Coronavirus: Slower growth should be expected after the crisis – Natixis

Three mechanisms or risks explain the low-growth profile that economists at Natixis believe the recovery will take after the corona crisis.

Key quotes

“We believe the profile that GDP will follow after the crisis will be V-shaped, with a somewhat flatter right-hand line of the V.”

“The collapse in corporate revenues in a recession leads companies to run up debt. This increase in debt can then curb corporate investment for a long period.”

“The risk that governments, whose public debt has increased sharply during the recession , may want to reduce it and adopt a more restrictive fiscal policy too soon after the crisis.”

“The increase in corporate debt justifies a rise in companies’ borrowing costs. This increase in borrowing costs stems not only from a rise in risk premia at all rating levels but also from the fact that the average rating of companies is lower.”