The coronavirus pandemic has hit the world hard. Many businesses have been ruined, to the extent that chances of recovery look bleak.
And added to that is the tension between the world’s two largest economies – United States and China.
China on Friday reiterated its commitment to implementing the phase-one trade deal signed with the US at the National People’s Congress. The agreement, signed in January, compels it to buy goods in goals that seemed lofty even before the Covid-19 pandemic hit demand and battered supply chains.
Within hours, White House economic aide Kevin Hassett told CNN that the US is closely studying economic penalties for China related to the nation’s plan to enact sweeping national security legislation in Hong Kong.
Recently, the incoming chief economist of the World Bank said the era of globalisation is probably dead.
“Without being melodramatic, Covid-19 is like the last nail in the coffin of globalisation,” Carmen Reinhart, a professor of international finance at the Harvard Kennedy School, told Bloomberg.
“The 2008-2009 crisis gave globalisation a big hit, as did Brexit, as did the US-China trade war, but Covid-19 is taking it to a new level.”
Reinhart, a financial crisis expert, currently serves on advisory boards of the International Monetary Fund (IMF) and the New York Federal Reserve.
World Bank President David Malpass said in a statement Reinhart’s experience and insights would prove invaluable as the coronavirus pandemic heaps economic pain on developing countries. She starts at the bank on June 15.
Reinhart published a book entitled “This Time is Different: Eight Centuries of Financial Folly,” together with economist Kenneth Rogoff of Harvard University in 2009.
The book called for stricter regulations and an early-warning system to sound the alarm about financial bubbles, arguing that central bankers, policy makers and investors tended to ignore the telltale signs of a bubble.
In an article she wrote on the pandemic in March, Reinhart said: “Clearly, this is a ‘whatever-it-takes’ moment for large-scale, outside-the-box fiscal and monetary policies.”
Reinhart’s expertise include international capital flows, and sovereign debt crises, the World Bank said.
She replaces Pinelopi Goldberg, who left on March 1 after only 15 months on the job.