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“Fight the Coronavirus first and later worry about stimulus” : Raghuram Rajan

The weakest since 2009, Bank of America Corp. economists warned clients on Thursday that they now expect 2.8% global growth this year

New Delhi: The best way to recover from the coronavirus shock is to contain its spread and worry about stimulus later, said Raghuram Rajan, former governor of the Reserve Bank of India.

Rajan said, “The central banks can do something, and while more government spending would help, the priority should be on convincing companies and households that the virus is under control”.

He said this while an interview with Bloomberg Television Haidi Stroud Watts and Stery Ahn “People want to have a sense that there is a limit to the spread of this virus perhaps because of containment measures or because there is hope that some kind of viral solution can be found,”.

“And I would say the best thing that governments can do is to really fight the epidemic rather than worry about stimulus measures that come later,” said Rajan.

The spread of coronavirus is pushing the world economy toward its worst performance since the financial crisis more than a decade ago.

The weakest since 2009, Bank of America Corp. economists warned clients on Thursday that they now expect 2.8% global growth this year.

“We have moved from extreme confidence in markets to extreme panic, all in the space of one week,” said Rajan.

The virus outbreak will force companies to rethink supply chains and overseas production facilities, he said.

Rajan said, “I think we will see a lot of rethinking on this, coming on the back of the trade disruption, now we have this,”. “Globalization in production is going to be hit quite badly,” he added.

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