After a pandemic. Professor RASh Valery Chernokoy about risks for the global economy

The pandemic of coronavirus will end. Sooner or later, group immunity will be developed. It may be possible to create a vaccine. But the restoration of shock will not be simple. The main risks at the request of The Bell were called the professor of the Russian Economic School (RASH) Valery Chernokoy.

The whole world of the Coronavirus epidemic that has covered today is an emergency that requires emergency decisions. The governments of most countries take strict quarantine measures to reduce the rate of infection, reduce the load on healthcare systems and thereby save as many lives as possible. At the same time, the world consciously goes to large -scale economic losses.

Closing of borders leads to a sharp compression of the income of aviation and travel companies. The stop of industrial enterprises in one region of the world causes a shortage of components and materials and a reduction in production in another. The introduction of quarantine strongly hits the income of enterprises in the service sector. Even companies that are not affected by Pandemia directly suffer losses from a reduction in demand and are forced to revise investment plans, even more tightly entrusting the economy into the abyss of the crisis. Revenues fall, enterprises are closed, unemployment is growing.

We have not yet reached the peak of the epidemic, and the coming months will still frighten us with the numbers of the sick and the dead, and economic statistics, the indicators of financial markets and the thickness of the wallets will make us think how justified economic sacrifices were.

The governments of many countries promise to do everything possible to support injured enterprises and people, and then to restore the economy. The possible, however, has its limits. There are no miracles - large -scale injections of budget money and cheap loans cannot compensate for the fall in the release caused by factors on the proposal, but only redistribute the reducing real income between the least and the most affected by the crisis.

At the same time, many decisions that look justified today have serious risks for the world economy in the future, when the virus is over. One of these risks is a significant increase in the level of public debt. The G20 countries have already sent more than $ 5 trillion (more than 6% of world GDP) to support national economies. Perhaps even more budget expenditures will follow in the near future.

Following the compressing world economy, tax revenues are sharply reduced, and the state budget deficit is growing. Most of this deficit will be funded by the release of new public debt.

We have already seen that after the crisis of 2008, a number of European countries (Greece, Ireland, Portugal, Spain and Cyprus) were faced with a serious debt crisis. Times do not change - after the 2020 crisis, we may again discuss debt problems in the most affected by European countries - such as Italy and Spain. Financing the additional expenses of these countries through the European stabilization mechanism or by the release of Eurobonds so far run into a number of political problems and looks unlikely.

Even more serious problems can be expected by developing countries, many of which, in conditions of low savings and undeveloped financial markets, are forced to resort to external borrowing and the assistance of international financial organizations. Already today, more than 80 developing countries requested financial assistance from the IMF. However, in conditions when developed countries themselves are forced to occupy huge amounts to support their economies, the financial resources of international organizations may be insufficient.

Wars, pandemia, natural disasters in the past often led to a sharp decrease in state budget revenues and forced the governments to rely on financing at the expense of a printing press and an unfair inflation tax. Probably, we will see new episodes of hyperinflation in individual developing countries in the near future.

Another serious risk to the global economy is an even greater increase in protectionism. In recent years, trading wars between the United States, China and the European Union, the exit of the UK from the EU, and the active use of sanctions policy have been marked.

Gaps of global value chains caused by coronavirus can give another argument to the supporters of import substitution and localization of production: if deliveries from other countries are so unreliable, then why not be rebuilding and sacrifice the economic benefit of trade and establish the production of materials and components within the country. However, in this argument there are several weaknesses.

Firstly, the risk of catastrophic economic events, one of which is a pandemic, is small-according to the estimates of American economists Robert Barro and Jose Ursua based on data for 150 years, the probability of such events does not exceed 3.5% per year. Therefore, the benefits of international trade at normal time significantly block the likely losses from the cessation of supplies as a result of wars, revolutions, pandemes, earthquakes or other disasters.

Secondly, the diversification of such a risk is more likely to create duplicate industries in different parts of the world, and not on the territory of one country, where, with a catastrophic version of the development of events, losses are affected by more than one link in the production chain, but the entire chain as a whole.

The closure of borders, quarantine measures and social distance, voluntarily or for coercion, caused significant shifts in consumer behavior, which could affect the structure of demand after the crisis. What used to happen gradually, over several years or decades, has passed over a few days or weeks. Online trade, online dodging, online cinemas, online education or online consultations by a doctor-before for many people all this was fun and youth. Today, everything is forced to use online services.

When the crisis is over, shopping centers, cinemas and restaurants can not read many old customers, because they have already switched to their online competitors. In addition, during quarantine, many office workers liked remote work, and the lack of full control was not so terrible for employers. Such changes do not pass without a trace. When the epidemic is over, we may see a decrease in demand for commercial real estate and transport. Why stand for hours in traffic jams, getting to the office, if the same work can be successfully done without leaving home.