It may be too early to call the bottom of the market, and the growth in new cases has yet to slow, but it is worth acknowledging the sheer scale of fiscal stimulus (as of 30 March, 2020) in our chart of the week. 

With one third of the global population now in some form of isolation, more countries have rolled out exceptional measures to combat the economic impact. The US passed a $2 trillion rescue package, the biggest in history, which provides relief to small business and direct payments to workers. The UK and Germany have announced similar large scale plans to support workers and businesses. The scale of the stimulus announced by the US amounts to around 10 per cent of its 2019 GDP and, for some European countries, it is as high as 15 per cent. Japan is also planning a big economic stimulus package that will exceed the one introduced after the Lehman crisis.  

Central banks, meanwhile, have provided monetary stimulus through emergency rate cuts and huge QE programmes. The latter should enable governments to borrow money to fund the stimulus packages and worry about how to pay for them later. But depending on how long the shutdowns last, yet more stimulus may be required. Looking at the current virus spread in developed markets, especially in the US, it is likely that things will get worse before they get better. Asian countries, meanwhile, appear to have contained the spread more effectively and may emerge sooner from the crisis.

Edith Chan

Edith Chan

Bob Chen

Bob Chen

Mark J Hamilton

Mark J Hamilton