The Center for Global Business (CGB) and Academic Director Kislaya Prasad hosted a conversation with Catherine Mann, global chief economist at Citibank, on Thursday, October 15, 2020, as part of the Distinguished Speakers in International Business Series (DSS). The conversation centered on how the COVID-19 global pandemic has affected the global economy and what an economic recovery could look like in a post-pandemic world, specifically focusing on the relationship between fiscal and monetary policy and how these policies contribute to bolstering private sector activity.
Mann began the discussion by talking about the current state of the global economy and what its future might look like. As the world deals with what she characterized as “the worst economic contraction in living memory,” projections for global economic growth in 2021 are declining, which suggests that the world may not return to the GDP levels seen in January 2020 until 2022. This would indicate significant losses in terms of unemployment, capital stock, and capital expenditures. Mann explained that the struggling global economy is “desperate for the type of policy that is going to catalyze private sector activity going forward,” and that collaboration between the government and central bank are critical to strengthening both supply and demand. She noted that no amount of fiscal funding can bring the global economy back, and therefore the focus must be around strengthening commercial activity. Mann pointed to efforts in place around the world to try and curb this, but ultimately, “mitigation, adaptation, and innovation” investment by the private sector are required to achieve “new capital activities…as well as employment.”
The second half of the conversation focused on the longer-term effects of the pandemic, including the business environment in a post-pandemic state. From a macroeconomic standpoint, Mann articulated the concern around the length of the pandemic significantly affecting the workforce, the weakening of the stock market due to minimal capital investments, and the slow growth in productivity. Further, there is concern around the GDP recovery due to the younger generation struggling with entering the workforce, those in their thirties and forties having to repay this liability due to differences in their earning profiles compared to previous generations, and those nearing retirement finding it more difficult to finance retirement savings plans and healthcare.
Turning to a microeconomic perspective, Mann stated that the world will not go back to how it used to be. She believes the world will continue to work from home, meet virtually, and live in the digital space post-pandemic, and that the investment in information technology will grow exponentially. In response to a question from the audience, which asked about the ability of small and medium-sized enterprises (SMEs) to survive, Mann explained that SMEs with collateral and relationships with large supply chain firms will have a much better chance of surviving a delay in economic recovery.
Watch the recording of the event to learn more about the discussion. This DSS is part of our #KeepGlobalSmith campaign, which calls attention to our commitment to bringing the world to Smith during the pandemic. Check out the website to learn what else the Center for Global Business is planning in November to recognize the global impact of the Smith School during International Education Week.
This event was supported in part by CIBE, a Title VI grant administered by the U.S. Department of Education.
— By Jordan Heitzner, graduate assistant, Center for Global Business