In this RadioFinance session, we looked at economic recovery scenarios post-pandemic. John Gong, professor of economics at the University of International Business and Economics shared how history shows possible outcomes to the crisis, with economies experiencing rebounds and a period of boom after recessions.

Charles Bean, former deputy governor for monetary policy at Bank of England, emphasised that recovery pace depends on both government decisions and consumer behaviour. Taimur Baig, managing director and chief economist at DBS Bank stressed that although stimulus measures help economies, band aid solutions will peel if recovery is staggered. Post-pandemic policies will also define economic trajectory.

Key discussion points include the following:

• Governments focus on funding SMEs and creating jobs to re-energise the economy.
• Chinese authorities are channelling resources to the ‘consumption’ side of the economy, with a focus on upgrading soft infrastructure such as the rollout of 5G services.
• Markets are pricing in a deglobalisation bias with elements such as cost-push inflation and lower returns to capital, but these fail to show in numbers.
• Business models will change as companies undergo structural and operational transformations.

Here is the full transcript of the session:

Emmanuel Daniel (ED): How will the global economy recover? This is a very big question. I'm very pleased that we got a distinguished group of people who are our guests – Charles Bean, former chief economist and deputy governor of the Bank of England, who was responsible for monetary policy [and financial policy committees]; John Gong, professor of economics at the University of International Business and Economics in Beijing, and who's an insider in terms ofpolicy makers in China; and Taimur Baig, the chief economist of DBS Bank, who got a very strong emerging market focus.

When we talk about the global economy going forward – especially resulting from everything that's happening because of the pandemic – we're talking about very complex issues, public finances, capital market and job creation, as well as small businesses. There are many different dimensions that we need to cover.

All of us have a perspective of the magnitude of the issues that we're dealing with right now, but we now need to start constructing what or how we think recovery will work itself out, given the current realities. One of the realities is that, there does not seem to be a vaccine anytime soon. I have had to internalise that, because I was hoping that even without a vaccine, there would be some form of recovery process underway. With the European holidays coming on stream, we fear a second wave, which actually happened in China.

With all that we’re looking at, as economists, as chief economists and as people who have been in this position, what's on top of your mind, in terms of how this whole process is going to work out, and what are the elements that you put your finger on individually? 

Charles Bean (CB): The first thing I'd want to stress is that the nature of the problem that we're faced with has inherent uncertainty. There's not a world of risk, which is genuine uncertainty where we can't put probabilities on particular outcomes. We don't really know when an effective vaccine or treatment will be available. There are vaccines under trial at the moment, which may turn out to be effective, but they may not. A good outcome is obviously one where, say towards the end of this year, we think we have effective vaccines or treatments available. A worst-case scenario is one where the scientists failed to come up with something that's very effective and we're living with the disease, endemic, for many years to come. That's one essential uncertainty.

On top of that are two other uncertainties, which are interrelated with that. The first is the pace of the recovery, which depends not only on the government policy choices but also in the health sphere. The UK government was debating whether to reduce the social distancing rule from two metres down to one metre. It's not just government choices, but it's also how individuals respond to that. So, even if full measures reduced intensity, consumers may still be quite reluctant to go to the shops. Beyond that question, there's obviously an issue about what policy support is provided to the recovery. There's also the longer-term question of how much permanent scarring there is to the economy's productive potential. That can come about through business failures, from the destruction of valuable job matches, and this is even if you got an early vaccine. There will probably be a desire for businesses to operate more resilient business models with shorter supply chains. Restructuring may be required, and seeing how those three elements – the health, the recovery and the longer-term scarring – play out and interrelate, that is the key question.

ED: As the monetarist, what numbers do you have at the top of your mind that you're tracking? There are the government subsidies that are underway, the government's affordability of those subsidies, how long will they run and how much do they go to at least keep the gross domestic product (GDP) tagging along?

