[Quick Read] Global Economy since Black Monday II
March 16, 2020 witnessed the largest drop in stock prices with global markets down ~12%. The day was named ‘Black Monday II’. Since then a lot has changed in the global economy from markets to the way we live today. Here are a few highlights on the shape of the global economy today after (and in most cases ‘because of the crash on’) March 16, 2020.
- Global lockdown proved that remote working is possible and efficient in most cases but cannot be implemented in all sectors. Hence, while most companies were impacted by COVID, IT companies (with higher remote-working capability) were on a rise.
- The US Federal government’s actions played an important role in driving sentiment across the global markets as the markets moved based on the effectiveness of the stimulations provided.
- The stock market does not always represent the current state of the economy. The market moved up when the global GDP had fallen to dramatic levels but sectoral correction seems to mitigate the impact.
- Shift of focus of investors to the climate crisis and building green businesses and economies gives prominence to the concept ESG and Sustainability which may have long-lasting permanent impact on the way businesses and economies function.
- Mental health is a real issue and needs to be just as normal as any other health problem (especially for the investors who booked losses during the crash).
- Governments across the world can stimulate economic activity (do we recall the Keynesian theory?)
- Technological advancement has helped develop vaccines faster. But do we really need so many vaccines and compete? The good part is, vaccines are rolling out, but, they are not 100% effective. Time will show what is the best solution here.
- Digitisation is now a necessity than an added advantage for businesses and institutions.
- Stock markets have the capacity to recover from a crash way faster than before, and help emit positivity in the economy.
- Heightened inflation along with governments transitioning from recovery stimulations to normal policies will have an impact on the stock and the labour market. Better to be prepared for any scenario and keep liquidity…just in case!
Hope this helps! Happy Investing!
Disclaimer: These articles are intended towards novice audience trying to understand the market with little to no knowledge about the same. The purpose is educational and must not be considered as a tip of any sort. Always make your financial decisions based on expert's personal advice to you. Also, do not forget to do your background research and not fall prey to any kind of fraud or manipulation.