Global economic stability could be difficult to recover in the wake of COVID-19 pandemic, finds study

Date:
June 26, 2020
Source:
University of Surrey
Summary:
New analysis suggests that the economies of countries such as
America, the United Kingdom and Germany should prepare for a long
slow recovery with prolonged periods of instability.



FULL STORY ========================================================================== Analysis from the University of Surrey suggests that the economies of
countries such as America, the United Kingdom and Germany should prepare
for a long slow recovery with prolonged periods of instability.


========================================================================== Rates of growth across member states of Organisation for Economic
Co-operation and Development (OECD) have been in decline since the
1970s, a phenomenon known as 'secular stagnation'. The average growth in
gross domestic product (GDP) per capita fell from over 4 percent in the mid-1960s to little more than 1 percent in the pre-pandemic years. The International Monetary Fund expects global GDP to decline by 5 percent
this year alone (2020) with a contraction of 3 percent likely even in
the emerging and developing market economies.

In a paper published by Nature, researchers from Surrey's Centre for Understanding Sustainable Prosperity (CUSP) broke new research ground by applying critical slowing down (CSD) theory, typically used in physics
and ecology, to analyse long-term trends in the global GDP datasets from
as far back as the 1820s.

CSD theory suggests that when a constrained, dynamic system is close to breaking point, its ability to recovery decreases. Fluctuations around
the system's equilibrium become deeper and more pronounced because its
internal stabilisation forces have weakened.

The team from CUSP found that, even before the Covid-19 crisis, many
of the world's leading economies were experiencing larger slower growth
cycles (recession cycles), suggesting precisely such a period of critical slowing down in the economic system. The team's analysis suggests that
the added weight of the Covid-19 crisis may result in one of the weakest
and most unstable recoveries in recorded history for many economies.

Professor Tim Jackson, Director of CUSP at the University of Surrey, said:
"The global economy is facing one of the largest downturns since the
Great Depression in the 1930s. Placing the economy on hold to prevent unfathomable human tragedy from the Covid-19 pandemic was the right
decision. Trying to force our way back to economic growth now would be
the wrong one. A post-growth world is the new normal.

"It's time to rethink and remake the economic models that have been
failing us for decades. The challenge is enormous. But so is the
prize. CSD theory suggests that a resilient, sustainable economic system
which protects the health of people and planet is now within our grasp."

========================================================================== Story Source: Materials provided by University_of_Surrey. Note: Content
may be edited for style and length.


========================================================================== Journal Reference:
1. Craig D. Rye, Tim Jackson. Using critical slowing down indicators to
understand economic growth rate variability and secular stagnation.

Scientific Reports, 2020; 10 (1) DOI: 10.1038/s41598-020-66996-6 ==========================================================================

Link to news story: https://www.sciencedaily.com/releases/2020/06/200626114759.htm

--- up 22 weeks, 3 days, 2 hours, 34 minutes
* Origin: -=> Castle Rock BBS <=- Now Husky HPT Powered! (1337:3/111)