The trend of deglobalization steadily gained strength after the global financial crisis. One popular explanation of this downturn focuses on rising inequalities in advanced economies as a result of globalization. Political pressure towards populism rises and is materialized through elections and referendums in the form of the Trump presidency and Brexit. The main economic consequence of the pressure emerges as protectionism.

What will be added to the already changing global economic landscape by the humongous shock of COVID-19? A couple of channels will work.

First, economic agents will take health shocks into consideration in their decisions and related costs will be internalized. The foremost impact through this channel is the acceleration in digital transformation. On the other hand, the internalized cost elevates cross-border transaction barriers, which will reshape the GVCs. It has also been revealed that the exposure to health risks is uneven across ethnicity, age and income groups, which will escalate the political pressure to reinforce protectionism.

Second, the crisis management leaves long-lasting marks on the economy. Government interventions will become more common and frequent. Rising uncertainty is another concern.

It is still too early to forecast the loss and the recovery from this unprecedented shock. The direction of changes are vaguely foreseeable. Within this ambiguity, we should keep striving to measure and judge the global economic landscape and be prepared to catch the opportunities that materialize.