The really important issue is how much of our economy
is destroyed in the process of managing the disease
and how easily we can get back to normal.
The optimistic view would be that we
will bring the explosion that we have recently seen in cases
and death under control.
We will then have testing regimes available
that allow us to keep it under control,
so that within a relatively short time
the major economies can follow China and begin to get back
to work by the summer.
But at an extreme opposite it may be the case we simply
cannot contain the disease.
It might last till the end of 2021.
If that were to happen, we'd obviously
have colossal increases in public debt, maybe 20 or 30
percentage points of GDP.
We would have many companies that have disappeared.
We would have had many people who have been unemployed
for a year and a half or more.
We would have profound social unrest.
I think the trading system would probably have collapsed.
It could certainly be immediately,
I think, in the short run, a bigger decline in output
than in the early 1930s.
The impact on output gross domestic product
in the developed countries will vary between minus 15 per cent
and minus 30 per cent.
So every month, as it were, our GDP
will be smaller by that amount, below what
it would have been if the crisis had never happened.
And so over a year, that will be the shrinkage of GDP?
And that's why you mustn't have it every year.
What the IMF is telling us is that we're
going over an economic cliff right now.
They're expecting that in advanced countries
GDP will decline roughly by 12 per cent
between the end of last year and the second quarter
of this year.
Thereafter, they hope, there will be a recovery.
It will be a long time to get back to the starting point,
but there will be a steady recovery.
Unfortunately, even that could prove to be too optimistic.
If we look at what sectors are being hit, well,
obviously it's travel, it's leisure, it's tourism,
it's restaurants, it's retail.
In the emerging developing countries
there are no cushions of the type
we have in the developed world, so their fate
will be really much more like what happened in the '30s.
This will be a truly profound transformation.
Governments would be colossally indebted.
They would have printed an enormous amount of money.
I would expect serious inflation to emerge, one way or another.
If we were to do the very best one could imagine,
the recession globally would still
be worse than the Great Recession, not necessarily
worse in the developed countries which were most directly hit
by the 2007 or 2008 crisis.
But it's very important to remember the 2007
and 2008 crisis wasn't really a global crisis.
While the developed countries were badly hit
and that affected the whole world,
China did incredibly well, came out very, very quickly
with an incredibly strong growth in 2009.
That supported commodities, and that
meant a lot of emerging and developing countries
did pretty well.
Today, this is a global crisis.
It's affecting every economy in the world,
including China, of course, and all the emerging and developing
countries, as well as the developed countries.
If you think we are now in 1930, as it were,
we're going over a cliff faster than in 1930.
It's more global than in 1930.
And if it goes like this for two or three years,
then I think political consequences which, ultimately,
will feed back into the economy are just wildly unpredictable
and could be devastating.
Without the Great Depression, Adolf Hitler
would never have been elected to power in Germany.
It is possible, if we get the disease under control,
that the recovery will be quicker.
We're going to have to have higher taxation
to strengthen our health systems,
and I think we'll have to strengthen our social safety
nets.
And those costs will have to be borne by the relatively
well-off.
We will have to consider whether we can continue with gig
working, precarious working.
We will have to rethink how we relate
the winners to the losers in our economic system.
Otherwise, I don't believe our democratic systems
will survive.