The economic fallout from the coronavirus coupled with a sudden drop in oil prices is threatening to catapult Iraq into an unprecedented crisis.
The crude-exporting country is struggling to finance measures to contain the pandemic amid a leadership void in the federal government, and the unexpected oil price war between Russia and Saudi Arabia is further exacerbating budget shortfalls as losses accrue daily in trade, commerce, tourism and transportation.
"This epidemic is striking our economy more than it is striking our health," said Thamir Gharib, a hotel owner in Karbala. The Shiite holy city in southern Iraq that hummed with religious pilgrims all year long is now ghostly quiet.
Gone are the dozens of buses primarily from neighboring Iran, the Gulf and Europe carrying visitors to the Imam Hussein shrine and filling up Karbala's hotels and restaurants.
Revenues from tourists who traveled to holy sites in Iraq accounted for nearly 8% of the country's GDP, according to figures from the World Travel and Tourism Council. But as the global pandemic takes hold of the country, religious tourism has ground to a halt and Gharib's hotel doors — like others in Karbala and the nearby city of Najaf — are shuttered.
A potentially weeks-long curfew went into effect in the capital Baghdad on Tuesday night, further compounding economic losses.
"If we calculate the damages with the fall of oil prices, it's no less than $120-130 million per day," said Mudher Saleh, financial adviser to the prime minister.
"It is necessary to legislate an emergency budget in the short term that provides financial sustainability at this stage to meet the necessary needs," he added.
But Iraqi officials appear to be slow to heed these calls amid a deepening political crisis as rival blocs sparred for weeks over the naming of the next prime minister, precipitating a void in the country's top leadership. On Tuesday, former governor of Najaf, Adnan al-Zurfi, was named premier-designate but it remained to be seen whether political blocs will approve his Cabinet line-up.
Prime Minister Adel Abdul-Mahdi's government has been functioning in caretaker status since his December resignation under pressure from mass protests. Previous premier-designate Mohammed Allawi withdrew his candidacy amid delays and political dysfunction.
"The prime minister has absolved himself of political leadership and is acting as an administrator. Politically we don't have any leadership or consensus," said Sajad Jiyad, a Baghdad-based analyst.
Other officials expressed optimism that oil prices would bounce back in a matter of months and that Iraq could rely on central bank reserves in the meantime. Based on assessments from the bank and the Finance Ministry these reserves stand between $45-60 billion.
Decision-making is further hampered by the fact that government orders to contain the virus will impact the ability of parliament to pass legislation.
"Sessions are impossible as all internal flights are cancelled and no public gatherings are allowed," said Kurdish lawmaker Sarkawt Shamseddine.
Oil prices were already suffering shock from the virus outbreak and plunged further when Saudi Arabia began heavily discounting its crude and announced plans to increase output. The move came after Russia refused to sign on to a plan proposed by the Saudis to cut output and manage global oil supplies at an OPEC meeting earlier this month.
Oil currently trades at around $26 per barrel, the lowest in 18 years and about half of what Iraq has projected to fund the state budget for this year. If prolonged, Baghdad will be unable to pay public sector employees and deliver basic services. Iraq's deficit, which is estimated at $40 billion, would also double, Iraqi officials said.
Iraq relies on oil exports to fund over 90% of state revenue. The proposed 2020 budget projected revenues at $56 per barrel but political deadlock has delayed its passing, casting more uncertainty over Iraq's economic future.
Already, the economic challenges are having an impact. Last week, Health Minister Jaafar Allawi said in televised comments that $150 million per month was still needed to purchase equipment and materials to fight the virus. To meet these needs the Finance Ministry said it was accepting donations from banks, government and private institutions. Kuwait has pledged $10 billion.
Meanwhile, virus cases continue to rise, with 13 dead among 192 confirmed infected, according to the Health Ministry. The vast majority of people recover from the new virus, although it can kill the elderly or those with other underlying illnesses.
Transport, trade, tourism and commerce are among the sectors hardest hit by the pandemic, according to senior Iraqi officials, experts and businessmen.
The movement of goods has decreased by at least 30%, said Iraq's Transport Minister Abdullah Laibi. Crucial imports of goods from neighboring countries Turkey and Iran are down by two-thirds.
Prices in the local market are already seeing an effect. Ahmed Rahim, 25, a grocer in Baghdad said the price of Iran-imported onions for example has nearly doubled.
The construction sector in northern Iraq, which relies heavily on Iranian labor has also halted big commercial projects in the wake of border closures.
