Economic growth has been measured using gross domestic product (GDP) , gross domestic product per capita,etc.
Using expenses approach to calcute GDP, the equation becomes:
GDP= C+I+G+(X-M), where C is private consumption, I is investment, G is Government expediture, X is exports and M is import.
During these hard moments, it can be seen that all those variables included in calculation of GDP are concerned: decrease of consuption, investment, governmet expenditure, export and import.
In such conditions, GDP will necessary decrease as consequence of decline of its determinants.
How economic growth can be boosted after covid'19?
... promote independent analysis and public discussion of open economies ...
Fornaro, L., & Wolf, M. (2020). Covid-19 coronavirus and macroeconomic policy.
… an expansion of the existing employment support package for young adults ...
Loayza, N. V., & Pennings, S. (2020). Macroeconomic Policy in the Time of COVID-19: A Primer for Developing Countries.
...Policy responses by central banks and treasuries ...
McKibbin, W., & Fernando, R. (2020). 3 The economic impact of COVID-19. Economics in the Time of COVID-19, 45.
... The coronavirus pandemic is likely to lead to a steep, and potentially protracted, economic downturn. In response, many countries have implemented ambitious packages to support households and businesses ...
Bénassy-Quéré, A., Boot, A., Fatás, A., Fratzscher, M., Fuest, C., Giavazzi, F., & SCHOENMAKER, D. (2020). Corporate debt burdens threaten economic recovery after COVID-19: Planning for debt restructuring should start now. VOX CEPR Policy Portal [21/03/2020]. Disponível em:. Acesso em, 2(04).
… Essential services should remain operational and governments should put in place social and economic policies ...
World Health Organization. (2020). Coronavirus disease 2019 (COVID-19): situation report, 72.
Dear Dr. Mukhlif M.S. , thank you so much for your contribution. There are many good ideas that can contribute in strategy building after covid'19.
Niyungeko Antoine ,
We all know that GDP (regadless of which formula is used to calculate it) is a matter of government statistics and accounting. ;)
It is an aproximated/ tweaked reference number only.
It works with actual, missing and projected data.
As such, GDP can never be 100% accurate due to imperfect information gathering, input of mid- and long-term contracts (signed this year, fulfilled much later, but often counted twice), lack of capability to predict the market, impossible to envision the true ramifications of government's stimulus packages to government-owned businesses/ private parties, desire to conform to supra-national entities' economic requirements, participation in international institutions, etc.
Plus, the formula above lacks clarity as to consumption as private citizens' vs producing industry's vs other businesses', national external and internal debt obligations (servicing, or incurring new ones), inflation, diplomatic investments into country's future economic inflows,...
As to how to stimulate economic growth?
In times of crises, economic prudence is advised. Priorities usually go with the following progression - national, regional, and finally, international level, i.e. take care of you own house first (nationalism, partial protectionism + make sure you have enough citizens engaged in the active work force - even if this means another delay of retirement age), then engage with your neighbours, and only then - with the world (unless, of course, there are goods/ services that either one's own country, or other countries want desperately).
Otherwise, it is too difficult to monitor/ guide economic/ financial inflows and outflows - eventually, instead of a fix, the problems tend to get worse.
History shows that another longer-term solution to one's economic woes (for the big boys only) would be to engage in a war that one makes sure to win, but as a physician, of course, I do not recommend it.
Besides a great human cost, war also produces ecological and infrastructural damage that no country nowadays can afford to pay.
All in all, the answer to your question would depend on whether you ask a hawk, or a dove in politico-economic terms.
Either way, there are always victims.
:)
Dr. Tananska , I strongly appreciate your comment. I strongly agree with you about the limitation of GDP as in the calculation many elements are omitted ( quality of the environment, leisure time, non-market activity, equitable distribution of income, voluntary , unpaid activities or work within the home, etc). However even though it has such limitations, it still in use in many studies. About your other ideas, you are right.GDP it is used as indication and should be well analyzed. It cannot be confused with well-being of the population.etc
Dear researcher,
shortly, governments have to step in and step in HARD and HEAVY. Look at USA - they learned their lesson from 2008 (amount of rescue package cca 700bln). Now, 2.2 trillion and counting. This is the only way. This is only technically a recession (or recession by numbers), it is more like an economic hybernation and economy need a financial injection in order to get itself restarted. If governments act fast, hard, and heavy they can influence all items in the formula you provided GDP= C+I+G+(X-M). Without this intervention economy will restart verrrry sloowwwwly and along lines cause lots of damages to the economy itself as business activity can't wait for later - action is needed now.
regards
To relaunch growth after the covid-19 crisis, in my opinion, it is necessary to constitute development strategies based on new sectors of activity. These sectors, we already know them, they are biotechnology, renewable energy, organic farming, digital. These strategies must be coordinated between different economies to allow the emergence of positive externalities.
