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Current economic situation ‘as severe as it is unpredictable’
Economies worldwide could begin recovering in just six months if two conditions were fulfilled, a CEO has considered.
Current economic situation ‘as severe as it is unpredictable’
Nigel Green is the CEO and founder of financial advisory organisation deVere Group.
He is arguing that the rolling out of mass testing now and a guarantee from governments to support demand would see a move towards recovery within half a year.
His positioning came as stocks held steady on Tuesday after previously rallying on the tentative indicators that the Chinese economy is stabilising, before dropping again on Wednesday as a result of the worsening situation in the United States.
According to Mr Green, “the economic fallout of COVID-19 is as severe as it is unpredictable”.
“No one knows for sure the full of extent of the impact of the public health emergency on the world economy, but a significant downturn is, unfortunately, almost inevitable,” he conceded.
This was before noting that signs from countries where lockdown restrictions are now being eased “suggest that the economic downturn could be relatively short-lived”.
But this hinges on certain factors coming into play “sooner rather than later”.
“Indeed, I believe that the global economy is likely to be headed for recovery from a coronavirus-triggered downturn within six months — but only if mass testing is rolled out now and governments guarantee to support demand,” he continued.
With most of the world currently in the phase one of lockdown, Mr Green said this is, of course, “dramatically slowing economies as both supply and demand are hit”.
According to the CEO, “the next phase, phase two, needs to be mass testing”.
“An aggressive mass testing agenda, the likes of which could soon happen in Germany, according to reports, would allow potentially millions of people to leave lockdown early, get back to work and help kick-start economies,” he explained.
If mass testing is implemented, Mr Green said we can expect to see supply increase.
“But what about the other essential factor: demand? Without it, economies will continue their downward trajectory,” he continued, stating that the coronavirus is proving to be a “hammer blow” to consumer confidence.
“This is why it is essential that governments around the world continue and increase their unprecedented support measures for these unprecedented times.”
He said that G20 leaders must remain committed to fulfilling their pledge to do “whatever it takes” to minimise the social and economic fallout.
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