As we start to emerge from this crisis, a number of global institutions issued future guidance last week on what we might expect to see in the global recovery.
On Friday, it was the European Central Bank’s (ECB) turn, which came shortly after the International Monetary Fund (IMF) announced that it expects the world economy to shrink 4.9% this year. The ECB’s, Christine Lagarde, formerly head of the IMF, said she expects the recovery to be restrained, arguing that households are just as likely to continue saving as they cautiously – and some would say apprehensively – open up their wallets to buying non-essential items. Like most developed countries, savings in Europe hit an all-time high in February, jumping to 7.3 trillion Euros (up 136% year over year).
We expect countries to slowly reopen as they do their best to stave off second wave of infections, however, it is unlikely to be the ‘V’ shape recovery that we are all hoping for (of course, we could be wrong and we hope for the best). A ‘U’ is much more likely. The question will be, how wide is the base of the ‘U.’