Report
Patrick Artus

Who will be the most negatively affected in the medium term by a permanent loss of GDP?

Like the subprime crisis, the COVID crisis will give rise to a permanent loss in the level of GDP compared to the level it would have had without the crisis (for example because there is an irreversible capital loss). The question is: who will be the most negatively affected by this permanent loss of GDP ? In the medium term, governments will not be able to maintain the current policy of shouldering the entire income loss; How the loss is shared between companies and households will then depend on their respective bargaining power. In the OECD as a whole, companies' bargaining power is greater than that of employees: earnings return to normal and the income loss is borne by employees, which is what happened already after the subprime crisis. But there are a few countries (France, Italy) where employees' bargaining power is strong: in these countries, it is earnings that will bear the brunt of the loss of overall income (of GDP) .
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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