Others its the only way to get a job despite the risks. Was an Army Bomb Disposal engineer in Helmand Province he knew the risks he was blinded in both eyes and lost a leg when a roadside device exploded as you try to defuse it i was aware of the danger of seeing friends wounded while working on mines i wasnt scared to lose an arm or a leg is a 2nd phase we have to make to serve this country. Im Adrian Finnegan this is counting the cost on aljazeera a weekly look at the world of business and economics this week recession why an emergency fed rate cuts just isnt good enough to save the Global Economy from the impact of the fast spreading coronavirus as the World Bank Offers billions to developing nations to support Health Care Systems where inside a lab thats working to find a vaccine to fight the virus that Oil Companies in the republic of congo have discovered vast oil reserves but drilling could be environmentally damaging. The worlds factory has been shuttered supply chains have been broken flights of been grounded tourism decimated thats the real world consequence of the coronavirus and the epidemic has yet to peak outside china growth could hard this year want the o. E. C. D. To 1. 5 percent from its previous forecast of 2. 9 percent growth below 2 and a half percent indicates a global recession as markets crashed Central Banks stepped forward to say that they were ready to support growth the Federal Reserve cut rates by a half a percentage point its 1st emergency cut since the financial crisis in 2008. Now whether Central Banks have the firepower of the more than 700. 00 rate cuts and trillions in phone buying after the financial crisis is another question after all that it was the stock markets that benefited most from the rate cuts little trickle down into the real economy unlike the 2008 crisis where banks needed it desperately infusion of cash after they lost a bet on sub prime mortgages this time they need governments to step forward to stimulate the economy case in point governments may need to find money to bail out airlines the industry stands to lose 113000000000. 00 in revenue European Regional Airlines fly below ready in financial trouble went into administration after bookings collapsed due to the virus the i. M. F. And World Bank Say that theyre ready to help poor countries where Health Systems are weakest including providing emergency funding the world bank has pledged 12000000000 dollars and the i. M. F. A set aside 50000000000. 00 so we had that grim warning from the o. E. C. D. That growth could shrink this quarter for the 1st time since 2008 Ratings Agency standard and poors believes 200 11000000000. 00 could be knocked off asia pacific economies and weve had grim Economic Data chinas factory activity slumped to a record low last month now this is a supply side shock what exactly do we mean by that will previous recessions have come about because consumers have stopped spending this coming recession that is more like the oil shock of the early 1970 s. When middle east states cut off crude supplies which means that companies dont have the labor all supplies to make goods just to illustrate that further zeros jessica washington reports now from indonesia. On the outskirts of jakarta this 6000000000. 00 project is one of chinas socalled built in road investments construction is on hold for now pending a Safety Assessment but the project is facing more serious concerns the team is depleted workers who went back to china for the Lunar New Year cant return because of a ban on chinese travelers the minister for investment also says the supply of Raw Materials from china is disrupted the fast Train Service is supposed to start from early next year but the coronavirus outbreak could put the brakes on the project and slow down construction this is just one example of how the outbreak is directly investment and disrupting supply chains and countries all over the world dealing with the fallout. Happened 1003. 00 the chinese economy is only one percent of the Global Economy and 19 percent. Of chinas capital is very much in. Needed and used globally countries are feeling the strain in different ways in Australia International education is the countrys 3rd biggest export but a travel ban has left thousands of Chinese Students unable to return to university it could cost of the sector millions if they cancel in romans thailand has lowered its Growth Outlook for the year as its economy suffers from the absence of chinese tour groups italys already sluggish economy will take a further hit with a number of towns and manufacturing hubs in lockdown and trillions of dollars has been wiped from u. S. Equities pushing stock markets around the world into the red what were also seeing is a disruption supply trains as companies have slowed down manufacturing in china that has impacted other asian and pacific countries have a lot on those imports into their Manufacturing Processes no longer are we stand alone countries we operating Global Supply chains and thats what the current of viruses really exposed governments are looking for ways to ease the economic burden hong kong announcing a stimulus package a cash handout of around 1200. 