Feeble global recovery, despite massive fiscal supports!

The developed nations are also in a quagmire right now. First, it was the splash of cash to people & businesses. Stimulus worth 8-10% of GDP were a norm. Oh but that had an expiry. Despite the govt support, economies are still 20-30% behind the pre-covid days. This too is with crutches.

The countries need to “taper” the support down. A) you can’t have indefinite rise in Debt to GDP to unsustainable level B) let the economy wean off & child should learn to walk again. However, that threatens the recovery right at the time of second wave?

The businesses are still not covering variable costs let alone the ability to pay salaries, utilities & loans. They would need support until consumer confidence is pay; not happening till we are vaccine-d. It’s a global mess. Bankruptcies are going to balloon. Businesses & Economies are at major risk for depressing years/depression. Nonetheless, the govt would have to continue the support with a lower-water mark. Premature withdrawal would be catastrophic.

Out of the woods? Oh, we have just entered the woods.

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