Paul Krugman, 2008 Nobel Memorial Prize in Economic Sciences and distinguished professor at the Graduate Center of the City University of New York, speaks at the ADIPEC Virtual 2020 session on how the COVID-19 changes the world’s long held assumptions on global growth and how to manage the long-term effects of the economic downturn and stabilise markets worldwide
Speaking with the moderator Steve Sedgwick, achor at CNBC, Krugman stated that the impact of the coronavirus has been severe and global leaders are joining forces in an attempt to slow the pace of recession and determine the most effective response to this year’s unprecedented crisis.
Comparing the ongoing economic crisis with that of the 2008-09, he said that the initial slump in GDP and employment was actually much worse than 2008-09. “Although there has been a partial snapback, we are still currently as depressed, as we were at the bottom of the last crisis. We still have severely depressed economies, depressed employment and a lot of hardship but it is a very peculiar slump. It doesn't look like the normal slump. Normally, slumps hit industry and the goods producing sector much more heavily than the service producing sector. Driven by the pandemic rather than by more conventional recessionary forces, the services have taken the brunt this time and the goods have held up pretty well and global trade has held up very well.”
“We have a severe restriction on mobility of people, but not really on mobility of goods, because container ships are not a vector for COVID-19 transmission. As a result, the global trade volume is almost back to pre-pandemic levels right now, whereas, it took almost three years to have this kind of recovery in global trade after the 2008 financial crisis. So, we are at a situation where globalisation is one of the things that is in surprisingly good shape, considering everything that has happened.”
He expressed optimism about the global economy recovery. According to him, once the COVID-19 shock is removed, the industry can expect the economy to spring back quite rapidly.