CB: The government, quite rightly, has taken the view that it was appropriate to undertake a major fiscal relaxation. The budget deficit this year is likely to be off the order of 50% of GDP. So, really, huge increase, but that's an entirely appropriate response to a natural disaster. The standard argument should be that governments allow boring to rise when we have wars, disasters, financial crises, and then in good times you get the deficit under control, bring that GDP down to make room for the next time you need to undertake emergency measures. The government has introduced a lot of schemes designed to support the economy through the hiatus of activity, particularly, the job retention scheme – the furlough scheme – which pays up to 80% of workers who are on temporary layoff. The government has said that it wants to start withdrawing that support gradually. There's a limit to how much support the government can offer. In addition to that, it has also provided loan support. Part of this has come through the Bank of England, providing loans underwritten by the government.

A key question is going to be, if the period of depressed activity lasts a long time, so the firms build up quite large decks to keep going. Then there's a question about whether you have to shift from expecting those loans to be paid back to. I've been writing some of them all for converting them into equity. Because, otherwise, when you finally get through the other end of the recession, slow down, you leave businesses so heavily indebted, they can't really invest and take the economy forward. There are going to be key questions for the government about how it unwinds the schemes that it's introduced already, getting the pace of that right, facilitating structural change where it's necessary and potentially also the question about how it deals with any private debt hangover from this.

ED: The first question is, as an economist, what's on top of your mind in terms of the numbers that you're looking at and what do you think are the three key issues? 

John Gong (JG): I started to make an analogy to the Spanish flu a few months ago, but this time, this analogy is more and more appropriate. Beijing, as you said, is just starting to see the second wave. These kinds of things are going to happen as well in other parts of the world. The Spanish flu lasted 18 months, a year and a half, actually. I experienced three waves. [COVID-19] looks very much like the Spanish flu, except the Spanish flu sort of disappeared miraculously. The development of these vaccines will make a big difference. Although, I don't think the vaccines will be available by the end of the year.

Now, having said that, let's look at what's going to happen to the economy. The economic performance during and after the Spanish flu can serve as a reference point to look at. It's actually quite interesting. Look at the GDP, it is actually quite an interesting curve. Events like this, it has a very precipitous drop as we would expect, like in China's case, it is a drop of minus 6.8% GDP in the last two months. And then, it was followed by an extremely strong rebound. In my assessment, it's like a rebound with a vengeance. It's overshooting, followed by a very long period of tapering off. In the case of the United States, there are some studies pointing out that the entire 1930s after the Spanish flu, which happened in 1918 to 1919, the entire 10 years after that period was a very much economic boom. Some economists attribute that boom partly to the Spanish flu.

I don't think that the government should be too much concerned about the economics performance during the pandemic. Other than the objective of helping people who really need, it's not a good idea to overstimulate, because we're going to see a very strong recovery, a very quick recovery after this thing is over. Of course, a lot of people need help. This is something that governments should do.

In China's case, the government doesn't spend a lot of money trying to give handouts to people and help people who are employed. The money injected into the economy, in my opinion, is the worst spent by just subsidising people on consumption. It's a bad idea to stimulate in a way to roll out those fiscal projects and investment projects. Infrastructure projects in China will be called soft infrastructures to create jobs, help people’s living and help them weather through the storm. The subsidy, in a sense, should be spent that way. On the second message is that the experience from the recovery after the Spanish flu in the 1980s to 1990s was that there's a distributional effect. In other words, the well-off economist. A lot of people tend to perform much better than a poor country than the poor people. That's a very strong implication for the economic landscape in the world.

ED: The distribution effect you're saying, does it come because of government subsidies incentives or is it generated from wealth itself? 

JG: This economic boom I'm talking about tends to be benefited mostly by the countries that are relatively well off. The poor countries tend to be left behind. Poverty will widen the gap between the developed world and developing world. This is a very strong implication for China's case, because China has this ‘One Belt, One Road’ initiative. We have 2,000 loans given to many developing countries. These loans will have some problems, not just because of the economic performance, but also because of the currency these countries have. It's starting to depreciate, so there's a strong implication.

