Kennes Middot; Rogiffe
It is now predicting that the long -term development trajectory of the 2019 Coronary Virus epidemic is too early, but realizing that the next global recession may be coming soon, it is not too early.And this decline seems to be very different from the two times in 2001 and 2008.
First of all, the next decline is likely to start in China, and in fact it may have happened.As an economy with a high leverage, China cannot withstand long -term economic offsets like Japan, which has grown at a high speed in the 1980s, because individuals, enterprises and municipal authorities need funds to repay excess debt.The severe unfavorable population structure, the narrowing of the gap between the technical catch -up, and the excessive house surplus caused by the periodic stimulus plan, let alone the increasingly intensive decision -making process, which has indicated that the economic growth of China in the next 10 years will slow down significantly slowly.Essence
In addition, unlike the two global economic recession in the first two centuries, the crown disease epidemic has also caused the impact of both the supply and demand.In fact, the same size impact last time has to be traced back to the oil supply crisis in the mid -1970s.Although the concerns about infection will crack down on the needs of airlines and global tourism, preventive savings will increase, but tens of millions of people (from blockades or fear) cannot go to work, the global value chain collapses, the border is blocked, and the border is blocked.When the world trade has shrunk due to the inconsistent health statistics of each country, the supply side will also be equally damaged.
Those affected countries can only (or should) carry huge deficits, spend money to consolidate their health system and support the economy.They should have accumulated a planning fiscal reserves, and they should have realized that the danger of the acting of a bottomless deficit expenditure during the prosperity period is that there are always plague, war, climate crisis, and other unexpected events.And to.
However, policy makers and too many economic critics have failed to understand how the supply factors make the next global recession different from the past two times.In contrast to the decline mainly caused by the shortage of demand, the challenge brought by the recession of the supply side is that it may lead to a sharp decline in output and the general bottleneck of production.In this case, the shortage of universal nature (also the situation that some countries have never encountered the oil crisis since the 1970s), which may eventually lead to rising inflation rather than decline.
It is true that the initial conditions that are currently curbing general inflation are extremely beneficial, but in view of the globalization of the past 40 years, it is almost definitely the main factor that causes low inflation, so in addition to the intensified trade friction, the crown disease epidemic (even for the possibility of an epidemic situation.The continuous retreat locking country caused by continuous panic) will be the cause of the pressure of rising prices.In this case, rising inflation may push high interest rates and challenge the makers of currencies and fiscal policy.
It is worth mentioning that when the crisis of the crown disease impaches the world economy, it coincides with the time node of global growth, and many countries excessively leverage.The global growth in 2019 is only 2.9%, which is not far from the historical level of 2.5%of the global recession.The Italian economy had just improved before the virus invasion. It was ended in Japan's increasing increasing consumption tax, and Germany fell forward in political confusion.The United States is currently in the best state, but only 15%of the possibility of recession occurred before the Presidential election and Congress elections in November, and now it seems much higher.
The surprising thing is that the coronary virus has also caused such a huge economic loss to those countries that seem to have sufficient resistance to resources and technology.One key factor is that previous generations are much poorer than today, so more people have to risk work (thereby maintaining economic operation).Different from the present, if you take extreme economic reduction measures to cope with the epidemic, you have to starve to death.
Although the current situation in Wuhan, China (also the core area of the entire epidemic) is extreme, it is significant.The Chinese government has basically blocked the entire Hubei Province and placed its 58 million people under the martial law. Unless there are special reasons, it is difficult for many ordinary Wuhan citizens to step out.At the same time, the government seems to have been for six consecutive weeks to supply food and water to the people of Hubei.This is simply unimaginable for those poor countries.
In other parts of China, many people in major cities such as Shanghai and Beijing stay in the room most of the time to reduce contact with virus.Governments such as South Korea and Italy may not take extreme measures like China, but many people still stay at home and therefore have a significant adverse effect on economic activities.
The possibility of global economic recession has risen sharply, far exceeding the traditional forecast scope that investors and international institutions are willing to recognize.Policy makers must recognize that in addition to interest rate cuts and fiscal stimulus measures, they must also resolve a huge impact on global supply chains.The most direct relief measures may be that the United States has significantly reduced the tariffs on trade war, thereby soothe the market, showing China to China, and pushing money back to American consumers' pockets.A global recession is a good opportunity to cooperate, not when it is isolated.
Author Kenneth Rogoff is a former chief economist of the International Monetary Fund, a professor of economics and public policy at Harvard University in the United States
English Title: That 1970s Feeling
Copyright: Project Syndicate, 2020
