Facing the corona virus threat

02 MAR,2020 | MEDC


 

Coronavirus, which is now assuming pandemic proportions, is not a conventional economic threat. Efforts to contain the virus are having an indirect effect on the global economy, by closing factories and disrupting supply-chains. Should the virus truly sweep the world, the global economy as a whole will need a dose of stimulus, just as China requires today. For policymakers facing increasing unknowns, both overreaction and underreaction pose serious risks. The time to fortify production chains and financial systems has sadly passed. Stock markets worldwide are also experiencing meltdown over rising concerns of a global recession. Probably the single most important lesson to learn from this unfortunate incident is that in an increasingly interconnected world we need to be prepared for random systemic shocks having the potential to rapidly transform time-tested economic terrain into something unfamiliar.

*Photo Credit: Google

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