Covid-19 and the macroeconomic fallout

Intesa’s head of macroeconomic research on the outlook for the world economy after Covid-19


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Nothing in our lifetimes has had a greater or more rapid economic impact than the Covid-19 crisis. Its effects have been felt faster and by more people than even the global financial crisis of 2008.

Everything from international trade flows to trading relationships have been affected, with serious questions asked about how countries will both manage themselves and deal with each other in the future.

This podcast is the first of five macroeconomic discussions from Intesa Sanpaolo. In four following articles, we’ll examine the outlook in Intesa Sanpaolo’s four global hubs: New York, London, Dubai and Hong Kong.

In this podcast, we hear from Luca Mezzomo, Intesa Sanpaolo’s head of macroeconomic research, on the global macroeconomic outlook in the wake of Covid-19.

Mezzomo suggests that the world will follow China in terms of the pace of recovery: the road will be long and slow. Analysts expect GDP in China to grow just one per cent in 2020, with weak export potential choking growth in the country.

“I’m afraid that the recovery will not be as fast as the drop in economic activity we experienced,” he says. “We do not expect a return to pre-crisis levels anytime soon. Frankly, most forecasters expect pre-crisis levels to be reached only between 2022 and 2023, depending on the country.”

“We do not expect a return to pre-crisis levels anytime soon”
Luca Mezzomo, Intesa Sanpaolo’s head of macroeconomic research

The cataclysmic global impact of the novel coronavirus also threatens to upset the political status quo, including the EU. Policymakers and economists were already in debate about how Brexit would play out. Now they seem to be in the dark.

The US-China trade war, thought to be put to bed at the beginning of the year, also threatens to reawaken as the two countries continue to engage in public bickering about the sources and exacerbating factors of the global health crisis.

On top of this is a gloomy outlook for the US, with mass unemployment and a spooked Federal Reserve, and no sign of true engagement with the emergency from the Trump administration – the President’s sights set firmly on a re-election.

Listen to the podcast to find out Mezzomo’s thoughts on the consequences of Covid-19, the biggest global catastrophe in our lifetime, and check back for new instalments focusing on the impact on the four economic hubs, coming soon.

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