The "massacre" of Covid-19 can leave great "scars" on the global economy

The newly updated Brookings-FT TIGER report (Tracking Index for Global Economic Recovery) makes it clear that economic activity, financial markets, and private sector confidence are all taking a hit. And if international cooperation is still not as tight as it is now, the situation will be even worse.

Many argue that the current decline may be short-term, arguing that economic activity will return to normal once the epidemic is under control. But there is good reason to worry that, The world economy is entering a deep and prolonged recession. The recession will depend largely on the course of the pandemic and the response of policymakers. Are governments doing a good job of preventing damage and rebuilding consumer and business confidence?

A scenario of a rapid recovery seems highly unlikely. Demand has been hit hard, and there have been major disruptions to manufacturing supply chains, and a financial crisis is underway. 

Unlike the 2008-2009 crisis, which was caused by a lack of liquidity in the financial markets, the Covid-19 crisis involved problems that went beyond the financial sector.

During and immediately after the 2008 crisis, a number of emerging markets, not just China and India, continued to grow strongly, bearing the burden of the rest of the world economy. But this time, none of the economies were immune. and no country will be able to recover in an export-oriented manner. 

The current collapse has increased deflationary and financial risks in advanced economies, at the same time dealt a blow to commodity exporters. On top of that, Oil prices are falling more sharply than before.

Hoang An

According to Dan Sinh Newspaper/Project Syndicate