In February, the theme of the virus gradually replaced everyone else from the news background. If at first most analysts believed that it did not pose a serious threat to the global economy, then by the end of February the mood began to change dramatically due to the sharp increase in the epidemic in Italy and Iran. If the strongest totalitarian state could not stop the outbreak in one place, then what can we say about a free Europe without borders or a country with much less developed medicine like Iran. In many countries, there was an acute problem of the availability of tests, which hindered the response and allowed outbreaks of the virus to develop in ever new places. Although mortality from the virus is not so terrible, we estimate it at 1%, much more people will simultaneously need inpatient medical care, in particular breathing assistance, which leads to a significant overload or even paralysis of the medical system. China was able to stop the spread of the virus only by absolutely draconian restrictions on the movement of people and the massive closure of enterprises, which has already led to economic damage. Now the markets fear that the same restrictions will be introduced by other countries, and this, in turn, will further weaken the global and national economies.
Ukraine is lucky that the passenger flow with China is relatively small, but our citizens go to Italy willingly and in large numbers, and of course it is inevitable that not all infected people will be stopped by measures at airports. Probably, we will have outbreaks of coronavirus. And the economic effects will not pass by. The virus is a huge factor of uncertainty, investors in front of such a factor want to reduce risk and sell assets, pushing prices down, which further worsens economic expectations. And although 2 months ago no one would have believed it, but today it seems the world is already sliding into a recession. In these conditions, investors flee from risky emerging markets to the dollar and US bonds. Ukraine may forget about market placements of dollar debts for now, because cooperation with the IMF is now urgently needed. We expect to see more certainty next month regarding the path of the epidemic, measures to combat the virus and support the Ukrainian economy.
