Harvard University professor Jeffrey Frankel has warned against a so called W recession that could happen if global leaders lift restrictions too soon and declare victory over the virus.
He said that historical data from the 1918 epidemic suggests that ending lockdowns too quickly could bring about a deadlier second wave.
He also warned that political leaders might also abandon economic stimulus too soon – the second mistake that could lead to a W-shaped recession.
He said: “US policymakers made a similar blunder after the 2008 global financial crisis. President Barack Obama’s fiscal stimulus program, enacted in February 2009, together with the Fed’s monetary expansion, halted the economy’s free fall.
“The recovery began in June of that year. But in 2011, after Republicans took control of the US Congress, the fiscal stimulus was prematurely ended, impeding the recovery considerably.”
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However, J.P.Morgan Asset Management still predicts a U shaped recession for the US and says the decline in real GDP growth in Q1 is consistent with their forecast of a U-shaped recession, or a fall, a stall and a surge.
Meanwhile, McKinsey described five qualities that will be critical for business leaders to find their way to the post Covid-19 new normal : resolve, resilience, return, reimagination, and reform. With some of these likely to overlap and differ based on sector and country.
The consulting firm also said there are four strategic areas to focus on: recovering revenue, rebuilding operations, rethinking the organisation, and accelerating the adoption of digital solutions.
McKinsey also called on companies to act with urgency: During the current crisis, businesses have worked faster and better than they dreamed possible just a few months ago.
Maintaining that sense of possibility will be an enduring source of competitive advantage.