FRANKFURT – When the global economy melted down in 2008, world leaders swiftly created an international forum to boost economies by spending more and keeping trade open. Central banks announced rate cuts within seconds of each other.
But so far, nations' approach to the economic shock from the coronavirus outbreak is looking very different.
With the world economy teetering, plenty of action is being taken — but often without coordination or consultation that could increase its impact. U.S. President Donald Trump banned flights from Europe, surprising outraged allies and causing markets to collapse. Plans for fiscal stimulus have popped up separately and incrementally in Italy and Germany as U.S. Congress debates aid measures.
The Federal Reserve, Bank of England, and European Central Bank poured in more stimulus —announced separately, the Fed on March 3, the Bank of England on Wednesday and the ECB on Thursday.
The disease, which has infected over 156,000 people worldwide, for most causes only mild or moderate symptoms. For some, especially the elderly and the sick, it can cause more severe illness. At least 5,800 people have died so far, and another 74,000 have recovered.
On Monday, leaders of the Group of Seven rich democracies — the U.S., France, Italy, Britain, Canada, Japan and Germany — are to talk by phone, according to a tweet from French President Emmanuel Macron. What action or commitments result from that remains to be seen. Investors in financial markets brushed off an earlier G-7 statement by finance officials. Since then, major indexes have fallen by the most since the market crash of 1987 and remain unusually volatile.
It is a sharp contrast with the coordination shown during the global financial crisis, when the Fed, ECB, Bank of England, Bank of Canada and others announced a half-percentage point rate cut simultaneously on Oct. 8, 2008, as stock markets plunged.
The current piecemeal approach does not sit well with former policymakers who dealt with previous crises, including ex-ECB chief Jean-Claude Trichet.