The SPDR S&P 500 ETF Trust (NYSE: SPY) is down 17.4% in the past month, and the coronavirus is costing investors a pretty penny. However, central banks around the world are also emptying their pockets in an effort to stave off the negative economic impacts of the virus.
Stocks tumbled again on Wednesday after hopes for a swift U.S. stimulus bill to combat the coronavirus faded. President Donald Trump had reportedly proposed a potential $300 billion payroll tax holiday as a bailout for U.S. businesses, but Congress was reportedly not on board with the proposal.
The U.S. signed a $7.8 billion emergency spending bill to fund a response to the outbreak on March 6.
Spending Around The World
Last week, Italy doubled its coronavirus stimulus package to $8.4 billion.
South Korea also announced an aggressive $9.8 billion in a special budget to help with the nation’s medical response.
Australia said it's planning a $13 billion stimulus measure to combat the impact of the virus.
On Tuesday, Japan Prime Minister Shinzo Abe announced a second stimulus package worth $10.6 billion in loan support.
Indonesia is following suit with its own $717 million stimulus package, while Thailand has said it plans to inject $12.7 billion into its economy.
Around the world, more than $84 billion has been pledged or is reportedly under consideration to help fight the coronavirus. The World Bank has set aside $12 billion for virus aid in developing countries. The International Monetary Fund has allocated $50 billion to help countries combat the outbreak.
Investors may see more and more spending on behalf of central banks in coming weeks given interest rates are already at or near zero in many places around the world. In the past, rate cuts have been saved for times like these during which they can be used to help stabilize a distressed economy.
However, central banks have instead used rate cuts fin recent years to stimulate sluggish economic growth, leaving few weapons other than stimulus spending to combat the coronavirus slowdown.
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