Thread by @ChinaFinance40

# COVID19 will possibly restructure the global economic landscape, bringing about 2 major risks, said Prof Huang Yiping:
mp.weixin.qq.com/s/RXnMaJAyR_mx…

The first risk is that anti-globalization will find new momentum after the pandemic.

E.g. the pandemic has exposed vulnerabilities in global supply chain, and led some to believe that the #supplychain for facial mask production should be localized.

That's not the beginning of the anti-globalization drive, since even before the virus broke out, we were already talking about the possibility of partial decoupling between #China & the #US.

Up until now, he still thinks it will be a partial decoupling, but perhaps to a higher degree than before COVID-19 attacked. This risk is worth special attention even if it is more about risk management or politics than about #economics.

The second risk is that many countries are giving “whatever it takes” to intensify their fiscal and monetary policy efforts, with the US, Japan and European countries resorting to unlimited #QE measures.

According to the forecast by the IMF, the debt-to-GDP ratio of developed countries after the pandemic is very likely to burgeon from 105% previously to 122%.

It could be hard to exit from these extraordinary measures after the crises. Many of the loose monetary policies rolled out amid the global financial crisis from 2007 to 2009 still remain in place, while the global economy has not seen significant improvement ever since.

Extremely eased monetary or fiscal policies are popular when introduced, but it can be hard to conclude them because austerity is less welcomed. There remains the risk that the eased policies taken amid the pandemic find it hard/impossible to exit.

In that case, liquidities could continue to flood the global market, and cause greater inflation pressure or place more strains on the financial market, if not deal super blows such as a financial turmoil.