March 3, 2021, UK Chancellor of the Exchequer Sunak announced a £65 billion stimulus package over two years to revive the UK economy, to be followed by tax increases starting in 2023. In the United States, the House of Representatives was set to pass a Senate-amended $1.9 trillion COVID-related economic stimulus bill during the week of March 8, 2021, with President Biden prepared to sign the legislation. On March 4, 2021, the Labor Department reported that over 80 million Americans (half of the 160 million civilian work force) had filed for unemployment insurance since mid-March 2020. 455 This total does not include 6.2 million workers who were working part time not by choice and 7.3 million individuals who were seeking employment. Congressional Research Service 122 Global Economic Effects of COVID-19 On a seasonally adjusted basis, the number of insured unemployed individuals was 4.3 million; and by the end of February 2021, 18 million people claimed benefits in all programs. Developed economies, including Britain, Switzerland, the EU, and the United States, blocked a proposal by over 80 developing countries at the World Trade Organization to suspend intellectual property rights restrictions on production of COVID-19 vaccines. On March 26, 2021, Germany’s highest court stopped a law that would have ratified the EU Pandemic Emergency Purchase Program (PEPP) bond-buying program. The program requires ratification by each of the EU member’s national parliaments. The legislation had been passed by both of Germany’s houses of Parliament and was expected to be signed by German president, Frank-Walter Steinmeier, when the court intervened. April 2021 On April 25, India reported a single-day total of 350,000 new cases. Brazil reportedly has had over 350,000 viral-related deaths: in some cities in Brazil, COVID-related daily deaths have outnumbered daily births. A group of 175 former world leaders and Nobel laureates called on the United States to suspend intellectual property rights for COVID-19 vaccines to facilitate the international production and distribution by allowing developing countries the ability to manufacture their own vaccines. The group warned that, “….inequitable vaccine access would impact the global economy and prevent it from recovering.” May 2021 On May 5, the Biden administration announced it would support international discussions to waive intellectual property restrictions on COVID-19 vaccines. June 2021 On June 1, OPEC ministers and other oil producers announced they would slowly increase oil output in response to rising demand for energy as the global economy revives from the depths of the pandemic-related economic recession. International oil market prices rose above $71 per barrel for the first time since January 2018.456 Brazil’s first quarter rate of economic growth rose by over 1% from the previous quarter, besting forecasts and raising expectations that economic growth could return to pre-pandemic rates sooner than had been forecasted.457 456 Raval, Anjli, and David Sheppard, Oil Prices Rally as OPEC+ Producers Agree Slow Supply Increase, Financial Times, June 1, 2021. https://www.ft.com/content/e74a09b0-9ce3-46f0-95b9-5fa7f0792dce. 457 Harris, Bryan, Brazil’s GDP Surges Back to Pre-Pandemic Levels, Financial Times, June 1, 2021. https://www.ft.com/content/9c930e22-6616-413b-a40e-3f21a2315010. Congressional Research Service 123 Global Economic Effects of COVID-19 Appendix B. Table A-1. Select Measures Implemented and Announced by Major Economies in Response to COVID-19 United States U.S. Federal Reserve March 3: Cut the target range for the federal funds rate by 0.5 percentage point. March 12: Expanded reverse repo operations, adding $1.5 tril ion of liquidity to the banking system. March 15: Cut the target range for the federal funds rate by a ful percentage point to a range of 0.00% to 0.25% and restarted quantitative easing with the purchase of at least $500 bil ion in Treasury securities and $200 bil ion in mortgage-backed securities. March 16: Increased reverse repo operations by another $500 bil ion. March 17: U.S. Treasury Secretary Mnuchin approved the Federal Reserve’s creation of a “Commercial Paper Funding Facility," (CPFF) through March 17, 2021, which wil allows the Fed to create a corporation which can purchase commercial paper, short-term, unsecured loans made by businesses for everyday expenses and authorized up to $10 bil ion from the Treasury to help cover loan losses incurred under this program. March 17: Relaunched the Primary Dealer Credit Facility (PDCF) for at least six months. Starting March 20, the PDCF wil offer short-term loans to banks secured by col ateral such as municipal bonds or investment-grade corporate debt. March 18: Launched the Money Market Mutual Fund Liquidity Facility (MMLF) through the end of September, a new program to lend money to banks so they can purchase assets from money market funds. Treasury is offering up to $10 bil ion to cover loan losses the Fed incurs from the program. March 23: Announced a series of measures designed to stabilize markets, enhance liquidity and stimulate growth. The measures included the rol out of 2 new facilities, the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds. The FOMC removed its caps on planned QE purchases and wil now purchase Treasuries and agency mortgage-backed securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.” U.S. Congress March 5: Passed, and the President signed, a bil providing $8.3 bil ion in emergency funding for federal agencies to respond to the COVID-19 outbreak (H.R. 6074: COVID-19 Preparedness and Response Supplemental Appropriations Act 2020). March 13: The House of Representatives passed a COVID-19 response package (H.R. 6201; P.L. 116-127, Families First COVID-19 Response Act); measure was signed by President Trump on March 18, 2020. The measure appropriates about $100 bil ion and includes tax credits for employers offering paid sick leave and increases to unemployment benefits and food assistance. March 19: The Senate introduced the COVID-19 Aid, Relief, and Economic Security Act (S. 3548) to provide $2.0 tril ion in assistance to businesses and workers. March 27: Passed, and the President signed, the COVID-19 Aid, Relief, and Economic Security Act (CARES Act, H.R. 748, P.L. 116-136), a $2.1 tril ion fiscal stimulus package. It includes $454 bil ion in loans for businesses, $349 bil ion in loans for small businesses, $300 bil ion for direct payments of $1,200 each for lower- and middle-income individual taxpayers (and $500 for each child), $250 bil ion for unemployment insurance, and $221 bil ion in tax deferrals, among other measures. Congressional Research Service 124 Global Economic Effects of COVID-19 March 30: Some Members of the House of Representatives announced they had begun work on a fourth COVID-19 bil targeting a number of issues, including short supplies of medical equipment and protective gear to enhance worker protections, infrastructure needs, and additional payments to individuals. Trump Administration March 13: President Trump declared a state of emergency, allowing the Federal Government to distribute up to $50 bil ion in aid to states, cities, and territories. March 17: The Internal Revenue Service postponed the April 15 tax-payment deadline for 90 days and wil waive interest and penalties. (The extension and waiver is available only to individuals and corporations that owe $1 mil ion or $10 mil ion or less, respectively.) March 17: Administration officials begin negotiations with Members of Congress on a third stimulus package. March 31: President Trump calls for $2 tril ion infrastructure spending, possibly as part of fourth COVID-19 stimulus bil . Albania The Bank of Albania March 25: Cut its benchmark interest rate to a record-low 0.5% and its one-day lending rate to 0.9% on to help lending in the economy affected by the COVID-19 outbreak. It also announced that it would inject unlimited liquidity into the banking sector, ensure the normal functioning of the electronic payments system, and that, together with the government, it had agreed to postpone until the end of May all loan repayments by businesses and individuals facing difficulties due to the outbreak. Government of Albania March 20: Passed measures totaling $370 mil ion in its budget to soften the impact from the COVID-19 crisis, including $25 mil ion for the health sector; guarantees worth $100 mil ion to companies unable to pay their employees; and $65 mil ion to help the needy, small businesses, and those unable to work because of stay-at-home orders. It also announced that it would write off penalties on delayed electricity bil payments worth some $150 mil ion, postpone taxes on company profits, and cut the wages of government ministers and lawmakers by half for the duration of the crisis. Argentina Central Bank of Argentina March 19: Indicated that it would lower reserve requirements for banks that extended special credit lines to small and medium-sized enterprises at a maximum annual interest rate of 24% in a bid to offset the impact of COVID-19. Government of Argentina March 19: Announced a fiscal stimulus package of 700 bil ion pesos ($11.3 bil ion) to mitigate the impact of the COVID-19 and support the economy. The main measures include providing credit to productive activities (350 bil ion pesos), increasing public investments (100 bil ion pesos), and waiving payrol taxes for firms affected by the COVID-19. Armenia March 17: The Central Bank of Armenia cut its key refinancing rate by 25 basis points to 5.25% from 5.5% due to the effects of the COVID-19 outbreak on the economy. Australia Reserve Bank of Australia March 3: Cut its benchmark interest rate by 25 basis points to 0.5% due to the significant effect of the COVID-19 outbreak on the Australian economy. March 19: Cut its cash rate by 25 basis points to 0.25% and and introduced a series of measures: (1) targeting the 3-year government bond yield at 0.25% via purchases in the secondary market, (2) providing a three-year term funding facility to authorized deposit-taking institutions worth at least AU$90 bil ion at a fixed rate of 0.25%, aiming to support credit to small and medium-sized enterprises, (3) fixing the Congressional Research Service 125 Global Economic Effects of COVID-19 exchange settle balances at the central bank at 10 basis points. It wil also continue to provide liquidity by conducting one-month and three-month repo operations until further notice. Longer-term repo operations of six-month maturity or longer would be undertaken at least weekly. The central bank also set out forward guidance, saying that it wil not increase the cash rate until progress is made towards ful employment and confident that inflation is sustainably within its target band. March 19: Through its daily money market operation, it has injected cash into the banking system (through repurchasing agreements), aiming to ease liquidity constraints in the stressed bond market: AU$12.7 bil ion (March 19), AU$10.7 bil ion (March 18), AU$8.8 (March 17), AU$5.9 bil ion (March 16), and AU$8.8 (March 13). Government of Australia March 12: Announced a AU$17.6 bil ion ($11.4 bil ion) stimulus package that includes support for business investment, cash flow assistance for small and medium sized business and employees, and household stimulus payments. March 16: The Australian Securities and Investments Commission ordered large equity market participants to reduce their number of executed trades by 25% from the levels executed on March 13, 2020, until further notice. March 19: Announced that the Australian Office of Financial Management (AOFM) wil be provided with an investment capacity of $15 bil ion to enable smaller lenders to continue supporting Australian consumers and small businesses. (AOFM wil be able to purchase residential mortgage backed securities and invest in a range of other asset backed securities and warehouse facilities over the next 12 months.) March 22: Announced an additional AU$66.4 bil ion ($38.5 bil ion) fiscal package, which extends income support measures for existing welfare and newly unemployed workers, and boosted previously announced measures for businesses such as cash flow and wage subsidies. The government is also expected to give local businesses AU$100,000 if the company has a turnover of less than AU$50 mil ion each year and underwrite 50% of up AU$40 bil ion in loans offered by local lenders to small and medium sized companies. March 30: Unveiled an economic package of AU$130 bil ion ($79.85 bil ion) to subsidize the wages of an estimated 6 mil ion people, marking a third tranche of stimulus designed to limit the fallout of the COVID-19 pandemic on the country’s economy. The “job keeper” allowance, which would bring the country’s COVID-19-related stimulus so far to A$320 bil ion (about 15% of Australia’s gross domestic product), wil provide eligible companies with AU$1,500 every fortnight for six months for each employee. Any company that lost 30% of its revenue can apply for the funds. Austria Government of Austria March 14: Set up an initial 4 bil ion euro ($4.4 bil ion) “corona crisis fund” to cover, among other things, benefits for affected workers, as well as bridge loans and credit guarantees to shore up businesses’ liquidity. March 18: Announced that it wil spend up to 38 bil ion euros ($42 bil ion) to secure jobs and keep companies afloat, and it wil provide another 9 bil ion euros in guarantees and warranties, 15 bil ion euros in emergency aid, and 10 bil ion euros in tax deferrals. Bosnia and March 17: The prime minister met with the IMF Resident Representative