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Home » When will the Global Economy return to normal? – Insights by Hani Zeini

When will the Global Economy return to normal? – Insights by Hani Zeini

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Hani Zeini

Hani Zeini according to the latest reports, the global economy. Might have to witness a prolonged setback due to the COVID-19 pandemic. Economists and market analysts predicted. That worldwide expansion would slow down due to constant lockdowns, business closures. Travel limitations that are the after-effects of the pandemic. According to HIS Markit, the global economy might shrink by 5.5% in 2020. That we are triple the loss that occurred during the 2008 recession. There might be small phases of economic growth during this time, but complete recovery will take more time.

Insights and facts shared by Hani Zeini

The COVID-19 pandemic outbreak has stagnated the global economy. As a response, bank balance sheets have shown a minimal increase. Global capital markets are estimated to be about $19.7 trillion, which is almost one-quarter of nominal GDP. It is also three times bigger in liquidity as compared to 2007. According to Hani Zeini, finance will have very little to contribute to the growth of capital appreciation. The U.S stock markets are gradually moving to their earlier levels. And corporate profits during the pandemic are witnessing a decline.

Governments around the world are trying to promote an optimistic view that this virus will end soon. According to them, after a phase of constant suffering, the economy might bounce back in 2021. The lockdowns are slightly relaxed in the U.S, allowing. Americans to return to work that has been on hold for a long time. Furthermore, stock market traders are also betting that one can expect an economic recovery very soon. But the U.S unemployment rate currently stands at 13.3%, higher than the unemployment rate during the Great Depression.

According to the U.S Congressional Budget Office (CBO), the national nominal GDP will fall. To approximately 14.2% in the first half of 2020. And keeping this in mind, the CBO can anticipate. What monetary and fiscal injections will be needed before the lockdowns come to an end.

The economy will get back to pre-crisis level by 2022

What Deutsche Bank Wealth Management claims that the economy will return to normalcy by the end of 2020, many disagree. Before that will happen it is essential to undo all the damages. Done in Japan, Europe, the United States and other countries. That will take ample time. It is not wise to expect the developed economies to get back to normalcy before 2022.

In V-shaped economies, countries usually get back to its normalcy fast. However, Deutsche Bank Wealth Management believes that this pandemic will be different. Moreover, Deutsche believes that the recovery from this pandemic will not need any long term. Growth-stimulating strategy, which is typical for typhoons and earthquakes. 

According to several economists, however, the recovery will in fact get delayed or subdued; till such time that the virus gets contained with the help of correct treatments and vaccines. To conclude, according to a Peterson Institute for International Economics. Senior person, the economy will not have a credible V-shaped recovery. Hence, the medical community will need to work on taming. The virus so that the economic recovery can happen sooner, but not perhaps until 2022.

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