Time to pull the G20 fire bell

Pandemic requires 2008-style coordinated response

 
When economic commentators say the pandemic is the most dangerous policy challenge since the 2008 financial crisis, they are surely right. The two crises differ in their causes and scope. But what clearly links them is the need for a large, early, and coordinated international response.

The 2008 upset was driven by economic and financial imbalances that had been allowed to fester in major economies and by associated policy failures. Covid-19 is an ‘exogenous shock’. It is first and foremost a health crisis that puts human lives and physical wellbeing directly at risk. In its economic effects, the pandemic is more complex than the 2008 crisis because it hits both the supply (production and distribution of goods and services) and demand (consumption) sides of the economy at the same time. Until there is confidence that the health crisis is being effectively tackled, economic uncertainties and their corrosive effects will not be dispelled.

Just as it was in 2008-09, international coordination will be critical to resolving the crisis. The G7 Leaders’ teleconference on 16 March to discuss co-operation to overcome Covid-19 was a useful first step. But the G7 statement was light on specific commitments and included no dollar numbers. And a group of just seven advanced economies is no longer sufficient to solve a global crisis like Covid-19.

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Πηγή: omfif.org