BIS Says Unilateral Policies to Address Pandemic ‘Doomed to Fail’

AKP Phnom Penh, April 07, 2020 —

Global macroeconomic policy coordination is “crucial” to address COVID-19 and unilateral policies are “doomed to fail,” the Bank for International Settlements (BIS)-an international financial institution based in Switzerland says.

In a study released Monday, BIS staff members argued that the recent spread of the new coronavirus was an “unprecedented shock” to the global economy.

The authors modeled four scenarios for five major blocs — the United States, China, the euro area, other advanced economies (Australia, Britain, Canada, Japan, Sweden and Switzerland) and other emerging market economies (Brazil, India, Indonesia, South Korea and Mexico).

Simulations showed “very large” economic spillovers and spillbacks from confining people to their homes.

“International coordination of macroeconomic policies is crucial,” the study found.

“Uncoordinated confinements raise the possibility that the virus will re-emerge sequentially across the globe. This would mean repeated confinements and their associated heavy toll on economic activity.”

At the same time, countries with policies that limit domestic slowdowns “will not be immune from insufficient or ineffective policies put in place in other parts of the world.

“No one can hide from the consequences of a pandemic, and unilateral macroeconomic policies are doomed to fail,” the study warned.

On a brighter note, the modelling reflected only “average” domestic monetary and fiscal policy responses in each country from 1997 to 2019.

Policy packages unveiled by various countries in recent weeks have so far been “much larger” than those responses.

“Additionally, some countries have also taken crucial actions to preserve existing employment relations and avoid widespread firm-closures and bankruptcies.

“This should help to limit the downturn in aggregate demand and assist firms to restart production rapidly,” the study found.

But “we are in uncharted waters,” the authors warned. “It remains to be seen how spending responds when economies are still under lockdown.”

The study is the fourth in a new series of bulletins launched by the bank last week.

Based in Basel, Switzerland, the BIS was founded in 1930 and is now owned by more than 60 central banks accounting for 95 percent of the world’s GDP.

The unilateral policies to address pandemic of COVID-19 is absolutely rejected by the Royal Government of Cambodia.

Prime Minister Samdech Akka Moha Sena Padei Techo Hun Sen always highlighted the importance of international cooperation in combating the pandemic and has encouraged this issue to be settled by ASEAN, ASEAN-China, and any other means of multilateral cooperation.

According to the Ministry of Health, a new case of COVID-19 infection was reported on a 27-year-old Vietnamese tourist, with 5 new recovered patients.

As of 07:00 am on April 7, 2020, Cambodia has recorded in total 115 COVID-19 confirmed cases, including 49 Cambodians, 40 French, 13 Malaysians, 5 British, 2 Americans, 2 Indonesians, one Canadian, one Belgian, one Chinese, and one Vietnamese. Of them, 58 have been successfully cured.

World Health Organisation has reported that globally, as of 2:00am CEST, April 7, 2020, there were 1,214,973 confirmed cases of COVID-19, including 67,841 deaths.
Among them, Europe had in total 655,339 confirmed cases, the U.S. 352,600 confirmed cases, Western Pacific 112,578 confirmed cases, Eastern Mediterranean 77,359 confirmed cases, South-East Asia 9,132 confirmed cases, and Africa 6,986 confirmed cases.

By Sao Da & Khan Sophirom