Monday, April 06,
2020 / 01:27PM / By Emanuel Kohlscheen, Benoit Mojon and Daniel Rees / Header Image Credit: Ecographics
- Given the historical persistence of
economic activity, the reduction of GDP due to confinement measures is
likely to drag on over several quarters. The total GDP shortfall could be
as much as twice that implied by the direct initial effects of confinement.
- This persistence reflects in part two
types of spillovers across countries. One is due to the risk that
uncoordinated confinements lead to repeated virus outbreaks and
confinements across the globe. Another is the more traditional trade and
financial integration interlinkages.
- Economic spillovers and spillbacks
across the major economic blocs are large. There is no immunity from the
economic effects if the epidemic is controlled in only one or two regions.
Countries should adopt confinement, border control and macroeconomic
policies that internalise these global considerations.
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