Coronavirus will slow pace of globalisation, warn financial leaders
Financial leaders are concerned the outbreak of coronavirus is having a slowing effect on globalisation, as the prospect of a global recession looms.
Three quarters of senior leaders based in Luxembourg’s financial centre do not expect economic conditions to normalise to pre-crisis levels for at least a year.
Additionally, 82 per cent of respondents to a Luxembourg for Finance survey of asset managers, banks and insurers believe the pandemic will slow the pace of globalisation.
The overwhelming concern for most bosses was a global recession, followed by financial stability. This was despite more than 80 per cent of respondents saying the steps taken by governments and central banks were either “excellent” or “above average”.
Economists have predicted a global recession after data earlier this month showed the US experienced its worst first-quarter GDP drop since the financial crisis in 2008.
Coronavirus has already pushed Europe’s largest economy into recession, as sustained lockdown restrictions wreak havoc on businesses.
Germany’s economy shrank 2.2 per cent in the first quarter and figures for the final three months of 2019 were revised to show a contraction of 0.1 per cent. It means GDP growth has been negative for two successive quarters, the technical definition of a recession.
This morning figures showed Japan had also fallen into recession as the economy shrank 3.4 per cent in the first quarter.
Respondents to the Luxembourg for Finance survey say digitisation, sustainable finance and global growth are their most viable commercial opportunities going forward.
Chief executive Nicolas Mackel said: “This shows the financial sector is still thinking in cross border and international terms, despite the potential threat to these concepts from Covid-19, and their possible exploitation by populist elements.”
“For this reason, we must ensure governments, central banks and regulators do not raise their drawbridges, and instead continue to make the case for globalisation as a positive force for social change, business growth and economic development.”