Editorial | Health officials not bankers hold key to economic recovery
- Bounce back will only take place once the outbreak is contained, despite all the efforts of key central banks and cash for countries worst hit by Covid-19
Just as Hong Kong experienced panic buying of face masks, capital markets have had a bout of panic selling. Now that it’s clear the novel coronavirus has spread around the world, the global economy is about to be hit badly.
Some economists have even warned of an impending recession. Rather than finger-pointing, only coordinated efforts by governments and leading international institutions can avert economic disaster.
Key central banks are cutting rates. Not since the global financial crisis has there been such a coordinated move. The US Federal Reserve cut by half a percentage point. The move was preceded by central banks in Australia and Malaysia, and quickly followed by Canada, while the European Central Bank is expected to follow.
Meanwhile, the International Monetary Fund has unveiled a US$50 billion package of emergency financing with zero-interest loans for virus-hit countries. The measure came after the World Bank pledged US$12 billion to help countries improve their public health systems and mitigate the economic impact of the outbreak.
The Hong Kong Monetary Authority reduced its base lending rate by half a percentage point in lockstep with the United States. China’s central bank, though, has kept short-term borrowing costs steady, mindful of still elevated consumer prices.