- Tags:
- China
- Coronavirus
- Raghuram Rajan
Journalism of Courage
Premium
This is an archive article published on February 28, 2020
Raghuram Rajan says fight coronavirus first, worry about stimulus later
With the spread of coronavirus pushing the world economy toward its worst performance since the financial crisis more than a decade ago, Raghuram Rajan says the best thing governments can do is to fight the epidemic before worrying about stimulus measures.
Raghuram Rajan, former head of the Reserve Bank of India. (PTI Photo)
The best economic tonic for the coronavirus shock is to contain its spread and worry about stimulus later, said Raghuram Rajan, former head of the Reserve Bank of India.
There’s little central banks can do, and while more government spending would help, the priority should be on convincing companies and households that the virus is under control, he said.
“People want to have a sense that there is a limit to the spread of this virus perhaps because of containment measures or because there is hope that some kind of viral solution can be found,” Rajan told Bloomberg Television’s Haidi Stroud Watts and Shery Ahn.
“At this point I would say the best thing that governments can do is to really fight the epidemic rather than worry about stimulus measures that comes later,” said Rajan, who is currently a professor at the Chicago Booth School of Business.
Click to read the latest news on the global coronavirus outbreak
The spread of coronavirus is pushing the world economy toward its worst performance since the financial crisis more than a decade ago.
Bank of America Corp. economists warned clients Thursday that they now expect 2.8% global growth this year, the weakest since 2009.
Story continues below this ad
“We have moved from extreme confidence in markets to extreme panic, all in the space of one week,” said Rajan, who previously was chief economist at the International Monetary Fund.
The virus outbreak will force companies to rethink supply chains and overseas production facilities, he said.
“I think we will see a lot of rethinking on this, coming on the back of the trade disruption, now we have this,” Rajan said. “Globalization in production is going to be hit quite badly.”
Advertisement
Loading Recommendations...
Advertisement
Live Blog