Nuestra NEBRIJA 33 - abril 2020

46 47 Published in La verdad on April the 23rd 2020 Article Possible scenarios Regarding the economic recovery, economists distinguish several possible scenarios: -V-shaped, which would mean a rebound when confinement ends and a quick return to economic normality. This option is possible, but it is difficult to create because, as we have mentioned, we will not return to the same economic scenario as be- fore the pandemic. Security measures, limited ca- pacity, closed borders and fear of contagion work against this option. -U-shaped, this option means that it will take lon- ger to return to economic normality. This form of recovery seems more in line with the situation that we will find after confinement since its end will be progressive. -L-shaped, this is the worst option we would face. It would mean that we would go through a great crisis from which it would take a long time to re- cover. This is the bleakest economic scenario and would imply strong economic and social chan- ges, which always happens when large economic collapses occur. -W-shaped. This means that, after a slight reco- very, there would be another fall and then a defini- tive economic recovery. This option is consistent with the appearance of a new outbreak, or the disappearance of the initial effect of the mone- tary and fiscal measures put in place to combat the coronavirus. Circular flow of income To these possible scenarios we must add the complexity that the pandemic is more widespread in some countries and regions than in others, and also that nations and regions are at different sta- ges in the development of the disease. A good model to represent the economy is the "circular flow of income". In this model we distinguish three economic agents: families, the State and companies. These agents are related and interdependent. Families buy goods and services from compa- nies, which in turn pay, among other things, wages to workers. The State, for its part, redistributes it through taxes and public spending. Everything is a circle and is interrelated. Well, the priority of the State at the moment is to keep this circular flow running, which means en- suring that companies do not disappear and that families can continue consuming goods and ser- vices. This is precisely what economic measures should be aimed at. On the other hand, as a result of the coronavi- rus and confinement, we are witnessing a grea- ter transition from the physical to the virtual world. Companies that cannot operate on the Internet will have serious difficulties adapting to this new period, characterized by physical distancing. As always, there will be sectors that will have to reinvent themselves until there is a vaccine. Others, however, have been able to take ad- vantage of confinement: food, Internet sales, manufacturers of medical products, home en- tertainment... Because many companies do not meet the re- quirements for social distancing, and taking into account other factors such as crowds on public transport, remote work could be greatly promoted in the following months. Finally, various studies show that the loss of bio- diversity and destruction of ecosystems is related to the increase in the transmission of infectious diseases. In recent years we are experiencing the proliferation of diseases such as COVID-19, MERS, Ebola and SARS, which appear on a recu- rring basis. In short, as soon as we overcome this crisis, we must learn and work both on the prevention of this type of disease and on sustainable economic de- velopment before it is too late. The International Monetary Fund (IMF) foresees a very profound global crisis due to the coronavirus, the worst since the Great Depression of the thir- ties during the last century. Prospects are especially dark for Spain. Speci- fically, this organization expects a drop of 8% in Spanish Gross Domestic Product in 2020, and that the unemployment rate will reach 20.8%. Among the main reasons for this forecast are the impact of COVID-19, which in our country has been even more pronounced than in others, as well as the present and future consequences of the virus for the tourism sector, one of the major drivers of the economy. In addition, there is great uncertainty regarding the end of confinement and the norma- lization of economic activity. Regaining normality, a relative term Regaining "normality" is a relative term. It is im- possible for us to return to the pre-pandemic si- tuation without a vaccine or widespread immunity. Once confinement is over, the return to economic normality will be gradual. There will be extensi- ve hygiene and safety measures, avoidance of crowds, and checking the number of infections every week in order to avoid a new outbreak. The- se measures will represent a great challenge for many businesses, as there is limited capacity in restaurants and bars, concerts, museums, uni- versities, schools... with its respective impact on business results. In addition, once confinement ends, the deep psychological imprint and fear of contagion that this pandemic has left will begin to show. These “animal spirits” or emotional nuances, as Keynes pointed out, play an important role in today's eco- nomy. Only the vaccine and immunity can bring us back to something similar to our pre-coronavi- rus situation. The long-awaited vaccine looks like it won't arrive until 2021 at the earliest, once this outbreak has passed. And not only do we have to count on the discovery of the vaccine, but also on its massive production and worldwide distribution, which will take time. So, it is possible that we may spend se- veral months in a situation like the one described above, with its respective economic impact. The International Monetary Fund foresees a fall of 8% in Spanish Gross Domestic Product in 2020, and that the unemployment rate will reach 20.8%. We analyze future economic scenarios drawn on the horizon. Covid-19 and the economy: what normality awaits us? Jorge Hernando. Professor of Economics and Business at Nebrija University I t is impossible for us to return to the pre - pandemic situation without a vaccine or widespread immunity