With Wolfgang Munchau, Director, Eurointelligence; Columnist for Financial Times and Corriere della Sera; Domenico Siniscalco, Vice Chairman, Morgan Stanley; President, The Council for the United States and Italy.
How deep the recession will be and how long it will last. These are the two points on which the future of Italy, Europe and the world will depend on. The fact that there are now 170 countries in recession gives an idea of the severity of the crisis in which we find ourselves: many will see their GDP fall by about 10% at the end of this year, moving towards a partial recovery only at the beginning of 2021.
However, at this stage, it is not possible to predict the exact duration of the recession. Will it be a V-shape recession or a U-shape recession? Or, again, a “Nike-shape recession”, with a long stagnation at the end of which it will start to grow again? Predicting this is difficult because we do not know what the different political responses in the countries will be and how long the lockdown measures, perceived differently by the social forces, will last. On the one hand, there is the scientific world, promoter of a lockdown extension to protect public health. On the other hand, the business world, eager to reopen activities immediately to avoid their definitive closure.
In between, a political class that tries to mediate between these two forces by favouring, for reasons of public finance and social balance, the reopening as soon as possible.
In this context, the financial and fiscal instruments introduced by the various governments and European institutions will be essential to ensure long-term structural growth in the post-crisis period: it is an opportunity, moreover, to rethink growth on different bases. What we can be sure of is that geopolitical balances, supply chains, labour and global trade will no longer be the same. This crisis is a perfect “creative destruction”, it may help us overcome some technology or innovation problems, acting as a stimulus.
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