in Bosnia Herzegovina to request assistance from the IMF. The IMF indicated that it may extend a 165 mil ion euros ($181 mil ion) loan to Bosnia under a Rapid Financing Instrument (RFI) to finance the increasing costs sustained by the country’s health system in combating COVID-19. Brazil Central Bank of Brazil March 18: Cut its benchmark interest rate by 50 basis points to 3.75% to cushion the economic blow of the COVID-19 pandemic. It also sold $830 mil ion in two rounds of spot foreign exchange intervention and announced a repurchase program Congressional Research Service 126 Global Economic Effects of COVID-19 for dol ar-denominated sovereign bonds held by Brazilian banks, which wil be carried out in conjunction with the Treasury. March 23: Announced that it planned to inject 1.2 tril ion reais ($233.81 bil ion) into the country’s financial system to counteract the effects of the COVID-19 outbreak, with more than half that amount comprising loans to banks. Under the program, lenders wil be able to package their loan portfolios into long-term deposits to be acquired by the central bank in a move aimed at freeing up 670 bil ion reais for fresh loans. It also (1) cut long-term reserve requirements to 17% from 25%, freeing up 68 bil ion reais currently in compulsory deposits with the central bank to banks, (2) announced measures allowing small and mid-sized lenders to issue up to 2 bil ion reais in special long-term bonds guaranteed by a privately held deposit insurance fund, limited to an amount equivalent to its shareholders’ equity, and (3) wil extend loans backed by corporate bonds to financial institutions between March 23 and April 30 to add liquidity to their investment funds. Government of Brazil March 16: Announced a fiscal stimulus package of 147.1 bil ion reais ($28.6 bil ion) to mitigate the impact of the COVID-19 and boost the economy. It does not contain new money, but is a range of measures that aim to protect the most vulnerable population through social assistance payments (83.4 bil ion reais), support domestic companies and defer business taxes (59.4 bil ion reais), and increase investments in healthcare to combat the COVID-19 (4.5 bil ion reais). The government also announced a 3.1 bil ion reais boost to the “Bolsa Família” assistance for some of Brazil’s poorest families. March 16: The National Monetary Council (CMN) approved the measures that wil allow banks to (1) increase loans and offer better terms to firms and households over the next six months and (2) extend certain loan maturities for the next six months. It also lowered capital requirements for banks. April 1: Announced that it wil cut the IOF financial tax for 90 days. It wil be temporary and cost 7 bil ion reais. It wil also extend the deadline for submitting the 2019 base year net income report to June 30 from April 30 and allow companies to postpone payment of certain tax contributions for two months and reduce wages by up to 70% (or the minimum wage) for three months, among other measures. Bulgaria Government of Bulgaria March 30: Announced it wil spend more than 1 bil ion levs ($566 mil ion) to pay part of workers’ salaries in companies whose operations have been hit by the COVID-19 crisis, part of part of an overall 4.5 bil ion-lev package. March 31: Announced plans to raise the ceiling on new debt it can raise to 10 bil ion levs due to the COVID-19 pandemic. Cambodia Government of Cambodia March 5: Announced that it would allocate $30 mil ion to finance Cambodia’s COVID-19 screening and monitoring efforts. March 10: Al ocated between $800 mil ion to $2 bil ion to address the economic impacts of the novel COVID-19 outbreak. Canada Bank of Canada March 4: Lowered its target for the overnight rate by 50 basis points to 1.25% (setting the bank rate to 1.5% and the deposit rate to 1%). March 12: Announced that it wil broaden the scope of the current Government of Canada bond buyback program and temporarily add new Term Repo operations. March 13: Lowered its benchmark overnight rate to 1.25% from 1.75% in response to the epidemic. March 13: Announced its intention to launch the Bankers’ Acceptance Purchase Facility (BAPF), starting the week of March 23, 2020, in an effort to support the continuous functioning of financial markets; it wil conduct secondary market purchases of one-month Bankers’ Acceptances issued and guaranteed by any Congressional Research Service 127 Global Economic Effects of COVID-19 Canadian bank and of sufficiently high quality. BAPF operations wil be conducted weekly with the purchase amount and reserve rate being adjusted to reflect market conditions. (For the first operation, the Bank of Canada will purchase up to $10 bil ion of one-month Bankers’ Acceptances with a reserve rate of the overnight index swap rate plus 20 basis points.) March 16: Announced that it wil broaden eligible col ateral for its term repo facility and increase purchases of mortgage-backed securities (Canada Mortgage Bonds). March 27: Cut its overnight interest rate by 50 basis points to 0.25%, its lowest level since June 2010 and the third cut in March, to support an economy hit hard by the outbreak of COVID-19. It also announced that it would begin purchases of CA$5 bil ion per week of Government of Canada securities in the secondary market. Canadian Government March 6: Announced an investment of CA$27 mil ion to fund COVID-19 research and accelerate the development, testing, and implementation of measures to deal with the COVID-19 outbreak. March 11: Unveiled CA$1 bil ion ($750 mil ion) in funding for vaccine research and health measures. March 13: Established a Business Credit Availability Program (BCAP) to support financing in the private sector through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC); it wil allow BDC and EDC to provide more than $10 bil ion of additional support to businesses. March 13: The Office of the Superintendent of Financial Institutions (OSFI) lowered the Domestic Stability Buffer requirement for domestic systemically important banks by 1.25% of risk weighted assets; it wil increase the lending capacity of Canada’s large banks and support the supply of credit to the economy by more than CA$300 bil ion. March 25: Almost doubled the value of an aid package previously announced to help people and businesses deal with losses from the COVID-19 outbreak, from CA$27 bil ion to CA$52 bil ion ($36.6 bil ion). It wil give people affected by the outbreak CA$2,000 a month, delay student loan repayments, and defer tax payments, among other measures to boost the economy. Chile Central Bank of Chile March 16: Cut its benchmark rate by 75 basis points to 1% and announced measures to inject liquidity, including allocating $4 billion to purchase inflation-linked bank bonds and providing additional credit to banks. March 31: Cut its benchmark interest rate by 50 basis points to 0.50% amid the COVID-19 pandemic. Government of Chile March 19: Announced a stimulus package of $11.75 bn to mitigate the negative economic impact of the outbreak of COVID-19 and civil unrest. The measures include extending unemployment insurance to those who are sick or unable to work from home, delaying tax payments for small businesses, a cash bonus for approximately 2 mil ion workers who lack formal employment, and emergency funds for municipalities. China People’s Bank of China (PBOC) February 3: Expanded reverse repo operations by $174 bil ion; added another $71 bil ion on February 4. February 16: Cut the one-year medium-term lending facility rate by 10 basis points. February 20: Cut the one-year and five-year prime rates by 10 and 5 basis points, respectively. March 13: Lowered bank reserve requirements, freeing up about $79 bil ion to be loaned out. Congressional Research Service 128 Global Economic Effects of COVID-19 March 30: Lowered the interest rate on reverse repurchase agreements to 2.20% from 2.40%, as authorities stepped up easing measures to relieve pressure on the economy that has been hit hard by the epidemic. PRC Government February: Asked banks to extend the terms of business loans and commercial landlords to reduce rents. February 24: The Asian Infrastructure Investment Bank (AIIB) contributed $1 mil ion in medical equipment to help China control the spread of COVID-19. February 27: Announced a number of tax relief measures to tackle COVID-19 disruption, including a temporary reduction its value-added tax (VAT) and the elimination of VAT on medical, catering, accommodation, hairdressing, and laundry services as well as on masks and protective clothing. March: Earmarked $15.9 bil ion to fight the epidemic. March 21: Announced that it would cut fees on a large scale to stimulate private-sector investment and also accelerate the development of “new infrastructure” to help spur the economy. March 19: Reportedly is considering a fiscal stimulus package worth tril ions of yuan to revive the economy amid the COVID-19 pandemic. The ramped-up spending will aim to spur infrastructure investment, backed by as much as 2.8 tril ion yuan ($394 bil ion) of local government special bonds. March 27: The Communist Party’s Politburo announced that it would step up macroeconomic policy changes and pursue more proactive fiscal policy. It called for expanding the budget deficit, issuing more local and national bonds, guiding interest rates lower, delaying loan repayments, reducing supply-chain bottlenecks and boosting consumption. Colombia Central Bank of Colombia March 18: Announced a $400 mil ion dol ar to peso swap to take place on March 19, and that it would increase the resources available to financial institutions and ease rules on which institutions can have access to funds. March 27: Cut its benchmark interest rate by 50 basis points to 3.75% in an effort to boost economic growth amid fall-out from COVID-19. Government of Colombia March 18: Announced that it has 14.8 tril ion pesos ($3.65 bil ion) to spend on emergency measures to ease the economic fallout from COVID-19, but it wil not take on additional debt to finance the efforts (12.1 tril ion pesos wil come from the country’s savings programs). It wil initially spend 1 tril ion pesos on the healthcare system and 500 bil ion pesos on additional payments to social welfare programs for families, young people and the elderly, accelerate a plan to return value added tax to the neediest Colombians from April, and make 48 tril ion pesos available to give credit guarantees to small and medium-sized businesses and households. Congo-Kinshasa March 24: The Central Bank of the Congo cut its base interest rate to 7.5% from (Democratic Republic 9.0% in order to cushion the economic impact of the COVID-19 outbreak. It wil also of the Congo) cut mandatory reserve requirements and provide liquidity to banks. Cyprus Government of Cyprus March 15: Unveiled a 700 mil ion euro support package for companies and workers to deal with the impact of the spread of COVID-19, which includes a temporary VAT reduction, support for individuals and companies affected, additional paid sick leave, and 100 mil ion euro for the public health sector. March 23: Announced that it is revising the economic package announced on March 15. It wil amount to at least 1.5 bil ion euro and include direct support, deferred government income in the form of payment suspension of direct and indirect taxes Congressional Research Service 129 Global Economic Effects of COVID-19 and other fees, as well as government guarantees (which would not incur a fiscal impact unless they materialize). Czech Republic Czech National Bank March 16: The Czech National Bank lowered its main two-week repo rate by 50 basis points to 1.75%, reversing its February rate hike to combat the hit from the virus outbreak. It also raised the number of repo operations that provide liquidity to banks to three times a week from once, noting that bids would be met with zero spread to the repo rate. March 17: Revised the countercyclical capital buffer for exposures located in the Czech Republic to 1.75 %. March 26: Cut its main two-week repo rate by 75 basis points to 1.00% and announced that it was ready to cut interest rates further if needed. Government of the Czech Republic March 9: Adopted a number of economic measures, which wil include providing 100 bil ion CZK ($3.9 bil ion) in direct support and 900 bil ion CZK ($34.8 bil ion) in indirect in the form of guarantees to maintain the employment rate, paying out (through the respective employers) 60% of the average contribution base to employees affected by the quarantine, supporting employers who continue, despite their businesses being shut down, to pay out 100% of the salary to affected employees by covering 80% of salary costs (up to 1.2 bil ion CZK), and allocating 10 bil ion CZK ($390 mil ion) to the Czech-Moravian Guarantee and Development Bank for immediate granting of interest-free loans with a one-year deferral with the possibility of a two-year extension for businesses affected by the COVID-19 (“COVID Loans Program”). (On March 16, the government earmarked another 1 bil ion CZK to the COVID Loans Program.) March 13: Extended the deadline for the filing of tax returns until 1 July and waived fines stemming from the late submission of tax declarations or reports. March 13: The Czech Banking Association (ČBA) wil allow banks to voluntarily extend the deadlines on loan and mortgage payments. March 23: Approved a five-fold rise in this year’s budget deficit, as it offers help to businesses hit hard by the COVID-19 outbreak. April 1: Announced that it had approved a scheme for a moratorium of up to six months on consumer, company, and mortgage loan payments to