International companies have been unable to rotate staff in and out of the company due to flight suspensions.
In response, many Chinese oil companies across Iraq have declared their inability to fulfill contracts because of the unexpected pandemic, according to an industry official. The official spoke on condition of anonymity in line with regulations.
China, where the virus first originated, is deeply entrenched in Iraq's energy sector and is a major importer of Iraqi crude. Iraqi officials fear Beijing's falling demand for crude in light of the coronavirus might also impact state revenues.
But as many ongoing Chinese projects in the country are funded on the back of future oil sales, officials said they expected Beijing to cut back on imports from other Middle East countries before reaching Iraq.
Private businessmen in Baghdad's commercial centers said they have had to let go staff because of plunging revenues.
Muhammed Najm estimated sales from his perfume shop in the capital's main Shorja Market dropped by 60% in the wake of the coronavirus.
"We do not have anything, and the state has no solutions," he said.
Bangladesh Bank has relaxed the loan repayment system considering the impact of coronavirus on trade and business.
According to a circular issued by the central bank, classification of loan will not be changed between January 1 and June 30 this year even if anyone failed to pay back the loan as per the schedule.
The circular, issued by its Banking Regulation and Policy Department (BRPD), said businesses in Bangladesh were affected like other parts in the globe due to the coronavirus outbreak.
It is assumed that many loan recipients may not be able to repay their loans as per the schedule, it said.
In such a situation, there is an apprehension that the trade and businesses might be affected and the overall employment might be impeded.
Considering the situation, this was decided that the classification of any loan will remain unchanged until June 30 of 2020 and will be treated as it was from January 1, 2020, mentioned the BB circular.
But if the classification of the loan is improved, it could be upgraded by this time, it added.
Ford is suspending its dividend to preserve cash as vehicles sales fade due to the coronavirus outbreak.
The company said it's drawing on two credit lines to put another $15.4 billion in cash on its balance sheet.
Like other companies, Ford Motor Co. also withdrew its financial guidance for the year Thursday.
The cash Ford saves will be used to offset the impact on working capital due to factory shutdowns.
On Wednesday Ford and other automakers announced that they will close all of their North American factories in the coming days. Factories in Europe and elsewhere have already been shut down.
The coronavirus delivered a pair of gut punches to Theodore Peck, owner of a coffee shop and bakery in Brooklyn.
When his 8-year-old son came down with symptoms that prompted their doctor to test for COVID-19, they were quarantined together until the results came back negative.
But while he was confined to his home, New York ordered a near-shutdown of all restaurants to fight the virus. Peck had to close down his business and fire all his workers, and do it remotely.
"My life's work is being ... you know, destroyed, like picked over," he said. "I really love my employees and the fact that I didn't get to say goodbye to 22 of them?" he said.
"I wrote them letters and emails and, you know, reached out and have donated. But I mean, there's no recourse for being able to say I was in quarantine. I only had like an hour meeting with my staff and my managers before I knew it was going to happen."
Emergency policies to curtail the spread of the respiratory disease have sent shockwaves through the economy. Small businesses, like Peck's, are less resilient when faced with reduced foot traffic due to movement restrictions.
"My business is doing a certain type of business," said Peck. "And to all of a sudden, you know, 'Oh, we're going to move everything to the Internet' or 'We're going to move everything to just phone calls?" We're a community coffee shop. People have to come in to be a part of it."
Now he and his general manager Kyle Dollinger are cleaning his shuttered storefront. Facing down rent and vendor bills while suffering losses on perishable foods, Peck, who operates two locations, bristles at the federal response to the crisis.
"It's very challenging when you look at the federal response," said Peck, "Let's say it's very disconcerting when you can't trust your federal leaders. I guess I'll put it like that."
Shares in Asia tumbled further on Thursday after the Dow industrials plunged 6.3% despite more government help for economies reeling from virus outbreaks.
Stocks fell in Tokyo and almost all other Asian markets as investors rushed to convert holdings to cash, bracing for a prolonged coronavirus-induced recession.
Japan's Nikkei 225 index gave up 1.0% to 16,552,83, while in South Korea, the Kospi sank 7.5% to 1,471.61. Hong Kong's Hang Seng index slipped 2.6% to 21,709.40, and the Shanghai Composite index shed 0.9% to 2,704.89.
Australia's S&P ASX/200 declined 3.4% to 4,7982.90 after the central bank announced it was cutting its policy rate by 0.25 percentage point to a record low 0.25%, among other measures.
