Coronavirus: global recession fears triggered by failure to contain Covid-19 spread
- Wall Street suffered its biggest drop since the 1987 crash on Monday, with the S&P 500 down almost 30 per cent from its historic peak in mid-February
- Experts agree large-scale coordinated global government spending measures are needed to support the global economy
A failure by governments in major western countries to contain the coronavirus outbreak is fuelling the perception in financial markets worldwide that the global economy is headed for a deep recession because of the severe, and in many cases, permanent damage being done to businesses.
Financial markets had initially expected the economic trajectory of the current outbreak to mirror that of the severe acute respiratory syndrome (Sars) epidemic in 2002-2003, which sharply declined before enjoying a quick and sustained or so-called V-shaped recovery, as pent up demand offset the initial damage from the outbreak.
US equities suffered their biggest drop since the 1987 crash on Monday, with the S&P 500 down almost 30 per cent from its historic peak in mid-February.
Markets lack confidence as policymakers have been caught off guard by the virus and the speed of its effects
“Markets lack confidence as policymakers have been caught off guard by the virus and the speed of its effects,” said Mitch Reznick, head of research and sustainable fixed income at Federated Hermes, a US-based investment manager.
