global economy

How should our policy approaches adjust so that we are better equipped to deal with such crises?

“As countries implement containment measures to control the pandemic, the world has been put in a lockdown. The magnitude of collapsing activity that has followed is unlike anything experienced in our lifetimes,” says IMF economic chancellor Gita Gopinath

As countries impose lockdowns and people lose jobs, sustaining those sectors that can function online has never been more important for a global economy facing one of its darkest periods since the Great Depression.

“Only in a crisis are governments able to rally people to accept necessary but painful reforms. Every crisis is also an opportunity." - James Boughton, former IMF historian.

In any case, the key point is that the steps needed to restart the economy are the same as those needed to slow the transmission of the virus.

After the US on April 2 reported higher-than-expected job losses, other figures have illustrated how the Covid-19 pandemic is extending the paralysis from producers to households, from big trading powers to more insulated economies and emerging markets.

Investors must recognise that with policy rates near their effective lower bound and fiscal policy becoming a more important driver, that the equity-bond correlation can become less negative.

Along with the westward move of this unfolding health care crisis, markets have declined and become increasingly volatile. In addition, steeply falling oil prices have worsened the situation.

With business optimism sinking to all-time low levels, and landlords being pushed to pass on their full tax rebates to their tenants, here's what's going on in the market this week.

“There is a complex relationship between the path of the virus, the effectiveness of virus containment and economic support policies, and the behaviour of the private sector,” JPMorgan Chase & Co economists said in a report to clients.