Since the outbreak of Covid-19 in January this year, governments and central banks around the world have been spending trillions of dollars in order to keep the global economy afloat. The scale of the economic impact so far has been unprecedented, hence why the policy response has been similarly dramatic.
According to an analysis by reporters at CNN, the bill so far is an incredible US$7 trillion. This figure is significantly more than has ever been spent by governments and central banks in global economic history. The money spent so far by the world’s largest economies is outlined below.
Whilst the magnitude of the response from global leaders is undoubtedly huge, concerns still exist as to whether it will be enough to avoid a global depression which could be felt for years to come. The main reason for this is that we have never faced a challenge of this scale in our lifetimes. With no vaccine to stem the spread of Covid-19, it will continue its relentless destruction, and the only way to slow it down is by shutting up shop.
In the existence we have created, closing our doors to the outside world comes with a huge opportunity cost. The economic and social fallout is going to be astounding, and none us can even begin to predict exactly how much it will be, and what life will look like once the world reopens.
THINK LIKE AN ECONOMIST!
Q1. What is the role of a central bank?
Q2. What are the similarities and differences between the measures taken by the world’s major economies?
Q3. Explain what the opportunity cost is of closing our doors to the outside world?
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