On the Economic Impacts of the Coronavirus

Abstract

The year 2020 saw a new eco­nomic crisis shake the world more deeply than the 2008 one. This down­turn dif­fers from the pre­vi­ous ones: in­stead of the in­ternal pat­terns of the in­di­vidual eco­nom­ies, the pre­dom­in­ant factors to de­term­ine the pace of fall are the con­straints re­lated to the pan­demic. Al­though most of the cur­rently used anti-crisis tools had already de­veloped as a res­ult of the 2008 crisis, new ele­ments in­clude in­creased har­mon­isa­tion between the mon­et­ary and fiscal policies and the speed of their ap­plic­a­tion. The vari­ous eco­nom­ies will re­cover from the eco­nomic low point fun­da­ment­ally by eco­nomic factors, sup­por­ted by fiscal and mon­et­ary policy in­stru­ments, but pan­demic obstacles may emerge and com­pel them to halt. An­other prob­lem is that it may take sev­eral years to achieve pre-crisis out­put levels. This is due to pop­u­la­tion age­ing, the cas­caded de­ploy­ment of the anti-crisis tools, the fu­ture com­pul­sion to re­duce in­debted­ness, the side-ef­fects of the ap­plied anti-crisis rem­ed­ies, the time re­quired by the re­or­gan­isa­tion of global sup­ply chains, slow­down in China’s growth, the ex­pec­ted slow re­cov­ery of the US eco­nomy and the too high propensity to save on be­half of the con­sumers of cer­tain European coun­tries.