Third thing I want to also point out is that this is a natural disaster. We don't have to worry too much about companies getting too much into debt, these kinds of issues. Look at the stock market right now in the United States. There's an access of capital in my view, especially given the years euro, if not negative interest rates, is low. That is not a problem. Once the economy comes back and once this pandemic is gone, the economy will run its course, the companies will thrive and capital will somehow appear miraculously. I'm not so much worried about this.

ED: Here’s the big question I have for all three economists: is the economy coming back or is it just market absorbing liquidities? 

JG: The economy's not coming back. This pandemic is not going to go away anytime soon. Probably, we're just into the middle of this. The economy's not going to perform well.

ED: One element that I'd like you to add to it is, some of the incentives the Chinese government has put in place. You said that it should be directed more to consumption, so can you give us a perspective of what has been done in China so far to either stimulate consumption or are they just holding business activities at the moment?

JG: It does both things. It stimulates consumption not just by giving people paychecks and money. What it does is give people matching funds for purchases, basically a rebate of taxes, socialist consumption or the government giving back the taxes collected from consumption. You have to buy things to enjoy the subsidies, basically. That's one thing. The second thing is that it's very difficult for the Chinese government to give free money to the poor. Keeping that in mind, the government usually doesn't do that. The government is spending money on a lot of projects – what's trying to stimulate investment, infrastructure investment and soft infrastructure investment.

ED: Is this different from the projects in spending? I remember in 2008, it was more like $300 billion equivalent. Is that the same thing now? 

JG: It has a distinction between hard and soft infrastructure. In 2008 and 2009, the money is mostly spent on building railroads, bridges and highways. Now, the government is talking about soft infrastructure. What does that mean? The 5G telecommunications networks, the electric charging infrastructure within the cities for electric cars, the beautifying of the city and building parks and roads in a city. Investments are new technologies. They're injecting money into these new ventures about new technologies, artificial intelligence and those things. That's the difference.

ED: What are the top three issues on your mind as an economist in terms of how this whole process is going to work its way through?

Taimur Baig (TB): Let's think about Ebola, Zika, West Nile virus, hepatitis C, HIV, what is in common among these things? We don't have a vaccine for any of these things. Finding a vaccine for a virus is really hard. Even if you spend decades, you may not get one. The market narrative is that because we have this proverbial Manhattan Project going on around the world, everybody has some sort of massive race to come up with a solution to this pandemic. We should be carrying ourselves for the possibility that there could be significant delays and disappointments along the way. Making a vaccine is not easy, and it's going to embed into the pricing of markets.

There’s a major underwriting of progress on central banks around the world. In fact, we're now talking about moving toward a formalised yield curve controlling (YCC) in the US, not just to take care of the sovereign debt requirement, but also for the corporate sector to keep the yield curve low as much as possible. This goes back to the discussion that's been circulating in the central banking circle and influencing market pricing for the last couple of years, which is the notion of our star.

The natural rate of interest, has it been gradually trending down over the last couple of decades? With this pandemic and the likelihood of an economy beset with excess capacity – because we want to create physical distance – when we go to public spaces, would that lead to even further decline in the natural rate of interest? When you look at what's happening to spreads around the world, sovereign spreads or corporate spreads for both investment grade as well as how you can create the view is central banks have come to the conclusion that our star will continue to go down. They will keep through price targeting that is no longer quantity-based monetary policy, but price-based monetary policy to keep a lid on things. This basically takes us back to the 1950s, if you will, because that was the last time major central banks around the world try to dictate the price of money as opposed to the quantity of money.

