Faster deindustrialisation after the coronavirus crisis: Bad for living standards, good for the climate

The coronavirus crisis is expected to further accelerate the world’s deindustrialisation , which began in the wake of the subprime crisis in 2008-2009. Uncertainty and higher risk aversion should lead to a determination to deleverage among the private sector, and therefore drive down demand for durable goods (companies’ capital goods, cars, etc.) and intermediate goods used in the production of these durable goods. Another wave of global deindustrialisation would be: Bad for living standards, as labour productivity is higher in industry than in the rest of the economy; But good for the climate. The deindustrialisation after the subprime crisis brought about a fall in global CO 2 emissions growth relative to global GDP.