(Bloomberg) -- The international recovery could be job-poor due to technological structural shifts stemming from the Covid crisis, says Warwick McKibbin, a professor of economics at the Australian National University.
The crisis has accelerated the takeup of technology that will leave many jobs obsolete, McKibbin, also a non-resident senior fellow at the Brookings Institution in Washington, said in an interview. That creates a “real dilemma for policy makers,” he said.
“There are going to be many industries that will need to be restructuring,” he said. “There’ll be some industries that may cease to exist, especially if we never get an effective vaccine.”
Unemployment has surged across the globe as nations shuttered large parts of their economies. McKibbin, who calculated the cost of the 2003 SARS outbreak at $40 billion and produced macroeconomic scenarios on the current pandemic, estimates the world economy has slumped between 10-20%.
“There is no G-20 response at this point,” said McKibbin, who was previously a Reserve Bank of Australia board member. “The global coordination has to be front and center at this point because there are some countries that are going to go through deep economic crises as a result of coming out of the other end of Covid,” he said.
The technological structural shifts, McKibbin said might finally resolve the puzzle -- that has also plagued RBA Governor Philip Lowe -- of why new technologies hadn’t yet led to higher productivity.
Globally, McKibbin sees chains of production shifting from “just in time to just in case.” This will create a major economic and geopolitical issue as countries move production networks onshore to minimize national supply risks, he says.
Given the multiple uncertainties, he says countries would do best designing their policy strategy around the idea that there won’t be a vaccine.
“If it turns out there is a vaccine, then that’s a great reward,” he said.
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