00 to every adult indonesias government meanwhile will provide massive discounts on hotels and flights for foreign and domestic travelers economists say measures like these are expensive but necessary this is the challenge that governments have consumers. Aspies governments only have a few labors to pull in this crisis one is providing confidence in the Health System and then the 2nd is giving some stimulation to spending by other discounting elements or lowering the cost of did these are short term Bandaid Solutions ultimately theres only one way to improve the health of the worlds economies finding a cure to the virus. Well lets pull all of this together with our panel of Experts Joining us now from london but ill have phase c. E. O. Of metro high from singapore rajiv as well as skype rajiv is the executive director asia pacific chief economist at i. H. S. Market gentlemen welcome to you both but lets start with you 1st we heading for a global recession well i think the chances are very high that we are indeed heading for a global recession i very least that we could add to whats called a technical recession we have 2 quarters of negative growth whether we had sort of a deeper recession way used way you see shop increases unemployment is still hard to tell but at the very least as a very high probability that we do indeed and a technical recession rajeev would you agree with that and what sort of recession are we talking about here supply side recession well our base case is the world growth will be slowing down but we still have growth in our base case of around 2 percent for the World Economy. But clearly the 1st order rubi a very big negative in one china as well as many other asia pacific on a mees whether region then progress to the situation of a scenario global recession really will depend on how much this epidemic spreads globally clearly now we have a very substantial escalation in south korea iran and also italy so its certainly a growing risk that we could see this escalating into a pandemic and affects the whole World Economy and that could destroy the Global Consumption and in that kind of scenarios there is certainly a risk that it could evolve into global recession but at the moment our viewers world growth in the order of 2 percent is what were going to have this year below to Central Banks have the file. Power the wherewithal to at least cushion any sort of recession Interest Rates already have about as low as they can go one day and that is indeed true i mean obviously weve seen this past week theres been coordinated central and action from numerous central bank notes meet the fed they cut rates by 50 basis points markets have responded on balance then favorably to that so at the margin it does seem like theres actions are cushioning the blow somewhat but as you do as you rightly point out there are a number of countries from japan to the euro zone and indeed even the u. K. We rates are very very low already so theres a limit to how much further they can indeed cut rates but theres also something more fundamental which is that this is actually a health issue where people obviously are catching the virus its spreading as an infection theres a pandemic or possibility of a pandemic and so there is only so much a central bank can actually do to mitigate that whats needed more is a Health Response and a mitigation policy to soften the spread of the virus that also to limit casualties from it. What do you make of the feds emergency rates cut. Well clearly they were trying to take action to. Be a bit preemptive on expectations that the spreading epidemic would affect the u. S. Economy and certainly our surveys of u. S. Manufacturing and also services from month of february do indicate that already u. S. Companies are starting to feel the impact of weaker you know dumon coming out of asia in particular of course china is an important market for revenues for many u. S. Multinationals so i think part of that plus what weve seen in Financial Markets with a lot of you know selling in recent weeks have all kind of account come together to. Get the fed to be more preemptive in their action and i think thats why they moved between there should you have meetings and i think that also of course spooked markets that markets became worried that the fed seen a big shock coming out for the u. S. Economy and that actually perhaps was a little bit about counterproductive action but we would expect the fed to move more and we would also expect many other Central Banks to also take further action weve seen a lot of asian Central Banks from the australian central right already moving and theyll be a lot more easing certainly in Asian Countries which are at the forefront of a lot of the economic up to now and there will be a lot of financial stresses on companies that are in the forefront of all of this particularly in china now in south korea small to Medium Enterprises are going to face a lot of financial stresses in the coming weeks ahead so Central Bank Action is one of the important tools to try to pump more liquidity. Into the Financial System and also to the extent that its possible to Lower Borrowing costs for these companies bilel President Trump made it quite clear he thought the feds percent rate cut wasnt enough and that they should be doing more but what more does he does he mean well i think President Trump has a big focus on performance of the s. And p. 500 stocks in general he often tweets about the level of the stock market and so i thought you know i think that what front wants is the fed to do whatever it takes to ensure that the s. And p. 500. 