Global Pairings

COVID-19 Response: A Global Reality Check

Policymakers are getting it step by step.

Takeaways


  • While the coronavirus pandemic and its economic fallout will affect regions differently, these are profoundly global events.
  • In an ideal world, policymakers around the globe would maximize the impact of their measures by announcing all of them jointly. Alas, we will never live in an ideal world.
  • The various initiatives to fight the coronavirus add up to an unprecedented and unusually fast response around major parts of the globe.

The world is facing a medical emergency. According to the World Health Organization, the coronavirus infection had spread to 117 countries and territories outside China by March 12, 2020.

While the pandemic and its economic fallout will affect regions differently, these are profoundly global events.

In an ideal world, national policymakers around the globe would maximize the impact and efficacy of their measures by announcing all of them fast and jointly. That would have the best effect on improving confidence.

A joint response

And, of course, they would do so without any partisan bickering or cross-border scoring of points. This would apply equally to:

• containment efforts

• monetary policy

• fiscal policy, and

• the regulatory response in the financial sphere.

Conclusion

Alas, we will never live in an ideal world. The responses will continue to come out in a piecemeal fashion.

And thus, we may criticize that neither the Fed nor the ECB presented their recent monetary policy decisions well.

We may also agree or not with some of the precise fiscal or regulatory measures taken by the competent national authorities.

However, that should not obscure the fact that the various initiatives add up to an unprecedented and unusually fast response around major parts of the globe.

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About Holger Schmieding

Holger Schmieding is chief economist at Berenberg Bank in London. [United Kingdom] Follow him @Berenberg_Econ

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