Pandemic Economic Recovery “L” Not “V” and Extending Past 2021
50 Years of Economic History Say “L” Not “V” Recovery
The idea of a V-shaped recovery, where an economy returns to its pre-crisis path following a recession, is embedded in central bank models and entrenched in investors’ thinking. But a Bloomberg Economics analysis of 36 recessions since 1965 across the Group-of-Seven (G7) countries suggests an L-shaped recovery is more likely than a V. With the world facing a second wave of COVID infections this winter, it’s not hard to imagine how the pandemic could inflict significantly more long-term damage than forecasters envisage.
Shallower Slump, Slower Bounceback, Recovery From Pandemic Seen Extending Past 2021
Two custodians of the global economy signaled that while the early days of pandemic recovery were stronger than expected in some countries and industries, a return to full health is likely to be longer and bumpier than first predicted.
The World Trade Organization (WTO) says 2020 trade will contract 9.2%, before rebounding next year. The WTO also warned that the current forecast could slip if there’s a resurgence of coronavirus cases in the fourth quarter of 2020 or if nations resort to trade protectionism. The more sluggish rebound means global trade will remain below its pre-pandemic trend through 2021.
About the Author
Bruce A. Kahn, CCIM, CPM is a Managing Director of Foundation Group Investment Real Estate Solutions, a full-service property management and brokerage company. He has earned the designation of CCIM (Certified Commercial Investment Member) issued by the CCIM Institute, and is a CPM (Certified Property Manager) with the IREM (Institute of Real Estate Management). For further information or for a property analysis, please contact him at 206-324-9424 or by email.