help the country through the COVID-19 crisis. Denmark Danmarks Nationalbank March 12: Released banks’ emergency buffer and wil be offering low interest rate loans to banks. March 26: Injected $2.85 bil ion in loans to Danish banks and financial institutions by auctioning off U.S. dol ars in two loans with a maturity date on April 8 and June 19 and a cut-off rate of 0.32 and 0.34, respectively. April 1: Sold $750 mil ion worth of its mint 30-year government bonds in an auction that was held a month early to expedite funding of aid packages due to COVID-19 that is expected to cost the state more than 60 bil ion Danish crowns ($8.8 bil ion). Government of Denmark March 10: Wil grant tax breaks to businesses affected by the COVID-19 as part of a series of measures worth $20 bil ion. Large businesses wil be given an additional 30 days to pay value added tax, while all companies wil be granted four additional months to pay their labor contributions. The government is also lifting the ceiling on businesses’ tax accounts, so that corporations can avoid paying the negative interest rates they are charged when placing cash in the bank. March 12: Indicated that it would release banks’ counter-cyclical capital buffer, freeing about 200 bil ion Danish crowns ($30 bil ion) for lending. Other fiscal measures, worth 2.8 bil ion Danish crowns ($416 mil ion), include compensation to Congressional Research Service 130 Global Economic Effects of COVID-19 companies for salary payments to employees who have fallen il or been quarantined due to the COVID-19. March 18: Proposed an economic aid package worth 40 bil ion kroner ($5.8 bil ion) to help small businesses cover (for three months) most of the losses in revenue and some of their fixed expenses as a result of the COVID-19 outbreak. Under the program, companies who have seen their revenues decline by 40% or more wil receive government grants to help cover between 25% to 80% of their fixed costs, and self-employed and small firms who see their revenues fall more than 30% wil also be offered government compensation worth 75% of their normal monthly income. March 31: Announced that it wil postpone by three months around 200,000 companies’ deadline of end-May to submit their annual reports in an effort to help companies affected by the COVID-19 outbreak. Egypt Central Bank of Egypt March 16: Cut by 300 basis points both the overnight lending rate (from 13.25% to 10.25%) and the overnight deposit rate (from 12.25% to 9.25%) in what it described as a “preemptive” move to support the economy in the face of the COVID-19 outbreak. March 23: Told commercial banks to cut interest on dol ar deposits to 1% above the London Interbank Offered Rate (Libor) instead of 1.5% above Libor, starting March 23, in order to control the exchange market and reduce the expected dol arization operations after cutting interest rates on March 16. March 29: Instructed Egyptian banks to apply temporary limits on daily withdrawals and deposits in a move seemingly designed to control inflation and hoarding during the coronavirus’ spread, after 30 bil ion Egyptian pounds ($1.91 bil ion) were withdrawn from banks in the past three weeks. The daily limit for individuals would be 10,000 Egyptian pounds ($635) and 50,000 pounds for companies. Government of Egypt March 14: Indicated that the government wil allocate 100 bil ion Egyptian pounds ($6.4 bil ion) to finance a “comprehensive” state plan for combating the COVID-19 outbreak. March 22: Announced that the government would allocate 20 bil ion Egyptian pounds ($1.27 bil ion) to support the stock exchange. March 30: Ordered relevant authorities to boost strategic reserves of staple goods, as global concerns about food security rise amid the COVID-19 crisis. Eswatini (Swaziland) March 21: The Central Bank of Eswatini cut its main lending rate by 100 basis points to 5.5%, citing global and domestic economic developments and the impact of COVID-19. The reduction was to ensure the equal pegging of the local currency with the South African rand after the South African Reserve Bank (SARB) cut its main lending rate by 100 basis points to 5.25% on March 19. European Union European Central Bank (ECB) March 12: Announced that it would provide banks with loans at a rate as low as minus 0.75%, below the-0.5% deposit rate, increase bond purchases by 120 bil ion euros ($135.28 bil ion) this year (with a focus on corporate debt), and allow euro zone banks to fall short of some key capital and cash requirements (in order to keep credit flowing to the economy). March 18: Launched a new, 750 bil ion euro ($818 bil ion) temporary asset purchase program of private and public sector securities to counter the risks posed by the outbreak and escalating diffusion of COVID-19 (the Pandemic Emergency Purchase Programme). Purchases wil be conducted until the end of 2020 and wil include all the asset categories eligible under the existing asset purchase program. It wil also support commercial debt markets by expanding the range of eligible assets under the corporate sector purchase program to nonfinancial commercial paper of sufficient credit quality, and by easing col ateral standards by expanding the scope of Additional Credit Claims to include claims related to the financing of the corporate sector. Congressional Research Service 131 Global Economic Effects of COVID-19 March 26: Announced that under the new 750 bil ion euro ($818 bil ion) temporary bond purchase Pandemic Emergency Purchase Program (PEPP), it would not apply self-imposed limits on how many bonds it could buy from any single euro zone country. Under its long-running asset purchase scheme, the ECB has capped bond buys at 33% of each euro zone state’s debt. European Commission March 11: Announced a 37 bil ion euro ($41 bil ion) “Corona Investment Fund” that would use “spare” money from the EU budget to help businesses, health-care systems, and sectors in need; additionally, the EU’s own investment fund wil guarantee 8 bil ion euros ($8.9 bil ion) of loans to 100,000 small- and medium-sized enterprises and affected companies may be able to delay the payment of their existing loans. March 19: Adopted a Temporary Framework to enable Member States to use the ful flexibility foreseen under state aid rules to support the economy in the context of the COVID-19 outbreak. It provides for five types of aid: (1) direct grants, selective tax advantages and advance payments (Member States wil be able to set up schemes to grant up to 800,000 euros to a company to address its urgent liquidity needs); (2) state guarantees for loans taken by companies from banks; (3) subsidized public loans to companies; (4) safeguards for banks that channel state aid to the real economy; and (5) short-term export credit insurance. Fiji March 18: The Reserve Bank of Fiji cut its Overnight Policy Rate by 25 basis points to 0.25% in order to stimulate demand and cushion the blow to its important tourism industry from the global spread of COVID-19. France Government of France March 12: Pledged more generous guarantees on loans made to small businesses, more cash for firms struggling to hold on to workers, and a solidarity fund to help companies cushion the blow from the COVID-19 outbreak; it also announced that the government would be ready to increase funds available to help companies reduce workers’ hours, instead of laying them off. March 16: Announced that the government would guarantee 300 bil ion euros in bank loans for small and medium-sized businesses. March 17: The Autorité des Marchés Financiers (AMF), France’s financial-markets authority, stated that it would forbid short selling of stock in 92 companies during the March 17 session. March 17: Announced that it would spend 45 bil ion euros ($50 bil ion) to help small businesses and employees struggling with the COVID-19 outbreak, including through an expanded partial-unemployment package in which the state pays the salaries of employees who are not needed during the crisis. Gambia February 28: The Central Bank of The Gambia lowered its policy rate by 50 basis points to 12.0% amid risks from the COVID-19 outbreak and uncertainty surrounding global food prices. Georgia April 1: The government announced that it wil put 2 bil ion lari ($606 mil ion) from its state budget toward helping the economy through the COVID-19 pandemic, in addition to 351 mil ion lari that wil be allocated for the healthcare system from the state budget. The government wil fund three months’ payments for electricity and gas consumption to Georgians who used less than 200 kilowatts of electricity and 200 cubic meters of gas a month in March, April, and May. Germany Government of Germany March 13: Pledged to provide unlimited liquidity assistance to German companies hit by the pandemic. (The measure envisages an expansion of loans provided by KfW, the state development bank, and wil allow companies to defer bil ions of euros in tax payments.) The Bundestag also expanded the Kurzarbeit or short-time work scheme, under which companies that put their workers on reduced hours can receive state Congressional Research Service 132 Global Economic Effects of COVID-19 support. The government also indicated that it would boost investments by €3.1 bil ion per year (about $3.5 bil ion) between 2021 and 2024. March 23: Agreed to a package worth more than 750 bil ion euros ($808 bil ion) to mitigate the damage of the COVID-19 outbreak. It includes 156 bil ion euros in debt to finance higher social spending, 50 bil ion-euro liquidity fund for self-employed people, 600 bil ion-euro rescue fund (400 bil ion euros in guarantees,100 bil ion euros in loans through state-run development bank KfW, and 100 bil ion euros earmarked for equity stakes in companies). Additionally, the state’s KfW bank has 500 bil ion euros available to boost liquidity of German companies. March 30: Announced that, in response to COVID-19, it would expand export loan guarantees on short-term payments to include transactions within the EU and with Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, Britain, and the United States. Ghana March 18: The Bank of Ghana (Ghana’s central bank) cut its interest rate to 14.5% from 16% due to the negative economic impacts it anticipates from the spread of the COVID-19. Greece Government of Greece March 9: Wil suspend the payment of sales taxes due at the end of March (for four months) of social security contributions by companies (until June 30). March 17: Announced a package of up to 2 bil ion euros ($2.20 bil ion) to support businesses fol owing the COVID-19 outbreak March 17: The Hellenic Bank Association wil offer businesses hit by the COVID-19 crisis a six-month freeze on loan payments as part of relief efforts to help borrowers deal with the economic shutdown. March 30: Announced new tax breaks and economic assistance to thousands of businesses and workers to buffer its economy from a national lockdown triggered by the COVID-19 pandemic. The support measures include a one-off benefit for 1.7 mil ion, or 81% of private sector workers whose jobs are temporarily suspended and payment of their social security contributions for 45 days, extend financial aid for the self-employed, and suspend VAT and tax arrear payments for 800,000 businesses. Guatemala March 29: The government announced that it would use nearly $26 mil ion from an emergency fund to help the country’s neediest families, as measures to combat the spread of a COVID-19 impact on the economy and jobs, It plans to withdraw 200 mil ion quetzals ($25.8 mil ion) from the emergency fund and give families 1,000 quetzals ($129) to help pay for electricity, water and supplies. Hong Kong Hong Kong Monetary Authority March 3: Lowered its base rate charged through the overnight discount window by 50 basis points to 1.5% after the U.S. Federal Reserve delivered a rate cut of the same margin. March 16: Lowered its base rate charged through the overnight discount window to 0.86%, after the U.S. Federal Reserve delivered a rate cut. It also cut the level of capital buffers it requires financial institutions to hold to 1% from 2% of their risk-weighted assets to help companies and lenders weather the impact of the COVID-19 outbreak. Government of Hong Kong February 26: Announced a HK$120 bil ion ($15.4 bil ion) relief package as part of its 2020-2021 budget, including a payment of HK$10,000 ($1,200) to each permanent resident of the city 18 or older, paying one month’s rent for people living in public housing, cutting payrol , income, property, and business taxes, low-interest, government-guaranteed loans for businesses, and an extra month’s worth of payments to people col ecting old-age or disability benefits. Hungary Hungarian National Bank Congressional Research Service 133 Global Economic Effects of COVID-19 March 16: Announced emergency steps to help businesses, boosting the range of col ateral it accepts from banks and calling on lenders to apply a loan repayment moratorium for firms hit by the coronavirus economic fallout. (It said in a statement that performing corporate loans in domestic banks’ balance sheets totaled close to 3.6 tril ion forints, and that it would apply a 30% haircut on those, boosting the range of col aterals that can be used and thus also lifting banks’ lending potential by more than 2.5 tril ion forints ($8.10 bil ion)). It also offered to inject forint liquidity into the banking system via foreign exchange swaps. March 18: Urged domestic banks to introduce a moratorium on household loan repayments considering the “extraordinary situation” due to the coronavirus crisis, and that if banks did not bring in the measure, the