MacroscopeEconomic recovery is certain even after the worst hit – the coronavirus crisis will be no different

The optimism of the US stock rally last week may look misplaced, but the nature of economic cycles should give confidence that the world will bounce back – even if the recovery is more likely to be gradual and U-shaped, than sharp and V-shaped

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Terraces sit empty in riverside restaurants and bars at Boat Quay in Singapore. Governments in Singapore and elsewhere are delivering stimulus packages to support economies heading for recession. Photo: Bloomberg

Published: 10:15pm, 13 Apr 2020Updated: 1:23am, 14 Apr 2020

The shape of our world has changed so much in the last three months that it’s hard to envisage what the future holds, let alone where we will be in the next three months. It is said the darkest hour is just before the dawn, but recent events have been so gloomy – the terrible toll Covid-19 has taken on lives, livelihoods and general well-being – it’s impossible to say when the news will turn upbeat again.

However, although more than 110,000 people have lost their lives in the pandemic, the global economy is imploding, and tens of millions of jobs are on the line, American stock markets have just have their best week in 45 years – the very markets that are supposed to be bellwethers for the future.

The case for optimism might defy logic right now, but eventually the war will be won, and the global economy will battle its way back to recovery.

But the economic data is going to look a lot worse before it gets better again. Guessing just how poor global growth will be seems to be the new lottery.

The odds are we have already slipped into recession but whether we are heading into a more serious cataclysm, worse than the 1930s Great Depression in terms of the damage to jobs and growth, is a matter for fevered speculation at the moment.