Economic growth is well-nigh impossible without international trade and investment but with the COVID – 19 pandemic strengthening its grip on the world the possibility is that most countries would sooner rather than later slump into recession and eventual economic ruin. The reality staring the international community in the face is that countries, in rising numbers are drifting into self-isolation and restricted international interaction in the wake of the world’s latest contagion which is claiming human lives in the thousands inasmuch as it is blighting almost beyond redemption the material prospects of countries.
The world has been in recession before; a case in point is the phenomenal economic downturn of the late twenties which plunged even the US into dire material straits. However, economic globalization was not as pronounced then as it is now. Accordingly, the negative repercussions of an economic recession are bound to be more wide-ranging, more overwhelming and more disruptive today globally than it was decades ago.
This is a principal worry the current economic tailspin triggers for the world. On the economic plane, the world is more interdependent at present than ever before and a major economic setback in a productive part of the world is bound to affect the rest of the globe with unprecedented disruptiveness.
For example, China’s industrial output in the wake of the COVID-19 blight is reported to have contracted for the first time in decades and it should be clear that the world would be worse off for this setback since the economic growth of a substantial part of the world depends crucially on China’s prosperity, so much so an economic debacle in China would have a destructive impact on the rest of the world. This is now almost a home truth. China’s economic health is synonymous with that of almost the rest of the world. Accordingly, those sections that are tending to derive any malicious pleasure from China’s economic straits are engaging in an exercise of veritable self-mockery.
A revisit to the recession of the twenties, however, could be instructive and revelatory for reasons other than those of an economic nature. It would be relevant to remember that the ‘Great Recession’ was a prominent backdrop to the coming into being of Nazi Germany and the eventual outbreak of the Second World War, which was driven essentially by strident nationalism and territorial expansionism in mainly Germany and Japan. It would be of considerable importance to remind the world that it could face a plethora of militant nationalisms the world over in the wake of COVID-19 as well, unless constructive international action is taken to defuse these disruptive possibilities.
However, the writing could be said to be already on the wall. President Trump has declared a national emergency to fight the COVID-19 crisis which he claims is of ‘foreign’ origin. Among the travel restriction measures Trump has imposed on the world is a 30 day travel ban on those travelling from Europe to the US. European political leaders have expressed opposition to this move but have initiated restrictive travel measures of their own to protect their perceived interests. Germany, for instance, has clamped border controls on five countries: Austria, Denmark, France, Luxembourg and Switzerland.
Many Western powers are exercising like measures to safeguard their borders and national interests. Provided efforts are made by the world’s foremost powers to fight the runaway virus collectively the world is likely to be swept by another wave of crude nationalistic fervour that played a key role in World War Two.
The extent to which the current contagion could compound existing international hostilities was illustrated by China’s argument to the effect that the virus that originated within its borders is the handiwork of the US army. Not to be outdone President Trump, as indicated, hit back with the comment that the virus is of ‘foreign’ origin. Among other things, these developments have made observers wonder whether there would be any positive outcomes from the reported respite in the US-China trade war. These ripples of conflict, triggered by economic tensions, smack of the economic frustrations of the thirties that ignited World War Two.
However, there is no possibility of these tendencies in world politics degenerating into full-blown conflicts any time soon. Currently, the world is weighed down by overwhelming economic woes to such a degree that the possibility of international armed conflicts occurring in the foreseeable future needs to be ruled out. Rather, there is likely to be a long spell of international isolation and a minding of one’s economies by the foremost powers. That is, economic pressures would be playing a decisive role in international relations. But economic nationalism is likely to enjoy a new lease of life among the more powerful states of the world.
However, recession spells economic disruption and creeping world- wide poverty. Ironically, not only panic buying but a frenetic jostling among Western citizens for consumer goods is the order of the day. The weak and the old are being sidelined for ‘Daily Bread’ in mainly Western capitals and in the months to come such ravenous jousts are bound to only increase, compelling governments to, perhaps, opt for food rationing. Britain has already sounded a warning that it could adopt austerity measures on the lines of those adopted during World War Two.
The financial losses suffered by the world’s airlines in the wake of the present crisis are a significant pointer to the economic tailspin in which the international community finds itself. Proliferating international travel was a marked characteristic of the world economy that was. It was a natural feature as it were of a booming economy boosted by international trade, investment and tourism, for example. The IATA estimates a US $ 113 billion revenue loss for global passenger airlines this year. Thus, are the glory days, so to speak, ending for the international economy?
As the saying goes, every serious problem should be viewed as an opportunity. May be, the time’s ripe to see the financial capital-driven world economy as ‘a bubble’ that could burst with even the first major jolt sourced by nature. Hopefully, in the days ahead there would be a searching look by world leaders at how the international economy could be rendered both just and enduring.