Bank would ask the government to pass a decree enforcing it. It also announced that it was considering restarting its mortgage note buying program to provide more long-term liquidity for the banking system and reduce the financing costs of household loans. March 24: Launched new measures to boost liquidity and flagged further steps if needed to prevent long-term damage to the economy from the coronavirus pandemic. It moved to pump more money into the banking system by introducing a massive fixed-rate col ateralized loan instrument. Lending will be provided to banks at a fixed interest rate in unlimited quantity, to support bank lending and also government bond purchases. It also released domestic lenders from the requirement to hold a certain level of cash as reserves. April 1: Announced its col ateralized loan tenders, offering liquidity to banks at a fixed rate of 0.9% on various maturities, and that it would offer them to domestic open-ended investment funds, in order to support the government securities market and the real estate market and help offset the fallout from the coronavirus pandemic. Government of Hungary April 4: Created a $2 bil ion special fund to aid the fight against COVID-19 and it wil include contributions from banks and foreign retailers. Hungarian banks wil be expected to pay 55 bil ion forints ($163 mil ion) in the fund this year, with multinational retailers adding 36 bil ion forints. Local governments wil have to divert vehicle taxes amounting to a total of 34 bil ion forints to the fund, while political parties wil pay half of their central budget revenue to the fund for a total of 1.2 bil ion forints. April 6: Announced a stimulus package, which includes subsidized loans to Hungarian companies and funds to preserve jobs. It would amount to 18%-20% of gross domestic product (GDP), including National Bank of Hungary programs. The prime minister said that the government was ready to pay some of the wage costs of companies forced to cut working hours, would support investments with 450 bil ion forints ($1.3 bil ion), and would provide targeted support for sectors such as tourism, the food industry, and construction. Subsidized loans to companies wil total more than 2 tril ion forints, while pensioners wil get one month’s extra pension to be disbursed in four tranches from early 2021. Iceland The Central Bank of Iceland March 11: Cut its benchmark interest rate by 50 basis points to 2.25%, as it tries to alleviate the potential impact of the COVID-19 on its tourism-dependent economy. It wil also lower deposit institutions’ average reserve requirement to 0% from 1% to ease banks’ liquidity positions. March 18: Cut its key interest rate for the second time in a week by 50 basis points to 1.75% and reduced the banks’ countercyclical capital buffer to 0% from 2%. March 23: Announced that it would start buying up treasury bonds in order to boost liquidity and support government plans to increase spending to help the economy weather the COVID-19 outbreak. Government of Iceland March 10: Announced an action plan to respond to the economic impact of COVID-19, which includes deferring taxes and levies, providing temporary relief to the tourism industry, and accelerating ongoing and planned infrastructure projects. Congressional Research Service 134 Global Economic Effects of COVID-19 March 21: Announced a 230-bil ion-krona ($1.6 bil ion) package (8% of gross domestic product) to cushion the impact of COVID-19 on the economy. It includes state guarantees on bridge loans to businesses and the payment of as much as 75% of an employee’s lost salaries over the next two-and-a-half months. In addition, public projects worth 20 bil ion krona will be moved forward to this year and tax breaks for banks wil be implemented sooner than originally planned. India Reserve Bank of India March 12: Announced a $2 bil ion injection into the foreign-exchange market to support the rupee. March 13: Announced a plan to add liquidity through short-term repurchase operations. March 14: Plans to infuse 250 bil ion rupees ($3.4 bil ion) into the system through short-term repurchase operation. March 19: Announced that it wil buy bonds on the open market for a total of 100 bil ion Indian rupees ($1.35 bil ion) due to mature between 2022 and 2025 to try to keep all market segments liquid and stable. March 27: Lowered its benchmark repo rate by 75 basis points to 4.40% and announced several other steps to tackle the impact of COVID-19 on various industries from the lockdown, some of which include cutting banks’ cash reserve ratio and targeted long term repos operations. The reverse repo rate was reduced by 90 basis points to 4%. Government of India March 15: Pledged $10 mil ion towards South Asian Association for Regional Cooperation (SAARC) “COVID-19 emergency fund.” March 15: Is reportedly “pushing” state-run banks to approve new loans amounting to 500 bil ion-600 bil ion rupees by the end of March. March 26: Announced a 1.7-tril ion-rupee ($22.6 bil ion) economic stimulus plan providing direct cash transfers and food security measures to give relief to mil ions of poor people hit by a nationwide lockdown over COVID-19. It wil provide direct cash transfers to 200 mil ion women and the elderly, hand out free cooking gas cylinders to 83 mil ion poor families, and help feed about 800 mil ion poor people over the next three months by distributing 5 kilograms of staple food-grains wheat or rice for each person free of cost, with a kilogram of pulses for every low-income family. The government outlined plans for medical insurance cover of 5 mil ion rupees ($66,000) for every frontline health worker, from doctors, nurses and paramedics to those involved in sanitary services. Indonesia Bank Indonesia (Bank Sentral Republik Indonesia) February 20: Cut the seven-day reverse repurchase rate by 25 basis points to 4.75%. March 19: Cut the seven-day reverse repurchase rate by 25 basis points to 4.50% and indicated that it wil intensify intervention to ensure market confidence and liquidity. It has purchased government bonds to combat capital outflows amid the COVID-19 epidemic, including 27 tril ion rupiah ($2 bil ion) on February 20 and 6 tril ion rupiah ($405 mil ion) on March 13, adding to 8 tril ion rupiah of bonds purchased March 12. March 25: Announced with the country’s financial regulator that currency market and stock trading hours wil be limited next week as part of efforts to contain the spread of COVID-19. Government of Indonesia February 25: Announced a stimulus package worth 10.3 tril ion rupiah ($742.6 mil ion) to protect its economy from the impact of the COVID-19 outbreak. It includes 4.6 tril ion rupiah in subsidies for basic needs for poor households, 1.5 tril ion rupiah for the state property financing program, 443.4 bil ion rupiah for Congressional Research Service 135 Global Economic Effects of COVID-19 airlines and travel agents, 298.5 bil ion rupiah to bring in foreign tourists, 3.3 tril ion rupiah cover for shortfalls in regional budgets, and fiscal transfers (147 bil ion rupiah). March 13: Announced a 120 tril ion rupiah ($8.1 bil ion) stimulus package to support the economy, of which 22.9 tril ion rupiah wil be tax breaks, lasting six months starting in April. The government is also exempting companies in 19 manufacturing sectors from having to pay import taxes, while giving them a 30% corporate tax discount, relaxing rules for exports (e.g., fisheries and forestry products) and imports (e.g., steel, sugar, flour and salt), and easing rules on loan restructuring for small- and medium-sized companies. March 17: Ordered the Finance Minister to divert 40 tril ion rupiah ($2.7 bil ion) from the non-urgent government budget to increase spending in programs that could provide direct support to household consumption or increase people’s purchasing power. March 31: Announced a national public health emergency and that it would spend 405.1 tril ion rupiah ($24.85 bil ion) more on COVID-19 response, social welfare programs, and economic stimulus, including a 3 percentage point cut in corporate tax rates to 22%. Iran Central Bank of Iran February/March: Indicated that it would help small businesses affected by the COVID-19 outbreak by providing tax breaks and allowing defaults on bank loans for several months. March 12: Requested $5 bil ion emergency funding from the International Monetary Fund’s Rapid Financing Instrument to help Iran fight the COVID-19 outbreak. March 17: Allocated at least 250 mil ion euro to import medicine and medical equipment required to fight COVID-19. Government of Iran March 12: Asked the United Nations to allocate resources to help it tackle COVID-19 and facilitate imports as a way of boosting the country’s sanctions-hit healthcare system. March 15: Announced a series of banking, welfare and tax relief measures to support businesses and families as the COVID-19 outbreak puts severe strain on the economy. Employees wil be able to defer health insurance, tax and utility bil payments for the next three months, while the 3 mil ion poorest Iranians wil receive an additional cash subsidy starting March 17, 2020. March 23: The European Union’s High Representative of the Union for Foreign Affairs and Security Policy (Josep Borrell) announced that the EU would provide 20 mil ion euros in humanitarian aid to Iran to help alleviate the COVID-19 and support Iran’s request for IMF financial help. March 26: President Hassan Rouhani wrote to Supreme Leader Ayatol ah Ali Khamenei requesting permission to withdraw $1 bil ion from the country’s sovereign wealth fund (the National Development Fund) to support the healthcare system, which is overstretched by the COVID-19 outbreak. March 28: Announced that it would allocate 20% of its annual state budget to fighting the pandemic in the country. The budget al ocation, amounting to about 1,000 tril ion rials, would include grants and low-interest loans to those affected by COVID-19, Rouhani said. While the allocated amount is worth some $6.3 bil ion at the rial’s free market exchange rate of about 160,000 rials per dol ar, the government may decide to allocate some of the funds at the official rate of 42,000 (which is used to subsidize food and medicine). Ireland March 9: The government announced that it wil set aside 3 bil ion euros ($3.44 bil ion) to provide additional funding to the health service (435 mil ion euros), boost workers’ sick pay and benefits (2.4 bil ion euros), and offer liquidity assistance to businesses affected (200 mil ion euros). Israel Bank of Israel Congressional Research Service 136 Global Economic Effects of COVID-19 March 18: Announced it would allocate up to $15 bil ion for swap transactions between currencies for domestic banks, part of a move aimed at shoring up the Israeli economy amid the COVID-19 pandemic. April 6: Cut its benchmark interest rate to 0.1% from 0.25%, its first rate cut in five years, expanded its repo transactions so that the agreements can include corporate bonds—in addition to government bonds—as security, and wil provide loans to banks for a term of three years (with a fixed interest rate of 0.1%) with the goal of increasing the supply of bank credit to small businesses. The size of the plan wil be 5 bil ion shekels. Government of Israel March 9: The Finance Ministry announced that it was opening a 4 bil ion-shekel credit line for banks to lend money to small and medium-sized businesses facing a cash crisis with a high-level government guarantee. March 11: Wil expand an aid package (for a second time) to help the country deal with the COVID-19 outbreak by 6 bil ion shekels to a total of 10 bil ion shekels ($2.8 bil ion). Of that, 8 bil ion shekels wil be in a fund to provide cheap loans to businesses, 1 bil ion shekels wil boost the health system by increasing medicine stocks and preparing hospitals to receive a larger number of patients, and 1 bil ion wil be earmarked for needs such as the police force. March 16: Wil expand its aid package (for a third time) to help businesses hurt by the COVID-19 crisis by another 5 bil ion shekels ($1.3 bil ion). March 30: Announced that it wil spend 80 bil ion shekels ($22 bil ion) to help the economy weather the COVID-19 crisis—70 bil ion shekels in addition to 10 bil ion already promised to boost welfare services for those who have lost their jobs or are on unpaid leave and to assist the private sector. It includes a 20-bil ion-shekel social safety net, with stipends for those who lost income; 40 bil ion shekels earmarked to assist businesses with tax breaks, loans, and other services; about 10 bil ion for the healthcare system; and nearly 8 bil ion wil be spent to speed up the recovery. Italy Government of Italy March 11: Announced two packages worth 25 bil ion euros ($28.3 bil ion): A package worth 12 bil ion euros wil provide extra funding for the health system as well as a mix of measures to help companies and households, including freezing tax and loan payments and boosting unemployment benefits to ensure no jobs were lost. The remainder wil be a reserve to pay for any further measures. The government also indicated that payments on mortgages wil be suspended across Italy. ABI, Italy’s banking lobby, said lenders would offer debt moratoriums to small firms and households grappling with the economic fallout from the virus. April 6: Announced a new emergency decree aimed at granting liquidity and bank loans worth more than 400 bil ion euros to companies hit by COVID-19. The new legislation, combined with a previous stimulus package in March, would allow banks to offer credit totaling over 750 bil ion euros ($809.78 bil ion). Japan