Harvard Economist Kenneth Rogoff: COVID-19 Global Recession Will Likely Be Deeper And Longer Than 2008 Financial Crisis

Kevin Mwanza
Written by Kevin Mwanza
Global recession
Harvard economist Kenneth Rogoff believes that the COVID-19 global recession will likely be deeper and longer than the 2008 financial crisis. Harvard University Prof. Kenneth Rogoff speaks during the Gaidar Forum in Moscow, Russia, Wednesday, Jan. 14, 2015. Image: AP Photo/Pavel Golovkin

COVID-19 has affected the global economy in a deeper way than any recession in the last 150 years and is expected to be far worse than the 2008 global financial crisis, according to Harvard economist Kenneth Rogoff.

Asset markets in advanced economies have cratered despite all the efforts by central banks and fiscal authorities to soften the blow from the coronavirus.

With capital pouring out of emerging markets at a breathtaking pace, a deep economic slump and financial crisis are unavoidable, Rogoff says.

The question now is how bad the recession will be, and how long it will last.

Rogoff says there is great scientific uncertainty about the coronavirus; however, there is also great socioeconomic uncertainty about how people and policy-makers will behave in the coming weeks.

The economist says that it is highly possible that human creativity and determination will prevail even though the world is experiencing something similar to an alien invasion.

Markets seem to be cautiously hopeful that a recovery will be fast, maybe by the start of the fourth quarter, with some experts pointing to China’s experience as an encouraging harbinger of what the rest of the world should wait for, even though it may not be perspectively justified.

Although employment in China has somehow rebounded, it is not clear when it will return to how it was before COVID-19.

Even if Chinese manufacturing goes back to normal, Rogoff wonders who will buy the goods when the rest of the world is going through an economic crisis?

Despite having one of the world’s most advanced health systems, in his opinion, the U.S. has failed to contain the outbreak.

Unless a vaccine becomes widely available, Americans are likely to find it difficult to return to economic normalcy, given that it could be a year or more away until a vaccine is found. It is also uncertain how this will affect the U.S. presidential election in November.

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“The likeliest scenario — specifically, for a situation where unemployment mushrooms to 15 percent — a record in modern American history — is the economy starts growing again by no earlier than September and U.S. GDP for the year contracts by 6 percent,” wrote Bart van Ark (Conference Board’s executive vice president and global chief economist) and Erik Lundh (a senior economist).