The European Union Is Facing Its Worst Recession Ever. Watch Out, World

The structure of support makes things less severe for the average citizen than in the us, but that doesn’t mean we’ve dodged the overall effects on the economy.

Not in Italy, for example, where a tiny fraction of people got 600 euro (minus tax) for the March period, and for the rest there are loans that could be technically obtained and need to be repaid within 6 years (but the procedure is byzantine).

And the government asked for "an act of love" from the banks (== give money without guarantees) instead of, say, act as guarantor (for the above-mentioned loans, there is some form of guarantee, but not everything).

Also the EU fiscal policy has not changed in practice, so you can't go on a spending spree without facing the consequences later.

I'm not surprised the GDP is expected to drop by 15%. Very tough times ahead.

While much of the EU has overall much better unemployment benefits these were never tested in a period where so many people could lose their jobs.

And we are more than self-sufficient concerning agricultural product even with the reduced output caused by the pandemic. We could also reduce our meat intake by 10%, doing so would allow us to export as much food as we did in 2019.

That's a real issue in the developing world; in the developed world the resources exist to buffer the temporary additional low-end economic impact; not doing so effectively is a policy choice (and, in practice, a deliberate active one made when the alternative of providing the aid is presented), not an inherent corollary of lockdowns.

The choice between "saving people" vs "economy" is a false choice. Lockdowns might help the economy more in the long run. People that live in fear of the virus will not consume, and lockdowns reduce the amount of time that the virus is out there.

You can force people to go back to work, but you can't force people to consume.

I suspect we will be debating that for years or even decades.

Currently there are little bit more than 0.1 million reported deaths across the EU.

And as I was saying, in the best case scenario, based on the current data [0] 1 million more could die if people would live their lives normally.

But people would not live normally as they do not in Sweden or Belarus and economies would be in downfall anyway.

The difference would be in the number of deaths, long term health issues, as well as in the length of the crisis - probably more like 2 years, or until herd immunity trough vaccination.

[0] https://miro.medium.com/max/1400/1*G6ql9WUz114Mdwktyp53Mg.pn...

Still, Belarus mobility statistics according to Google [0] are:

Retail & recreation: -16%

Transit stations: -20%

Workplaces: -25%

Their economic activity is certainly reduced right now. People do not want to expose themselves even if their leaders are downplaying it. BTW - Belarus was probably prepared the best in the world for pandemic with 11 beds per 1000 people vs. 5.8 beds per 1000 people in EU in 2010 [2].

So entering speculation again, IMF is projecting 6% GDP contraction in Belarus [1].

Another data point is Open Table (restaurants reservations) data [3] from USA. Most of the drop in reservations happened before lock-down. People decided to not go on their own - on average 73% down before restaurants were ordered to close. My prediction is that up-tick in states that are opening right now will be very small as well.

[0] https://www.gstatic.com/covid19/mobility/2020-04-30_BY_Mobil...

[1] https://www.imf.org/en/Countries/BLR

[2] https://databank.worldbank.org/reports.aspx?source=2&series=...

[3] https://s4.freebeacon.com/up/2020/04/plot2.png

And people are correct in their everyday choices, herd immunity is just wrong when you have no idea what this virus actually does to people and you can afford to not get sick. If indeed 50% of people including young and middle age asymptomatic/mild cases of COVID-19 lead to permanent lung damage (we don't know!), then "herd immunity" means destroying health of the population, while killing millions at the same time. We are certain that people needing intrusive ventilation will need years to go back to fully normal life, but they may never recover full health.

And I agree, maybe USA, Africa and India can not afford to suppress the virus. Starvation will very likely be bigger killer in those countries. I was and I still am especially worried about India, because I don't see how they could stop exponential spread even with full lock-down. Social distancing is just impossible there. And they have millions upon millions of people that have to work to eat. Thankfully, India seems to be easing lock-down.

But EU economies certainly can afford lock-down. Even Swedish people paid and are paying heavy economical price to stop the exponential growth. But we did suppress the virus, now we can go back to sort of normal life and keep things under control.

[0] https://news.ycombinator.com/item?id=23105922

The lockdown undoubtedly magnifies the economic damage, given it prevents many people who would otherwise be working, from working, and businesses that would otherwise be operating, from operating.

The only possible rationale I can imagine you having for believing the economic damage without the lockdowns would be the same/worse is that the virus would have hurt productivity even more than the lockdowns did, by killing workers.

But the virus has an extremely low mortality rate for those of working age, and especially those in good health who are disproportionately represented among the most productive, so I don't know how you could reason that absent the lockdown, productivity might have taken an equivalent or larger hit due to more people being infected.