Can a decline in potential growth be avoided after the COVID crisis?
Potential growth declined markedly after the subprime crisis (we look at the United States and the euro zone) due to the decline in capital accumulation, the deterioration in companies' financial situation, the rise in long-term unemployment and the fall in the employment rate. Can a decline in potential growth be avoided after the COVID crisis? Even if recovery plans try to stimulate supply, and even if obtaining the vaccine leads to an increase in demand and a lifting of health measures, we believe potential growth will decline in the aftermath of the crisis, due to: The lasting and seemingly irreversible deterioration in the situation of certain business sectors, whose production will be permanently affected, and whose employment will be permanently reduced and difficult to transfer to other business sectors; The increase in structural unemployment caused by these job losses; The equally permanent deterioration in companies' situation (increased debt, loss of earnings and equity).