In case anyone needed more proof that the entire world is sliding into recession, if not outright depression, on Wednesday morning the Organisation for Economic Cooperation and Development said that major economies are seeing the biggest monthly slump in activity ever amid the coronavirus crisis and no end is in sight without clarity about how long lockdowns will last.
The OECD said its leading indicators, which are designed to flag turning points in economic activity, suggested all major economies had plunged into a “sharp slowdown” with only India registering as being in a mere “slowdown”.
The indicators were flagging “the largest drop on record in most major economies”, the Paris-based OECD said in statement, adding that huge uncertainty over how long lockdowns would last severely muted their predictive value.
The Long-Term Impact of Coronavirus on the Global Economy
As a result, the OECD said the indicators “are not yet able to anticipate the end of the slowdown, especially as it is not yet clear how long, nor indeed severe, lockdown measures are likely to be”. Last month, the OECD estimated that each month major economies spend in lockdown knocked 2% off their annual growth.
Yet while the OECD has no idea what will happen, traders appears to be convinced that the worst is now behind us. As Rabobank wrote this morning, the stock market rallies of the past two days are despite the fact that neither economic nor earnings data have really begun to unveil the enormity of the economic crisis that the world has been plunging into in the past few weeks.
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