In economic terms, the COVID-19 crisis is predominantly a severe demand shock to the economy but with the potential to significantly damage the supply side which would have long-lasting effects on growth. It now appears that the global economy will enter recession at some point in 2020, (some economies may already be there) with a rapid contraction in consumer demand as limits are placed on the movement of populations. Should the impact be limited to a shortterm demand shock with limited impact on the supply side then an upside scenario of fiscal and monetary easing and a return in confidence to consumers and business could see a V or U-shaped recovery in GDP. However, if the impact severely reduces capacity in the economy, then the recovery is more likely to be slower and lower with the potential for a prolonged deflationary period. The volatile price swings in global risk assets reflects the fact that there is no consensus view as to the most likely outcome.

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