Stock markets have been performing above average despite a warning from the World Health Organisation that a new and dangerous phase of the pandemic is emerging. The possibility of a fourth phase of stimulus package in the US and reopening of the economy are some of the factors fuelling this performance leading investors to predict a quick V-shaped recovery. The huge impact of the pandemic and a possible resurgence of cases may not lead to such a quick recovery.
Timothy McBride, Bernard Becker Professor at the Washington University, shared an article on how some investors are too optimistic of a quick economic recovery. The article notes that stock markets are performing well in the US despite the rise in the number of Covid-19 cases.
Over the last few weeks, markets have performed above average prompting some investors to predict a V-shaped recovery, the article adds. Such projections seem premature as they do not take into account the permanent damage caused by the pandemic.
Daniel Lacalle, chief economist at Tressis SV, shared statistics on the impact of Covid-19 on emerging economies. He noted that emerging economies face a difficult recovery in future mainly due to the growth stagnation they were already experiencing in 2019.
Lacalle further noted that the recovery of these economies will be slow due to the huge trade and fiscal deficits despite the growth posted over the last few years. He added that these economies also have weaker commodity revenues and lower foreign exchange reserves making recovery difficult.
Emerging economies face a new growth downgrade and a difficult recovery.
1) Many were in stagnation already in 20192) Large trade and fiscal deficits despite years of growth3) Weaker commodity revenues, lower FX reserves pic.twitter.com/yvsWz0RWtK
— Daniel Lacalle (@dlacalle_IA) June 21, 2020
Romesh Vaitilingam, an economics writer, shared an article on how countries led by female leaders have been far more successful in tackling the Covid-19 pandemic than those led by male leaders. The article notes that countries such as New Zealand, Taiwan and Germany have been able to control the spread pandemic more effectively as they are led by female leaders.
The article takes into account the policy measures implemented by these countries and other factors such as timing of the lockdown to assess their effectiveness in containing the pandemic. Countries led by female leaders were more effective in controlling the number of COVID-19 cases and related deaths compared to male-led countries.
Being led by women has provided countries with an advantage in the current crisis, @voxeu research evidence on #Covid19 outcomes & the impact of gender differences in risk aversion & leadership style https://t.co/GyYlyDLBD6
— Romesh Vaitilingam (@econromesh) June 21, 2020
Nasser Saidi, president of Nasser Saidi & Associates, shared the weekly commentary on the economic situation across the world. He noted that although the stock markets are currently performing well, they may soon discover the geopolitical risks that are emerging across the world.
Saidi added that the clashes between Indian and Chinese troops, the tensions between North Korea and South Korea, and the contradictory messages from the US regarding the trade deal with China will soon impact the performance of the stock markets.
Markets will soon rediscover that Geopolitical risks are on the radar: clash between #Indian & Chinese troops, tensions between South & North Korea, contradictory messaging from #US regarding the trade deal with #China #geopolitics @NSA_economics https://t.co/MbQyhU30it…
— Nasser Saidi (@Nasser_Saidi) June 21, 2020