Shock and awe: Planning economic Covid-19 recovery

Three steps for markets to bounce back

Financial markets are attempting to stabilise after the shock delivered from large parts of the global economy shutting down as policymakers struggled to prevent the spread of the Covid-19 pandemic.

While we still have little clarity on the path or duration of the virus or the subsequent economic impact, it is now possible to look at the range of likely outcomes and develop a plan; although flexibility will still be a key requirement.  I see a three-stage path to recovery for markets. Firstly, they needed to come to terms with the prospect of a very abrupt, unexpected and deep recession and form a technical base. Secondly, the markets need to calibrate the likely scale and duration of the loss of demand as consumption, investment and global trade collapse. Thirdly, we also ...