Coronavirus: Five reasons why the recovery will take time – ABN Amro

Economists at ABN Amro set out five reasons to expect the economy to take time to recover.

Key quotes

“According to the various government plans, the exit process is going to be a gradual process in most jurisdictions. In addition, there will likely be a long tail with some activities working at below pre-corona capacity levels because of social distancing measures that will likely persist for several months.”

“There is a distinct possibility that the exit process is not smooth, but determined by how the virus data react to the lifting of restrictions. Deteriorations in the virus data could lead to a pause in the process of lifting restrictions or even a re-introduction of some measures.”

“The lack of a silver bullet solution or alternatively virus trends being very suppressed could lead to ongoing subdued consumer behaviour.” 

“China’s post lockdown experience also points to a slow recovery in the services sector, with consumers remaining cautious.”

“The second round effects from the initial economic shock will continue to weigh on the economy, as these effects take longer to work their way through.”