Published: 26 June 2020
It’s become an unpleasant but accepted fact that COVID-19 will have a significant impact on the global economy. Even more important than measuring the financial impact is to begin to look for ways the economy can recover once life goes back to something like normal. Dr Giuseppe Cantafio, Lecturer in Postgraduate Business at the University of Sunderland in London, talks us through how we measure the economy and why we should look for alternative ways of thinking about economic growth.
Last month, the Resolution Foundation published data that suggested Britain’s economy shrank in the first month of lockdown by around 20%. This month, the Organisation for Economic Cooperation and Development (OECD) reported that the UK’s national income will drop by 11.5%, the lowest of any developed country.
Many statistics that have tried to assess the impact of COVID-19 on the world economy use Gross Domestic Product (GDP). This is a measure of the market value of goods and services and can be scaled for use in countries, continents and the world.
But Dr Giuseppe Cantafio believes that GDP should not be the only way we measure how economies perform and recover from COVID-19.
“In recent years, the meaning of growth and development has changed,” Giuseppe says. “Business analysts and economists are starting to embrace a more social dimension."
Development must be more than just the increase in income and wealth. We have to also focus on the people whose livelihoods are impacted by the economy.
Instead of continuing to over explore the traditional measures for growth like GDP we should try to look at the bigger picture.” Giuseppe believes we should be using measures linked to the green economy - the area of the economy focused on reducing environmental risks and building on sustainable development. He’s also looking at measuring social equity - the measure of how just and fair social policy is.
“Through looking at a wider range of measures than just basic financial growth we have a better chance of understanding the economies of our cities. We’ll be able to properly assess how sustainable the lives of our citizens are, and from that focus on building real, well-rounded growth from a new, more just perspective.”
Dr Giuseppe Cantafio is a Lecturer in Postgraduate Business at the University of Sunderland in London. Visit the course pages for Master of Administration (MBA) and MSc International Business Management to find out more.