Bertille Bayart: "Tomorrow, a zombie economy?"

Bertille Bayart: “Tomorrow, a zombie economy?”

ANALYSIS – Does the deluge of credit keep non-performing companies in artificial survival? This is the danger of shutting down the economy, which could be prolonged by a loss of productivity and potential growth over time.

Will the living dead cross the big screen and escape from the B-movie horror movies to land in reality? The economy fears in any case these “zombies”, creatures that the scientific literature does not precisely define but that are commonly described as companies whose operating profit does not cover, on a recurring basis, interest charges. In other words, over-indebted companies, draggers, which weigh down growth and productivity. “The ‘zombification’ of the economy refers to a situation in which government support programs and bank credit keep unviable businesses alive,” write in a recent CEPR note three voices from the ECB, Isabel Schnabel, Glenn Schepens and Luc Laeven. Is the Covid-19 crisis, drowned in a deluge of credits, preparing us for a horrific tomorrow?

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