As NATO governments and parliaments grapple with the profound economic impact of the COVID-19 crisis, NATO legislators exchanged views with Alvaro Santos Pereira, Director of the Country Studies Branch at the Organisation for Economic Co-operation and Development’s (OECD) Economics Department, on the global economic outlook and international responses. This was the NATO PA’s third webinar dedicated to the impact of the COVID-19 crisis.
“Containment of the COVID-19 pandemic and our citizens’ health must remain our number one priority,” President Attila Mesterhazy (Hungary) stressed ahead of the webinar. “At the same time, our economies have experienced a colossal shock, which has affected many of our citizens’ livelihoods. Our countries and parliaments must work together to ensure a robust recovery. As members of the NATO Parliamentary Assembly, we must also discuss ways we can ensure that this severe economic shock does not spill over to affect international stability and security”.
Roughly 75 parliamentarians, parliamentary staff, and observers from 16 NATO and OECD countries and the European Parliament took part in the webinar. The Assembly has a decades-long partnership with the OECD.
Alvaro Pereira noted that “All OECD economies are in recession, many of them with double-digit recessions, and the recovery will be slow and uncertain”. He stressed that “particularly worrying is the fact that virtually all potential catalysts for growth are being hit simultaneously, for example:
- consumer demand, investment, and international trade has fallen precipitously;
- tremendous uncertainty remains about the pandemic and a potential second wave, undermining investment and other economic activities;
- young people and vulnerable groups lacking resources to economically survive are put at severe risk;
- high levels of corporate debt pose another set of risks, potentially putting enormous strain on financial markets; and
- emerging markets are suffering massively from a dramatic fall in commodity prices and unprecedented capital flight”.
These risks pose dauntingly complex policy challenges. Alvaro Pereira insisted that “governments need to dedicate themselves to pumping liquidity into markets to sustain demand and help firms retain workers and remain solvent.
Governments will eventually confront heavier debt burdens and, more than ever, will now need to mobilise tax revenue in an efficient manner.
Finally, some spending will have to focus on vulnerable sectors of society to ensure that their basic needs are met as this crisis unfolds”.
The NATO PA is currently organising a series of webinars focusing on COVID-19 crisis and its many impacts for its parliamentary members. This summer, its Committees will begin to consider a range of reports, including a series of special reports exploring various dimensions of the COVID-19 pandemic. The NATO PA’s Economics and Security Committee is currently working on a report that explores the economic consequences of the pandemic.
From its inception in 1955, the NATO PA stressed the importance of Article 2 of the North Atlantic Treaty – NATO’s founding Treaty – which explicitly encouraged the elimination of conflict in international economic relations and encouraged economic collaboration among the Allies. Thus, the Assembly has always focused on the coverage of economic issues, as they are judged by parliamentarians to be of critical importance to the Atlantic community of nations.