THE PANDEMIC has hit the world economy with the biggest shock since the second world war. It has also created big performance disparities between countries. By the end of next year, according to forecasts by the OECD, America’s economy will be the same size as it was in 2019 but China’s will be 10% larger. The pandemic will also leave economies less globalised, more digitised and less equal. It is accentuating global trade imbalances. Its legacies will include even lower interest rates and even higher asset prices. As the better-off work on in their kitchens, lower-paid workers may face long spells of unemployment. In America permanent job losses are mounting even as the headline unemployment rate falls, yet there is a once-in-a-generation surge in startups. And some existing businesses are booming. Despite a slowdown in global trade, for example, the shipping industry is having a banner year.

Another industry enjoying a covid-19 bonanza is digital finance. A new era is dawning: conventional banks now account for only 72% of the total market value of the global banking and payments industry, down from 81% at the start of the year and 96% a decade ago. Leading the charge against them globally is Ant Group, which began life as a payments service on Alibaba, a Chinese e-commerce giant, but is about to sell shares in the biggest initial public offering in history, which could value the company at over $300bn, more than any bank in the world. Ant’s rise worries hawks in the White House and enthralls global investors. It portends a bigger transformation of how the financial system works—not just in China but around the world.

The Economist