Bank of Japan March 16: Announced that it would (1) double its upper limit of annual purchases of exchange traded funds to 12 tril ion yen ($112.46 bil ion) and of real-estate investment trusts to 180 bil ion yen ($1.7 bil ion) per year, (2) expand its upper limit of its corporate bond balance and commercial paper balance by 1 tril ion yen ($9.5 bil ion) each, and (3) start a lending program for commercial banks, providing them with one-year loans in exchange for corporate col ateral worth 8 tril ion yen ($75.6 bil ion). Government of Japan February 13: Unveiled a set of measures worth 15.3 bil ion yen ($140 mil ion) to fight the spread of COVID-19; secured 500 bil ion yen ($4.7 bil ion) for emergency lending and loan guarantees at the Japan Finance Corporation and other institutions for small businesses hit hard by the virus outbreak. Congressional Research Service 137 Global Economic Effects of COVID-19 March 10: Unveiled a second package of measures totaling 430.8 bil ion yen ($4.1 bil ion) in spending to cope with the fallout of the COVID-19 outbreak (focusing on support to small and mid-sized firms) and boosted to 1.6 tril ion yen ($15.1 bil ion) its special financing for small- and mid-size firms hit by the virus, up from 500 bil ion yen. March 23: Announced that it is working on a package of measures to combat the widening economic fallout from the COVID-19 that wil involve direct fiscal spending exceeding 15 tril ion yen ($137 bil ion). Including loans and other steps that does not include direct spending, the size of the package may exceed 30 tril ion yen. April 6: Announced a 108 tril ion yen ($989 bil ion, equivalent to 20% of gross domestic product) stimulus package, Japan’s largest ever, to rescue the COVID-19-hit economy. It wil include cash handouts worth 6 tril ion yen for households and small businesses hit by the virus and offers businesses deferrals on tax and social service costs worth 26 tril ion yen. The first phase of the package aims to stop job losses and bankruptcies, while a second round of aid, after the virus is contained, wil try to support a V-shaped economic recovery. Kazakhstan National Bank of Kazakhstan April 3: Cut its policy rate to 9.5% from 12.0% in an unscheduled move aimed at boosting economic growth. Government of Kazakhstan March 23: The president ordered state-owned companies to start selling part of their foreign currency revenue on the domestic market to support the local tenge currency (and to pay out up to 100% of last year’s profits in dividends) in order to soften the impact of the oil price crash and the COVID-19 outbreak on the economy. He also ordered a standstil on bank loan repayments by individuals and small- and medium-sized businesses for the duration of the state of emergency, announced that the government would pay 42,500 tenge ($95) per month to people who have lost their source of income, was delaying tax payments for small businesses, and stood ready to more than triple spending on a program to provide temporary employment through infrastructure maintenance and construction projects. Together with soft loan program and other spending, the volume of the stimulus package is expected to reach $10 bil ion. April 2: Announced that it plans to borrow $3 bil ion on foreign capital markets to finance its budget deficit this year, due to the col apse in energy prices and the additional stimulus spending amid the COVID-19 outbreak. Kenya Central Bank of Kenya March 23: Cut its benchmark lending rate by 100 basis points to 7.25% and lowered the cash reserve ratio for commercial banks to 4.25% from 5.25%. The move to lower the cash ratio is expected to release an extra 35.2 bil ion shil ings ($330.83 mil ion) for banks to lend to customers trying to deal with the outbreak. Government of Kenya March 16: The World Bank announced that it is making $60 mil ion available to Kenya’s health sector to help it deal with the COVID-19 outbreak. March 24: Announced that it wil seek emergency assistance from the IMF of up to $350 mil ion, and $750 mil ion from the World Bank, release 49 bil ion shil ings ($460 mil ion) to pay pending bil s to suppliers, and expedite the payment of close to 10 bil ion ($94 mil ion) shil ings in value-added tax refunds to businesses in the next two to three months. March 25: Announced that the value-added tax rate would be cut to 14% from 16% and corporation tax would be reduced to 25% from 30% under plans scheduled to come into force by April, and that there would be 100% tax relief for Kenyans earning a monthly income of up to 24,000 Kenyan Shil ings ($226) to increase their disposable income. Kuwait Central Bank of Kuwait Congressional Research Service 138 Global Economic Effects of COVID-19 March 16: Cut by 100 basis points its deposit rate to 1.5% and its overnight, one-week, and one-month repo rates to 1%, 1.25%, and 1.75%, respectively. April 2: Announced a stimulus package to support vital sectors and small and medium enterprises (SMEs) amid the fallout from the COVID-19 pandemic. It cut capital adequacy requirements by 2.5%, eased the risk weighting for SMEs to 25% from 75%, raised the maximum lending limit to 100% from 90%, and increased the maximum financing for residential real estate developments to the value of the property or the cost of development. The measures are expected to raise banks’ lending capacity by 5 bil ion dinars ($16 bil ion). Government of Kuwait April 1: Announced measures aimed at shoring up its economy against the pandemic, including soft long-term loans from local banks to provide liquidity for small and medium-sized enterprises and directing government agencies to pay obligations to the private sector as soon as possible. Malaysia Government of Malaysia February 27: Announced the “Economic Stimulus Package 2020” to mitigate the economic impact of COVID-19, improve the cash flow of affected businesses, stimulate private consumption, and accelerate domestic investment activities. It includes exempting accommodation services from services tax, providing sales tax exemptions, and lifting duties on certain imports. March 27: Announced a stimulus package worth 250 bil ion ringgit ($58.28 bil ion), its second in a month, to help cushion the economic blow from the pandemic. It includes a 25 bil ion ringgit direct fiscal injection by the government aimed at helping families and business owners; one-off payments and discounts on utilities for people whose livelihoods have been affected; 1 bil ion ringgit for a food security fund; and a 50 bil ion ringgit loan scheme for larger companies, which wil offer guarantees of up to 80% of the sum borrowed to shore up working capital in the corporate sector. Mauritius March 10: The Bank of Mauritius cut its key repo rate by 50 basis points to 2.85% amid the COVID-19 outbreak, which is expected to have a significant impact on the domestic economy. Mexico Banxico (Bank of Mexico) February 13: Cut its key rate by 25 basis points to 7.0%. March 19: Lowered its benchmark interest rate by 50 basis points to 6.50% in an out-of-cycle cut in a bid to support the country’s financial markets, reduced the rates on its additional ordinary liquidity facility, and cut by 50 bil ion pesos ($2.06 bil ion) the monetary regulation deposit that private banks must observe. Moldova National Bank of Moldova March 4: Cut its main interest rate by 100 basis points to 4.50%, citing the domestic disinflationary trend and global economic concerns related to the COVID-19 outbreak. March 20: Cut its main interest rate for the second time in March to 3.25% from 4.50% in order to support banking system amid markets volatility due to the COVID-19 spread. Mongolia March 11: The Central Bank of Mongolia cut its policy rate 100 basis points to 10.0% in response to increased uncertainties in connection with the spread of COVID-19. It also lowered the reserve requirement on banks. Morocco March 15: Morocco’s King Mohammed VI ordered the creation of a 10 bil ion-dirham ($1 bil ion) fund to upgrade health infrastructure, help vulnerable economic sectors such as tourism, maintain jobs, and mitigate the social repercussions of the outbreak. March 17: Bank Al-Maghrib (Central Bank of the Kingdom of Morocco) cut its benchmark interest rate by 25 basis points to 2% in order to help shore up economic activity fol owing a drought and the outbreak of COVID-19. Congressional Research Service 139 Global Economic Effects of COVID-19 Netherlands Government of the Netherlands March 12: Announced that it would expand loan guarantees for small and medium sized enterprises, from 50% to 75%. March 12: The Tax Authority wil al ow companies affected by COVID-19 to defer income, corporate, turnover, and wage taxes for the time being. March 17: Announced measures to support companies, ranging from tax exemptions to having up to 90% of wages lost for work hour reductions paid by the government. New Zealand Reserve Bank of New Zealand March 16: Cut the official cash rate by 75 basis points to a record low of 0.25%, and pledged to keep it at this level for at least 12 months. March 22: Announced that it wil purchase up NZ$30 bil ion ($17 bil ion) of government bonds in the secondary market over the next 12 months. It wil seek to buy NZ$750 mil ion bonds a week across a range of maturities, via an auction process. March 24: Reduced banks’ core funding ratios to 50% from 75% to help banks make credit available. March 30: Announced that it was deploying more tools to provide additional liquidity to the corporate sector and support market functioning to offset the impact of the pandemic. A new weekly Open Market Operation—to be held each Tuesday—wil provide liquidity in exchange for eligible corporate and asset-backed securities by offering up to NZ$500 mil ion ($300 mil ion) for terms out to approximately three months, starting on March 31. The bank also wil offer to purchase government bonds maturing on May 15, 2021, for liquidity management purposes. Government of New Zealand March 16: Announced a spending package of NZ$12.1 bil ion ($7.3 bil ion), equivalent to 4% of GDP in an attempt to fight the effects of COVID-19 on the economy; approximately NZ$5 bil ion wil go toward wage subsidies for businesses, NZ$2.8 bil ion toward income support, NZ$2.8 bil ion in business tax relief, and NZ$600 mil ion toward the airline industry. March 24: Announced that retail banks wil offer a six-month principal and interest payment holiday for mortgage holders and small business customers whose incomes have been affected by the economic disruption from COVID-19. The government and the banks wil also implement a NZ$6.25 bil ion ($3.62 bil ion) Business Finance Guarantee Scheme for small and medium-sized businesses. It wil include a limit of NZ$500,000 per loan and wil apply to firms with a turnover of between NZ$250,000 and NZ$80 mil ion per annum (the government wil carry 80% of the credit risk, with the other 20% to be carried by the banks). Norway Norges Bank March 13: Cut its key interest rate to 1% from 1.5%, as it seeks to counter the economic impact of the COVID-19 pandemic. It indicated that it would offer funding to banks to help counter the volatility in financial markets and announced that banks’ countercyclical capital buffer would be reduced from 2.5% to 1%, to help banks continue to lend money. March 20: Cut its key policy rate by 75 basis points to 0.25% from 1.0% in a bid to alleviate the economic impact from the COVID-19 outbreak. It also offered a third batch of extraordinary loans to the banking industry to ensure it has enough for the months ahead. March 30: Increased its planned issuance of government bonds this year to between 70 bil ion and 85 bil ion Norwegian crowns ($6.68 bil ion-$8.11 bil ion) from an original plan of 55 bil ion crowns, fol owing the government’s decision to offer loans worth tens of bil ions of crowns in emergency funding to companies hurt by the coronavirus outbreak. Congressional Research Service 140 Global Economic Effects of COVID-19 March 31: Wil increase further its daily purchase of Norwegian currency to 2 bil ion crowns ($190 mil ion) per day from 1.6 bil ion crowns in order to make funds available for the government’s fiscal budget. (On March 18, it announced that it would increase it to 1.6 bil ion Norwegian crowns per day from 500 mil ion crowns.) Government of Norway March 13: Announced that it would pay a greater part of the bil for all companies seeking to make temporary layoffs, suspended all airport fees for the first six months of 2020, and lifted for a period of 10 months the tax charged for each passenger. March 15: Announced that it would offer companies at least 100 bil ion Norwegian crowns ($9.7 bil ion) in funding in the form of loan guarantees (50 bil ion crowns to small and medium sized companies seeking bank loans) and bond issues (50 bil ion crowns to large firms issuing corporate bonds). In addition, payments of payrol taxes wil be postponed. March 20: Presented legislation that would temporarily reduce the value-added tax, postpone tax filing deadlines and add worker and business protections under a 280 bil ion kroner ($24 bil ion) plan to boost the economy amid the pandemic. Along with the tax provisions, the legislative package includes two previously announced lending programs that the government said would provide up to 100 bil ion kroner in support for Norwegian businesses, improving their access to credit to ensure liquidity. March 27: Proposed new measures to support businesses hit by the viral outbreak and a sharp fall in the price of oil. They include, among other things, covering fixed costs for companies affected by the