The Four-Stage Impacts of the Coronavirus
Initial expectations of a quick-V recovery are over. A more holistic understanding is still required.
Can we find our way back to economic prosperity?
Photographer: Alberto Pizzoli/AFP/Getty
When it comes to the impacts that the coronavirus could have on economic well-being and corporate profitability, it may be useful to think of four stages. The first two are currently in play and legitimately worry many, from households, companies and financial markets to governments and central banks. They don’t just overlap but feed on each other in an unsettling manner.
The third phase involves forming a market bottom and, subsequently, an economic one providing the basis for a sustained though far from full recovery. The final one is potentially longer-term and could have elements of de-globalization and, in the case of financial regulation and supervision, greater focus on liquidity risks among non-banks.
Phase 1: Economic and corporate damage