On 16 September 2020, the Centre for Multilateralism Studies (CMS) organised a webinar on the impact of COVID-19 on domestic economies and economic multilateralism. The session began with an elaboration by Dr Jikon Lai, Assistant Professor at CMS, on the factors influencing economic recovery policies. Through an ongoing assessment of over 100 countries, he postulated that governments have leaned on deploying macroprudential and fiscal policies to stave off the worst of the pandemic’s socioeconomic ramifications. Guiding their choices were Gross Domestic Product (GDP) and more significantly, good governance levels — mainly to create credit, as well as provide liquidity and income support.
Following this, Dr Gong Xue, Assistant Professor at the China Programme, RSIS, presented on COVID-19’s implications for the US-China trade war. Given the uptick in economic nationalism and self-sufficiency, which COVID-19 exacerbated, she noted that China will face an increasingly pessimistic trade landscape. However, there is greater willingness to reset trade relations with China, especially among the Indo-Pacific powers. Trends of restructuring global value chains will also accelerate, with “China+1” type supply chains becoming more likely.
Finally, Dr Pradumna Rana, Visiting Associate Professor at CMS, spoke on how COVID-19 is heralding a different form of fragmented economic multilateralism. Previously, global economic institutions underwent decentralisation as governments dissatisfied with the slow pace of negotiations in multilateral fora like the World Trade Organization turned increasingly towards plurilateral or regional-based economic and financial agreements and institutional arrangements. While multiple levels of economic cooperation were functionally complementary, COVID-19 has threatened to catalyse unhealthy competition due to increasing protectionism, economic nationalism and geopolitical rivalries.
When asked whether recovery would be swift, the panellists agreed that various factors could delay or hasten economic rebounds, such as a second wave of infections. In addition, GDP levels may only return to pre-pandemic numbers circa 2022 – 2023. Though a multilateral response could facilitate a speedier recovery, it was further noted that a Biden presidency may not reverse US-China tensions. Rather, it may simply ameliorate its intensity considering bipartisan consensus on the China threat within Washington.