The economist believes that the global economy will collapse due to COVID-19

The global economy will face a collapse in the near future if governments do not give the opportunity to resume work to those who were forced to quit due to quarantine, said Oscar Stakhovyak, venture investor and managing partner of Untitled Ventures, to RIA Novosti.

Due to the coronavirus pandemic, quarantine remains in many countries; governments are forced to provide support to both business and ordinary citizens who have lost their jobs.

The negative impact on the economy from the forced stop of entire industries is accumulating and threatens to turn into a serious crisis.

“The complete collapse of the economy is a real scenario of the near future, if the economies of the countries do not open … Most of the damage to the economy was done in the second quarter of this year, but, as we see now, the situation will improve by the end of the quarter. Nevertheless, the general situation, many companies will reset and depreciate their assets, which may increase debts, the size of which will depend on the industry. And if restrictions (quarantine and a ban on the work of companies) continue in the third quarter, the whole economy will be in big trouble, ” – said the expert Hg.

According to him, the situation is further complicated by several factors: measures of support in the countries that are different in nature and the old outdated approach to doing business.

“Contractors of earlier agreements, depending on the country, have different levels of amnesty (tax breaks, etc.) during this period regulated by governments (quarantine). The government can save one group, but sentence another by default. In addition, the financial sector today managed according to the old models … when we assumed that tomorrow will be the same as yesterday, and in this scenario you did not need any reserves, because you always had access to capital, “Stakhovyak said.

He believes that industrial enterprises will be the first to open after the suspension, but the restaurant business will have to endure quarantine longer.

“For a number of reasons, opening the industrial sector is much easier than providing services, including restaurants, hairdressers, and bars. The industry has more control over working conditions, which can reduce the likelihood of spreading the infection. In Europe, Germany is probably best able to deal with this crisis.” therefore, the reasons why they remove restrictions are understandable. The example of Germany will help other countries make decisions on removing restrictions at home, “said the investor.

Answering the question of how much, under the threat of a complete collapse of the world economy, the health of the population can be a deterrent to quarantine removal, Stakhovyak noted that the population itself is tired of the forced “imprisonment” and is probably ready to take certain risks.

“It depends on the point of view. If you (the country) are in quarantine for a long time, then the population is tired and wants to take the risks offered by the state. And in this case, such a decision (to reduce or cancel quarantine) will outweigh any risks economically. Moreover but at present, we see a decrease in cases of infection and, due to human nature, are now more inclined to believe that the worst is behind, an impulse to renew life has begun and the economy is restarting, ”said the expert.

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