Has the bottom been reached? Perhaps, say these economists


The global economy has probably bottomed out, writes business magazine Bloomberg Business Week based on recent reports of the American investment banks Goldman Sachs and Morgan Stanley. If it is correct, the magazine writes, it means that the recovery of the economy has started.

According to Morgan Stanley chief economist Chetan Ahya, the Chinese economy hit rock bottom in February and the Eurozone and the US in mid and late April as a result of Corona. Only South America is estimated to have not yet reached that point. In many places there is more travel and household expenditure decreases less sharply than in the first weeks of the outbreak.

‘Slowly some recovery’

Dutch economists tend to respond positively to the reports. “We are also asking ourselves whether the bottom has been reached,” says Ester Barendregt, head of the Netherlands at RaboResearch. She does not want to make a harsh statement. “There is simply a lack of numbers. But the fact that we are now slowly gaining a little more room to maneuver by easing the corona measures means that consumers can start spending more. With that, you could slowly see some recovery.”

The other side of the story is, according to the economist, that even if measures are relaxed, for example hairdressers and catering can open again soon, the Netherlands will not immediately run at full capacity.

“This means that this corona crisis will also have a detrimental effect on the economy in the long term. We could have had the worst when it comes to production problems, ie the supply side of the economy,” Barendregt thinks. “The question is whether this is also the case on the demand side, ie when it comes to spending. Businesses and households will be cautious about spending in the near future.”

Recovery here, not there

Still, Barendregt is cautiously optimistic. “The fact that we are asking ourselves out loud if the worst has been says something. The atmosphere is different from a few weeks ago, when we were mainly dealing with what happened to the economy. The thinking is now focused on how the recovery will start, how long it will take and what it will take. The focus is on the future, and it could be more. “

For the time being, the economic low point seems to have been reached, says Harald Benink, professor of Banks and Finance at Tilburg University. But he says that does not say everything. “Because if the recovery can only be felt in parts of the economy, you can still have problems for a long time. Think of unemployment. This can increase if companies fall over after a while if they are allowed to open again, but not the turnover that they had before, for example due to reduced consumer confidence, then layoffs and bankruptcies. “

Keep the pants on yourself

So it does not mean that we are past the low point of the economic contraction. “Factories are partially opening again, there is more production,” says Benink. “And yet it may be that many companies are not going to make it. I just want to say that passing the trough doesn’t mean the slump is over.”

Benink therefore does not consider optimism appropriate. “Because of the disaster that is coming for many companies. They have been kept a bit out of the way by the economic support measures, but if the doors are allowed to open, maybe 90 percent of the salaries will no longer be paid, and they will have to pay their own put the pants back on. Then it may turn out that this is not possible. “

Moreover, the Dutch economy is not an isolated thing. “At the moment the discussion is going on whether there should be a recovery fund for the European countries that are in deep trouble. Countries like the Netherlands are struggling with that, but I think that without such a fund the economic recovery will not get off the ground. And exports will also come into question here. Then we will sell fewer flowers and cheese to countries such as Italy and the major problems will remain. “


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