How will the coronavirus epidemic affect the global economy? Leading Western analysts are actively discussing this topic, and many of them draw catastrophic scenarios. So, the famous American economist Nuriel Roubini believes that the current epidemic will grow into a major economic and geopolitical crisis. Coronavirus will provoke the collapse of the modern world order, which, according to him, is already bursting at the seams. A long economic “ice age” will follow, national conflicts will aggravate, borders will close, protectionism will prevail, and things can go as far as military operations. The atomization of society will continue: more and more events will be held online, large fairs, performances, lectures will be canceled, shopping centers will close, purchases will also be carried out mainly via the Internet.

Indeed, so far the symptoms of the crisis are growing: stock prices are falling on world exchanges, the price of gold is rising, international economic ties are breaking, including in the global automotive industry. Companies report a lack of components, international trade fairs are canceled, and the tourism industry is in decline. In the latest quarterly report of the leading association of German industrialists BDI, it was noted that the coronavirus epidemic had an extremely negative impact on the German economy, and GDP growth almost stopped. And if the epidemic continues by the end of the year, all the main indicators will go negative. A report by the S&P Global Ratings rating agency said that the further spread of coronavirus could cost the economies of the Asia-Pacific region $ 211 billion. S &

According to many Western observers, the coronavirus shock took the world by surprise, in which the fragmentation process has prevailed for several years. Geopolitical uncertainty, populism, nationalism, and protectionism have already negatively affected the economy, and the coronavirus epidemic has only strengthened these trends. Their growth can lead to the destruction of transport and production ties, as well as put an end to globalization in its current form. One of the possible consequences may be the “virtualization” of the economy: the flow of information online will replace the physical exchange of goods and people. In any case, the changes will be colossal, and everyone needs to prepare for them.

The German economist Mark Schiritz writes on the pages of the Zeit newspaper that a serious global crisis is likely to be avoided. Even if global stock markets collapse and the pace of economic growth seriously slows down, a recurrence of the financial crisis similar to 2008 is unlikely. Against this, the following arguments speak:

– Firstly, the bankruptcy of Lehman Brothers was not a cause, but a detonator of the crisis. In the global economy at that time, significant imbalances accumulated. Huge bubbles have inflated in real estate markets in the USA, as well as in Spain, Ireland, and many other countries, banks have allowed themselves to be drawn into extremely risky operations without a sufficient “airbag”. Correction of these distortions was inevitable. Today, bank balances look much better, although of course there are problems. Forced adjustment in the form of a crisis is not a necessity. In other words, if Lehman Brothers went bankrupt today, this would not have caused a global financial crisis.

Secondly, the coronavirus epidemic harmed global trade, but it did not affect the structure of the economy. At the moment, economic growth has been slowed down, as transport communications are disrupted, components are not supplied to the plants, and workers are forced to stay at home. That is why the Organization for Economic Co-operation and Development (OECD) has warned that the economic growth rate this year may be halved, and Germany is threatened by a recession. In this regard, it is important, the OECD believes, that states and central banks contribute to economic recovery, do not allow the crisis to become protracted and draw significant sectors of the economy into a whirlpool.

– Thirdly, when the epidemic is over and transport communications are restored, workers will reappear at their jobs, and manufacturers will supply components with a vengeance. Overcoming the deficit may require additional efforts, and this will lead to a rapid increase in production. As with all previous crises and epidemics, a sharp drop will be followed by the same rapid growth. The recovery algorithm will not change this time either.

– Fourth, as a result of the current crisis, enterprises will more carefully build production chains. Many will think about the production of components at home or in neighboring countries, instead of importing them from China. In other words, the process of regionalization, or the formation of new economic zones, will continue. The German government is already calling for an end to “excessive” globalization in this regard.

But what if the virus is resistant, the vaccine is not found, and the crisis drags on? Then the world economy will expect really hard times, but this option is unlikely so far. Mark Shirits admits that a huge uncertainty arises before humanity. No one knows how the behavior of ordinary citizens, investors and governments will change as a result of the crisis. It is possible that with the onset of summer the epidemic will come to naught by itself, and a powerful recovery period awaits the global economy. This option is as likely as the catastrophic scenario of Daniel Roubini. But, most likely, a certain third, intermediate option is being implemented. In any case, the economy will need help from states and central banks: exchanges must be saved from collapse and enterprises from ruin. During the 2008 crisis, states have already demonstrated

At the same time, the famous German economist Henrik Müller writes in the Spiegel magazine, the situation today is worse than in 2008, for three reasons:

The total debt of the G20 countries is much higher than in 2008. Then it amounted to 200% of total GDP, today, according to the Bank for International Settlements in Basel, it reached 240%. This means that the risk of a potential collapse is higher than with the bankruptcy of Lehman Brothers.

– The freedom of maneuver for central banks and finance ministries has become lower. In contrast to 2008, in many countries, bank interest rates are close to zero, and government debt is much higher. If a major global recession begins, central banks will be forced to buy up government debts on an unprecedented scale, but how long can they sustain it?

– The spirit of international cooperation is no more. Nationalism and protectionism set the agenda for the global economy. In 2008, globally coordinated measures were still in place to strengthen market conditions and financial markets. The united front was the G20 countries, primarily the USA, China, the Eurozone, Japan, and the United Kingdom. Today it is impossible to imagine the coordination of the leading economies of the world. Of course, even today in the event of an acute economic crisis, states can do something, but their freedom of maneuver and determination to act is very limited.

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