Where to from here? The crucial next steps in the coronavirus crisis
News from 2020-09-15 / KfW Research
The economic crisis from the coronavirus shock is unprecedented in the speed of its spread, its depth and global scale. Because of high uncertainty, a lasting recovery is particularly difficult and will depend mainly on meeting three key challenges: First, the business sector can be expected to incur higher debt, which will adversely impact investment activity. High loan losses and low earnings are putting increased pressure on banks’ equity positions, reducing credit supply. Second, the coronavirus pandemic has accelerated the implementation of short-term digitalisation and innovation projects. More long-term, in-depth projects, however, are at risk of being put off for lack of funds. Third, climate change demands structural adjustments in all areas of the economy which must be addressed quickly and decisively regardless of financial constraints.