coronavirus outbreak at a cost of 10 bil ion to 20 bil ion Norwegian crowns ($958 mil ion to $1.92 bil ion) per month for two months. Oman March 18: The Central Bank of Oman announced that it wil provide about 8 bil ion Omani rials ($20.8 bil ion) in extra liquidity to banks as one of several measures aimed at supporting the economy. It also asked banks to cut banking fees, adjust capital and credit ratios, allow repayment postponements for up to six months, and facilitate lending, particularly in sectors affected by the COVID-19, including healthcare, travel and tourism. Pakistan State Bank of Pakistan March 17: Cut its key interest rate by 75 basis points to 12.50% in response to the anticipated slowdown due to COVID-19, provided additional support to investment, offering a new package of 100 bil ion rupees ($630.5 mil ion) for investment in the manufacturing sector to fund investors at 7% for 10 years., and announced that it would refinance banks to provide 5 bil ion rupees ($31.5 mil ion) at a maximum of 3% for the purchasing of equipment used to fight the COVID-19. March 24: Cut its benchmark interest rate for the second time in a week, lowering it by 150 basis points to 11% amid considerable uncertainty about how the COVID-19 outbreak would impact the global economy and Pakistan. Government of Pakistan March 24: Announced a financial-relief package of more than 1 tril ion rupees ($6.3 bil ion) to support the economy and poorer workers. It wil include help to the export and industry sectors, tax breaks, procurement of medical and other equipment required to fight the pandemic, and the distribution of a monthly cash stipend among the poor. Paraguay Central Bank of Paraguay March 13: Cut its benchmark interest rate by 25 basis points to 3.75%, as part of a series of measures aimed at dealing with the impact of the COVID-19 outbreak. Banks’ reserve requirements wil also be reduced to help the financial sector refinance debts. Government of Paraguay Congressional Research Service 141 Global Economic Effects of COVID-19 March 13: Announced tax relief measures, as well as $150 mil ion of credit lines in state banks and loans from multilateral agencies. Peru Central Reserve Bank of Peru March 19: Cut its benchmark interest rate by 100 basis points to 1.25%, from 2.25% to counter the economic impact of the COVID-19 pandemic and announced that, if necessary, could employ other additional liquidity injection instruments to alleviate the crisis. March 29: Announced that that as part of the 90 bil ion soles stimulus plan announced on March 29, the Bank would inject 30 bil ion soles into banks for loans to mainly smaller companies to help cover their working capital. April 2: Announced that it is preparing a major bond issuance to help underwrite an unprecedented stimulus package to counter the economic impact of the fast-spreading pandemic. Government of Peru March 29: Announced that it is planning an economic stimulus package worth around 90 bil ion soles ($26.41 bil ion or 12% of gross domestic product) to support citizens and the key mining sector that have been impacted by COVID-19. It wil have three phases of 30 bil ion soles each: containing the disease, ensuring companies’ payment chains by granting credit guarantees, and reactivating production, particularly in the copper industry. Philippines Central Bank of the Philippines (Bangko Sentral ng Pilipinas) March 19: Cut the rate on its overnight reverse repurchase facility by 50 basis points to 3.25%, authorized a temporary relaxation of regulations on compliance reporting by banks, calculations of penalties on required reserves and single borrower limits, and approved a temporary reduction to zero of the term spread on rediscounting loans relative to the overnight lending rate. March 23: Revealed it would purchase up to 300 bil ion Philippine peso ($5.9 bil ion) worth of short-term securities under a repurchase agreement with the Bureau of the Treasury in a bid to inject a fresh round of liquidity into the market and to keep a lid on interest rates in the process. March 24: Announced a 200 basis points reduction in the reserve requirement ratio (RRR) to calm financial markets and boost lending. The cut, effective March 30, wil bring the ratio to 12% and ensure there is sufficient liquidity to counter the economic impact of the COVID-19 outbreak. Government of the Philippines March 13: Instructed the Government Service Insurance System and the Social Security System “to take advantage of the low stock prices" and "support the stock market by at least doubling their daily average purchase volumes" from 2019. March 16: The government announced a 27.1-bil ion peso package to help fight the COVID-19 pandemic and provide economic relief to affected sectors. March 17: The Philippine Stock Exchange halted all stock, bond and currency trading until further notice, after President Rodrigo Duterte placed Luzon, the country’s economic powerhouse, under “enhanced community quarantine”. March 22: The Philippine Congress is reportedly drafting a stimulus package of at least 200 bil ion pesos ($3.9 bil ion) as part of a supplemental budget to shore up the economy from the impact of the COVID-19 outbreak. March 19: The Philippine Stock Exchange reopened with shortened hours. Poland National Bank of Poland March 17: Cut its benchmark interest rate by 50 basis points to 1.0% from 1.5% in response to the COVID-19 pandemic; it also lowered its lombard rate to 1.50% from 2.50% and the rediscount rate to 1.05% from 1.75%, reduced banks’ required reserve ratios to 0.5% from 3.5%, announced plans to boost banking sector liquidity (through Congressional Research Service 142 Global Economic Effects of COVID-19 the extension of repo operations), and offered “large-scale” purchases of government bonds as part of its open-market operations. Government of Poland March 18: Announced an economic stimulus package of 212 bil ion zloty ($52 bil ion, or approximately 9% of gross domestic product) to assist entrepreneurs and employees during the COVID-19 crisis. It consists of 5 pil ars: employee safety, company financing, health protection, strengthening the financial system, and a public investment program. Specific measures include holidays in debt repayments and social contributions, loan guarantees, as well as payments of salaries to those unable to work. March 26: Announced that the state bank BGK wil issue bonds worth around 16 bil ion zlotys ($3.9 bil ion) in 2020-2021 as part of a wider plan to combat the coronavirus impact on the economy. The state wil buy the bonds back in 2021-2025, spending around 2.5 bil ion zlotys a year in the first year and then around 3.7 bil ion zlotys annually. Portugal Government of Portugal March 13: Announced a 2.3 bil ion-euro package that wil include delaying some tax payments and granting soft loans. Companies wil be allowed to suspend social security payments and maintain employees’ contracts with payments equal to two-thirds of salaries, funded largely by the state, and workers who have to stay at home to care for school children of up to 12 years of age wil receive 66% of their base salaries. March 18: Announced a 9.2 bil ion-euro package to support workers and provide liquidity for companies affected by the COVID-19 outbreak. It consists of 5.2 bil ion euros in fiscal stimulus, 3 bil ion in state-backed credit guarantees, and 1 bil ion related to social security payments. (Just over half of the 3 bil ion euros in credit lines announced is aimed at companies working in tourism, hotels and restaurants. The other half goes to industries like textiles, clothing and wood. Around a third is set aside for micro and small enterprises.) Qatar Qatar Central Bank March 16: Cut the deposit rate by 50 basis points to 1%, lending rate by 100 basis points to 2.50%, and repurchase rate (repo) by 50 basis points to 1%. Government of Qatar March 15: The Emir of Qatar announced several measures to shield the economic and financial sectors in the country from the impact of the COVID-19, including (1) allocating 75 bil ion Qatari riyals ($20.6 bil ion) to support and provide financial and economic incentives in the private sector, (2) directing the Central Bank of Qatar to provide additional liquidity to banks operating in the country and putting in place the appropriate mechanism to encourage banks to postpone loan installments and obligations of the private sector with a grace period of six months, (3) directing the Qatar Development Bank to postpone the installments for all borrowers for a period of six months, (4) directing the government to increase its investments in the stock exchange by 10 bil ion Qatari riyals ($2.75 bil ion), (5) exempting food and medical goods from customs duties for a period of six months, and (6) exempting the various sectors of the economy from electricity and water fees for a period of 6 months. Romania March 20: The National bank of Romania cut its benchmark interest rate by 50 basis points to 2.0% in order to curb the economic fallout from the COVID-19 outbreak. It also cut its lending rate facility to 2.50% from 3.50% and wil provide liquidity to banks via repo transactions and purchase leu-denominated debt on the secondary market. Saudi Arabia Saudi Arabian Monetary Authority March 15: Announced that it had prepared a 50 bil ion riyal ($13.32 bil ion) package to help small and medium-sized enterprises cope with the economic impacts of Congressional Research Service 143 Global Economic Effects of COVID-19 COVID-19; it also lowered by 75 basis points both its repo rate to 1%, and its reverse repo rate to 0.5%. Government of Saudi Arabia March 20: Introduced an additional stimulus package worth 120 bil ion riyals ($32 bil ion) to aid businesses, including the postponement of value-added tax (VAT), excise tax, and income tax payments for a period of three months and exemptions of various government levies and fees. March 30: Announced that it wil finance treatment for anyone infected with COVID-19 in the country, and took steps to boost wheat and livestock supplies amid global fears of a food shortage. Serbia National Bank of Serbia March 11: Cut its reference interest rate by 50 basis points to 1.75% to help minimize economic disruption caused by the COVID-19 outbreak. Government of Serbia March 29: Announced that it plans to offer about 5 bil ion euros ($5.54 bil ion) in loans and subsidies to businesses to help them cope with the economic impact of COVID-19 and make a one-time payment of 100 euros to every citizen older than 18. The president indicated that the state would use 700 mil ion euros to pay minimum wages of 30,367 dinars ($288.58) and allow tax delays for micro and small enterprises for the three months after the end of the state of emergency to avoid job loss. Seychelles March 24: The Central Bank of Seychelles cut its monetary policy rate by 100 basis points to 4.0%, indicating that this was the first phase of its response to the challenge from the spread of the COVID-19, which is expected to lower this year’s earnings from tourism by 70% and trigger a double-digit drop in economic growth. Singapore Monetary Authority of Singapore March 30: Announced that it would adopt a 0% per annum rate of appreciation of the policy band starting at the prevailing level of the Singapore Dol ar Nominal Effective Exchange Rate (S$NEER), currently slightly below the mid-point of the policy band. Government of Singapore February 18: Announced around $4.5 bil ion in financial packages to help contain the COVID-19 outbreak, including $575 mil ion to fight and contain the disease, mainly through healthcare funding, and 4 bil ion in economic stimulus measures to manage its impact on businesses, jobs and households. March 26: Unveiled stimulus plan worth around S$48 bil ion ($33.7 bil ion) to deal with the economic fallout from COVID-19 (of which S$17 bil ion wil be drawn from the national reserves). A key part of the stimulus package involves ramping up a jobs support scheme first announced in February. The government wil now offset up to 25% of the first S$4,600 of workers’ monthly wages for a nine-month period (up from the 8% quantum and S$3,600 cap announced in February), while self-employed workers wil be eligible to receive monthly payments of S$1,000 for nine months. Some hard-hit sectors wil receive additional support: the government would offset up to 50% of wages in the food services sector and up to 75% of wages in the aviation and tourism sectors. A previously announced cash payout to all adult Singaporeans would be tripled and low-income families wil also receive grocery vouchers. Slovakia Government of the Slovak Republic March 29: Announced plans for an aid package of up to 1 bil ion euros a month to help firms and employees hurt by the pandemic. Under the plan, the state would (1) pay 80% of wages for employees at firms forced to shut, (2) help self-employed people and employees in firms that suffer falling revenue, with payments linked to the size of the revenue drop, (3) allow employers to postpone their contributions to Congressional Research Service 144 Global Economic Effects of COVID-19 state social and health systems and delay some tax payments if they suffer a 40% drop in revenue; (4) allow firms to offset accumulated losses from past years going back to 2014 against corporate income tax, and (5) offer firms bank guarantees of up to 500 mil ion euros a month. South Africa South African Reserve Bank March 19: Cut its main lending rate by 100 basis points to 5.25% as it sought to offset the drag from the COVID-19 outbreak and the plunge in oil prices. March 20: Announced measures