The Economist Covid-19 is testing globalisation

From: The Economist this week - Thursday May 14, 2020 06:15 pm

The open system of trade that dominated the world economy for decades had already been damaged by the financial crash and the Sino-American trade war. Now it is reeling from its third body-blow

May 14th 2020

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	The Economist this week

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We have two covers this week. In most of our editions we lead with a lament for globalisation. It was in trouble even before the pandemic. The open system of trade that dominated the world economy for decades had been damaged by the financial crash and the Sino-American trade war. Now it is reeling from its third body-blow. World goods trade may shrink by 10-30% this year. In the first ten days of May exports from South Korea, a trade powerhouse, fell by 46% year-on-year, probably the worst decline since records began in 1967. The underlying anarchy of global governance is being exposed. Don’t be fooled that a trading system with an unstable web of national controls will be more humane or safer. Poorer countries will find it harder to catch up and, in richer ones, life will be more expensive and less free. A fractured world will make solving planet-wide problems harder, including finding a vaccine and securing an economic recovery.

Our Europe edition focuses on the European Union. The pandemic is not just causing an economic crisis there, as elsewhere in the world, but is fast creating a political and constitutional crisis, too. The persistent failure to reform the EU and its currency is leading to workarounds that provoke challenges to the European Court of Justice and the European Central Bank; Germany is doling out huge subsidies to cushion its companies from the effects of covid-19, undermining the single market; and economic stagnation in the euro zone’s southern members threatens to poison the euro. All this is solvable, but the EU’s members cannot agree on what they want, nor on how to bring about reform. Now of all times, when America and China are at loggerheads, that is a tragic missed opportunity.

Zanny Minton Beddoes, Editor-In-Chief

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Boris Johnson, Britain’s prime minister, set out a path for easing lockdown in England. His message has changed from “stay at home” to “stay alert”. Restrictions will be eased in phases, depending on how quickly infections fall. Those who can’t work from home are urged to return cautiously to their jobs. Northern Ireland, Scotland and Wales published their own advice.

Saudi Arabia said it would cut oil production by another 1m barrels a day from next month, furthering its effort to shore up oil prices. Kuwait and the United Arab Emirates swiftly followed with their own reductions. OPEC’s deal with Russia last month, which ended their abrupt price war and made record cuts to output, has done little to increase prices. Brent crude is trading at around $30 a barrel, half its level in mid-February.


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The Economist Covid-19 is testing globalisation