Invest
COVID-19 recession on track for quick recovery
While the current recession is the sharpest since 1930, a new cycle of economic expansion has already begun, according to one economist, who has indicated it could also make this recession the shortest.
COVID-19 recession on track for quick recovery
While the current recession is the sharpest since 1930, a new cycle of economic expansion has already begun, according to one economist, who has indicated it could also make this recession the shortest.

Dr Bob Baur, the chief global economist for Principal Global Investors, has highlighted how China is leading the way to a COVID-19 recovery, which bodes well for metrics across the rest of the world.
“China was the first country to emerge from the COVID-19 lockdown, and data from its government notes economic improvement in March from the collapse in January and February,” he commented.
While consumer spending in the country “is still somewhat restrained” thanks to a lingering fear of infection, Dr Baur said “demand seems to be improving overall”.
This is coupled with a rush to reopen businesses across the United States, where a V-shaped upwelling occurred in May after its record April contraction.

And while the “early reopening energy will have dissipated” by September, Dr Baur is still expectant of further growth – just at a more gradual pace.
While March and April’s economic plunge had ended a 128-month period of expansion after a February peak, Dr Baur has expressed optimism in the short-term future of economic activity.
In the context of global macroeconomic data, the economist said it suggests a new cycle of economic expansion has already begun.
“While many are calling for a prolonged period of stagnation, economic data suggests the opposite, with a recovery already under way in much of the world,” he offered.
While an end date on the current recession is yet to be known, “it is likely that despite it being the worst since 1930, it may well be the shortest”.
So, what does this mean for your investments?
According to Dr Baur, “The continued revival of world growth should keep the equity uptrend intact at least for a while.”
Despite this, a lot of uncertainty does remain around the strength of the rebound into next year, as well as the potential for a second wave of virus activity.
Looking even further ahead, the economist flagged that stock valuations as well as bond prices are very high – signs that long-term financial returns may be far less than exciting.
“The best potential for robust long-term equity profits is a rotation into value and cyclical stocks, a reverse of the investment climate of the last decade,” he explained.
“For now, though, the recovery seems on track, and we’d stay fully invested commensurate with one’s tolerance for risk.”
“Stay optimistic for now,” he concluded.
About the author

About the author


Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more

Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more

Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more

Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more

Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more

Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more

Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more

Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more

Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more

Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more

Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more

Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more

Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more

Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more

Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more

Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more