COVID-19: "Economics alone won't get us through this"

Jean-Pierre Danthine, an EPFL professor and the managing director of the Enterprise for Society Center (E4S), discusses the economic fallout of the COVID-19 crisis in Switzerland and worldwide, and argues that the future depends on government policy responses. According to recent International Labour Organization (ILO) estimates, the coronavirus disease (COVID-19) pandemic could cause up to 25 million job losses. As governments everywhere launch stimulus packages, softening the impact of the crisis on global unemployment will require effective and coordinated economic policy responses. "We have to make sure the effects of this unprecedented episode aren't permanent," says Jean-Pierre Danthine, a professor at EPFL's College of Management of Technology and former vice-president of the Swiss National Bank. Danthine cautions that, if too many companies - including small businesses - go bust, future production capacity will be severely reduced. "We need firm policy responses to stop this crisis from having long-term adverse effects. Economics alone won't get us through this." An atypical recession Danthine is unimpressed by widespread talk of an impending recession. "Output will inevitably shrink because most workers can no longer do their jobs," he says. "We shouldn't be focusing solely on the numbers. It's clear that growth will enter negative territory. We should be looking at the bigger picture. This isn't a typical recession rooted in endogenous macroeconomic factors. It's a slowdown in activity caused by an external shock. From an economic standpoint, our real priority should be to minimize the long-term consequences." Switzerland can ride out the storm