Page 41 - COVID-19: The Great Reset

corresponding impact on GDP is not linear. The Dutch central
planning bureau found that every additional month of containment

results in a greater, non-proportional deterioration of economic
activity. According to the model, a full month of economic
“hibernation” would result in a loss of 1.2% in Dutch growth in
2020, while three months would cause a 5% loss. [29]

For the regions and countries that have already exited

lockdowns, it is too early to tell how GDP growth will evolve. At the
end of June 2020, some V-shaped data (like the eurozone
Purchasing Manufacturing Indices - PMI) and a bit of anecdotal

evidence generated a stronger-than-expected rebound narrative,
but we should not get carried away for two reasons:

1. The marked improvement in PMI in the eurozone and the
US does not mean that these economies have turned the
corner. It simply indicates that business activity has

improved compared to previous months, which is natural
since a significant pickup in activity should follow the period
of inactivity caused by rigorous lockdowns.

2. In terms of future growth, one of the most meaningful

indicators to watch is the savings rate. In April (admittedly
during the lockdown), the US personal savings rate
climbed to 33% while, in the eurozone, the household
savings rate (calculated differently than the US personal

savings rate) rose to 19%. They will both significantly drop
as the economies reopen, but probably not enough to
prevent these rates from remaining at historically elevated
levels.

In its “World Economic Outlook Update” published in June
2020, the International Monetary Fund (IMF) warned about “a
crisis like no other” and an “uncertain recovery”. [30] Compared to
April, it revised its projections for global growth downwards,

anticipating global GDP at -4.9% in 2020, almost two percentage
points below its previous estimate.

1.2.2.2. Employment

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