China News Service, January 14 According to Singapore’s Lianhe Zaobao report on the 14th, World Bank economists are worried that if the new crown epidemic does not end, the world may face a financial crisis.
Data map: On January 4, 2021 local time, New York, USA, nurse Sandra Lindsay received the second shot of the new crown virus vaccine at the Long Island Jewish Hospital.
Reinhardt, chief economist of the World Bank, pointed out in an interview with Bloomberg that the prolonged pandemic of the new crown virus may overwhelm the balance sheets of households and businesses and evolve into a financial crisis.
She said: "This was not a financial problem at first... It was a health crisis at first, but some elements of it have evolved into classic balance sheet problems."
Reinhardt emphasized not to confuse the expected economic rebound with recovery.
She said that the World Bank predicts that per capita income by the end of 2021 will still be lower than the level before the epidemic, which means that any statement about the recovery is "misleading."
The number of new confirmed cases in large areas of the northern hemisphere is still setting a record.
Reinhardt said: "...I am worried that the longer this situation lasts, the greater the pressure on the balance sheets of individuals, families, businesses, and nations."
At the annual virtual meeting of the American Economic Association, which ended on the 13th, one of the topics discussed by the economists at the meeting was that the new crown crisis will increase the global debt burden and increase inequality, which may hinder global economic growth in the long run.
According to data from the International Finance Association, global debt will increase by more than 15 trillion U.S. dollars in 2020, reaching a record of 277 trillion U.S. dollars, equivalent to 365% of the world's economic output.
Households, businesses, and governments are all shouldering more debts.
Stiglitz, an economist who won the Nobel Prize in Economics, pointed out that some emerging market economies and poorer countries will build up debt, which may trigger a "debt crisis that is enough to harm the world."
The new crown epidemic has also exacerbated inequality within and between countries, and the poor have been particularly affected.
In the United States, the death rate from the new crown of African Americans and Hispanics is significantly higher than that of whites. Most of the unemployed are low-paid workers in industries such as leisure and service, while white-collar workers can continue to work from home.
Stiglitz said: "This pandemic has exposed the severity of inequality and has exacerbated these inequalities in many ways."
Rich countries such as the United States have reduced the impact on their citizens through massive government assistance, but poor countries cannot do this. According to reports, in order to combat the impact of the epidemic, countries around the world have allocated a total of US$12.7 trillion as public expenditure to boost the economy, and the 46 least developed countries in the world accounted for only 0.002% of this expenditure.