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FPI Coffee Hour | Diverging Prospects, Differing Responses: Economic Prospects and Global Policy Collaboration in a Time of Crisis

April 30, 2020

John Lipsky, Senior Fellow, Foreign Policy Institute, Johns Hopkins SAIS

Gregory Chin, Senior Fellow, Foreign Policy Institute, Johns Hopkins SAIS and Associate Professor of Political Science at York University, Canada

As the global COVID-19 pandemic progresses, it appears that the effects have not been felt evenly: Europe and the United States have been the hardest hit, while developing Asia (excluding China) has escaped the worst effects. As a result, national policy responses have differed, as have plans for restarting locked-down economies. With low-income countries facing economic and financial hardships — in some cases even in the absence so far of serious coronavirus outbreaks — unprecedented debt standstills have been proposed for these countries. FPI Senior Fellow Lipsky emphasized that the responses to the COVID-19 crisis differs in many respects from the 2008-2009 global financial crisis and therefore the tactics being used by policymakers differs greatly. 

Advanced economies have responded rapidly and in size with actions to bolster themselves, but with differing levels in aggressiveness. Those economies did come together to provide support to the most vulnerable countries. Lipsky discussed the huge differences in fiscal responses to the COVID-19 crisis by G20 countries. He mentioned that the G20 neglected to provide support to some of their own members who are under immense pressure and will potentially have significant problems caused by the COVID-19 crisis. At the same time, the G20 finance ministers and the Multilateral Financial Institutions have sought to forge a coherent multilateral policy response. As a result, we are entering a period of historic challenges for the institutions that form the current multilateral system, as well as the most difficult economic and financial conditions in nearly a century.