The sight of a collapse of stock markets worldwide brought back memories of the 2008 credit crisis.
On Black Monday 2.5 trillion dollars were lost in the global markets largely due to fears of a coming recession.
Panic is based on heightened concerns about the economic repercussions of the coronavirus epidemic and on the Saudi Arabia-Russia “war” that led to the biggest plunge in oil prices since 1991.
One of the particularities of the current crisis as compared to the great fiscal crisis is that the virus harms both supply and demand. It leads to the closure of factories, breaks supply chains, and limits consumer consumption.
As in 2008 the breadth of the current crisis requires international cooperation which the IMF has asked for.
The Fund called on all governments to forge a coordinated international response in order to limit the economic impact of the epidemic.
The IMF is calling for a response similar to the one 12 years ago, when the G20 had undertaken a coordinating role and in a series of meetings took decisions that helped address the crisis and send a positive signal to markets.
How likely is it for something similar to happen today to avert a plunge into recession of the international economy?
The current environment is a far cry from 2008 as much has changed since then.
There have been strong commercial tensions, the rise to power of authoritarian-populist leaders, a strengthening of ethnocentrism, an outbreak of irrationality, suspicion, and hostility between the powerful on the one hand and an EU without the UK on the other.
Even in such an environment, there is no choice but to seek international coordination and cooperation.
The sooner that is understood the smaller the repercussions on the economy will be.
Global problems demand global solutions.