The Covid crash

The covid-19 virus will lead to a global economic crash.  Closing schools, universities and shops will cause a supply crunch which in turn will lead to a collapse in demand.  In China, things are returning to normal.  Elsewhere the covid crash is just beginning.  I expect global growth to plunge in March and again in April and thereafter to begin a recovery, helped by fiscal support from governments and monetary support from central banks.  My calculation of world industrial production (below) shows just how weak the world economy was even before this crisis.

However, the worst for share markets may be over.  They look ahead, and the willingness of governments and central banks to stimulate economic activity suggest that economic growth will resume when the crisis is over.  But the global recession is likely to be deep, deeper than the GFC in 2008/9 at its worst point.