Report
Will the COVID crisis give way to a rapid normalisation of the economy or a disastrous situation instead?
Two theories are circulating: That economies will normalise rapidly. This argument is based on the observation of their resilience: once the health restrictions are lifted, demand and activity very quickly get going again; That economic disaster awaits, due to the rise in unemployment because economic sectors have contracted and will have to reduce employment and it will be very difficult to retrain workers; due to the deterioration in corporate balance sheets (fall in earnings and in equity, indebtedness), which will lead to bankruptcies and to weak investment; and due to the disruption of young people’s education, which will lead them to experience problems finding work. The reality may be between the two: production will certainly rebound rapidly once the health restrictions are lifted; but at the same time, structural unemployment will rise, structural youth unemployment will rise sharply and potential growth will be reduced by the deterioration in companies’ financial situation.
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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.
Patrick Artus
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