JP Morgan predicts an ugly global recession: "global economy is poised to contract this quarter & next with the US projected to decline at a -14% and the Euro area at a -22% ar next quarter." But my view is that it's highly unlikely that growth grows >0 by Q3. At the earliest Q4!
Which global recession? V or U or L or I? For now it is is an I as global GDP is free falling at a faster rate than the GFC or even the Great Depression. Q2 will be even uglier with growth at -15 to 20% in US & Europe. That will limit the recovery of China in Q2 after an I in Q1
It's highly unlikely that growth will be >0 in US/Europe by Q3 as delayed response to pandemic implies that it will take more than 3 months to contain it (the way China did with its draconian quarantines/lockdowns). So expect a Q1-Q3 recession in US/Europe. Growth>0 maybe by Q4
Growth recovery will be lukewarm even in Q4 as large monetary/fiscal stimulus will face economy agents still shell-shocked by worse recession since the Great Depression causing massive precautionary savings for more hard times to come when this pandemic will likely return/mutate!
So V-shaped recovery is the talk of total lunatics (there are still a few around). Currently we are in a free fall I into all of Q2. In Q3 we will be lucky to move into L (a smaller contraction than H1) & by Q4 we will be lucky to see the beginning of a very anemic U recovery!
There's also risk of double dip W recession rather than an anemic U recovery. So risk of going from I to L, then start U & fall into a W. A double dip will occur if fiscal stimulus wanes as likely after Q4 & the pandemics returns mutated in 2020 winter as virus alertness wanes!
I recession turning into depression or a double dip W is likely if other tail risks emerge just when the pandemic comes under control by the summer: US-Iran full war; US-China cold war escalates; 1st global cyberwar btw US & China/Iran/Russia/NK; US electoral political violence!
So we go into Depression if we go from Coronavirus 2 CyberVirus War & actual Cold/Hot Wars: US-Iran hot war; US-China cold war escalates; 1st global cyberwar btw US & four revisionists powers (China, Russia, Iran, North Korea); near civil war/violence in US round election time!
