In an interview with the Wall Street Journal, Christine Lagarde (ECB) warns that “instead of a V-shaped recovery, we fear that the second arm of the V might be a little more shaky.” The IMF, for its part, says it expects a “slow, difficult, and uneven” recovery. And it is indeed this inequality that is the whole problem.
Nearly five months after the world emerged from lockdown, it now seems clear that the recovery is K-shaped. Some are fully rebooting: the German automotive industry has surpassed its order level from February, China will experience growth in 2020, and US stock indices have returned to their record levels (or nearly so). Yalaa.
But for others, it’s flatlining: global air traffic in December 2020 will be 68% lower than in December 2019, according to INSEE, in France, 10 sectors (out of approximately 50) alone explain 50% of the decline in activity. The problem? Our policies and economic tools are not designed to address such contrasting situations.
Furthermore, the World Bank announces that – following the health crisis – between 2020 and 2021 “the global extreme poverty rate is expected to rise for the first time in 20 years” and 150 million people worldwide will fall back into extreme poverty (less than $1.90/day). A catastrophe that makes the Bank worry about “the maintenance of social order, political stability, and even democracy.”