We're also going back to the 1920s, as John was saying, because if you look at the economic trajectory of the UK and the US, it tells you that both pandemic policy matter substantially in terms of the trajectory as the economy pursues. The US came out of the First World War, taking the mantle of the global manufacturing power up for cotton and textile. It also became a big exporter of capital to the world, including primarily to Europe. UK came out of the World War and faced a pandemic with a huge burden of debt and a commitment to restoring the gold standard, embracing deflation and massive amount of debt servicing as a result. This created many things that we revel Europe in the world for decades.

US embrace globalisation. When you look at the average tariff in the UK, immediately after the First World War, UK sort of shied away from globalisation. When we look at the markets and think about what the market is pricing, it is trying to price in a deglobalisation narrative. We'll be forced because of political pressure to move some of the manufacturing away from China. This should entail some degree of expecting inefficiencies, lower return on capital, perhaps even some cost push inflation. But none of that is showing up in any of the pricing we're seeing in the markets, whether it is inflation expectations, corporate debt or risk premia that investors would demand from equity. They're not doing that because they are caught up in the short-term monetary injection, underwriting of the yield curve and corporate credit risk for the time being.

We're in a very interesting juxtaposition. You can come up with a fairly convincing stagflation airy scenario for the next four or five years, you can come up with a policy divergence scenario where the US moves away from globalisation and suffers whereas, you know, China becomes a new champion of globalisation. And despite all the pushback from the west, does more creative does better. Or you could also have this deflationary a scenario where we make the mistake of post war years after the pandemic, where what was the order of our professor Bean talked about the very beginning, the order of the hour might be debt forgiveness. But if we don't do that, and if we start talking in neoclassical terms that let the business sector cleanse its way out, let the consumer feel some crunch because it is needed, we'll be making in the States.

ED: Interestingly, there are countries which run long term deficient budgets and there are countries which, you know, have reserves and we've had difference in the in the way that you know how resourceful The country is, in terms of, you know, how they're going to deal with debt and long term, long term, you know, negative growth.

TB: Look at the example of what's happening to the market pricing of debt for the sovereigns of India and Indonesia as we speak. Both countries are looking at extremely weak growth rate. Particularly India also has a massive fiscal overhang, you would expect that the Indian that right now to display something real fiscal dominance, which will lead to inflationary expectations going up which would lead to significant rise in interest rates. That is happening. Why? Because again, the market is displaying this belief that even India's our star is going down substantially. And between the central bank and the Minister of Finance, there'll be a lot of debt monetisation. But the risk out of that is not that there'll be this big explosion of inflation because we are all again, looking at a world of low growth and low interest rates, not demand, push inflation, not cost, push inflation.

ED: What are the interest rates looking like in China? How's the People’s Bank of China (PBoC)’s guiding interest rates right now?

JG: The problem in China right now from the government's perspective is, they’re trying their best to incentivise banks to extend credit to small and medium-sized businesses. If that's the objective, lower interest rates or other measures, like reduced reservations, don't help across the board because the banks will still have no incentives to make loans to the smallest macro businesses. The idea that the central bankers come up with is that they try to make these measures to be contingent upon making loans to these companies. In other words, it has one type of loan specific reserve requirement. The government's objective is to resolve the unemployment issues. We all know small and medium-sized businesses are the workhorses of creating jobs. Look at the bankruptcies that are happening right now, they mostly stay with those small and medium-sized businesses. That's their priority. If you know the interest rate overall is trending lower, that's for sure. The more important emphasis is to create incentives within the mechanism to help these small and medium-sized businesses.

ED: In terms of the Belt and Road initiative, do you see any downside risks that are beginning to show up?

JG: These loans are made in US dollar, but the proceeds from these loans – when these projects associate with these loans – are mostly in local currencies. It's a double jeopardy here. The economy's not doing well, the currency is depreciating. We're already starting to see many countries, especially Africa, that are calling for China writing off these loans. As a matter of fact, China did. The government announced that they will give some loans. There's a very restrictive category of loans that will be written off.

ED: Does the pushback on the US-China agreement give some concession, help with manufacturing data in China or does it show up anywhere?

