Coronavirus Drives Industrial Production Near WWII Levels

As the epidemic caused devastation to the US economy, the American industry and global economies witnessed a sharp steep last March, driving industrial production records to the biggest decline since the demobilization of World War II.

The Federal Reserve reported on Wednesday that manufacturing fell 6.3% last March, driven by lower production amid fully closed auto factories. In general, industrial production including factories, facilities and mines dropped by 5.4%. In addition, car and auto parts production also fell 28%, the biggest decline since 1946.

Meantime, COVID-19 closures and travel restrictions have plunged economic activity. The Fed said production fell 3.9% in utilities and 2% in mining with lower oil and gas drilling activities. "As the global recession of the coronavirus slows leading to a sudden interruption of activity worldwide, factory production is likely to decline further in April," James Watson and Gregory Daco of Oxford Economics wrote in a research note.

"Key imbalances in the supply chain, lower energy activity, and more stringent financial conditions in the face of major businesses are expected in the coming months," they pointed out, adding that industrial production could drop 15%.

Also, Hala Al-Saed, Minister of Planning and Economic Development, confirmed that the current pandemic crisis is very similar to the great depression of the 1930s that struck the world following World War I and lasted until WWII.

During the great depression international trade fell by more than 50%, unemployment in the U.S. rose to 23% and in some countries as high as 33%.

She added that the global epidemic has negative economic repercussions on all countries beyond the 2007-2009 global financial crises.

Al-Saed pointed out that the current crisis affects all financial and monetary policies around the world, as well as foreign supply chains and trade.

The Minister indicated that the Egyptian state deals with the crisis with disciplined policies to mitigate its negative effects on the economy and the safety of citizens.