On the Economic Impacts of the Coronavirus

Abstract

The year 2020 saw a new economic crisis shake the world more deeply than the 2008 one. This downturn differs from the previous ones: instead of the internal patterns of the individual economies, the predominant factors to determine the pace of fall are the constraints related to the pandemic. Although most of the currently used anti-crisis tools had already developed as a result of the 2008 crisis, new elements include increased harmonisation between the monetary and fiscal policies and the speed of their application. The various economies will recover from the economic low point fundamentally by economic factors, supported by fiscal and monetary policy instruments, but pandemic obstacles may emerge and compel them to halt. Another problem is that it may take several years to achieve pre-crisis output levels. This is due to population ageing, the cascaded deployment of the anti-crisis tools, the future compulsion to reduce in­debted­ness, the sideeffects of the applied anticrisis remedies, the time required by the reorganisation of global supply chains, slowdown in China’s growth, the expected slow recovery of the US economy and the too high propensity to save on behalf of the consumers of certain European countries.