LONDON, April 9 (Xinhua) -- The world economy could take a long time to recover from impacts of the novel coronavirus, a leading British economist has said.
"It is likely that recovery could take a long time, first because the pandemic looks unlikely to disappear quickly and secondly because the collateral damage to many businesses and to governments' borrowing positions mean that we will have to start from a badly damaged base," Douglas McWilliams, deputy chairman of Centre for Economics and Business Research, an economics consultancy, told Xinhua in a written interview.
"There will need to be government intervention and even then it is unlikely that the recovery will be strong initially," he predicted, calling on the Group of 20 (G20) to coordinate their macroeconomic policies while fighting the pandemic.
"If one country fixes its problems but other countries do not, most of its efforts are wasted. I think the best way would be to coordinate through G20," McWilliams said.
He said clearly the exact detail of policy needs a degree of flexibility but it would be worthwhile the G20 economies sharing what they think they have done right and also what they have got wrong.
Countries should avoid the mistakes of the 1930s where countries failed to support jobs and household incomes and became protectionist, he added.
China on Wednesday lifted outbound travel restrictions on Wuhan, the city hardest hit by the coronavirus outbreak, ending a lockdown that sealed off around 10 million people from the rest of the world for 76 days.
The easing of travel restrictions came after new infections have been drastically reduced across China, marking a milestone in the country's fight against the epidemic while giving confidence to a world grappling to contain the virus's ferocious spread.
On the basis of reinforcing the results of COVID-19 prevention and control, Chinese leaders said the country will speed up the resumption of work and production throughout the country, vowing to provide as many resources as it can for the global fight against the disease.
As to the future of globalization, McWilliams believes that it will change but won't stop.
"Though the coronavirus crisis means long and inflexible supply chains snaking halfway round the world impose serious risks for companies and this may encourage onshoring, it seems unlikely that the globalization baby will be thrown out with the coronavirus bathwater," he said.
The economist said he expects "a new form of globalization" to emerge, based on the traditional theory of specialization and comparative advantage.
"For the UK we will look to the Flat White Economy, the mix of the tech and creative sectors that has done so much to drive the UK forward in recent years and is arguably already the largest economic sector," McWilliams said.
China, meanwhile, has already been adjusting away from competing on cheap labour and moved much more to competing on specialization with companies like Huawei, Alibaba, Tencent, Geely and many others becoming world leaders in their fields, he said.
McWilliams noted that over the past half century globalization has often reflected arbitrage of labour costs and regulatory environments, but this was already starting to change.
Labour costs have been rising across the globe and regulatory differences have become smaller, and increasing automation through AI, robotics and 3D printing has reduced the labour content of production and made labour cost differences less important, he said.
