In this episode of COVIDcast, Roland Rajah sat down with the Institute’s Director of Research Alex Oliver to discuss the impact of the coronavirus on the global economy. Roland is Director of the International Economy Program and Lowy’s lead international economist.
One of the key questions about the economic impact of Covid-19 is whether the shock will be temporary or longer-lasting. Rajah explains in this episode why he believes the economic shock will permanently change the global economy, at least in some respects. Looking at the International Monetary Fund forecasts released this week, he notes that even under the IMF's “rosy outlook”, by the end of 2021 “the global economy will already have lost at least $5 trillion”, the equivalent of missing an economy the size of Japan’s. Under the IMF’s more negative scenarios, by the end of 2021 the world would be “missing an economy almost the size of the entire US”.
Each week since the severity of the coronavirus crisis became clear, Lowy Institute experts have been sitting down to discuss the implications of coronavirus for Australia, the Asia-Pacific region, and the world. Episodes one to six are already online, and this is the seventh instalment in the series, which we’ll be continuing on a weekly basis as this crisis unfolds.
Among other issues Oliver and Rajah discussed were the G20 finance action plan announced this week, and the economic plight of developing and emerging nations. According to Rajah, the virus has inflicted a “violent and unprecedented withdrawal of funds from these countries”. He outlines a proposal made on The Interpreter this week that Australia should extend a significant loan to Indonesia, to boost market confidence and help address the financial shocks it is experiencing.
Amid speculation that China will exploit the crisis to its own advantage by providing economic aid to emerging countries, Rajah points out the limits China will face in doing so and that China will only gain the upper hand if other countries don’t also step up in ways that they can, and should.
COVIDcast is a weekly pop-up podcast hosted by Lowy Institute experts to discuss the implications of COVID-19 for Australia, the Asia-Pacific region, and the world. Previous episodes are available on the Lowy Institute website. You can also subscribe to COVIDcast on Apple Podcasts, listen on SoundCloud, Spotify, Google podcasts, or wherever you get your podcasts.