00 remains at high levels so after the cuts by the fed only this week the initial response of stocks were to fall and his present from there responded to say they should do more as it happens a few days later stocks have have actually rebounded much more strongly and so my sense is that present from you is for them to cut rates whenever there is a large correction rajiv ultra loose Monetary Policy since the 2008 financial crisis boosted assets and stock prices as we were just saying thats failed to generate substantial rebound in economic growth. Is it fair to say that rate cuts will be less effective to combat any economic pain caused by a health emergency. I think in general terms thats sure because the nature of the shock is quite different to a traditional economic downturn because what were seeing here is panic amongst households they dont want to go out and in countries like china and south korea what were seeing is people want to stay at home. Only order online and therefore theyre not going to do a lot of the normal shopping and purchases that they would do such as buying cars buying durable goods on Electronic Items theyll just buy a household essential oils and trying to order it online so that very much really results in a contraction in Consumer Spending and i think that is the big difference where Government Action whatever they do on monetary stimulus or fiscal stimulus its hard to force the consumer to spend in this kind of situation. And i think that is the fundamental difference and why easing Monetary Policy has significant limitations and gratian bilel lets talk about. Some countries some specific countries who you mentioned its a league which of course has been one of the hottest countries hit by the coronavirus it says it plans to spend 3600000000 euros and stimulating the economy that sounds a lot but given the size of the economy its not really its only as a company it contracts it in the last quarter. What most of the the government be doing is italy headed for recession well 1st of all i think that there is a very high child safely that is currently in recession it had made some growth in q 4 last year this Current Quarter should see negative growth once again it is a good chance that q 2 the next quarter should also see negative growth as well and it sounds of what the government can do one is that should be a fiscal you know. Response and we all saw from to see say that there are also constraints for italy of course its overall debt levels are high and so the European Union maybe a bit more cautious around them expanding the fiscal balance too much but the important thing on the fiscal side is that it has to be the rights hype a 5th of fiscal support so the issue here is that there will be Numerous Companies that will lose revenue in the coming few months of courses and so theyll need support from the fiscal side or from the center by all sides maybe people who will be off from work as the ill and they may not necessarily get paid for prolonged periods of absence from work suddenly support for on that side as well so that type of fiscal policy that is needed just not just about the size of the fiscal policy its also the type of fiscal policy that has to be specifically addressed to a Health Crisis a roger lets come back to asia south korea but i want 10000000000. 70 plus in indonesia singapore and japan though a they headed to risk towards recession i think japan which is the 2nd largest economy in the asia pacific and one of the Worlds Largest economies is definitely facing the risk of entering recession 1st quarter. The 4th quarter on the 2019 was already quite contractionary because of the impact would be consumption tax hike and now in the 1st quarter you not only have that negative impact still on the consumer from the consumption tax but also you now have this negative shock from chinas economic slowdown weaker orders for japanese manufacturing so i think there is a real risk risk that you will. You know and your technical recession in the 1st quarter of this year and also. For singapore i think for the 20 to 20 year there is a growing risk of recession the in time to of the chinese epidemic back in the beginning of february was very very dramatic in singapore because chinese tourism is so important for the chinese for singapores Tourism Industry so that to come. Immediately when. Singapore government decided that visitors from china would be temporarily barred from entering so that meant to chinese tourism collapsed overnight and so i think you know as escalated the risk that when we look at the full year it could be a year of recession from singapore and the government itself has a knowledge about serous back in europe belleisle is germany ready to provide any form of stimulus it hasnt in the past despite International Calls and voices at home. Growing for it to do so a bit of drool german industry is in is in recession at the moment. Yes indeed i mean theres been a known going debate in germany well within germany and outside of germany that germany should do something on the fiscal side and i think this is the occasion where they will end up doing something there are some challenges theres certain rules they have within the constitution and within parliament that was straight how much fiscal stimulus they can do however there are caveats to that in socal come emergency situations they can engage in fiscal stimulus and there is indeed significant commentary amongst ministers within germany in recent days for them to enact some kind of this will stimulus and my sense is that they will instigate some kind of fiscal stimulus especially when the number of cases in germany starts to increase and it has indeed been increasing of of late