April 9, 2020 (MLN): The global economy is likely to be stripped off nearly $5 trillion in the next two years, due to the COVID-19 pandemic that has put the businesses across the board on a halt, says Bloomberg in one of its reports.
This prediction has been put forth by the Wall Street Banks, which also said it would take a considerable time before all the economies before they start functioning normally once the pandemic is over.
“Even with unprecedented levels of monetary and fiscal stimulus, gross domestic product is unlikely to return to its pre-crisis trend until at least 2022” the report added.
However, JP Morgan has a much more pessimistic view of the fate of global markets, as it has anticipated a cumulative loss of $5.5 trillion in the near term due to a halt in business activities.
Comparing the timescale of this ‘peaceful recession’ to that of the infamous financial crisis of 2008, some market analysts have said that the recovery of the global economy could turn out to be slower than expected.
These anticipations have exerted undue pressure on policymakers, who now carry the onus of delivering enough stimulus to boost the recovery and prevent their respective economies from reopening too soon so that the virus does not respreads.
Morgan Stanley, sharing its two cents on the same, has said that the GDP of developed economies wouldn’t revert to its pre-pandemic level before the third quarter of 2021.
To make the matters worse, Deutsche Bank has said that the developed economies, such as those of the USA and European Union, will be left nearly $1 trillion below their original level.
