Morgan Stanley: "Global Economy to Recover to Pre-COVID Levels in Q4" ... V-Shaped Outlook

[Asia Economy Reporter Jeong Hyunjin] Morgan Stanley forecasts that the global economy will overcome the economic damage caused by the novel coronavirus disease (COVID-19) and recover to previous levels by the fourth quarter of this year, following a V-shaped trajectory.

According to Bloomberg on the 14th (local time), economists including Chetan Ahia stated in a mid-term outlook report, "Considering the recent growth data and policy movements that are moving positively, there is strong confidence in a V-shaped recovery." They predicted a sharp but short-term recession, expecting the global economic growth rate to record -8.6% year-on-year in the second quarter and recover to 3.0% by the first quarter of next year.

Morgan Stanley explained that the reason for expecting a short recession period is that ▲ it is not an inherent shock caused by severe imbalances, ▲ deleveraging pressures have somewhat eased, and ▲ policy support is being decisively implemented on a massive scale, effectively supporting the recovery. They believe that government support will not decrease for the time being, and based on this, the economy can revive.

Bloomberg reported that this outlook reflects scenarios regarding the second wave of COVID-19 and vaccine development. The assumption was that a resurgence of COVID-19 would occur by this fall, leading to selective lockdown measures in some areas, and that vaccines would be widely available by next summer.

However, Morgan Stanley's outlook is relatively optimistic compared to more cautious forecasts from other institutions, including the International Monetary Fund (IMF). Recent forecasts have emphasized concerns about the second wave, slower-than-expected global economic recovery, and high uncertainty. Economists such as Bruce Kasman from JP Morgan forecast that massive fiscal stimulus will cause fiscal deficits and increased debt, which could weigh heavily on governments. They also expect that central banks will have limited ability to take action, which will be an important factor in an incomplete recovery.

This content was produced with the assistance of AI translation services.