to inject liquidity into local markets, including intraday overnight supplementary repos to provide liquidity support to clearing banks, lowering the standing facilities’ borrowing rate by 100 basis points to 200 basis point below the benchmark repo rate, and lowering the standing facilities’ lending rate to the repo rate from the previous rate of repo plus 100 basis points. March 25: Announced that it would begin buying an unspecified amount of government bonds as part of additional emergency policy measures aimed at easing a severe liquidity crunch triggered by the COVID-19. South Korea Bank of Korea March 16: Cut the seven-day repurchase rate by 50 basis points to 0.75% in an effort to soften the impact of the COVID-19 pandemic on the Korean economy. It also lowered borrowing costs for the bank’s low interest rate loan programs and relaxed col ateral rules of its repurchasing operations, to ensure companies can easily and cheaply access credit. March 19: Announced that it wil buy government bonds worth 1.5 tril ion won ($1.2 bil ion) to bolster liquidity in the bond market and back short-term liquidity in banks under increased loan demand due to fallout from COVID-19. Government of the Republic of Korea March 3: Announced a 11.7 tril ion won ($9.8 bil ion) stimulus package that includes funding for medical institutions and quarantine efforts, assistance to small- to medium-sized businesses struggling to pay wages to their workers, and subsidies for child care. March 17: The National Assembly approved a supplementary budget worth 11.7 tril ion won ($9.4 bil ion) to help contain COVID-19 and cushion the economic fallout. The government has indicated that it plans to execute at least 75% of its spending within the next two months. March 18: Pledged 50 tril ion won ($40 bil ion) in emergency financing for small businesses and other stimulus measures to help the economy. Some highlights of the package include 12 tril ion won in low-interest financing for small firms, 5.5 tril ion won in loan guarantees, easing loan terms and suspending interest payments for small businesses. The Bank of Korea reportedly wil actively provide liquidity support for around half of the new package. March 20: South Korea’s financial authorities and local banks agreed to set up a bond market stabilization fund worth more than 10 tril ion won ($7.9 bil ion) as part of the country’s efforts to calm financial markets roiled by the spread of COVID-19. March 24: Announced that it would double the planned economic rescue package announced on March 18 to 100 tril ion won ($80 bil ion) to save companies hit by the COVID-19 and put a floor under crashing stocks and bond markets. It includes 29.1 tril ion won in loans to small- and medium-sized companies and 20 tril ion won wil be used to buy corporate bonds and commercial paper of companies facing a credit crunch. As part of the rescue package, the Financial Services Commission wil establish a 10.7 tril ion won facility set up to stabilize stock markets. It wil also commence a bond buying facility in April that wil be funded by 84 institutions, including the Bank of Korea, commercial banks and insurers. March 29: Announced that an “emergency disaster relief payment” of up to 1 mil ion won ($820) would be made to all households (except the top 30% by income), totaling some 9.1 tril ion won ($7.44 bil ion). It is also preparing another extra budget Congressional Research Service 145 Global Economic Effects of COVID-19 worth 7.1 tril ion won ($5.80 bil ion) for parliamentary approval in April, and wil exempt some small and medium-sized companies from paying utility bil s. Spain Government of Spain March 12: Approved the creation of a 2.8 bil ion euro ($3 bil ion) aid package to help regional authorities mitigate the economic impact from COVID-19, and announced a 1 bil ion euro contribution to the health ministry’s budget and 14 bil ion euros ($15.1 bil ion) in liquidity for small and medium companies (e.g., small businesses affected by the outbreak would be exempt from paying taxes for six months). It also announced that it would open a 400 mil ion euro credit line to aid the tourism industry. March 17: Unveiled a package of 200 bil ion euros ($219 bil ion) to mitigate the effects of COVID-19 (117 bil ion euros wil be mobilized by the state, with the rest coming from private companies). It wil include state-backed credit guarantees for companies, loans and aid for vulnerable people, a moratorium on mortgage payments and evictions; the government wil also guarantee water, electricity and internet to for people adversely affected. Sri Lanka March 16: The Central Bank of Sri Lanka cut the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by 25 basis points to 6.25% and 7.25%, respectively, and the Statutory Reserve Ratio (SRR) on all rupee deposit liabilities of licensed commercial banks was reduced by 1 percentage point to 4% March 16: The Colombo Stock Exchange was closed until March 19, as the government extended the public holiday in a bid to halt the spread of COVID-19 in the country. April 3: The Central Bank of Sri Lanka cut by a further 25 basis points its benchmark interest rates (the Standing Deposit Facility Rate and Standing Lending Facility Rate to 6.00% and 7.00%, respectively), its second such reduction in three weeks, in a move to support the economy amid the coronavirus pandemic. Sweden Sveriges Riksbank March 13: Stated that it would lend up to 500 bil ion crowns ($51 bil ion) to Swedish companies via banks to shore up credit flows as the epidemic wreaks havoc on financial markets. March 16: Announced that it would buy securities for up to an additional 300 bil ion Swedish crowns ($31 bil ion) in 2020 to facilitate credit supply and mitigate the downturn in the economy caused by the COVID-19, reduced the overnight lending rate to banks to 0.2 percentage point above its repo rate (from 0.75 percentage point), and indicated that it would be flexible with the col ateral banks can use when they borrow money from the Riksbank, giving lenders more scope to use mortgage bonds as col ateral. Government of Sweden March 16: Presented a package worth more than 300 bil ion Swedish crowns ($31 bil ion) to support the economy in the face of the COVID-19 pandemic. It included measures such as the central government assuming the ful cost for sick leave from companies through the months of April and May 2020 and for temporary redundancies due to the crisis, and allowing companies to put off paying tax and VAT for up to a year (retroactive to the start of 2020). Switzerland Swiss National Bank March 23: Hiked its foreign currency interventions to their highest level since the Brexit referendum in 2016 in an effort to stem the rise in the franc, which has appreciated as investors sought safe assets while stock markets have plunged during the coronavirus pandemic. Government of Switzerland Congressional Research Service 146 Global Economic Effects of COVID-19 March 13: Unveiled an emergency economic-aid package of roughly 10 bil ion francs ($10.5 bil ion) for workers and small businesses. It includes 8 bil ion francs for “Kurzarbeit,” or short-time work, and 580 mil ion francs in guaranteed bank loans. March 20: Announced a new 32 bil ion franc ($32.56 bil ion) aid package to support companies and workers hit by the widening COVID-19 outbreak. The bulk of the cash (20 bil ion francs) wil go into guarantees for bank loans to companies at “very modest” interest rates. Firms wil be able to get loans worth up to 10% of their revenue, to a maximum of 20 mil ion francs. Amounts of 500,000 francs wil be paid out immediately and guaranteed by the government. The government’s short-time working scheme would also be extended to fixed-term, temporary workers, and trainees. The package fol ows one worth 10 bil ion francs announced on March 13, bringing the total stimulus to 42 bil ion francs ($42.8 bil ion). March 31: Announced that it is stepping up its funding plans in response to government measures to cushion the economic impact of the pandemic, doubling the volume of outstanding short-term money market instruments. The Federal Finance Administration (FFA) wil increase the outstanding volume of short-term money market instruments, from around 6 bil ion francs ($6.24 bil ion) to 12 bil ion francs, and wil once again step up sales of its own Confederation bond holdings. Taiwan Central Bank of the Republic of China (Taiwan) March 19: Cut its benchmark rate by 25 basis points to 1.125%, and announced that it would expand the scope of repurchase facility operations and provide banks with T$200 bil ion ($6.6 bil ion) of financing to support small and medium sized companies which have been hard hit by the COVID-19 outbreak. Government of Taiwan February 25: Approved a T$60 bil ion ($2 bil ion) package to help cushion the impact of the COVID-19 outbreak on its export-reliant economy, including loans for small businesses, subsidies for hard-hit tour agencies, tax cuts for tour bus drivers, and vouchers to spend on food in night markets. March 12: Announced that an additional T$40 bil ion ($1.33 bil ion) from the Employment Stabilization Fund and the Tourism Development Fund would be available to stimulate Taiwanese economy. March 19: The president said that the government would help its hard-hit airline industry access T$50 bil ion in financing, and did not rule out further economic stimulus. March 19: Authorized its National Stabilisation Fund to intervene and buy stocks on the market, as the island’s bourse continues to fall on COVID-19 worries. Thailand Bank of Thailand March 20: Cut its key interest rate by 25 basis points to 0.75%, as the spread of COVID-19 exerted further pressure on the Thai economy. March 22: Together with the Ministry of Finance and the Securities and Exchange Commission, announced three measures to address liquidity concerns and ensure the functioning of local financial markets: (1) setting up a special facility that allows commercial banks that purchase units in high-quality money market funds or daily fixed-income funds to use them as col ateral for liquidity support (initial estimate is 1 tril ion baht); (2) creation of a 70-100 bil ion baht “Corporate Bond Stabilization Fund” that invests in high-quality, newly issued bonds by corporates that cannot ful y rol over maturing corporate bonds, and (3) Bank of Thailand wil continue to purchase government bonds to provide liquidity to the market. Government of Thailand March 10: Approved a stimulus package worth an estimated 400 bil ion baht ($12.74 bil ion) to help alleviate the impact of the COVID-19 outbreak. It includes 150 bil ion baht of soft loans, a 20 bil ion baht fund to help firms and workers affected, and tax benefits and support for utilities costs. Congressional Research Service 147 Global Economic Effects of COVID-19 March 24: Approved a package of stimulus measures worth at least 117 bil ion baht ($3.56 bil ion) to try to mitigate the impact of the coronavirus outbreak. The measures include cash handouts worth 45 bil ion baht for 3 mil ion workers outside the social security system; soft loans worth 60 bil ion baht; and tax breaks. Separately, small firms wil be offered 10 bil ion baht of loans and business tax payments wil be delayed. March 30: Announced that it is preparing a third stimulus package, worth more than 500 bil ion baht ($15.3 bil ion), to alleviate the impact of the coronavirus crisis. March 31: Agreed to triple the number of workers receiving cash handouts to nine mil ion to help ease the impact of the spreading coronavirus. It had previously planned to provide cash handouts of 15,000 baht ($458) each to 3 mil ion workers, taking the total to 45 bil ion baht ($1.38 bil ion). Now its total handout wil reach 135 bil ion baht ($4.13 bil ion). Tunisia Central Bank of Tunisia March 17: Cut its key interest rate by 100 basis points to 6.75%, as it responded to the negative impact of the COVID-19 on the global growth outlook. April 1: Asked banks and financial institutions to suspend the distribution of 2019 dividends and allow customers to defer loan payments for three months as part of a package to ease the social and economic effects of the coronavirus. Government of Tunisia March 21: Announced that it would allocate 2.5 bil ion dinars ($850 mil ion) to combat the economic and social effects of the COVID-19 health crisis. Among new measures, the government wil delay tax debts, postpone taxes on small- and medium-sized businesses, delay repayment of low-income employee loans, and provide financial assistance to poor families and those who have lost their jobs due to the crisis and loans and aid to help companies affected. March 23: The finance minister announced that the International Monetary Fund wil disburse $400 mil ion to help the country face the effects of COVID-19. March 28: The European Union granted Tunisia 250 mil ion euros in aid to help it cope with the economic and social effects of the viral outbreak. Turkey Central Bank of Turkey March 17: Lowered its benchmark one-week repo rate by 100 basis points to 9.75%, as it responded to the negative impact of the COVID-19 on the global growth outlook. March 31: Announced emergency measures to stem the fallout from a growing pandemic. It would (1) allow primary dealers to sell to the Bank (for a temporary period) debt they purchased from the Unemployment Insurance Fund, (2) extend 60 bil ion lira ($9 bil ion) worth of rediscount credits, (3) add more lending options well below its 9.75% policy rate, (4) hold swap auctions with six-month maturities for lira against dol ars, euros, or gold at an interest rate 125 