“THERE WILL BE DIVERSIFICATION OF SUPPLY CHAINS”

With $571 billion worth of assets under management, Blackstone is one of the world’s leading investment firms. In India, it has invested about $16 billion in real estate, private equity and stressed assets. It is also the biggest commercial real estate investor in the country. Blackstone Chairman, CEO and Co-founder, Stephen A. Schwarzman, talks to Business Today’s Joe C. Mathew about what the emerging economic crisis caused by the spread of coronavirus means for the global economy, and more. Edited excerpts:

- Joe C. Mathew

What is your assessment of the world economy at present?

We had a situation that existed before the coronavirus and the current situation where there is coronavirus. The world was expecting something like 3.5 per cent growth, a little slower than in past years. The economic cycle around the world was getting a little old, but there wasn’t much concern about a recession except for, maybe, in one or two regions, typically Europe. That has now changed, not particularly because of the virus itself and its medical consequences but because of people’s response to that. It’s not so much in India, as of today, but in China, where there’s been almost a complete mobilisation of society, probably after decades. The first quarter has gone down for China’s economy. It is the second-biggest economy in the world and a major part of the supply chain for many companies, from many countries. If they can’t continue to supply those countries with goods, then some will start running out of goods. A lot of companies also sell a lot of things in China. For the last month or more, stores and clients in China have been closed in many areas, so earnings of certain types of companies are going down quite rapidly.

There’s a general fear of travelling as well as assembling. So aeroplanes and airports are empty. People are staying home so aren’t generally shopping vigorously, though they are buying some things online. Sports events are getting cancelled. So, there’s a ripple effect taking place across the world, and people’s reaction to the virus will have much more impact than this particular disease.

What about the economic impact of this ripple effect?