"It's amazing how desensitized we've become to central banks' dropping huge numbers and massive amounts of cash in the markets' laps," Stephen Innes of AxiCorp said in a commentary.
India's Sensex sank 2.7% and Taiwan's benchmark fell 5.8%. Shares in Southeast Asia also fell.
The losses followed a more than 1,300 point, or 6.3%, decline Wednesday in the Dow Jones Industrial Average, which has now lost nearly all of its gains since President Trump's inauguration. The Dow closed at 19,898.92.
The Dow future contract fell 1.7% and the S&P 500's future lost 1.9%.
The New York Stock Exchange said Wednesday it will temporarily close its iconic trading floor in lower Manhattan and move to all-electronic trading beginning Monday as a precautionary step amid the coronavirus outbreak.
Signs that the outbreak's impact will be far reaching and prolonged have undermined efforts to staunch the bloodletting on the markets.
Even prices for investments seen as very safe, like longer-term U.S. Treasurys, have been slumping as investors rush to raise cash.
The price of oil fell 24% on Wednesday, dropping below $21 per barrel for the first time since 2002. On Thursday, they had recovered some losses, with U.S. crude up 13.4%, or $2.76, at $23.13 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, picked up $1.48 to $26.36 per barrel.
Markets have been incredibly volatile for weeks with the rising likelihood that the outbreak will cause a recession. The typical day this month has seen the U.S. stock market swing up or down by 4.9%. Over the last decade, it was just 0.4%.
The Dow, now at its lowest level since 2016, had surged more than 5% on Tuesday after Trump promised massive aid to the economy.
The S&P 500, which dictates how 401(k) accounts perform much more than the Dow, is down nearly 30% from its record set last month, though it's still above its level on Election Day 2016.
The S&P 500's slide was so sharp that trading was halted for 15 minutes Wednesday. The losses deepened after trading resumed. The S&P 500 recouped some losses to close 5.2% lower, at 2,398.10.
The Nasdaq composite index shed 4.7% to 6,989.84.
As big swaths of the economy retrench while much of society comes to a halt in an attempt to slow the spread of the virus, investors have clamored for Congress, Federal Reserve and other authorities around the world to support the economy until it can begin to reopen.
They got a big shot of that Tuesday, when the Trump administration briefed lawmakers on a program that could surpass $1 trillion and the Fed announced its latest moves to support markets.
On Wednesday, President Donald Trump signed an aid package, approved earlier Wednesday by the Senate, to guarantee sick leave to workers who fall ill. Trump's authority under the 70-year-old Defense Production Act gives the government more power to steer production by private companies and try to overcome shortages in masks, ventilators and other supplies.
The European Central Bank, meanwhile, promised 750 billion euros ($817 billion) in asset purchases to support markets.
Investors are struggling with uncertainty about how badly the economy is getting hit, how much profit companies will make and how many companies may go into bankruptcy due to a cash crunch.
"It's, it's a very tough situation," Trump said at a news conference, during which losses for stocks accelerated. "You have to do things. You have to close parts of an economy that six weeks ago were the best they've ever been.... And then one day you have to close it down in order to defeat this enemy."
Even prices for longer-term U.S. Treasurys, which are seen as some of the safest possible investments, fell as investors sold what they could to raise cash. That pushed the yield on the 10-year Treasury sharply higher, to 1.22%. It had recently dropped below 1% for the first time ever.
The mayhem is creating a "cash crunch," that is putting pressure on financial institutions, said Jackson Wong of Amber Hill Capital in Hong Kong.
"That's why the financial markets are performing so badly," Wong said.
Last month, investors pulled $17.5 billion out of stock mutual funds and exchange-traded funds, even though stocks set all-time highs in the middle of the month. Money-market funds, meanwhile, drew $25.5 billion, according to Morningstar.
Investors are selling their highest-quality bonds to raise cash, thinking they will be the easiest to sell and will hold up the best. That's paradoxically undercutting their prices further.
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.
The turmoil is also rocking foreign exchange markets as investors scrounge for U.S. dollars. The Chinese yuan, or renminbi, fell to 7.026 to the dollar on Thursday and the Thai baht was trading at 32.55 per dollar.
The dollar was at 108.54 Japanese yen, up from 108.07 yen late Wednesday. The euro rose to $1.0944 from $1.0913.
Gold rebounded, gaining $4.50 per ounce to $1,482.40.