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'Doom and gloom' over the pandemic's long-term effects might be overdone, says Capital Economics

'Doom and gloom' over the pandemic's long-term effects might be overdone, says Capital Economics


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"Doom and gloom" about the long-term effects of COVID-19's economic slump may be overdone, according to Capital Economics.



Compared to the 2008 financial crisis, there are fewer reasons to expect the pandemic will weigh down on economic growth in the long-term as gradual rebounds are already underway, the research group's chief economist said.



Instead of focusing on output, economic legacy will be seen in other areas such as structural changes, de-globalization, and the role of state.



Most economies will not return to pre-virus GDP levels for another two to three years, but China - driven by an investment-intensive stimulus - will lead the way.



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It isn't all "doom and gloom" when considering the pandemic's long-term effect on the economy, according to Capital Economics.Pessimism over the economic slump triggered by COVID-19 might just be overdone, Neil Shearing, the research group's chief economist said in a webcast on Thursday.Compared to the 2008 financial crisis, there are fewer reasons to expect the pandemic will weigh down growth in the long term, he said.Instead, economic legacy will be found in the pushback against globalization, higher debt levels, a different way of working, and less emphasis on austerity on austerity in particular.A 
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