How serious will the coronavirus pandemic be in the economy? Does $ 82 billion sound good?
That’s the terrifying figure released by the Center for Risk Studies at the University of Cambridge’s Judge Business School.
This figure, of course, must be put in context. This lasts more than five years, not one, and represents the potential impact for the global economy and not just for the United States in the so-called “economic depression” scenario.
Last year, the GDP of the 19 largest economies in the world was $ 69.2 trillion.
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His “optimistic” take is a loss of $ 3.3 trillion in five years. He says waiting for consensus requires $ 26.8 trillion, or 5.3% of GDP over five years, to lose
.
For the United States In the United States, the potential loss over five years varies from $ 550 billion to $ 19.9 billion.
It is safe to say that the financial markets are not pricing in a global depression. The S&P 500
SPX
It is up over 30% from March lows.
If the numbers seem too bizarre, consider that asset growth and returns can be depressed for up to 40 years after the pandemic ends, according to Keith Wade, chief economist at UK fund manager Schroders.
He looked at the pandemics going back to the black plague at this Hall of Fame desperation table:
Paul Hollingsworth, UK chief economic officer at BNP Paribas, said in a presentation Tuesday that the pandemic would lead to structural changes, including an increase in household economies, more protectionism, realigned supply chains and increased digitization.
“Therefore, we could see that people want to keep a higher buffer in the future, because they might be concerned about both job prospects and their earnings,” he said, and the concerns regarding medical expenses and future taxes could also affect customers.