How this could be different to the GFC

• Global COVID-19 infections have continued to worsen sharply reducing investment sentiment and creating pockets of financial stress.
• While sentiment is clearly downbeat, there is still a wide range of outcomes that might occur.
• In the event COVID-19 does result in recession, note all recessions have been different and, if this one eventuates, it might be short and sharp.
• While this heightened volatility is unsettling, it is important to put this equity market sell-off in historical context.

Global COVID-19 infections have continued to worsen sharply reducing investment sentiment and creating pockets of financial stress.

At the time of writing, the US share market is down 29% since its peak, and the New Zealand market has fallen by about 23%, fearing the worst from COVID-19 with little optimism shown following monetary and fiscal policy responses thus far.

It is impossible to plot the exact path that markets will take from here. COVID-19 has become more widespread than markets initially anticipated, affecting supply chains and economic activity. This poses a challenging environment for economic policies and forecasting growth.