Global Unemployment Rates Projected to Soar Due to COVID-19

Published March 31st, 2020 - 08:00 GMT
Global Unemployment Rates Projected to Soar Due to COVID-19
As many as one million jobs are being lost every day in the travel and tourism sector due to coronavirus outbreak, according to the World Travel and Tourism Council. (Shutterstock)
Highlights
Amid closing workplaces, factories, halts in production, unemployment rates may reach double digits in coming days.

Due to the coronavirus’s impact on the global labor market, concerns over double-digit unemployment are on the rise, said economists on Monday.

The closure of workplaces and factories has led to halts in producing non-essential goods, with jobs cuts from businesses and industries like airlines expected to send millions of people to the unemployment line.

As many as one million jobs are being lost every day in the travel and tourism sector due to coronavirus outbreak, according to the World Travel and Tourism Council.

For the week ending March 21, the number of people applying for unemployment benefits for the first time in the U.S. reached an all-time high of 3.3 million .

Although markets have generally welcomed incentive packages and expansionary moves by central banks, uncertainties in the labor market continue, especially as a result of the disruption of business operations due to the concern over the virus.

"The surge in jobless claims is startling. The unemployment rate in the U.S. will increase to 12% in the second quarter of the year," Roiana Reid, vice president of German-based investment bank Berenberg, told Anadolu Agency.

She said the U.S. jobs report set for release in April will not fully reflect the deterioration in labor market conditions.

"The April employment report scheduled for release on May will show the bulk of the job losses," she explained.

Saying initial jobless claims will likely remain near these historic levels in the coming weeks, she added that if the U.S. economic relief package works as intended, it would minimize job losses.

Coronavirus recession different than others

The record surge in U.S. jobless claims is staggering, confirming that the coronavirus recession is without precedent in living memory, said Holger Schmieding, chief economist at Berenberg.

Unemployment will likely surge less in Europe, he said, adding:

"We look for unemployment to rise to 10.0% in the Eurozone, and rise to 6.5% in the UK. In most advanced economies, GDP looks set to contract by 5-10%."


© Copyright Andolu Ajansi

You may also like