Brookings Institute "Global Economic Recovery Index Hits Lowest in 11 Years... Economic Collapse Already Underway"

Brookings Institution Announces Global Economic Recovery Index (TIGER)

[Asia Economy Reporter Kim Eun-byeol] An analysis has emerged that the global economy has already entered a historic contraction phase due to the novel coronavirus infection (COVID-19).

On the 12th (local time), the U.S. think tank Brookings Institution announced the 'Brookings Global Economic Recovery Index (TIGER)' and stated that the world economy is collapsing at its worst level.

According to the Brookings Institution, the TIGER index in March this year recorded -14.63, falling to the lowest level since May 2009 (-15.08), right after the financial crisis. The TIGER confidence index of developing countries (-16.82) dropped more sharply than that of advanced countries (-13.83).

In particular, recent financial market instability caused a sharp decline in the financial index. The global financial index recorded -37.99, the lowest level since April 2009 (-43.10). The decline in the financial index was greater in advanced countries (-54.31) than in developing countries (-21.24). Economic experts believe that if COVID-19 prolongs, the market could be shaken again, especially around high-risk leveraged loans.

The TIGER index is a composite indicator of economic trends in the 20 major countries (G20), including South Korea. It quantifies the real economy movements, financial volatility, and corporate and consumer confidence indices of the surveyed countries.

Eswar Prasad, a professor at the Brookings Institution, forecasted, "No country currently has an immune system against COVID-19, so if lockdowns are lifted, economic recovery will occur more slowly than expected." He pointed out, "It is a time when the world should build a common front against the pandemic, but gatherings themselves are impossible. This destroys international cooperation and further lowers already rapidly declining corporate and consumer confidence."

By country, South Korea's TIGER index (-9.77) showed a smaller decline compared to other major countries hit by COVID-19. It was less than the declines in the U.S. (-11.16), Spain (-13.37), Japan (-17.14), Germany (-10.10), and France (-24.51). China also showed a smaller decline with a TIGER index of -7.81 compared to advanced countries. Among major Asian countries, China and South Korea are already showing signs of COVID-19 stabilization, which is interpreted as being influenced by the significant impact on financial markets in advanced countries.

However, if the impact of COVID-19 on advanced country markets prolongs, emerging countries could again suffer damage in exports and other areas, which is a risk factor. The Brookings Institution stated, "During the global financial crisis, some emerging markets such as China and India continued to record high growth rates and led the world economy, but this time, since there is no immunity in the global economy, export-oriented countries have no possibility of recovery."

In China's case, the economy is holding up based on strong government support, but the institute pointed out that the risk of a second infection wave is lurking.

Furthermore, it advised, "Since conventional monetary policies as well as unconventional monetary policy tools have already reached their limits, each country should put more effort into fiscal policy. Even if public debt is already at a high level, governments must help consumers, companies, and small and medium-sized enterprises mitigate the impact to maintain employment and demand."

This content was produced with the assistance of AI translation services.