Govts should encourage consumer spending rather than saving - Allianz economist
Speaking as one of five economists at a discussion convened by the WEF, Ludovic Subran said that economies must use tools beyond social safety nets and rather ensure sustained consumer spending.
JOHANNESBURG – Chief economist for the financial services conglomerate Allianz, Ludovic Subran, said that global economies must prioritise employment in their COVID-19 response, otherwise, the effects of the pandemic would not end.
He was one of five economists on a panel convened by the World Economic Forum.
He said that tax relief and social grants may not be enough if jobs were not safeguarded.
Subran said that economies were underestimating massively that this was a crisis.
“It’s much more than the financial crisis of 2008/9 and much more than the manufacturing or trade crisis. It’s about the expenditure of the middle class on the services.”
He said that economies must use tools beyond social safety nets and rather ensure sustained consumer spending.
“We make sure we prioritise employment because otherwise we are going to have a protracted crisis in 2020/21 and we want to avoid staying in this twilight zone because we know what it costs in terms of GDP but also living standards.”
Subran said that focusing on social relief alone was a piecemeal approach and governments should instill confidence in consumers who continued to save rather than spend.