Mohamed El-Erian said the world’s policy makers will do all they can to keep the coronavirus from spurring a deeper economic slump, but he said it’s worrisome that international policy coordination isn’t as solid as it was in the past.
“I foresee a whatever-it-takes policy approach that is going to be both in central banks and government agencies,” Mr El-Erian, chief economic adviser at Allianz, said in a Bloomberg Radio interview. A sudden economic halt “is particularly dangerous because it destroys both demand and supply, and that is what we are living through right now.”
Policy makers “have massive catch-up to play” as the scope of the challenge becomes clearer, said Mr El-Erian. He said he doesn’t see direct parallels with the start of the crisis in 2008 because he isn’t worried about banks and potential issues with the payments and settlements system. But he said another comparison is more worrying: the world’s economic authorities so far aren’t acting in concert as they have in the past.
“The extent of global policy coordination is much lower, and whether it’s the coronavirus, whether the excessive reliance on liquidity, whether it is markets that have been mispriced for a long time, this is a global problem that requires collective action,” he said.