In addition, the self-sufficiency of economies should be promoted in vital sectors such as health, education, agriculture, communication.
Economic growth can be increased after Covid-19 with new sources of growth. Some of the traditional industries need a rethink and inevitably we have new drivers of growth like biotechnology, pharmaceutical, sustainable growth and living. The traditional industries of the airlines and travel will need a re-look and revamp to take into account the social distancing requirement. Online and digitalization will be the way forward.
1. By capitalizing on virtual technology such as ICTs at all sectors now and after Covid-19 to ensure the economic depression is not too much.
2. Investing on cleaner production technologies to reduce the cost affiliated to pollution control and management.
3. To promote accurate data collection for precise analysis of socio-economic and environmental problems. n
Thank you Joan for your ideas. the world needs strong leadership able to implement all possible strategies.
Hello, and thank you for this opportunity. A good theme!
Having the chance to analyse several answers, and knowing different countries, it becomes obvious that a large set of elements will need to be changed. We recover economics with people, and with their cooperation and work for a better purpose/life. That is the target of politics - reunite people around shared ideas for shared solutions and gains.
If governments have been reducing, in most countries, their presence/costs in several basic sectors, we are now able to establish a framework on state and private economics. Both must exist, and cooperate, but one must lead under certain conditions, and the other use the path open by previous to create wealth.
Therefore I believe that Keynes will be back, but with a new mindset and under new lines for world development.
We cannot have infinite growth based on finite resources. We cannot demand austerity in repeated short cycles, when new transversal problems destroy balance and general welfare.
New values must be considered as monetary elements, and old elements of money value representation should/could be revised. Air, water, environment, Green house gas, common problems and resources cannot be monetised, unilaterally, but should be evaluated and guarded as basic elements for life. Where do they appear in common economic equations?
Recovery means involving people and demanding their participation. Recovery means sharing new ideas for a better, more stable and reliable social/economic evolution.
We have been testing for the last 12 years the sharing economics, in the digital based cooperation of goods, and ideas. All are being used now as basic elements to connect people, work and maintain jobs, in an emerging new framework based on trust and new concepts and digital networks and apps.
Trust, people's efforts, new ideas and revisiting tax models, economic representation of values, and projecting them into new shapes of governance, could be a interesting discussion.
No change, no recovery will be made without cooperation, democracy and aware that pandemics, or crisis are elements of a dynamic world.
To increase economic growth after the SARS-CoV-2 Coronavirus pandemic causing Covid-19 disease, the government should conduct a wise, well-planned, anti-crisis, interventionist socio-economic policy. Forecasts of many research centers show that in the coming weeks and months, economic growth will fall in many countries by several or even a dozen or so percent. In the media dealing with economic issues, one of the main topics is the issue of potential economic crisis, which now (April 2020) begins in many countries. Many enterprises in the tourist, hotel, catering, cosmetics services, etc. are currently losing most, almost all or all of their customers because people are afraid of SARS-CoV-2 coronavirus infection causing Covid-19 disease and this is also associated with various mobility restrictions away from home and with a warrant or recommendation to stay at home as part of preventive quarantine in many countries. Therefore, it is necessary to permanently improve and increase the scale of anti-crisis socio-economic policy planned, developed and implemented both at the level of individual countries as well as within coordinated international activities. In some countries, pro-development, interventionist, anti-crisis programs have already been launched to save business entities from mass bankruptcy by introducing additional temporary tax breaks or exemptions, subsidies to employees' remuneration under fiscal policy. On the other hand, as part of monetary policy, central banks reduce interest rates, launch loans for commercial banks on preferential terms, buy lost loans from commercial banks and / or implement sovereign bond buy-back programs to maintain liquidity in the commercial and public financial system of the state. On my RG profile, I have posted more information on this topic in ongoing discussions. I conduct research in this matter and encourage scientific cooperation.
Greetings,
Dariusz Prokopowicz
Thank you so much Dr. Dariusz for your comment. Many helpful ideas are presented. Saving the world economy is a great challenge for all leaders.
First preference is agriculture, then industry, finally service sector. This way we can get progress.
Thank you Mr. Nelaturi for your contribution. Primary sector is the basis as the world needs food.The secondary sector transforms the production of the primary sector.Third sector distribute or sell the production of the secondary sector.Thank you so much.
Dear Dr.Jaloslav, the question can be put diffrently with same result. How can countries increase income after covid'19?
1. GDP as a measure of economic progress has been rightly criticized a lot.
However, we need to have a certain indicator to evaluate results of human activity nationwide and globally.
