Coronavirus Recession Impact: GDP Of Advanced Countries To Stay 3-4% Below Pre-Covid Level, Rise in Long-Term Unemployment

US productive potential growth has been revised to 1.4 per cent from 1.9 per cent, the UK to 0.9 per cent from 1.6 per cent and the eurozone (weighted average of Germany, France, Italy and Spain) to 0.7 per cent from 1.2 per cent.

(Representational Photo - Arun SANKAR / AFP)

New Delhi, July 31: There is no breather if you are worried about the unemployment scenario in the country and expecting it to bounce back soon. If you go by the latest report from global financial company Fitch Ratings there is an expectation of a rise in long-term unemployment in the aftermath of the shock from coronavirus.  As the global economy is reeling under the impact of the Covid-19 outbreak, the GDP levels in the largest advanced economies expected to remain around 3 to 4% below their pre-virus trend path by the middle of this decade, said global financial company Fitch Ratings. The recession caused as a result of the novel coronavirus and its impact on GDP will continue to be felt for years to come.  “There will be lasting damage to supply-side productive potential from the coronavirus shock as long-term unemployment rises, working hours fall, and investment and capital accumulation slow,” said Maxime Darmet, Director in Fitch’s Economics team. “Repeated waves of new infections and renewed nationwide lockdowns could see a very sluggish recovery while medical breakthroughs could result in rapid normalisation of economic activity,” said Fitch in the report. Fitch said US productive potential growth has been revised to 1.4 per cent from 1.9 per cent, the UK to 0.9 per cent from 1.6 per cent and the eurozone (weighted average of Germany, France, Italy and Spain) to 0.7 per cent from 1.2 per cent. These revisions partly reflect the expectation of a rise in long-term unemployment in the aftermath of the shock. “The jobs shock is likely to see many workers -- particularly in the most adversely affected and labour-intensive travel, tourism and leisure sectors -- struggle to find re-employment quickly, resulting in detachment from the labour market,” said Fitch. WATCH | Do not forget Coronavirus amid Bakrid celebration