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Opinion | How innovation and imagination can build more resilient economies in an uncertain post-pandemic world
- Even after lockdowns, periodic outbreaks of Covid-19 mean more sustainable, resilient economic models are required. Governments must work with businesses and communities to encourage the mass experimentation needed to shockproof the world
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It has been a chaotic week as coronavirus infections topped 8 million around the world with over 445,000 deaths. Anti-racism protests have spread globally after the death of George Floyd. America’s image has been dragged through the mud after former US national security adviser John Bolton’s salacious new book accused President Donald Trump of inviting foreign interference in his re-election bid.
How profoundly the world has changed. Last year saw the peak of the longest bull run in stock market history and the best economic growth the US has enjoyed in recent history. Last year also saw US unemployment drop to its lowest level in over five decades – only to rebound, in a matter of months, to its highest since the 1930s Great Depression.
Business revenue, meanwhile, is down by up to 90 per cent. The US is lucky to have the Federal Reserve to throw money at the problem. Its balance sheet has expanded by US$3 trillion or 70.9 per cent from the end of 2019, with 11 programmes to buy Treasuries, mortgage securities, bank financing to help businesses, and recently corporate securities.
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How big is this monetary and fiscal stimulus? McKinsey Global Institute estimates that, this year, G20 fiscal deficits could reach US$9 trillion to US$11 trillion, growing to as much as US$30 trillion by 2023. Since US$10 trillion is roughly 11 per cent of global gross domestic product, by 2023, outstanding global government debt would exceed GDP, reaching wartime-record levels.
The OECD estimates that unemployment levels will not fall significantly below 10 per cent. World trade will decline by 9-11 per cent this year but inflation will remain subdued. Emerging markets will be badly affected, with Brazil and Africa becoming the new pandemic epicentres.
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Beware of the potential for a second Covid-19 wave, Zhong Nanshan warns
Beware of the potential for a second Covid-19 wave, Zhong Nanshan warns
Most experts fear a second wave of Covid-19 cannot be avoided, especially in the US, where mass protests are coinciding with rising numbers of new cases in a few states.
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