As the world starts to shake off the coronavirus pandemic’s effects, there are varied opinions about how the markets will recover. A section of economists believe the markets will experience a V-Shaped recovery where the market recovers rapidly after a sharp drop. However, most believe that the market will recover gradually. They also suggest that ups and downs will characterize the recovery before continual economic growth is experienced.
The economists who suggest the return will be slow cite the uncertainties as one of the major hindrances. The argument is that there is a thin line between reviving economic activities and keeping the curve flattened. There is a consensus that a second wave of COVID-19 infections could be experienced if people begin to travel, shop, and play normally.
However, there is positive news with some critical economies are reopening. The business conditions are improving in regions such as Asia, Europe, and the US. Economists also warn that return to business should not be confused with market recovery. It will take a while before the world economy returns to the pre-crisis conditions based on past economic crises.
The recovery of regional economies will depend on their capability to offset the crisis’s economic dent. The first step in the long recovery journey is the return of business operations. Some market indicators support the notion that the recovery will take some time.
The number one indicator is exports. Borders have been closed due to restricted movements and lockdowns, leading to a contracted demand for goods. As a result, economies that rely heavily on exports have been hit hard. Economies that rely on tourism have also been hit hard due to the collapse of international travel.
Another pointer to a slow and gradual recovery of economies is the issue of unemployment. The efforts put in place to mitigate the spread of the virus led to massive job losses. Some of the closed down businesses might not reopen, and their owners might deplete their savings during this period. This will lead to the fired and laid-off workers exiting the workforce. Long spells of unemployment might lead to workers losing their skills and opportunities for professional development.
As public health continues to improve, there will be gradual economic recovery strides. Some people will get their jobs back or get new employment opportunities. To date, most countries have crafted temporary fiscal responses that cannot drive the recovery. As the pandemic dust continues to settle, there’ll be more comprehensive stimulus programs to help jump-start economic activity.
The success of the recovery process will depend on how governments plan. However, there is no one-size-fits-all solution to the social, economic, and political problems caused by the pandemic. Governments must ensure that the economic conditions that led to other social and political issues don’t worsen. They should continue with the monetary stimulus programs and fiscal planning to ensure the road to recovery is smooth, albeit slow. Furthermore, they should not mistake the economic rebound with economic recovery.