basis points lower than the policy rate, and (5) allow lenders to use mortgage- and asset-backed securities as col ateral for foreign exchange operations. Government of Turkey March 18: Unveiled a 100 bil ion-lira ($15.4 bil ion) plan to help businesses affected by the COVID-19 pandemic. It includes measures from tax cuts and payment deferrals for businesses to an increase in minimum pension payouts. Ukraine March 19: The government published a new law that wil exempt taxpayers from paying the land and property taxes from March 1 to April 30, introduced a moratorium on tax audits from March 18 to May 31, and suspended some tax-related penalties from March 1 to May 31. Uganda Bank of Uganda Congressional Research Service 148 Global Economic Effects of COVID-19 March 24: Sold dol ars in the interbank market to support the local currency, which has been experiencing sharp depreciation due to COVID-19-related disruptions. April 6: Cut its policy rate by 100 basis points to 8.0% to support the economy which has been hit by the impact of COVID-19. It also announced that it had “directed” commercial banks to defer all discretionary payments, such as dividends and bonus payments, for at least 90 days from March. United Arab Emirates Central Bank of the UAE (UAE) March 15: Announced a 100 bil ion dirham ($27 bil ion) stimulus package to deal with the economic effects of the COVID-19 pandemic; it cut the rate on one-week certificates of deposit by 75 basis points and wil also ease regulatory limits on loans. April 5: Announced new measures to guarantee liquidity in the banking system in the face of the pandemic, boosting its stimulus to a total of 256 bil ion dirhams ($70 bil ion) from a previously announced 100 bil ion dirhams ($27 bil ion) package. It also halved banks’ reserve requirements for demand deposits to 7% from 14%, which wil inject about 61 bil ion dirhams of liquidity to support banks’ lending and liquidity management, extended the duration of a previously announced deferral of loan principal and interest payments for customers until the end of the year, and said banks participating in the scheme can benefit from a capital buffer relief of 50 bil ion dirhams until December 2021, among other measures. Government of the UAE March 30: Announced that it would inject funding into state-owned Emirates Airlines to help it deal with the impact of COVID-19 on its business. April 5: Announced that it would reinforce its stockpile of strategic goods and waive residency visa fines for the rest of the year in response to the viral outbreak. United Kingdom Bank of England March 11: Cut its benchmark interest rate by half a percentage point, to 0.25%, revived a program to support lending to small and midsize businesses, and reduced bank capital requirements to further boost credit. March 19: Cut its benchmark rate by 15 basis points to 0.1% to try to mitigate the impact of COVID-19 on the British economy, added 200 bil ion pounds ($232 bil ion) to its asset purchase program (including sovereign and private debt), increased its banks’ borrowing allowance under the Term Funding Scheme for Small and Medium Enterprises from 5% to 10% of participants’ stock of real economy lending, and cancelled its 2020 stress test of the 8 major UK banks. April 2: Announced that it wil double the size of its corporate bond purchase program to at least 20 bil ion pounds ($24.7 bil ion), part of a previously announced stimulus package to help the economy. It wil begin ramping up its corporate bond purchases through a series of reverse auctions starting on April 7, holding three a week, and it wil be able to buy 20 mil ion pounds of any single bond—double the previous amount. UK Government March 11: Announced a stimulus package totaling 30 bil ion pounds ($39 bil ion). It wil include 7 bil ion pounds ($8.6 bil ion) available to support the labor market, 5 bil ion pounds ($6.1 bil ion) to help the health-care system, and 18 bil ion pounds ($22 bil ion) to support the UK economy, bringing the total fiscal stimulus to 30 bil ion pounds ($39 bil ion). (Among the specific measures, there wil be a tax cut for retailers, cash grants to small businesses, a mandate to provide sick pay for people who need to self-isolate, subsidies to cover the costs of sick pay for small businesses, and expanded access to government benefits for the self-employed and unemployed.) March 17: Unveiled a package of 350 bil ion pounds ($424 bil ion) to support the economy; it includes 330 bil ion pounds of guaranteed loans for businesses that need cash to pay rent or suppliers, 20 bil ion pounds of tax cuts and grants for businesses in 2020, a three-month mortgage payment holiday for borrowers affected by the virus, and a one-year “business rates” holiday for businesses in the retail, leisure, and hospitality industry. Congressional Research Service 149 Global Economic Effects of COVID-19 March 28: Wil ease regulations for affected businesses, including simplifying the insolvency system to keep companies trading, easing administrative requirements and barriers to the import of personal protective equipment, and helping new companies produce and distribute hand sanitizer within a matter of days. Vietnam State Bank of Vietnam February 24: Ordered commercial banks to eliminate, cut, or delay interest payments on loans to companies facing losses due to the coronavirus outbreak. March 16: Cut by 100 basis points both its refinance rate (to 5%) and the overnight lending rate in the inter-bank market (to 6%), and by 50 basis points its discount rate (to 3.5%). Government of Vietnam March 3: Announced measures worth 27 tril ion dong ($1.16 bil ion) to help businesses cope with the coronavirus epidemic and help the economy stick to its 6.8% growth target this year. They include tax breaks, delayed tax payments, and a reduction in land lease fees. The government will also speed up state spending on infrastructure projects. Zimbabwe Reserve Bank of Zimbabwe March 26: Cut its main lending rate to 25% from 35% and set a fixed exchange rate (at 25 Zimbabwe dol ars to the U.S. dol ar) as part of measures to support the economy. It indicated that it had suspended the managed floating exchange rate system to provide for greater certainty in the pricing of goods and services in the economy. Government of Zimbabwe March 29: Published new exchange control regulations making it legal for Zimbabweans to use electronic and cash foreign currencies in domestic transactions, as the country readies for a 21-day lockdown to prevent the spread of COVID-19. Multi-Country and March 4: The International Monetary Fund (IMF) made $50 bil ion in loans International available to deal with the COVID-19 through its rapid-disbursing emergency financing Institutions’ facilities, including $10 bil ion of zero-interest loans to the poorest IMF member Responses countries. On March 16, the IMF announced that it “stands ready to mobilize its $1 tril ion lending capacity to help our membership" and that it has “40 ongoing arrangements—both disbursing and precautionary—with combined commitments of about $200 bil ion,” some of which could be used for this crisis, and that it is aiming to boost its debt relief fund to $1 bil ion from its current level of $400 mil ion. March 3: The World Bank announced an initial package of up to $12 bil ion in loans for countries to help countries cope with the effects of the COVID-19 outbreak. Specifically, it comprises up to $2.7 bil ion new financing from IBRD, $1.3 bil ion from IDA, complemented by reprioritization of $2 bil ion of the Bank’s existing portfolio, and $6 bil ion from IFC, as well as policy advice and technical assistance ($8 bil ion is new funding and the remaining $4 bil ion is redirected from current lines of credit). March 11: The Inter-American Development Bank (IADB) announced that it has up to $2 bil ion in resources that can be programmed to countries requesting support for disease monitoring, testing and public health services, and that it could work with countries that have undisbursed loan balances to redirect resources to pandemic-response efforts. March 13: The European Bank for Reconstruction and Development (EBRD) unveiled an emergency €1 bil ion “Solidarity Package” of measures to help companies across its regions deal with the impact of the COVID-19 pandemic. Under the emergency program, the EBRD wil set up a “resilience framework” to provide financing for existing EBRD clients with strong business fundamentals experiencing temporary credit difficulties, comprising emergency liquidity, working capital and trade finance. Congressional Research Service 150 Global Economic Effects of COVID-19 March 15: The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the U.S. Federal Reserve, and the Swiss National Bank agreed to lower the pricing on the standing US dol ar liquidity swap arrangements by 25 basis points, so that the new rate wil be the US dol ar overnight index swap (OIS) rate plus 25 basis points. March 16: The European Investment Bank Group (EIBG) proposed a 40 bil ion euro financing package consists of dedicated guarantee schemes to banks based on existing program for immediate deployment (20 bil ion euros), liquidity lines to banks to ensure additional working capital support for SMEs and mid-caps (10 bil ion euros), and asset-backed securities purchasing programs to allow banks to transfer risk on portfolios of SME loans (10 bil ion euros). March 16: The Islamic Development Bank (IsDB) Group announced that it is setting-up a special “Strategic Preparedness and Response Facility” of $730 mil ion to mitigate the negative health and socio-economic impact of the COVID-19 pandemic. It wil include $280 mil ion from the Bank and Islamic Solidarity Fund for Development (ISFD) for sovereign projects and programs, $300 mil ion from International Islamic Trade finance Corporation (ITFC) for trade finance and $150 mil ion from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) for insurance coverage. March 16: The Central American Bank for Economic Integration (CABEI) granted a nonreimbursable financial package worth $8 mil ion to the eight countries of the Central American Integration System in order to combat the widening economic fallout from the COVID-19 (Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Belize, and the Dominican Republic wil each receive $1 mil ion). March 18: The Asian Development Bank (ADB) announced a $6.5 bil ion initial package to address the immediate needs of its developing member countries (DMCs) as they respond to the COVID-19 pandemic. The initial package includes approximately $3.6 bil ion in sovereign operations for a range of responses to the health and economic consequences of the pandemic, $1.6 bil ion in non-sovereign operations for micro, small, and medium-sized enterprises, domestic and regional trade, and firms directly impacted, about $1 bil ion in concessional resources through reallocations from ongoing projects and assessing possible needs for contingencies, and $40 mil ion in technical assistance and quick-disbursing grants. (Since February 2020, ADB has provided more than $225 mil ion to meet urgent needs of both governments and businesses in DMCs.) March 19: The U.S. Federal Reserve announced the establishment of temporary U.S. dol ar liquidity arrangements (swap lines) with 9 central banks to help lessen strains in global U.S. dol ar funding markets. These new facilities wil support the provision of U.S. dol ar liquidity in amounts up to $60 bil ion each for the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Korea, the Banco de Mexico, the Monetary Authority of Singapore, and the Sveriges Riksbank, and $30 bil ion each for the Danmarks Nationalbank, the Norges Bank, and the Reserve Bank of New Zealand. March 19: The Board of Directors of the New Development Bank approved RMB 7 bil ion ($1 bil ion) Emergency Assistance Program Loan to the People’s Republic of China. The Program wil help finance urgent and unexpected public health expenditures in Hubei, Guangdong, and Henan. March 20: The Development Bank of Latin America (CAF) announced that it has opened an additional $2.5 bil ion line of credit to support the measures that member countries are taking to mitigate the effects of COVID-19. On March 3, it approved a credit line worth $300 mil ion to manage emergencies related to COVID-19 and the possibility of granting technical help of up to $5 mil ion for initiatives related to the outbreak in countries across the region. March 26: The Group of 20 (G20) announced that it would inject “over $5 tril ion into the global economy, as part of targeted fiscal policy, economic measures, and guarantee schemes to counteract the social, economic and financial impacts” of COVID-19. Source: Congressional Research Service based on information from news articles and press releases. Congressional Research Service 151 Global Economic Effects of COVID-19 Author Information James K. Jackson, Coordinator Rebecca M. Nelson Specialist in International Trade and Finance Specialist in International Trade and Finance Martin A. Weiss Karen M. Sutter Specialist in International Trade and Finance Specialist in Asian Trade and Finance Andres B. Schwarzenberg Michael D. Sutherland Analyst in International Trade and Finance Analyst in International Trade and Finance Acknowledgments The authors would like to thank and acknowledge the expert assistance provided by Amber Wilhelm, Visual Information Specialist, CRS, in the preparation of this report. Disclaimer This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material. Congressional Research Service R46270 · VERSION 71 · UPDATED 152