JG: This agreement is over two years. Nobody knows what's going to happen in two years because of the political uncertainty in Washington, but at the very least, the initial implementation of this agreement is mostly about purchases of agricultural products. This is something China's going to do, but moving forward, we don't know whether this agreement will be implemented to the full extent.

ED: Is that what's the situation in China at the moment? The southern region has a lot to do with manufacturing and export and the northern region has a lot to do with state own enterprises and heavy industry. Do you see a difference in the way in which these two different regions are coping?

JG: The northern region you're referring to is actually mostly restricted to the north eastern part of China. They're having difficulties, but it's not a recent phenomenon. The southern parts, they're doing fine. This structural picture is going to stay here for some time. It's not going to change, but the economy is coming back. I expect the numbers coming back very strongly. Most likely, the second wave is coming, but at least the Beijing government is going out of the way to contain this. They do a lot of things.

ED: What’s your point about the fact that the emerging markets have not suffered as a result of going into the market to borrow? Is that a leverage or a window of opportunity for emerging markets with a long deficient history to be able to raise capital, pay their debts and rebuild the economy?

TB: I may have pushed the industry a bit too enthusiastically. No, that's not my point. Look, by and large, many emerging market countries are in dire straits. I mean, if you look at South Africa and Argentina and Turkey and Lebanon, things that are really bad, it's in our neighborhood in Asia, there's still substantial interest that we have seen in the month of April and May, institutional investor flows into Asia and fixed income has gone up substantially. Even Indonesia, the middle of the pandemic related Penny monetary issue several billion dollars’ worth of sovereign debt and got multiple debits for that. India which has been put on a negative watch, despite not one but two ratings agencies still is not seeing a massive outflow and as far as the debt market is concerned. So, on one hand, we do have eager investors still sniffing around trying to find value and they see in India still promise of long-term growth and they're still taking some position. And a country like Indonesia, despite being hit by the commodity crisis, there's still some demand. So, these are the what we call the high yield countries of Asia. But in general terms, so the nexus of emerging market liquidity and solvency outlook and the role that the central banks have played around the world, somebody's former qualified to talk about this as their and he's back in the call. So, I'd like to actually pass the mantle to Professor Bean.

CB: This point about what is likely to happen to the underlying safe real interest rate going forward is really quite important. The discussions already exposed over the past couple of decades or so. This has been drifting down. It's fair to say we got plenty of hypotheses for why that might have occurred. Economists don't agree on exactly what the story is, and therefore, knowing whether it's going to continue or not, is uncertain. It is worth saying that even before the pandemic came along, there's one important demographic force, which is about change in directions.  We've gone through a period when there's been a bulge of middle aged savers, who've been in the period of their lives when they're saving for their retirement.

The demand for assets will start kicking in the other direction. On top of that, the pandemic is leading to a significant increase in the amount of public and potentially also private debt. You'll also expect that to start pushing up on the safe rate. There's a bit of a danger of just assuming that this trend that we've seen over the past 20 years is set to continue. But that then raises an interesting question, because you have a juxtaposition and perhaps forces that might be starting to push out on the safe rate. I have to say, a world where the real safe rate is in negative territory is not a good situation to be in. In general, it encourages investors to go into particularly risky asset classes to try and get high returns become excessively leveraged. It creates financial stability risks. But we're in the situation, because we're in the short-term. Central banks are doing precisely the right thing by trying to keep interest rates down by buying a lot of government debt to keep government debt markets orderly, and so forth. That all look perfectly sensible as a short-term response to what's going on. But when we come out of the other end, it is important that central banks start selling those assets that they bought back into the market, not rolling them over.

