PODCAST: the shape of the recovery

The COVID-19 crisis will clear but those hoping for a sharp V-shaped recovery may need to readjust their thinking, according to ANZ Chief Economist Richard Yetsenga, who says it could be as late as 2022 before we see economic activity back at pre-coronavirus levels.

Speaking on a call with ANZ customers, Yetsenga said the next few quarters would likely bring evidence of improving growth rates, but that may not indicate a recovery is truly upon us.

“It's likely to be the very end of 2021 or even into 2022 - under a pretty good set of forecasts - that we see the level of activity in the global economy, returning to where it was before… COVID-19,” he said.

“That's not a V-shaped recovery. It's a much more drawn-out economic cycle.”

Yetsenga led a global call into the impact of the pandemic which also featured ANZ Head of FX and G3 Research Daniel Been, Chief Economist New Zealand Sharon Zollner, Chief Economist South East Asia & India Sanjay Mathur, and Senior Economist Catherine Birch. You can hear edited highlights of the discussion in the podcast below.

Yetsenga said while it was clear form various data that the peak of infections has passed in a range of countries critical to the global recovery, history suggests rushing to reopen economies could be problematic.

“I think building the base for recovery is going to be quite a long-term process,” he said.

The outcome of attempts by some countries to partially reopen in the coming weeks would be telling, Yetsenga said.

“I'll actually be watching the Anglo Saxon countries very, very closely – the US, the UK, Australia and New Zealand,” he said.

“There are obviously various levers of opening in different parts of those economies. And I think the extent to which the case count increases or doesn't will be important in all these places.”

Listen to a podcast of the call above to find out more – including in-depth analysis of how the virus is impacting ANZ’s key markets.

Shane White is content manager at ANZ Institutional