The coronavirus crisis should trigger a turn to caring capitalism through a united global policy response

Rather than focusing on interest rate cuts, major economies must coordinate policy action, along the lines of the Marshall Plan, to propel growth in the less-developed world

Given the size of military spending, resources for such a strategy are available

Reading Time:3 minutes

French President Emmanuel Macron (left), US President Donald Trump and other leaders of the world’s seven richest democracies attend a session at the annual G7 Summit in August 2019. The US, Europe and Japan must initiate fiscal reflationary measures that will spur global growth. Photo: AFP

Published: 3:13am, 10 Mar 2020Updated: 5:39am, 10 Mar 2020

The world seems to have fallen down a rabbit hole. The coronavirus crisis has added a new element of risk into an impaired global economy that has been struggling to come to terms with fallout from the US-China trade war.

With growing talk of a global recession, rising geopolitical tensions and climate change fears coming to a head, it is no surprise that financial markets are in disarray. There is still hope though.

The world bounced back from the 2008 crash and it can do it again. Global policymakers just need to find the best way out of the mess, which will require a new mindset and countries working together to get coordinated policy intervention back on stream again.

Rather than succumbing to a deeper downturn, better policymaking can get global growth back above its 3.5 per cent long-term average in the not-too-distant future. A global recession is not inevitable.

While the US Federal Reserve’s emergency 0.5 percentage-point interest rate cut last week was done with the best intentions, G7 monetary policy is clearly firing blanks right now.

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