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Coronavirus: World economy 'unlikely to recover to pre-pandemic levels before 2022'

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The world’s economy is unlikely to return to pre-pandemic levels before 2022 at the earliest, the Dutch banking group ING has warned.

The bank says the scale of the current economic crisis is much worse than that of 2008.

“This is clearly just the start,” ING economist James Smith told Euronews Now. “Don’t forget these lockdowns were only brought in at the end of the first quarter, so the second-quarter numbers are going to be just as bad.

“Such is the scale of the crisis we are seeing at the moment, the recovery’s going to be very slow. At ING we don’t expect the likes of the Eurozone or the US or the UK economies to regain the size of where they were before the virus until say 2022 or later. It’s going to take a lot of time to pick up the pieces.”

He said despite government measures to mitigate the effects of national lockdowns, bankruptcies would be inevitable.

“The government measures, the likes of the short-time work schemes, the job retention scheme as it is called in the UK, that will help,” said Smith. “But with firms shut down, whatever the governments do there are going to be unfortunately firms that slip through the safety net and that means it is going to take a while to recover.”

And he said the unemployment crisis looming in the US was the worst since GIs demobilised after World War II.

“One of the best leading indicators we have had of how bad the situation is the US jobless claims numbers and they’re likely to show that 30 million people have been claiming unemployment benefits since the crisis began. That’s much more, much quicker than any previous crisis we’ve seen including the Great Recession and if you want to look at what the last big fall in jobs was in the US, you have to look back to the end of World War II.”

The only glimmer of hope in the forecast is that because the lockdown is an exceptional measure, there may be some industries that will be able to bounce back more quickly than others.

“This isn’t an ordinary recession, there will be an element of the economy that can just switch back on again. So there will be an element of a v-shaped recovery,” he said.