Finans

Finanshus: Vi står foran en global økonomisk recession

Fra BNP Paribas:

Recent market action and Italy’s new control measures in response to increased Covid-19 contagion represent a significant step-up in the likely economic impact of the virus outbreak.
The former tightens monetary and financial conditions at a time when the economy is subject to both a demand and a supply shock. The latter implies a significant drag on activity.
Our central case for 2020 is now a global recession, albeit an unusual one, as we believe that an appropriate policy response would see the economy snap back once the shock fades.
Deflation risks are back on the table, too, together with concerns over financial stability.
A coordinated fiscal and monetary policy response is needed. The fiscal policy response has been under-whelming to date, in our view, but we expect the recent shift in rhetoric to be eventually followed by action.
Monetary policy will also step in, we believe, and in a relatively aggressive fashion. We expect the US Federal Reserve to cut its policy rate by 50bp in March and take it close to zero by mid-year. The focus will probably soon move to unconventional policy measures, including more asset purchases.
We continue to expect the European Central Bank to announce a package on 12 March that includes a new TLTRO aimed at small and medium-sized companies, a 10bp depo-rate cut and more QE.
The global economy should eventually rebound as the shock fades and policy responses kick in, and our central case remains a U-shaped recovery. But we think things will get worse before they get better.

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