Coronavirus: 50% chance of a gradual recovery during H2 – Danske Bank
Thomas Harr, PhD, Global Head of FI&C Research at Danske Bank, discusses the risk of a global recession.
“I see a 50% chance (base case) of a gradual recovery during H2, following the current deep global recession. I believe there is a 10% chance (best) of a quick recovery from the beginning of H2, but there is a significant risk of a prolonged crisis and depression (worst). I put this probability at 40%.”
“The ECB has introduced a soft yield curve cap. This should keep government bond yields low, as ECB purchases should dominate very high issuance.”
“Eurozone countries have now committed 2.5% of GDP in fiscal stimulus but this is not enough. A fiscal package of 4-5% on average for the Eurozone would be appropriate, led by Germany and The Netherlands.”
“The spread of the virus and politicians’ desire to open the countries will determine whether we will have a global recession or a global depression.”