Experts see pattern of re-globalisation post-Covid

Global recovery will be very weak in the coming months, as the outbreak of the Covid-19 pandemic has decimated economic markets across the world, leading to a pattern of economic re-globalization, economists said.
Leading experts and economists participating in an e-symposium, while highlighting the various growth challenges facing the global economy, said that there is a great risk of depression after the pandemic as the effect of the crisis on the inflation remains unclear for the time being.
Robert Koopman, chief economist and director of Economic Research and Statistics Division at the World Trade Organisation, said: "Firms need to make a lot of adjustments between disrupted supply chains and automation of production while governments need to manage emergency stockpiles better."
Dr. Rabah Arezki, chief economist for the Middle East and North Africa Region at the World Bank, stressed the need to focus on the health response, given the occurrence of the second wave of Covid-19. However, he said that congruently, authorities need to postpone fiscal consolidation until the time is right. "Moreover, the unemployment pool has been on the rise. And to prepare on the recovery, investing in the health sector is the best and the most optimal way forward."
Emphasising that this is not the right time to do fiscal consolidation, Dr. Arezki said that it makes greater sense to eradicate leaks and increase transparency. "The Gulf countries have done well on digitalisation. The competition agenda should be the next step in the post-pandemic period. This might be a good move for attracting more investment," he said.
Dr. Jeronim Capaldo, an economic affairs officer in the UN Division on Globalisation and Development Strategies at Unctad, said that the macro-performance had been the fundamental driver of trade, especially when fiscal policies have a different role to play than in the previous crises.
"One way to look at possibilities for recovery is to put work at the center of post-pandemic economic development. We need to organize an entire array of macro-economic policies, and re-organize them around income," said Dr. Capaldo. He also emphasized the need to sustain spending, which is one of the significant determinants of employment growth.
According to Dr. Capaldo, monetary policy has been flooding the global economy with a lot of credit, which has brought relief to many balance sheets. "Congruently, they have encouraged the short-term illusion of the possibility for recovery. We need to think beyond this, as it might produce financial bubbles, rather than a sustained income," he said.
issacjohn@khaleejtimes.com