The negative effects of the coronavirus on the European economy have been apparent for some time and recent GDP figures confirm a historic fall in the economic growth of the eurozone. Bas Jacobs, Professor of Public Economics at Erasmus School of Economics, is a guest at Dutch radio station BNR Nieuwsradio to talk about the declining rates in economic growth and how to prevent a second lockdown.
At the moment, the figures are dropping considerably faster than during the financial crisis of 2008, when the whole world was in turmoil. Jacobs finds the current rates shocking and is surprised by how indifferent people seem towards the current figures. According to Jacobs, there was already a fall in growth rates in the first quarter, and he would not be surprised if in a year's time, the economic growth rate has fallen by 10 to 15 percent for most developed countries.
Lessons from the financial crisis
So far, the situation has been contained by government emergency packages, which causes the gravity of the crisis to be not yet reflected in the unemployment and bankruptcy figures. If peoples' salaries are continued to be paid, they do not see any reason to worry that much, Bas Jacobs says. On the bright side, Jacobs believes that society has learned from the previous financial crisis. Now, central banks and governments took immediate action which caused less panic among society.
Calm before the storm
The recently published figures confirm what was expected for a few months now and are nothing new in that respect. However, according to Jacobs, we underestimate the gravity of the figures that are yet to come. Every crisis has its own dynamics and this crisis depends on the course of the pandemic and how quickly the virus is under control. Jacobs hopes that in the event of a second wave of infections, governments now know what measures to take. According to him, the first wave left no other option than a lockdown, due to the intensive care capacity that had to be scaled up first. Now, we are more prepared and understand what needs to be done in order to avoid shutting down the entire economy again. According to Jacobs, high-quality policy interventions are needed to prevent a second lockdown.