A multispeed economic recovery is under way, reflecting the significant cross-country variations in containing the coronavirus and acquiring and administering vaccines. But notwithstanding these differences in timing, there will soon be a cascading sequence of rapid recoveries around the world.
Sectors that had to shut down because they could not function without unsafe human-to-human proximity will now (or soon) reopen. Businesses that survived the pandemic closures (many with support from fiscal programs) will experience rapid expansion, powered by pent-up demand. Growth rates will surge for a limited period of time before subsiding toward normal levels. We will enter the post-recovery world sometime in 2022 (though it will come sooner for some than others).
For investors, policymakers, businesses and households alike, a major question is whether and to what extent we will return to pre-pandemic growth patterns. Will we witness a shift to some markedly different set of dynamics?