Coronavirus will change global economy profoundly, says ECB
Saturday, 04 July 2020
The economic crisis spawned by the coronavirus will cause a deep shift in the global economy towards more ecology and digitisation and different ways of working, said European Central Bank President Christine Lagarde on Saturday.
The crisis “will accelerate transformations that were already latent in our economies,” the ECB head said in an address by video conferencing to the Rencontres économiques d’Aix-en-Seine in Paris, adding that Europe is in an “excellent position.”
The experience of the past few months, in manufacturing, labour and trade, will probably bring about an evolution towards a more sustainable and more ecological way of life, she added.
As examples, Lagarde cited telecommuting – which, she said, will transform the ways in which all wage-earners work, at least in the developed countries-, accelerated digitisation in services, and increased automatisation in industries.
It is now estimated that the crisis will lead to a contraction of about 35% in supply chains, and an increase of about 70% to 75% in robotisation, Lagarde said.
Additionally, online business has soared since most of the world’s inhabitants have had to shelter in place at the same time, and this trend is expected to develop, at the expense of more traditional trade, she added.
Europe is in an excellent position to join this transition, according to Lagarde. The continent has the world’s largest circular economy and ecological innovation sector while the euro is the first currency used for the issuing of green bonds, she noted.
However, this would not be enough and an economic policy framework that allows the required financing to be mobilized will need to be put in place, according to Lagarde.