August 15, 2020 House of Trust

Covid-19: Act Fast & Do Whatever it Takes!

As of March 24th 2020, there are already over 384,000 cases of Coronavirus worldwide, with 16,591 deaths. Though over 102,000 have recovered globally, this pandemic is not showing any signs of slowing down.

*Total Confirmed Cases of Covid-19 per million
Picture Source: Our World in Data

What was initially viewed as a ‘Chinese problem,’ and then an ‘Italian-Iranian-Korean problem’ has nightmarishly evolved into an ‘everybody problem’. In fact, the virus continues to spread in the Middle East and Africa, after paralyzing much of Asia and Europe.

Experts agree that the Coronavirus pandemic will have devastating effects on the global economy, which will be more intense than and distinct from those experienced during the 2008-2009 global financial crisis.

Specifically, this virus has and will continue on to endanger human health and weaken the global economy through both supply and demand shocks. This is through the interruption of global production chains, the loss of income and profitability due to higher unemployment rates leading to severe difficulties to fulfill debt service obligations.

In addition, recent measures to control the spread of the virus such as quarantine, social distancing, closures of educational institutions, temporary shutdowns of non-essential businesses, and the current Control Movement Order as seen in Malaysia; are all causing economies to come to a screeching halt.

In other words, containment policies will flatten the medical curve (reduce the growth of new cases) but steepen the economic recession curve, as depicted in the diagram below:

Source: Centre for Economic Policy Research (CEPR)

As a result, high-profile economists from around the world are calling for swift and radical policy action to mitigate the highly severe economic damage from this global pandemic. These great minds contributed to an ebook published by the Centre for Economic Policy Research (CEPR) entitled “Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes“.

Source: CEPR Policy Portal

In a unanimous call for decisive and coordinated fiscal stimulus, they strongly advocate using heavy fiscal firepower for a “whatever-it-takes” economic response to the Covid-19 crisis.

Helicopter Money
Source: European University Institute

Several interesting yet drastic measures from this book include:

  • Helicopter money,’ where everyone gets a no-strings-attached handout
  • Eurozone countries using eurobonds to issue debt together rather than individually
  • State investment banks providing unlimited emergency lending to firms
  • Reduce the number of personal and corporate bankruptcies, ensure people have money to keep spending even if they’re not working
  • Increase public investment and healthcare spending
  • Households and businesses hit by supply disruptions and a drop in demand could be targeted to receive cash transfers, wage subsidies, and tax relief, helping people to meet their needs and businesses to stay afloat
  • Unemployment insurance could be temporarily enhanced by extending its duration, increasing benefits, or relaxing eligibility
  • Central banks should be ready to provide ample liquidity to banks and nonbank finance companies, particularly to those lending to small and medium-sized enterprises
  • Broader monetary stimulus, such as policy rate cuts or asset purchases, can lift confidence and support financial markets if there is a marked risk of a sizable tightening in financial conditions

The national governments certainly have a big role to play, especially in reducing the economic scar tissue by addressing all the red crosses in the following diagram:

Source: Centre for Economic Policy Research (CEPR)

**For the full ebook, refer to the attachment below:

Related Posts

22 Achievements of Johor State Government

February 5, 2018

February 5, 2018

22 Achievements of Johor State Government Under the Leadership of YAB Datuk Seri Mohamed Khaled Nordin, Chief Minister of Johor...

International Affairs Update (Week 1 of January 2020)

January 8, 2020

January 8, 2020

A. Singapore i) Digital Tax Singapore started imposing GST on overseas digital services at the current standard rate of 7%,...

UMNO Jangan Berangan

December 12, 2019

December 12, 2019

UMNO parti terbesar orang Melayu, baru sahaja selesai berhimpun. Acara tahunan bagi memenuhi takwim parti tersebut sudah tentu dinanti-nantikan. Sama...

Khaled Nordin Presents 10 Year Development Plan For Johor

February 12, 2018

February 12, 2018

Kicking off a brand new start with the best foot forward, the Chief Minister of Johor, Datuk Seri Mohamed Khaled...

Senarai Kabinet Malaysia 2020

March 9, 2020

March 9, 2020

Menteri Kanan – Menteri Perdagangan Antarabangsa dan Industri YB Dato’ Seri Mohamed Azmin AliTimbalan Menteri: Datuk Lim Ban Hong (akan...

Dekad Baharu Johor : A Summary

February 14, 2018

February 14, 2018

YAB Dato’ Mohamed Khaled Bin Nordin, Chief Minister of Johor recently announced The New Decade of Johor, or better known...

Global Economy in Transition

January 28, 2019

January 28, 2019

Prosperity. Sustainability. Security. All rely on global economic cooperation, so how can we can we shape a more equitable and...

Statut Rom dan Kedaulatan Negara

April 1, 2019

April 1, 2019

Sejak kebelakangan ini, isu Malaysia menandatangani Statut Rom atau ‘Rome Statute’ kerap dibincangkan dan dibahaskan oleh pakar undang-undang. Hal ini...

Pemeliharaan dan Pemuliharaan Alam Sekitar Malaysia: Kerajaan Negeri Lebih Baik?

February 20, 2020

February 20, 2020

Isu pencemaran alam sekitar merentas sempadan bukan perkara baharu. Malah, natijahnya tidak terhenti setakat mengancam kesejahteraan dan kesihatan hidupan di...

UMNO di Kandang Tertuduh

August 19, 2019

August 19, 2019

TIADA ketaatan yang harus diberikan kepada sesiapa yang mungkar dan ingkar kepada Tuhan. Ketaatan terhad hanya kepada perkara yang terpuji...

Wajarkah jurang gaji CEO dan pekerja semakin melebar?

August 7, 2019

August 7, 2019

TAHUN lepas, lima syarikat berkaitan kerajaan (GLC) merupakan antara 20 syarikat dalam Bursa Malaysia yang memberi gaji ketua pegawai eksekutif (CEO)...

MB Johor : Ucapan Tahun Baru Cina 2018

February 15, 2018

February 15, 2018

Post Views: 35

Weekly Economic Update (Week 3 of January 2020)

January 22, 2020

January 22, 2020

I. Retrenchment & Downsizing in 2020 Malaysia’s unemployment rate could rise from 3.3% to between 3.4% and 3.6% in 2020...

Muda dan Matang: Untuk Malaysia Lebih Baik

July 17, 2019

July 17, 2019

Kini semakin menjadi realiti untuk rakyat Malaysia seawal umur 18 tahun ke atas berpatisipasi dalam proses demokrasi negara. Sama ada...

Comments
Leave a Reply

Your email address will not be published. Required fields are marked *