Recession sparked by COVID-19 will alter how we live, do business and invest
The way in which the world recovers from a coronavirus-triggered recession will lead to a profoundly different way of how we live, do business and invest.
Consensus is mounting across the globe that a temporary global recession is forthcoming and as governments and central banks grapple to attempt to curb the impact.
Indeed, on Sunday, the United States Federal Reserve reported another interest rate cut, its second emergency measure undertaken in March.
As such, however you look at it, it’s now almost undeniable that there will be a coronavirus-triggered recession as global supply and demand are hit.
I believe this recession will be deep, but short-term. The slowdown will be temporary as it has not stemmed from deep-rooted problems and economic imbalances, but an utterly unexpected shock that’s gripped the entire world.
Every recession leads to a new world and this one will be no different.
Therefore, a coronavirus recession will deeply affect how the world lives, does business and invests.
As it stands, we’re moving towards an era of negative interest rates. Last weekend’s second rate cut by the Fed, now at zero, indicates the U.S. may soon join the likes of Europe and Japan by adopting negative interest rates.
Zero or negative rates will help to boost the prices of financial assets, and shrewd investors will be looking to top-up their portfolios by slowly introducing new money into the market. Investors will then have more reason to heighten their exposure to equities as the money won’t be working for them as cash deposits.
Furthermore, the coronavirus outbreak will likely accelerate the so-called Fourth Revolution, driven by new technologies, such as computing and AI.
Of course, new industries will come about and there will be both winners and losers. This will result in job losses in certain sectors and vast job and investment opportunities in others.
Compulsory social distancing will show how friends, families and colleagues can interact, stay connected and work, how companies can still run efficiently and how investors can manage assets through advancing digital infrastructures.
This disruption and shifts will highlight that we live in a time of immense capabilities and promise.
However, in order to accumulate and safeguard their wealth as people around the world adapt to this new era, investors should be revising their portfolios to sidestep risk and make the most of the opportunities that present themselves.