To overcome GDP’s weakness, the World Economic Forum proposed an alternative way of measuring those results on a broader basis in 2017. This new approach replaces the economic growth concept by notion of inclusive economic growth.
The new measure of national economic performance within this approach is the Inclusive Development Index. It encompasses both economic side and living standards via 12 National Key Performance Indicators grouped into 3 sets (pillars): 1) growth and development (containing traditional GDP per capita among others), 2) inclusion, 3) intergenerational equity and sustainability.
http://www3.weforum.org/docs/WEF_Forum_IncGrwth_2017.pdf
2. Thinking about post-quarantine economy recovering, I'd like to say that pent-up demand is forming due to inability to consume a wide variety of services. When it becomes possible, it will support economic growth.
Dear Jaroslav Dvorak, Very good question: Do we really need growth? - Depending on the economic situation, the phase in the business cycle and the scale of development of the green economy concept, economic growth is more or less needed. In the following quarters and years, economic growth will in the short term be a natural consequence of the deep recession during recovery from the economic crisis caused directly and indirectly by the development of the SARS-CoV-2 Coronavirus pandemic causing Covid-19 disease. However, after this exit from the economic crisis, which may occur at the earliest since June this year, and according to worse scenarios, it was only at the beginning of 2021 that the world will be significantly changed, also in terms of economics. Perhaps the development of the SARS-CoV-2 pandemic SARS-CoV-2 causing Covid-19 disease will change the thinking of man about the importance of ecology, sustainable development of civilization, including the need to develop civilization according to the concept of circular economy and green economy. We already know that due to the increasing pollution of the environment, the increase in greenhouse gas emissions, the accelerating process of global warming, if humanity is interested in protecting life on Earth, maintaining biodiversity for subsequent generations, the 21st century should be the age of technology development and innovation, among others ecological economic should be implemented according to the principles of bioeconomy, circural economy and / or green economy. Then, by implementing the principles of sustainable, pro-ecological economic development and significantly increasing the scope of functioning of the global economy under the concept of green econpmy, economic growth will no longer be a priority. I encourage scientific cooperation.
Greetings,
Dariusz Prokopowicz
Thank Ruslana Zadorozhna and Dariusz Prokopowicz for your clarifications.
The impacts of COVID-19 are most likely to be felt on a large scale level across both developed and developing economies. Definitely, the global growth trajectory is expected to be negatively impacted as the pandemic continues to ravage various economies.
Aside the negative impact on economic growth, of greater concerns are its damaging impacts on the fight against food insecurity and unemployment in many low income countries that are highly vulnerable and are currently undergoing partial or total lockdown. You may check out the recommendations of the Committee on World Food Security (CFS) which I find to be important in these regards.
https://ec.europa.eu/knowledge4policy/publication/impact-covid-19-food-security-nutrition-fsn_en
As the impact of the COVID_19 is multi-faceted and wide range, the solution is not expected to be simple and straight. Second, the impact of COVID_19 across countries and sectors is not similar as well. Third, the solutions and the implied costs are not equally affordable for all types countries: developed and developing countries alike.
Hence, the solutions need to be crafted based on the actual context and extent of damage inflicted in each countries and respective sectors of the economy. To do these assessment standard assessment templates should be developed , so as arrive at comparable (internationally) damages across countries that can be used as input for an international intervention. Following the assessment stage, practical recommendations can be made based on the respective countries internal capacity (own resources) and possible international (external resources) that can be mobilized , both in the short and long term.
After COVID-19, the current neoliberal economic modeling does not work to revive the economy. The patterns of globalization is changing order. People have developed the national interest. Therefore the economy policy should be change from neoliberal to state capitalism and need to more focus agricultural activities and revive our historical and traditional sources of living to revive the economy of the country. Only the growth model or GDP model have large affected my (X-M). Therefore, it is better to focus sustainable and nationalist economy.
Joking - following the neoliberal recipes - they say they know everything about economy and about the mankind - are they?
Mukhlif M. S., Your point of view is too appropriate , i agree with you.
After every crisis the world is going through from a Great Depression or a pandemic or a global depression. War will be the key to this crisis.
Because the superpowers need a global restructuring. Powers will disappear and other countries will gain strength.
When the SARS-CoV-2 (Covid-19 disease) coronavirus pandemic fades to economic growth for many months after the pandemic, it will be much lower than if the pandemic had occurred. The available return to the level of consumption growth in various countries will last from several months to several years depending on many economic determinants, including the quality, quality and application of the anti-crisis instruments of social and economic policy, including interinstitutional budget policy, pro-development fiscal function , ensuring liquidity in the system of monetary services and other, typical of national services, state intervention instruments.
Best regards,
Dariusz Prokopowicz