I left the Bank of England in 2014. About then, I was starting to argue for at least not rolling over debt as it matures. There was a period when they could possibly have raised rates a little more than they had done and possibly moved into starting some asset sales. This will become even more of an issue. Now, central bank's balance sheets are that much bigger. This raises quite an interesting point of tension with governments, because governments want to see the cost of finance being kept low. Whereas central banks, during the period after the pandemic, are wanting to shrink their balance sheets, potentially putting upward pressure on that cost of finance. There's potentially a point of tension between central banks and governments here in the future, and it will raise a question, ‘Would we see a repeat of the 1950s, the period of five financial repression?’ That might be the outcome. That's a world where governments are dominant, but I would prefer us to be in a world where central banks start unwinding some of those purchases. We see that safe range starting to move back up a little bit. We don't see it rocketing, but it would be a healthy development for the equilibrium of the world economy. 

ED: Is it going to be a U-shaped recovery or V-shaped? What are the milestones? What are the triggers?

TB: Some of the makings of that start-stop rebound is already in place. If you look at the data surprises that have come out of the macro front in the US and Europe over the last four weeks, they've all been better than expected. So, we have now reached the nadir of dark expectations, spiking unemployment and collapsing sales. The easing of lockdown led improvement in numbers and are actually surprising us on the upside. You've seen that when the market was returning, a bit fatigue having run up so dramatically over the last couple of months. Now, we have this upside surprise on macroeconomic data, which is adding further fuel to the sense of comfort and complacency.

This will be short lived. We will be seeing what the economist famously called a few weeks ago, the 90% economy phenomenon. You see that in mobility data, in power production and so on. It's sort of uniform across the world. Even as economies normalise or come back from the lockdown, it doesn't matter whether they came back into lockdown three weeks ago, six weeks ago or this week, they all seem to be following the same pattern – they come back pretty quickly and then they stumble around minus 10%, minus 50%, relative to capacity with respect to traffic and public transportation, with respect to people going to office, people going to retail stores and so on. In a scenario like that, the upset surprise for the data will fizzle out pretty quickly, and then we'll be in for some disappointment.

TB: In terms of stress on balance sheet of households and corporations, a large part of it is being taken care of by the various support measures in place. I don't think central banks will be in any position to withdraw their support measures. The risk, of course, is you see a repeat of the Japan of the 2000. When there was zombification of economies, companies that should be flushed out of correction by pursuing bankruptcy and restructuring will hold on because they will be able to refinance their debts. That's very cheap cost. This is where Professor Bean’s point comes in, which is everybody would like to see interest rates go up because of the expected pickup in productivity, in long-term economic growth potential. The only way we can have that happen is all these money that is being printed goes into productive investments.

ED: What is the atmosphere in China with the regulators? 

JG: The sentiment is absolutely, as you said, on the conservative side, because this is after a slew of scandals and problems, and blow ups associated with the P2P (peer-to-peer) era. There are a lot of money involved, a lot of people involved, so the government came out really bruised. The last thing they see is these unrests coming up here and there, and in different cities people are protesting. These are the things that the government has learned the lesson. The entire P2P experiment has been ending a total fiasco, partly attributed to the government's lack of oversight and regulation. Have you learned that lesson? The government is becoming more and more cautious, conservative in your view, or your words, when viewing those new financial innovations coming out. It's a good thing, because when economists are doing very well, we sort of got ourselves ahead a little bit and forgot the lesson that in China, we need to do things in experimental basis first. Before, it's advancing on very large scale through the very large mass market. Every time we did that, it's always some problems occurred. Moving forward, the government is definitely going to be very careful. Also, they're starting to see more and more consolidation in this area. You're seeing activities that are mostly centered around those very large companies and weeded out the small players, smaller companies.

ED: What are the thinking process that takes place after a pandemic is over? What are some of the priorities that they set for themselves? And how do they work through those priorities?

CB: The first thing to be said is that, if we go back to just before the financial crisis, I could never have imagined the Bank of England, the Federal Reserve (Fed) or the European Central Bank (ECB) having balance, the size that they have. By and large, the right decisions have been taken, given that there was a limit to how much further that short rate could be kept. It was the only viable way of providing stimulus during the recovery to the financial crisis. 

