Coronavirus cure difficult to emerge; likely to spread further, says Financial Times’ Martin Wolf

Martin Wolf, chief economics commentator at Financial Times is of the belief that the coronavirus will hurt the global economy in the second quarter as well.

“My view has been not to have expectations about what could happen because we don’t know but it seems very plausible that it could spread. It is a very difficult disease because you are infectious before you are symptomatic. So unless you stop everybody from moving, it is likely to spread,” said Wolf.

“Now that it is in Europe, it is going to spread across Europe and that almost certainly means it is going to spread across the world because Europe is completely integrated into the world. We have to hope that the disease will die down in the summer, we don’t know but it is clear now that this is going to be a significant factor for the world economy,” he said in an interview with CNBC-TV18.

“Everybody expects this first quarter to be very bad and I would say now it seems likely that Q2 will also be very bad; lots of movement will stop, tourism will be down, trade will be down and Europe is a very important continent from this point of view. So, I would expect it to be a significant jolt,” he added.

Now real question is would the world economy recover in Q3 and Q4 as the disease dies down but at this stage we don’t know. Moreover, we don’t know what the fatality rate will be,” he said.

According to him, it is always difficult to find a cure for virus,” What I have been reading suggests that cure is not likely to emerge quickly. They of course know the structure of the disease but creating a cure that works seems to be quite difficult. So, I am assuming it is not going to be available in the next couple of quarters and it is therefore likely to spread further,” he added.

When asked about India and growth slowdown, he said, “I do think if nothing changes very much, Indian policy remains sort of where it is and the world is sort of where it is, India’s growth is not likely to be above 7 percent and is more likely be around 6 percent.”

“If everything goes roughly where we are now without any huge negative shocks, if India is to grow much faster than that, which means it is going to grow 2.5-3 times as fast as the world economy then some things have to improve a lot and the most obvious one is export competitiveness has to improve and that is a point that Arvind Subramanian has been making. You cannot have rapid growth without exports growing at least as fast as your economy,” he noted.

“Indian exports have to start growing at 8 percent a year or so, which is nowhere near what is happening and for that to happen, you need massive improvements in competitiveness, attraction of foreign investment. So, you have to do almost what China did. So, that needs change, a purposeful change,” he said, adding that it is not just about export competitiveness, it is also about the infrastructure and the other things, the skills etc.

“So, I am assuming that without those policy changes, particularly with the instability we are seeing now, India’s growth is probably going to be in the 5-6 percent range and that is very depressing because that means employment growth is not adequate. If employment growth is not adequate, you have got a lot of unhappy people here –so, where does that lead Indian politics? It could lead it to a very dark place. So it is very important that policy improves if India is to remain stable, prosperous and happy, which is what I want it to be,” he further mentioned.

Leave a Reply

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