The global economy is bottoming out from the coronavirus crisis: MS – Business Insider – Business Insider

The global economy is bottoming out from the coronavirus crisis: MS – Business Insider – Business Insider

  • Morgan Stanley sees signs that the global economy is in the process of bottoming out, according to a Sunday note by economist Chetan Ahya. 
  • The bank forecast that global growth will bottom out at -7.5% in the second quarter of the year, but sees global and developed-market output reaching pre-recession levels in four and eight quarters, respectively. That’s faster than the six and 14 quarters they took to recover from the great financial crisis. 
  • “The trigger for this recession is an exogenous shock in the form of a public health crisis, rather than the classic, endogenous adjustment triggered by rising imbalances,” Ahya wrote. “This also did not start out as a financial crisis, and the banking system is in better shape today than prior to the [great financial crisis].”
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Even though the coronavirus pandemic has wreaked havoc on the global economy, Morgan Stanley sees signs that the recovery is on its way, and that it will be faster than the great financial crisis. 

The bank forecast that global growth will bottom out at -7.5% in the second quarter of the year. However, Morgan Stanley sees global and developed-market output reaching pre-recession levels in four and eight quarters, respectively — faster than the six and 14 quarters they took to recover from the great financial crisis. 

“The trigger for this recession is an exogenous shock in the form of a public health crisis, rather than the classic, endogenous adjustment triggered by rising imbalances,” wrote economist
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