Morgan Stanley sees a V-shaped global economic recovery

The global economy is in a new expansion cycle and output will return to pre-coronavirus crisis levels by the fourth quarter, according to Morgan Stanley economists

“We have greater confidence in our call for a V-shaped recovery, given recent upside surprises in growth data and policy action,” economists led by Chetan Ahya wrote in a mid-year outlook research note on June 14.

Predicting a “sharp but short” recession, the economists said they expect global GDP growth will trough at -8.6% year on year in the second quarter and recover to 3.0% by the first quarter of 2021.

Morgan Stanley noted three reasons for why the recession will be short:

This is not an endogenous shock triggered by huge imbalancesDeleveraging pressures will be more moderatePolicy support has been decisive, sizable and will be effective in boosting the recovery