Friday 08 Oct 2021 | 02:07 | SYDNEY
Friday 08 Oct 2021 | 02:07 | SYDNEY

Swine flu: Stress-testing the world economy, again


Mark Thirlwell

27 April 2009 11:36

One theme of the some of the presentations I’ve given this year (including this one at the Institute back in February) is that the world economy has been subject to a series of dramatic stress tests: since 2007 we’ve had an oil price shock; a food price shock; a generalized fear of inflation which transmuted into worries about stagflation and from there into risks of deflation; a major financial crisis that has enveloped much of the developed world; and now the deepest global recession in the postwar period.

Each of these shocks has tested – and to some degree eroded – the resilience of the world economy, leaving it increasingly vulnerable to further adverse developments. In particular, in the February presentation linked to above, I warned that one of the biggest risks to the outlook was that the world economy would be hit by another major shock at a point when its ability to cope was dangerously low. 

Which means that this could be particularly bad news for the world economic outlook, as well as for global health. As this Lowy paper by Warwick McKibbin and Alexandra Sidorenko makes clear, pandemics can have severe economic as well as human consequences. If we are now facing yet another in a series of stress test for the world economy, lets hope that the process is not one of testing to destruction...

Photo by Flickr user jagosaurus, used under a Creative Commons license.