What to expect next?

The COVID - 19 has made through the core of business activity and daily life of million of people . So, Uncertainty is the new status for the economy and for everything else in months ahead.On the other hand, prominent thinkers, philosophers, economists gives their thought about what it is happening and its implications, but without knowing for sure any chance of getting the Virus expansion trend in a downward path.That means all of them are driven by hope that all of this episode will melt away sooner. Hope is the one and only feeling who may keep alive people expectations about any improvement soon . However, according with available data coming from consumer sentiments, business leader,economists,analists,journalist and International Orgnization like the IMF, all of them anticipate a tough scenario for the global economy in month ahead. Even with fiscal aid packages assuming the economy will restart again soon ,it does not seems to be clear that the health care system is strong enough in each country to overcome the situation and let that expected economic outcome happen, before it collapse.In such a case the restart would be later stressing the economy system to its limits. So will it be necessary another aid fiscal package?.In emerging economies there is not such a possibility given that most of these economies are with limited fiscal policy options,given its limitations to expand debt levels further. So, The current situation goes on within extremes: The risk of a massive collapse of the health care system,no matter the effort to tuckle the threat to avoid so, coupled with the high risk of a massive collapse of the fundamentals of the economy, no matter the poliicy responde so far. .The outcome may be worse than a greater depression.There is an ethical dilemma which must be solve by political leaders However, the question What to expect next, goes beyond the crisis. It is hard to believe that the expected new normal situation will be the way it used to be before COVID 19.The effects of this pandemic will last for years to come reaching out the economic system and its fundaments(for instance more sate in the economy ), as well as how people do their daily life obligations( better sanitary condtions at works, home , public places,and transportation).Besides, the tracking system on any individual to get control of any future cases,will change and modify the boundaries of privacy and freedom. It look like it is not just the econoomy which will have severe consequences,increasing the risk of proteccionism further , but also how democracy works in the future and how it improves its proximity with their citizens needs.

The global economy sudden stop

The world is still under stress by the coronavirus outbrake, and so it is the global economy and its remainings.Hard choices for global leaders, but also for the economy policy makers.They both face a completely unexpected situation which for economist is out of any economics text books.In fact , economics as a science rose to become a core on new knowledge concerning society behavior(right or wrong), based upon productive uses of scarce resources and its alternatives allocations.That is what economics policy issues are all about.However, now there is a huge challenge under way which does not have a proper match with the economic text books and policy response, other than to be prepare for the worst and hope for the best.- In a usual situation , most of the policy decision deals with the economy working at a certain level of productive capacity, even in a recession with low levels of activity, there is always a minimun capacity ready to be used. But now, that capacity shrink to almost zero when most of the productive force on the one hand, and consumer on the other hands must stay at home in both developed and less developed economies.The economy get the status of a global sudden stop. - Given its consequences (Severe recession,coupled with high social cost), the sudden stop scenario has been a key subject of macroeconomic research,Calvo (1998), Agosin,Maureira & Karnani (2017),such as it has been posible to set a signal to prevent it: Look at the correlation between inflow and outflows of capital.Wheher it is high , there are fewer chances of a financial account sudden stop.Agosin, et al (2017).- But now the situation is different , part of global economy has become like a global Hospital,and it may stay that way before a fully recovery take place because of lagged response to both fiscal and monetary policy action. So, what are the tools the economy has available to deal with this situaion in the short run?. At its best just a few, at its worst None. Fiscal policy lag is shorter than that one of monetary policy.However, the issue it is matter of sanitary policy which is far beyond the reach of macroeconomic policy framework which assumes both healthy and rational labor force, consumers and economic agent.- The COVID -19 pandemic so far, has hit the global services sector (50 million jobs) ,and the manufactures process as well, through he supply chain disruption(global production chains) . Air lines,(10% drop in past months schedule flights ) tourism, hotels, food industry all face a very difficult situation ,and the expectation arising from the vacation season to get it over,are probably gone. In the south Hemisphere the prospect of a winter more severe than previously expected will increase the burden upon sanitary facilities.So there is a simultaneous collapse of both suplly and demand which may lead to a deflationary recession ,and while the key productive forces are in quarantine either on the hospitals or at home , the policy makers are unable to do anything with real inmediate impact on the path of keeping the economy stable.So it looks like we will live for a while in the Zombie economy which has fear as its key driver.- The Zombie economy will work through the network connecting consumer at home and business capable of dealing with delivery process through drone .Those doing their job using telework or net working, will keep the economy on wait and survive mode.Internet will replace the physical usual transaction chanels as never before,so there will be a huge transformation the way economic agents used to do business. The probably outcome following the Zombie economcy may be a stronger Virtual economy with an higher share of real economy transactions than before reinforcing the pattern of shifting places away from public shopping malls .A lot of traditional business will be replaced by virtual (internet) alternatives.Firms will have to redefine the way to apply sanitary policies and how to care about its talented people , so it will in the tourism industry as a whole.- As a bounded optimism approach it is important to take into account that nothing is worst than do nothing.The scientifc community is working hard to overcome the crisis with a Vaccine, the necessary condition to make the economic policy tools to work fully again. The sooner the better.-