In focus

Economic & Strategic Viewpoints

Counting the cost of Covid-19


Schroders Economics Team

Evidence of the impact of Covid-19 on economic activity became apparent in April with the major economies registering significant falls in activity for Q1 which deepened as we went into Q2. We discussed the latest activity figures and the fading prospects for a sharp “V-shaped” rebound in the world economy.

While all economies are under stress at this moment, emerging market (EM) economies face additional pressure as investors seek safe havens, creating financing problems and raising the prospect of another crisis (here). However, for China we see “bad news as good news” as the poor economic data increases the prospects for policy stimulus (here).

Monetary policy support has also increased: see Bank of Japan ramps up QE again amid dismal outlook and ECB fine tunes its support for banks as GDP collapses.

Nonetheless, the downturn threatens to re-open some familiar fault lines in the world economy and we ask Are Italy’s days in the eurozone numbered? Many are also asking what’s next for monetary policy and we offer our views on helicopter money here.  

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