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World Bank's chief economist, Carmen Reinhart, expects full global economic recovery to take as long as 5 years. "Everything depends" on when a vaccine gets approved and how long it would take for global access, she said at a virtual conference hosted by El Pais on Thursday. Reinhart pointed out that the pandemic-caused recession will be more prominent and last longer in some countries than in others. In the early hours of Friday, the number of reported coronavirus cases worldwide passed 30 million, with over 946,000 fatalities. Visit Business Insider's homepage for more stories.
A full global economic recovery from the coronavirus pandemic may take as much as five years, according to World Bank's chief economist, Carmen Reinhart. "We have seen [economic] collapses that are very much outside of the norm," Reinhart said at a virtual conference hosted by Spanish daily El Pais on Thursday. "Naturally, there will be rebounds but the real recovery – how long it will take for the average person to recover the income they had before the crisis, the GDP per capita – this will take at least five years," she said. The economist, who is also a professor at the Harvard Kennedy School, said that rebounds will rely on when economic activity becomes "more normal" once lockdowns end fully. She highlighted that the pandemic-caused recession will be more prominent and last longer in some countries than in others. Read More: Goldman Sachs says oil prices are set to move 'meaningfully higher' into next year. Here are 7 reasons why the firm is bullish, and 5 stocks it recommends buying in advance Global poverty rates will rise following the crisis for the first time in 20 years, she said. Adding to widespread outlooks of uncertainty, she said: "After the 2008-2009 crisis, I more or less knew what to expect, but here, we are in a situation that is very different." "Everything depends hugely on how quickly there will be a vaccine, how quickly there is global access to it, if – like in Spain and France – there is a spike [in cases]." On Friday, the number of reported coronavirus cases worldwide passed 30 million, according to the Johns Hopkins University COVID-19 tracker. The figure has doubled in about two months after reaching 15 million on July 22. So far over 946,000 deaths have been attributed to COVID-19, according to the tracker. The US has reported the most confirmed infections, at just under 6.7 million, followed by India, Brazil, and Russia. Those four nations represent more than half the number of known cases. In its latest economic outlook, the Organization for Economic Cooperation and Development said the prospect for recovery is less negative than expected, but that 2020 will still mark the worst contraction in growth since World War Two. Read More: 3 top investing executives lay out the biggest risks to markets heading into a volatile election season — and share their best recommendations for navigating what happens next SEE ALSO: OPEC+ urges 'full conformity' with production cuts, and Saudi Arabia's energy minister warns market gamblers will be hurt 'like hell' Join the conversation about this story » NOW WATCH: We tested a machine that brews beer at the push of a button
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China's economy looks set for a much-vaunted V-shaped recovery, while the rest of the world lags behind. Here's why.
China looks to be on course for a V-shaped economic recovery from its coronavirus hit, growing...China looks to be on course for a V-shaped economic recovery from its coronavirus hit, growing 11% in the second quarter of 2020 compared to the first. But economist Miguel Chanco, of Pantheon Macroeconomics, tells Business Insider he expects China GDP to fall by 1.2% in 2020. China, however, is the only major economy that will see a V-shape, two economists told Business Insider. Most major nations will see W- or swoosh-shaped recoveries. Visit Business Insider's homepage for more stories. When China's GDP bounced 11% quarter-on-quarter in Q2, it affirmed views that the world's most populous and the first country hit by the coronavirus pandemic may be on course for a V-shaped recovery, something which has become more of a fantasy elsewhere in the world. China is well ahead of the game in terms of its recovery, but how did it get there, and what's to come for the world economy? Business Insider spoke to two economists to get their views on why. China's potential GDP is much higher than other countries Christophe Barraud, chief economist and market strategist at Market Securities told Business Insider a reason why China has recovered faster than the US, is due to its higher potential real GDP growth, also known as real output. He said: "Potential real output is much higher in China than in advanced economies. Chinese [potential] is close to 6% while for advanced economies it is close to 1.5%." Read more: GOLDMAN SACHS: Stocks have never been more vulnerable to the failure of a few mega-companies — and the risks of a blunder are quickly piling up Barraud added that demographics in China means that "mechanically Chinese growth will recover faster than in advanced economies." "I think for Europe or US it will be almost impossible to reach the level seen in the fourth quarter of 2019 before 2022," Barraud said. China's economy will contract by 1.2% in 2020 Miguel Chanco, senior economist at Pantheon Macroeconomics told Business Insider: "The second half of the year is going to be very different from Q2. It's going to be much softer. Now that's a huge parts of China's economy are sort of back to where they were pre-COVID-19." China's economy grew by 3.2% year-on-year in the second quarter of the year and by 11% compared to Q1, beating Reuters economists' predictions. Read more: Jefferies is telling investors to buy these 13 cheap, under-the-radar stocks in order to bet on an economic recovery But he now expects growth in China to fall about 1.2% for the full year. Chanco explains that China has recovered faster than the US and Europe due to the strict measures it took at the inception of the crisis. "Because it's taken a while for the virus to be suppressed in Europe, it will probably take a lot longer for those economies in [western] part of the world to sort of go back to their pre COVID rates of growth," he said. The US likely faces a