Credit damage. The COVID-led recession will likely weigh on credit metrics well into 2023 from the combination of lost output and increased debt burdens, threatening corporate solvency.
A different recovery. The shape of recovery will differ from previous crises, with a wide range of outcomes across industries and geographies, and accelerating some secular industry shifts.
Swift stimulus worked; pull-back carries risks. Central banks and governments acted promptly and massively to limit the damages to the real economy and the markets, but debt levels took another step up, making the unwinding of this liquidity support difficult, and widening the gap between market prices and credit fundamentals.
Profound political impact. National and international fragmentation could intensify as lowincome populations are suffering disproportionately, exacerbating inequalities and social tensions, while the disruption of critical supply chains revives economic nationalism.
Opportunities. The crisis could present an opportunity for governments to support the recovery through infrastructure investment, supporting a green, digital, and more sustainable economy.