Global report: The speed and volume of policy support over the past 6 months has softened Corona's blow to the economy

[Mary B]

Global report: The speed and volume of policy support over the past 6 months has softened Corona's blow to the economy

2020-10-11

In this Thursday, April 16, 2020 photo, Sidi Hasan psses for a photograph with his delivery bicycle in Pamplona, northern Spain. As Spain hunkers down after five weeks of home confinement, there are the brave few who keep the country going during a coronavirus outbreak that has killed over 20,000 of their fellow citizens. These laborers_ butchers, taxi drivers, pharmacists_ in the northern city of Pamplona as well as the rest of Spain's cities and towns are unified by their courage and one piece of equipment: the face mask. (AP Photo / Alvaro Barrientos)

Yes Iraq - Baghdad

An analysis by Capital Economics expects that the economic legacy of the outbreak of the Coronavirus will be a rift in the global economy, looking at the future of globalization, the role of digital technologies, artificial intelligence, and the changing role of the state, as will the impact on the real estate sector and its prices.

In a recent research note, the Agency’s chief economist, Neil Sharing, said that the epidemic established the principle of uncertainty, so what happened radically changed the economic expectations, but it is impossible to predict before it happened. .

He continued, "Nevertheless, it is difficult to translate the lessons learned from previous epidemics of the Coronavirus, partly due to the fact that previous epidemics have produced a variety of economic consequences, and some of them have caused significant and permanent reductions in production."

For example, the black plague that swept Europe in the 13th century caused the British economy to shrink by 23.5%, and it took 40 years for production to return to the pre-virus level, but some others had a much less impact, either it caused a short decline in production. He recovered quickly, and either barely decreased activity at all.

This applies to various outbreaks over the past 200 years, including the Hong Kong flu from 1967 to 1969 and the outbreak of SARS in 2003. Likewise, some epidemics have had a major impact on how the proceeds of growth are distributed, and in some cases the return to capital has decreased. And the return to work increased, because the loss of life and the subsequent contraction of the workforce led to an increase in the amount of capital per worker, thus reducing the demand for investment, and reducing the return on capital, and the corresponding was a higher share of labor in the GDP.

But in other epidemics, the share of income flowing to labor and capital was not affected. The economic consequences of previous epidemics were severely affected by the amount of loss of life. The most deadly epidemics, including the Black Death and the Spanish flu, left a large imprint on economies, but the less deadly epidemics including: That Hong Kong flu and SARS had smaller and shorter lived effects.

The policy response to Corona adds an additional layer of complexity when looking for historical similarities, while there are examples of individual cities imposing quarantines, Corona is the first pandemic in which governments have made a decision to shut down entire economies to stop the spread of the virus.

Moreover, governments and central banks were able to rely on financial and monetary tools to cope with the damage to aggregate demand, but in previous epidemics, central banks did not exist, and the idea of fiscal policy to counteract cyclical fluctuations did not enter until after World War II.

The analysis indicated that the speed and volume of policy support during the past six months helped mitigate the blow to output and facilitate what appears to be, for the time being at least, a V-shaped recovery in most countries, but one of the epidemic's biggest mistakes was in withdrawing subsidies. Politics too early.

https://yesiraq.com/تقرير-عالمي-سرعة-وحجم-دعم-السياسات-خلا/