The Financial Responses to Coronavirus – Around the World

by Mar 16, 2020Economic Topics


How Economies Are Reacting to COVID-19

Stock markets around the world have been reeling from the effects of Covid1, with some of the largest declines in history, particularly since the last economic recession in 2009. The table below shows some of the key markets and how their stocks have performed over the past month. Since this table was done, some have seen further decline.

Here’s how a few of those countries have been impacted and their government’s responses. 



On March 12, the JSE Index and JSE Financial Index fell by 0.9% over the previous day. For comparison, the Dow Jones Industrial Average in the US fell by 10% that day. Over the past month, the JSE Main index has lost 13.4% and the JSE Financial Index 12.1%.

$7 billion contingency for Covid19 with an additional $2 million immediately to prepare for the virus. This includes preventing, detecting, controlling , treating and containing as necessary.

– March 17, the Government announced another stimulus package, with a total spend of $25 billion, the largest stimulus in Jamaica’s history.


   United States of America

On March 3rd, the Federal Reserve took the emergency step of cutting the benchmark US interest rate by half a percentage point. This move was prompted in an attempt to limit the economic and financial fallout from the coronavirus and improve consumer confidence. An emergency cut of this nature has not been made since late 2008 (1.5% cut in 2008) following the collapse of Lehman Brothers. 

On March 12th, the Dow Jones (-9.99% or 2,352.6 point decline) and the S&P 500 (-9.5% or 260.62 point decline) were also hit by their steepest daily falls since 1987. This record was then broken on March 16th, where the Dow Jones lost 2,997 (12.93%) and the S&P 500 also fell 12% by 2,386 points.                                                        

On March 12th , the Federal Reserve also launched an over US$1 trillion liquidity operation to support money markets. This is a similar initiative to programs that the Fed undertook during and after the financial crisis referred to as quantitative easing. This asset purchase program entails US$500 billion in 3-month repo operations, US$500 billion in 1-month repo operations and at least US$220 billion in operations with duration of two weeks or fewer.

$50 billion in low-interest loans to companies in affected areas. Moreover, certain individuals and businesses negatively impacted would be allowed to defer federal income taxes, normally due April 15, for three months penalty-free.                          

March 15: Fed Reserve Cut Rates to Zero and stock market faced largest decline in history the next day. The Dow Jones plunged by 3,000 points or almost 13%, the largest drop since 1987.



  • Surveys of China’s manufacturing and services sector plunged to record lows in February, automobile sales sank a record 80 percent, and China’s exports fell 17.2 percent in January and February.

  • Among major economies outside of China, the OECD forecasts the largest downward growth revisions in countries deeply interconnected to China, especially South Korea, Australia, and Japan.

China’s central bank cut the cash that banks must hold as reserves On January 6th (50 b.p) and again on March 13th, releasing US $114 billion and US$79 billion respectively, to help its coronavirus-hit economy.



On March 12th, the Australia PM, Scott Morrison, unveiled US$11 billion stimulus package to help fight the impact of coronavirus. The 17.8 Billion AUS Dollars represents 0.9% of annual GDP and includes provisions for providing 6.5 million people $750 in cash payments paid directly to their bank accounts. Businesses with a turnover of up to $500 million will also be able to write off purchases of up to $150,000. Tourism operators will share in a $1 billion fund that will waive marine and national park fees, identify alternative export markets and promote domestic travel. Measures extend to June 2020.

International credit rating agency, Standards and Poor’s, has indicated that this temporary stimulus is “unlikely to strain Australia’s creditworthiness” given the Government’s commitment to maintain medium-term fiscal discipline.


New Zealand

On March 16, New Zealand announced the largest stimulus so far In terms of % of GDP. Representing 4 % of GDP or NZ $12.1B (US 7.33 Billion), the stimulus includes wage subsidies, healthcare spending, money for low income and social welfare and changes to business taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   


On March 5th, the Italian Government pledged to spend the equivalent of US$8 billion (0.6% of Italy’s GDP) to reduce the economic impact of the outbreak. On March 11th the government approved US $28 billion to fight the virus including supporting health services, civil protection and supporting the labor market.

 Italy was in negotiations with banks to provide breaks from debt payments, and announced on March 10th that payments on mortgages and household bills would be suspended, amidst a shutdown and closure of its borders.


United Kingdom 


The U.K. government announced £46 billion pound ($56.4B USD) emergency boost to spending as Boris Johnson’s government tries to protect the economy. This represents about 1.7% of GDP and will be used to aid in efforts to develop the vaccine and the production of rapid test kits.


The Bank of England also cut rates in an emergency announcement on March 11. The policy rate moved from 0.75% to 0.25%.