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What’s next for the economy?
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“ ‘A return to our old economic strength will take much longer than we assume today… The pre-crisis level will be difficult to reach.’ ”
That’s Christian Sewing, CEO of Deutsche Bank, sharing his bearish view on the global economy at the Handelsblatt Banking Summit in Frankfurt on Wednesday, according to CNBC.
Similar to the U.S., the euro zone is coming back to life following the economic devastation caused by the strict lockdown measures imposed earlier this year amid the coronavirus pandemic.
Sewing, however, isn’t convinced that a V-shaped economic recovery, which many forecasters have been predicting, will be taking hold, especially if new restrictions are put in place or if there’s not sufficient progress on the vaccine or treatment front.
“A lot of companies have to manage to live with reduced sales for quite a long time,” Sewing said, adding that parts of the economy will only operate at 70% of capacity. “This is not going to happen this year and not next year either… We have to deal with an economic situation where we will have a recovery, yes, but only step by step and not in all industries. ”
And it’s not just the coronavirus posing problems going forward. Sewing noted that there are other potential challenges that are being overlooked, such as a messy Brexit, low interest rates, and the trade conflict between the U.S. and China.
“I do not want to be too pessimistic, ladies and gentlemen, I am just describing the current environment,” Sewing said at the conference.
Meanwhile, the U.S. stock market continues to churn out gains. At last check in Wednesday’s session, the Dow Jones Industrial Average DJIA, +0.75%, Nasdaq Composite COMP, -0.23% and S&P 500 SPX, +0.66% were all firmly in the green.
