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What implications can we expect from COVID-19?

 10 medium to longer-term implications from the coronavirus shock 

   DR SHANE OLIVER

Key points

• Key medium to longer-term implications flowing from the coronavirus shock are:
  
  • lower for longer interest rates;
  • a further blow to globalisation;
  • another leg up in the US/China cold war;
  • bigger government and public debt;
  • a long-term risk of higher inflation;
  • consumer & investor caution;
  • faster embrace of technology;
  • bad for airlines;
  • another test for the Eurozone; and
  • lower immigration.
• Some of these will constrain economic growth but the faster embrace of technology is positive for growth.

Introduction

There has been much debate about the short-term economic and investment impact of coronavirus – on economic activity, unemployment, interest rates, house prices, shares, etc.

However, the magnitude of the shock means it will have medium to longer-term implications as well.

Of course, there is a danger in placing too much weight on current circumstances in assessing the future. Given this, we need to be a bit cautious, but here are 10 medium to longer-term impacts.

#1 Lower interest rates for even longer

The hit to economic activity has been huge, resulting in a lot of spare capacity that will take years to be used up. We don’t see global and Australian economic activity getting back to pre-coronavirus levels until late next year or 2022.

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Source  :  https://www.ampcapital.com/au/en/insights-hub/articles/2020/may/10-medium-to-longer-term-implications-from-the-coronavirus-shock?csid=1135474858

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