IMF chief economist tells Trevor Noah to ask health experts, and not economists, when global economy can recover

• Gopinath called this “great lockdown” a lot more different from what world economies have seen so far.
  
• She warned stimulus packages would push the fiscal deficit and the debt-to-GDP ratio of economies higher.
  
• She also said this is more of a health crisis and telling what coming next is impossible since there’s a lot of uncertainty.
  

The International Monetary Fund (IMF) has been busy fielding requests from over 90 countries which requested financial aid, as the Covid-19 pandemic stressed many economies. According to IMF’s chief economist Gita Gopinath, a crisis of this magnitude has never happened before.

While speaking to Trevor Noah of The Daily Show, she also coined a term of the crisis called the Great Lockdown, in the lines of Great Depression and Great Recession.

This crisis is systematically different from all the others and even the most recent subprime crisis of 2008. In the sense, the money spent to stimulate the economy is not circulating to drive its growth. In fact, it is aiding the ‘coma’ that it currently is in.

“In the past, if you lent the country money and told them to spend it, that would stimulate activity. But this time around, we actually don’t want people to go out and spend. We want them to stay at home. So this is about maintaining the economic system so that when the disease is under control, you can see a faster recovery,” she said.

But all the same, she feels that countries should do all that they can to keep people and medical workers safe and ensure those who lost jobs are not in want of basic necessities. “If you don’t do what you are doing now, you can actually end up in a worse situation because economic activity will collapse,” she said.


When will economies recover? Health experts can tell

Gopinath believes that 2021 would be the year of recovery but there is a lot of uncertainty to it, as it depends on when can the world effectively arrest the pandemic.

“It is not economists and market experts but health experts who will be able to tell when the economy can recover,” she said.

Yet, she is optimistic that global economies can recover ‘fast’ after the disease is under control. Though a 100% recovery may never happen.


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