The coronavirus is driving the global economy panic. This Monday, all the stock markets went down dramatically. Tokyo fell 5.07%, Sydney 7.33%. And in New York, Wall Street even stopped for fifteen minutes the listing of the 500 largest American companies after the collapse of 7% of the Dow Jones. In Europe, London and Berlin plunged 7.69% and 7.94%. Finally, in Paris, the CAC 40 fell 8.39%, its worst session since 2008.
Already abused for several weeks by the epidemic of Covid-19, which according to an AFP count has contaminated to date 110,000 people and led to 3800 deaths, the financial centers have been hit hard by the collapse of prices oil companies, victim of the showdown between the two heavyweights of black gold: Russia and Saudi Arabia.
Faced with Moscow’s refusal to cut production to maintain the price of crude oil in the face of the global economic slowdown, Ryad decided to cut prices. Which drops black gold from 25% to 30% on Monday. Unheard of since the 1991 Gulf War.
“It is an extremely significant shock”
Good news for motorists since prices at the pump will continue to fall but bad news for investors and oil-related companies. Total plunged 16.61% to € 30.98 and Vallourec plunged 21.57% to € 1.09. “It is an extremely significant shock even if the coronavirus only accelerated a situation that we felt was coming, analyzes Christophe Barraud, chief economist and strategist at Market Securities. This drop will create geopolitical tensions, a drop in tax revenue, an impact on budgetary policies. ” Bank stocks were also hit hard: Societe Generale (-17.65% to 17.62 euros), Crédit Agricole (-16.86% to 7.73 euros) and BNP Paribas (-12.28% to 33.78 euros).
This Monday, Bruno Le Maire, Minister of the Economy warned: “The epidemic of coronavirus will have a severe impact on the French economy, which will amount to several tenths of points of GDP during the year 2020”.
VIDEO. “The coronavirus will have a severe impact on the French economy”
On France Inter, he estimated this Monday morning that French growth in 2020 would undoubtedly be “less than 1%”, far from the 1.3% initially planned by the government. According to Bercy, several economic sectors are already particularly affected, with decreases in turnover of 30 to 40% on average in the hotel industry, by 25% for restaurateurs, by 60% for caterers.
Eyes on the European Union
To avoid series failures, the government announced on Monday a series of aid for companies in difficulty. Like the postponement of social charges by simply sending an email or even direct tax relief, on a case-by-case basis, for companies threatened with disappearance. Above all, the partial unemployment system, created to maintain employment in companies affected by a sharp drop in activity, is strengthened. The compensatory hourly allowance goes from € 7.74 to € 8.04. Or the level of the minimum wage. According to a statement from the Ministry of Labor, nearly 900 companies have asked to benefit, or around 15,000 employees.
