A French Jesuit economist has urged the world to learn lessons from the coronavirus crisis, warning “there will be other pandemics, that’s for sure”.
– “We knew it was coming, but the economy wasn’t ready at all”
Father Gaël Giraud, SJ – an expert in mathematical economics, former economist-in-chief of the French Development Agency (AFD) and director of research at the French National Centre for Scientific Research (CNRS) – spoke to Vatican News March 18 to analyse the economic and financial implications of the COVID-19 outbreak.
“It is obvious that the world economy was not prepared for such a pandemic”, Giraud lamented.
“Although the World Health Organization (WHO) had been warning China and all other countries for years that the meat and bushmeat markets in China, both in Beijing and Wuhan, were extremely dangerous, since the previous SARS epidemic had already been caused by bats in China.
“So we knew that such a pandemic was coming, but we took no precautions and the world economy wasn’t ready at all”.
– “I don’t see how we can escape a financial collapse”
Asked whether a coordinated response from the world’s central banks can head off a COVID-19-related recession, Giraud warned that at most, organised monetary policy would only be able to “delay” the downturn “a bit”, since “the very foundations [of the economy] have been so affected by the pandemic that I don’t see how we can escape a financial collapse”.
The Jesuit economist explained that there were two reasons for his pessimism.
“The first is the fact that there will be thousands of deaths, not necessarily all elderly, but also of young people and workers.
“So the very bases of the economy are under heavy attack.
“Central bank money is useless if it is not used to buy masks, respirators, intensive care beds and to give more resources to hospitals”.
Giraud’s second reason for fearing financial collapse was that, thanks to coronavirus, “international trade has been paralysed or even completely stopped”.
“Oil consumption is slowing down, oil companies are losing a lot of money.
“Because they [oil companies] were subsidised in disguise by the US government, they will potentially go bankrupt, and this will cause a very deep mess in the oil industry.
“The financial world is aware of this situation, and knows that if oil collapses, it collapses with it”.
– “The economy will lose at least 3 or 4% of world GDP”
In fact, as Giraud recalled, the world has already entered an economic downturn thanks to COVID-19, with hundreds of thousands of workers around the world already being laid off and the EU alone already predicting a dip in economic growth this year of between 2-2.5%.
“The economic consequences are already there, and have been for several months”, the Jesuit deplored.
“The real economy will lose at least 3 or 4% of world GDP, and this without a crash. But since there will probably be a crash, we have to expect something much worse”.
– Deforestation, global warming… the worst is yet to come
As to whether the world will learn anything from the coronavirus crisis, Giraud said: “I hope so, but that presupposes a very big political leap”.
The world’s economy will only further tested in coming years, “because we already know that pandemics of this type [like coronavirus] will multiply in coming years”, the Jesuit cautioned.
“For example, due to deforestation, which puts humans into contact with animals that live deep in the forests and carry viruses to which we have no immunity at the moment.
“So we will have other pandemics, which can also be caused by global warming.
“Global warming will bring, in particular, a resurgence of tropical pandemics, such as malaria, which 5 billion people could suffer by 2050, according to World Bank figures”.
If intensive care units all over the world are being tested now, “I’m sure we don’t have the hospital capacity to treat billions of people suffering from a malaria crisis”, Giraud warned.
“I hope we learn from this huge coronavirus crisis, to prepare for others, because there will be other pandemics, that’s for sure”.