The optimistic view
[A]nother more favourable scenario is conceivable: that of an acceleration in productivity resulting from a positive shock from the use of digital technology that has supported health policies and, in particular, lockdown periods. This would imply a real, widespread transition into the digital work era. This is reflected, for example, in the massive increase in teleworking, i.e. almost 40% of jobs in France according to DARES, and an estimated 34% in the United States according to Dingel and Neiman (2020). These forms of work save time (transport in particular) and constitute a major shift in firms’ demand for commercial real estate. The associated productivity gains would primarily concern the service sector, which now accounts for the lion’s share of the economy.
Current and past recessions: a long-term perspective
By: Antonin Bergeaud, Gilbert Cette, Rémy Lecat – Banque de France
The dark scenario
Even if the current recession turns out to be U-shaped, another L-shaped Great Depression is awaiting for us during a few years down the road. There are 10 factors, according to Nouriel Roubini, that will contribute to this scenario. A few of them are:
- The policy response to COVID-19 will lead to large debts and defaults;
- The geostrategic standoff between the US and China;
- The demographic time bomb in advanced countries; and
- De-globalization.
The Coming Greater Depression of the 2020s
By: Nouriel Roubini – New York University
No one knows!
[F]orecasters have almost always called for a V-shaped recovery (recession one year, recovery the next). Since V-shaped recoveries have occurred 70% of the time, they generally end up being right. In the other 30 percent of cases, they only learn fairly gradually over time that the economy is departing from the standard V-shaped recovery. […] As of April 2020, forecasters are predicting recoveries in most major economies in 2021. If past forecasting performance is any guide, it would only by October 2021 or so that forecasters would be reasonably confident whether 2021 is going to end up as a year of recovery or continued recession. Of course, this time could be different – forecast performance could be better than the historical record might indicate.
Forecasting recoveries is difficult: Evidence from past recessions
By: Zidong An, Prakash Loungani – University of China, IMF
