Forget about how bad it will get – it will get bad, there’s no doubting that. But what really matters for markets right now, ANZ Chief Economist Richard Yetsenga says, is how long it will be before the good times return.
Speaking on a call with ANZ customers, Yetsenga said it was clear as the COVID-19 crisis progresses markets are becoming less responsive to data suggesting the economic downturn in the second quarter may be worse than first thought.
“The depth of the downturn is really no longer the main issue,” he said. “It's still obviously important, but the main issue is the duration.”
On the length of the downturn, Yetsenga said ANZ Research’s forecasts suggested half or more of the decline in activity seen in the second quarter would be repeated in the third quarter.
“The length of the downturn, I think, is where the focus will be from us as economists,” he said. “And I think where the focus for financial markets will be as well.”
Yetsenga lead a global call into the impact of the pandemic which also featured ANZ FX Strategist John Bromhead, Senior China Economist Betty Wang, Senior Asia Rates Strategist Jennifer Kusuma and Head of Australian Economics David Plank.