A global COVID-19 pandemic would further accelerate the post-financial crisis deglobalization. China’s long-term growth rate could be hit the hardest, the US the least.
Three key factors could drive the long-term impact of a COVID-19 pandemic on global growth:
• Further reversal of globalization as corporations reassessed their supply chains. This would translate into a further decline in global trade and foreign direct investment (FDI) (Chart 1).
• The exposure of underlying financial fragility, which could have a lasting impact on growth (Chart 2).
• Impacted political stability and policymaking capacity.
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