Some positives in the economic consequences of COVID-19: BBVA

December 30, 2020

PARIS -- Beyond the human tragedy of COVID-19, 2020 has left the world with a long list of economic consequences for the future - but they are not all negative, says BBVA Bank. "The most obvious consequence is the severe recession, with global GDP expected to decrease by more than 2.5%, which is a bigger decrease than that of the 2009 financial crisis (-1.7%)," BBVA says in a new report. 

"We know that this decline is temporary and is not a response to cumulative imbalances of inflation or debt, as is the case with normal recessions," the report says.        

"This should mean we are able to quickly return to how the situation was previously."

Another new development of the COVID crisis, says BBVA, is the much more determined use of monetary and fiscal policies than in the past -" with a view to mitigating the effects of the pandemic, especially in Europe, which was previously more reserved than the United States.

"The pandemic will also leave us with long-term consequences in terms of sectoral changes, disproportionately affecting social consumption sectors over other activities," BBVA adds.
 "It remains to be seen how COVID-19 will alter the demands for greater security in different sectors and the way in which we respond to new needs.

"But the second-round effects of the crisis are going to be profound, including rising unemployment rates, part of the corporate fabric being and significantly higher levels of public and private debt, which will all have an effect on the ability to grow in the medium term."

BBVA says the European programme called Next Generation EU and its possible implications for the future of the euro are two positives that have come out of this crisis, as well as Northern European countries adopting a more open attitude toward countercyclical policies. (ATI).