— This is the script of CNBC's news report for China's CCTV on September 10, 2020, Thursday.
The World Bank estimates that 1.6 billion students worldwide were affected by school closures during this spring's peak, and it notes that an estimated $10 trillion in income could be lost to this generation of students if remedial action is not taken once school starts. In its latest report, the OECD cites third-party data to further point out the longer-term economic impact of school closures as a result of the outbreak.
The report argues that a reduction in learning time could lead to a loss of skills, which in turn could lead to a drop in overall productivity. The impact is that GDP will lose an average of 1.5% for the rest of the century. Discounting this future impact would account for 69 of a typical country's current GDP. In the United States, for example, this means up to $15.3 trillion in economic losses.
With this in mind, there is no doubt that parents and the economy as a whole will benefit from reopening schools. But the OECD notes in its report that health risks must be carefully weighed.
In the United States, a number of schools have been closed due to an outbreak after the school reopened recently. Schools from England to Wales have also reported clusters of the infection, with five schools in the city of Liverpool reporting cases, the Guardian reported. The UK government announced it would tighten rules on social gatherings from the 14th.
Amid the cautious restart, what will happen to government spending on education around the world also be a concern. The OECD notes that the impact of the crisis on education spending usually takes some time to show up. After the last financial crisis, for example, a third of OECD countries cut spending on education only in 2010.
One of the main factors affecting education expenditure is the change of national economic development and government revenue. Even on the most optimistic forecasts, global economic activity will fall by 6. 5% this year, the OECD says. In the United States, government debt has soared to record highs amid economic shocks and slumping growth, and the two parties are still deadlocked over new stimulus packages.
Milken institute, chief economist
every economist I know agrees we need a stimulus package. The fed back in June warned us that the economy was going to be on tenterhooks. because the heightened precautionary savings, the social distancing and the low employment is going to cause the economy to slow down and go into the medium term. I think the fact that the unemployment rate has dropped so much from the high levels of double digits to 8.4% last month has given, I think, people uh, uh, unwarranted confidence that we can wait and design the perfect package. And that's really going to be the real problem of getting a good package out there that's needed rather than the perfect package.
Delayed recovery would not only drag on economic growth but could also have a negative impact on American education. Earlier, media reports said that the US school reopening is facing a lack of money and people problem. How will those difficulties be solved? We will keep an eye on this issue.