16th April 2020 –Bevan Graham – Managing Director and Chief Economist, AMP Capital New Zealand

In 2020 global growth looks set to post its first negative result since the depths of the Global Financial Crisis and may even prove to be the weakest year of global growth in living memory. Unemployment rates are rising fast, underlining the widespread social harm.

Two things make this recession quite unlike any I’ve seen before. The first is the speed of the contraction in activity and the weakness in markets that has come with it. Secondly, this is not a recession borne of a prior build-up in economic imbalances. As regular readers will know, none of our traditional recession indicators have been flashing red, making this a classic ‘Black Swan’ event. The reason asset markets have taken this shock so hard is that many indicators were improving well into February. Shocks from outside the financial system are much harder to quantify and value in asset prices.

” … None of our traditional recession indicators have been flashing red, making this a classic ‘Black Swan’ event …”