Anticipate Another Global Depression? FT

High employment rates accompany the Covid-19 pandemic and lockdowns. Global economists assessed the possibility of economic depression for the Financial Time. Full recovery depends on availability of treatments and vaccines and maintenance of trust. Robert Zoellick, former World Bank president, reminds that the 1930s Great Depression caused more than economic pain: “It metastasised to a loss of faith in democracies, the triumph of ideologies of hate, a turn to demagogues, a breakdown of international trade and finance and, ultimately, the second world war.” World powers are fragmented, with the US disrupting the 20th century order it helped create and China pursuing a system based on tributary states; Japan relies on caution and India on “strategic autonomy” while EU struggles to preserve regional sense of purpose. Mike Wilson, Morgan Stanley’s chief investment officer, suggests, “recessions are never caused by a single event,” and instead “the result of excesses that have built up in the real economy.” Trinh Nguyen anticipates caution among consumers and investors. Andrés Velasco, dean of the School of Public Policy at the London School of Economics, points to a collapse in commodity prices, slowed trade and massive capital outflows for Latin America. Mariana Mazzucato urges societies, while relying on stimulus packages, to tackle major challenges like climate change and inequality with innovation, while Erik Nielsen expects the biggest peacetime recession since the 1930s and a long, gradual recovery as societies learn to live with the virus. – YaleGlobal