Weekly report : Covid-19

The main European countries have announced their reopening dates and procedures, but at this point “lockdown-light” would be a more appropriate term than “reopening”. Its sector-by-sector and step-by-step pace (by profession, region and age group), along with burdensome social distancing procedures, belies the scenario of a return to normal that prevailed at the start of the crisis.

The main uncertainty now is whether there will be a second wave of infections once the lockdown is lifted. That’s why the IMF¹ has come up with various scenarios:

• A “swoosh” economic recovery, i.e., a global recession followed by a slow and gradual recovery if the pandemic doesn’t take a path requiring a second lockdown, or if a vaccine is found soon. Under this scenario, the global recession would oscillate between -3% and -6%, depending on how well the epidemic has been brought under control by the end of June. It would be followed by a robust upturn.
• A recovery cut short by a second wave of the pandemic in early 2021: this is the so-called W-shaped scenario, which places the pandemic on a long-term trajectory and assumes far worse economic damage, with the recession spilling over into 2021.

In France, INSEE², the national statistics office, has fine-tuned its initial assessments while maintaining its assessment that household consumption and productive activity have declined by one third. According to Dares, a French public research agency, half of French employees work for a company whose business has been cut in half or been shut down completely. Unemployment benefits are therefore essential to preventing social unrest.

The equity markets, reassured by the prospect of reopening the economy and reliable government and central bank support, have rallied in the wake of their historic plunge.

What does the dashboard look like for real-estate investors? Daniel While explains it on this new note.

¹ IMF, April 2020, The Great Lockdown
² INSEE, 23 April 2020, Point de conjoncture

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