Inevitably, when you're coming out of a downturn, you're going to be cautious about raising rates or starting asset sales, because you don't want to get the recovery on the head just when it's getting started. But, it didn't look all that strong. You often got the argument, “Look, if we leave things too late, we can always raise the rate sharply, but if we tighten too early and push the economy into another downturn, given we got limited firepower, it might be quite difficult to get things going again”. It does push you towards being very cautious now, timing policy in the early phases of recovery. When you got a window where things are looking better, you have to be prepared to move a little bit more purposefully.

One other thing that is worth fitting into this, which is rather more relevant to the Fed and the ECB than it is to the Bank of England. The Bank of England mainly acquired government debt, so it's really just changing the maturity structure, the public sectors liabilities. The Fed has been involved with a much wider range of private sector institutions and the ECB has been involved in private sector assets. And that starts taking the central bank into political territory, which may also muddy the removal of that stimulus, because there will be politicians who have views about wanting to support a particular industry. 

ED: What's different from this crisis as opposed to 2008?

TB: Initial conditions matter. Some countries have come into this pandemic with already fairly weak corporate balance sheet, financial sector balance sheet, both bank and non-banking system. Clearly, for them, it's going to look really bad. The first case that comes to mind is India, where we've had a slow burning bank and non-bank financial sector crisis going on for the last couple of years.

This pandemic and a lockdown will of course make a bad situation worse, but when you go beyond, say a select developing countries where the stress is palpable, and then start looking at the say, the more developed world, whether it is banks in Singapore, Hong Kong or in the West, the big legacy of the 08-09 crisis and the success of people has been to make the bank stronger. We do have significantly bigger capital buffers. The bank balance sheets are stronger and they have less exposure to risky investments. Having said all that, no balance sheet can withstand a minus 5% or 7% outcome for a whole year, as far as GDP growth is concerned. That would lead to some degree of increase in credit risk. We are seeing heroic response from central banks to ameliorate that risk, and so far, it worked pretty well. 

We now know that we've had a sharp contraction. We're not entirely sure about the shape of the turnaround. We also have failed little understanding of the duration of that recovery. Is it going to take two quarters, four quarters, six quarters? The way fiscal monetary support measures are in place right now, the financial sector risk can be handled if we are going back to a somewhat normalised world in the next quarter or two. But, if it's going to go beyond that, if we're going to have a significantly staggered start-stop recovery, then a lot of these band aids will slowly start peeling off and the bleeding would be severe. That level will be everywhere.

ED:If a country was as financially strong as China is right now, how will the recovery process work its way through?

JG: The recovery is already starting. It might be slowing down a bit due to the recurrences of these infections, but overall, the train is going quite strong. The numbers are showing quite strong. One legacy after this monumental event is that companies are going to change forever. There will be structural changes how companies can offer. We're already starting to see more and more activities moving online, and all of a sudden company and other institutions start to figure out that this model works pretty well. Life can go on without having physical offices, for example. That's a profound change into the corporate world. We're going to see companies restructuring themselves. The business model is probably going to change as well, and they are changing for the good. They're making more efficiencies out of this mayhem. Overall, we're probably moving towards a better world.

ED: That's very promising. That's a very good tone to end this conversation. I hope to have all of you back at some point again. We really need to look at recovery in a three-dimensional aspect, which is what governments need to do, what financial institutions need to do – or any intermediary, whether it's capital markets or financial institutions – and what has to happen in the real economy. All three of you have made comments on each of these areas. We looked back to history and trends, and we took stock of how central banks have been behaving up to now. We realised that once you put certain tools in their hands, it's very difficult to take it away from them. The whole idea of quantitative easing, subsidies, interest rate, softening and so on, to lift it up again takes a process.

Gentlemen, thank you very much. We benefited from all of your insights as economists. This is a continuing conversation. We will be putting together different groups of people and trying to make sense of how this process is going to work its way through. Thank you very much.