Report
Patrick Artus

What are the conditions for avoiding a loss of GDP level after a recession?

After the subprime crisis, the GDP level was permanently lower than it would have been without the crisis in both the United States and the euro zone. How can the same situation be avoided after the COVID crisis? It can be avoided only if there is no loss concerning: The level of capital (and, accordingly, the decline in investment during the crisis must subsequently be offset); The sophistication of capital and corporate modernisation (given the risk that zombie firms that are too indebted and fragile refrain from making this modernisation effort); Employment levels (no people leaving the labour market); The quality of employment and human capital (which may be affected by persistently high unemployment and by deindustrialisation). After the subprime crisis, the loss of GDP was explained by all these cumulative causes.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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