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What does the world look like post COVID-19?



On 30 March, the Government announced the $130 billion JobKeeper Payment to help keep Australians in jobs during COVID-19, bringing the Government’s total support for the economy to $320 billion, representing 16.4 per cent of annual GDP. Additionally, State and Territory Governments have stepped up enforceable social distancing measures limiting travel outside of the home unless going to work; school or an educational institution; shop for food and essentials; getting medical care or supplies and exercise. This is set against the backdrop of the world slipping into a recession set to surpass the GFC according to the IMF.

“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Winston Churchill Nov, 1942

It may seem somewhat pretentious to quote one of the worlds greatest leaders during the darkest hours of World War II, but for many living today the COVID-19 pandemic and its devastating global impact is indeed the closest that we are, thankfully, ever likely to experience to those dark times.


The IMF expects the global economy to experience its worst recession since the Great Depression in 2020 surpassing the GFC a decade ago.

In its World Economic Outlook (WEO) released on 14 April 2020 the International Monetary Fund (IMF) highlights that as a result of COVID-19 the world has changed dramatically since its last update on the global economy in January 2020. The exponential growth of the contagion means 100 infected individuals become 10,000 in a matter of a few days with little certainty with respect to the timing and prospect of a vaccine.

In an attempt to contain the high and rising human cost of the pandemic, governments worldwide have imposed isolation, lockdowns and widespread closures to slow the spread of the virus. However, these measures are severely impacting economic activity globally.

Due to the extreme uncertainty caused by the pandemic the IMF projects the global economy to contract by 3% in 2020, a figure much worse than the 2008-09 global financial crisis (GFC). The IMF’s baseline scenario assumes the pandemic fades in the second half of 2020 wherein containment efforts are gradually unwound resulting  in a 5.8% growth in the global economy in 2021 as economic activity normalises.

Whilst comparable to previous global financial crisis’ in terms of impact, this crisis differs in:

  • The nature of the shock
  • The output loss as a consequence of the health emergency and related containment measures is expected to dwarf the losses that triggered the global financial crisis
  • Continued uncertainty about the duration and intensity of the shock
  • It remains unclear if and when therapies and / or a vaccine are able to be developed
  • Role for economic policy
  • In a “normal” crisis the role of economic policy is to try and encourage economic activity by stimulating demand. In the current crisis stimulating demand is markedly more challenging as to a large extent, it is the consequence of needed containment measures.

The crisis response across the world is shaping up in two phases according to the IMF: a phase of containment and stabilisation followed by the recovery phase.

In Australia there are many reasons for optimism despite the dire global circumstances including: evidence  that social distancing measures are  “flattening the curve”; significant and early Government intervention via unprecedented fiscal, monetary, and financial measures; and forecast economic growth of 6.1% in 2021.

This raises the question, whether we are now at a stage in this pandemic response domestically where we have achieved containment and stabilisation.

If so, what does the recovery phase look like in Australia? What implications are there for international multilateral cooperation given ongoing debate around China’s role in the pandemic?


As we seek to plan for what’s next. Now is perhaps not the time for crystal ball gazing but for a cautionary look in the rear mirror.

As global economies emerged post the Great Depression, end of World War II and more recently the GFC what lessons can business leaders draw on to assist them in their post Great Lockdown response? If anything, history tells us that early conversations with stakeholders in all guises is essential.

What we have seen to date is:

  • The rapid Australian Government’s stimulus response has created a platform for recovery. Banks & other financial institutions have afforded unprecedented levels of support
  • Employers and employees have worked together unlike the GFC to share the burden during the lockdown
  • Enterprise scale business have accelerated payments to SME supply chain partners, again a show of support & unity
  • Technology adoption across traditional industries e.g. Telehealth, Banking, Education, Legal, etc.

At Saltire we continue to maintain active commercial interactions with both debt & equity markets and our client base. A current engagement sees us providing financial due diligence support to a global multi-national business seeking to complete phase 2 of a staged acquisition of an Australian family business. Whilst this deal will now be subject to foreign investment review board (FIRB) approval it shows us that there’s a continued appetite to “get on with things” the other side of the current crisis.

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