Coronavirus: Economist calls for 'Ashley Bloomfield of economics' to explain how we're going to recover from COVID-19

A prominent economist has called for an "Ashley Bloomfield of economics" to help explain how we're going to climb out of the economic hole left by COVID-19.

More than 1 million employees' wages are being topped up or have been completely replaced by the Government's wage subsidy, with many businesses shut down for the duration of the lockdown or suffering massive drops in revenue. 

The World Trade Organization (WTO) has warned the global economy is on track for a collapse that could rival the Great Depression of the 1930s. 

It's predicting a fall of up to 32 percent in trade, around about what happened after the market crashed in 1929. Its best-case scenario is a drop of 13 percent, slightly bigger than that which followed the global financial crisis in 2008.

"These numbers are ugly - there is no getting around that," said WTO head Roberto Azevêdo. "But a rapid, vigorous rebound is possible. Decisions taken now will determine the future shape of the recovery and global growth prospects."

Economist Shamubeel Eaqub told The AM Show on Thursday the wage subsidy "was really important so we could have the lockdown - so people had incomes while they were sitting at home, unable to get to work".

"But the reality is for most businesses, the wage cost is only about 20 percent of all their outgoings. They've got all these other bills that they've got to pay, and they're going to be running into trouble once the lockdown lifts, unless we have more support for these businesses coming through."

He said while behind closed doors, the Government would be making plans for the post-lockdown economic recovery, the public hasn't really been told much. This is in contrast to the daily live-streamed news conferences with Dr Bloomfield, the Director-General of health, whose calm and measured delivery has made him an unlikely celebrity over the past few weeks.

"What we need is an Ashley Bloomfield of economics," said Eaqub. "We need somebody who's able to tell us, 'This is what we're doing, these are the steps we're taking, these are the things we're working on, and once we figure out what we're going to do, we'll tell you.' That transparency would give a lot of confidence to people. 

"Right now we know they're working on a lot of stuff - I'm involved in a lot of stuff, viewing a lot of stuff - but it's all scuttlebutt - we need to have clear communication, because that gives people confidence and the ability to plan." 

Ashley Bloomfield.
Ashley Bloomfield. Photo credit: Getty

Eaqub's suggestion was someone from Treasury could front, or at least hire someone with the communication skills to do so. 

"People are getting so much confidence from hearing the health aspects from Ashley Bloomfield... If we had the same kind of approach on the economic side, it would be a huge help."

By international standards, New Zealand has low debt levels and - at least until two weeks ago - low unemployment. 

Azevedo said unlike the 1930s, banks nowadays have a lot of capital to keep economies running.

"The pandemic cut the fuel line to the engine. If the fuel line is reconnected properly, a rapid and vigorous rebound is possible."

 

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