double-dip or "W" shaped recovery For the US, both economists are predicting a double dip recession, signified by a "W shaped recovery" or a swoosh-shaped recovery at best. Market participants spent much of June speculating whether the US was on course for a V-shaped recovery as some states began to re-open and May's jobs report showed the US added 2.5 million jobs defying expectations of 7.5 million jobs lost. But this V-shaped recovery expectation for the US has waned after a surge in virus cases. The US surpassed its biggest single day-rise with more than 75,000 cases reported on Thursday. As recently as June 24 the record was 37,014, and the record has been broken 11 times in the last month alone. "I think most developed markets will actually look like a Nike Swoosh. So you basically have a very steep drop and prolonged sort of return for long and very gradual recovery. With the second wave in the US reaching new heights, I think you could probably see a double dip there," Chanco said. Read more: 'Castles built on sand': Famed economist David Rosenberg says investors are being too reckless as stocks rally — and warns that a vicious long-term bear market is far from over 'China has made other emerging markets look bad' Chanco said India was the only country who he predicts an "L-shaped recovery" for, essentially a sharp contraction without any real economic comeback. "We are expecting a 10% contraction in India's economy this year and that's historic in many ways for one who hasn't had a recession in its modern history decades," Chanco said. "But in China we are probably looking at 1.2% contraction year-on-year. So that's a huge difference in outcomes. I think this is where sort of China has made other emerging markets look bad," he said. "The governments of India, Brazil and other emerging markets haven't really solved the problem of COVID or taken it seriously." Recent tensions between India and China could also prolong India's recovery from the virus, Chanco said. Tensions have flared in recent weeks between India and China, with some already speculating that the fighting on the two countries' Himalayan border could be a catalyst for a major conflict. Chanco explained India's strong "protectionist response" to the flareup will likely be problematic given India's reliance on China for imports. Brazil, the country with the second largest number of cases worldwide, will recover faster than India from the virus, he said. "In some ways Brazil being a commodity exporter will benefit to a large extent..as the trade links between Brazil and China are a lot stronger than they are between China and India," he said." Chanco added: "If Chinese demand recovers the way they expected to, then that will, to a certain extent, cushion the blow in Brazil. But India being a multi-domestic demand driven economy won't have this sort of lift from any recovery and external demand." Read more: Jason Tauber is crushing the market this year by finding the tech companies enabling the biggest disruptions. He told us how he's adjusting his game plan as valuations soar — and 7 of his top picks today.Join the conversation about this story » NOW WATCH: Why you don't see brilliantly blue fireworks
The US economic recovery could take 'just 4 or 5 years' if coronavirus is controlled, Fed president says
The US could see a quicker economic recovery from the coronavirus pandemic recession if the virus...The US could see a quicker economic recovery from the coronavirus pandemic recession if the virus is contained, said Mary Daly, president of the Federal Reserve Bank of San Francisco. If there's a mitigation strategy or vaccine that allows reengagement in economic activity, "Then it could take just four years or five years," Daly said Wednesday during a virtual event with The Washington Post. But, ultimately, the virus will decide the pace of recovery, she said. A more pervasive, long-lasting hit to the economy would make a recovery take longer. Read more on Business Insider. The US could see a quicker economic recovery from the coronavirus pandemic recession if the virus is contained through public measures or a vaccine, according to Mary Daly, president of the Federal Reserve Bank of San Francisco. "If we can get the public health issues under control either through a really robust mitigation strategy or a vaccine, then we can reengage in economic activity really quickly," Daly said Wednesday during a virtual event with the Washington Post. "Then it could take just four years or five years. But if we end up with a pervasive, long lasting hit to the economy, then it could take longer." Earlier this month, Daly said that the US can't wait another 10 years for an economic recovery to reach everyone. The US officially fell into a recession in February, according to the National Bureau of Economic Research, ending a record-long economic expansion that began after the 2008 financial crisis. Read more: JPMorgan breaks down how COVID-19 nearly destroyed one of the market's safest trades — and lays out 3 lessons to help investors tackle future crises There have been some recent positive signs of a rebound. Retail sales surged 17.7% in May, ADP data showed US companies added more jobs in June, and a gauge of manufacturing activity jumped the most since 1980 this month. Still, Daly "would hesitate to call this a recovery," she said. That's because "ultimately the virus will determine the pace at which we can go," she said. As states across the country reopen, there have been increasing coronavirus cases that've sparked fears of a second wave that could derail the economic recovery. More than 12 states have paused or rolled back reopening plans in an effort to get new COVID-19 cases under control. Join the conversation about this story » NOW WATCH: Here's what it's like to travel during the coronavirus outbreak
Bloomberg: As sections of the global economy tip-toe toward reopening, it’s becoming clearer that a full...Bloomberg: As sections of the global economy tip-toe toward reopening, it’s becoming clearer that a full recovery from the worst slump since the 1930s will be impossible until a vaccine or treatment is found for the deadly coronavirus. Consumers will stay on edge and companies will be held back as temperature checks and distancing rules […] The post Vaccines: Billions in Costs, Trillions in Benefits appeared first on Marginal REVOLUTION.