- The daily growth rate of Covid-19 cases in Italy is abating but stays at a double-digit pace.
- Beyond the inference we can make on a bottom-up, sectoral analyses, the economic impact is now showing in the” traditional” data in the US and the Euro area, strengthening the case for a steep recession worldwide in 1H 2020. We brought our forecasts further down.
- The policy response is “almost there” but we need more details and politicking around the US stimulus is a concern. Swift implementation is of the essence given the level of market stress.
- Looking ahead, we explore whether the crisis will be inflationary. We think it won’t.
Lockdowns work but they take time
Focus last week was on the policy response and we will explore this in the next sections, but let’s first assess the damage already quantifiable. Lockdowns work, but they will take time to do so, and in the meantime the decline in economic activity is going to be very significant. We are dependent now on the relative speed of the pandemic and the policy response.
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