Coronavirus: Fears of global recession

She said: “According to the Organization for Economic Cooperation and Development (OECD) the global economy now faces “its biggest challenge since the financial crisis”.

“For the last fifty years, central banks have been the “heroes” in managing demand using monetary policy as the main tool. However, there is currently little room to respond to the epidemic shock using only monetary policy, since interest rate are already very low.

“In the UK, Andrew Bailey, incoming Bank of England governor, said that the central bank has some monetary tools still to use, however government stimulus measures are also needed. The OECD have said that Governments need to act quickly to implement well-targeted policies to support health care systems and workers, and protect the incomes of vulnerable social groups and businesses during the virus outbreak.

“This obviously puts pressure on Rishi Sumak, the UK’s chancellor, to re-centre this week’s budget on the short-term response to the Covid-19 rather than focusing on the long-term. With the world’s economy already weakened by trade wars and political turmoil, Covid-19 risks causing a global recession, if prompt and appropriate governments’ intervention are not implemented.”