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One of the characteristics of the pandemic caused by the new coronavirus, which is that it is happening at different times in each country, makes it difficult to think globally about how and at what pace economies will react post-Covid-19. Some countries are in full quarantine, while others are already starting to return to activity. Because of this particularity and also because of the unpredictability of the spread, the experience of other global crises or pandemics cannot be applied to the current scenario.

As in other times of instability, GDP has already fallen a lot and will fall even more, average wages have fallen and will take time to recover, as will the level of employment, the pace of production and services. The recovery will come, but we don't know at what speed and in what format, since it will depend on the degree of interference with the supply of labor, the remuneration of capital, the expansion of activities and the flow of credit.

This is the big question for governments and society: whether the recovery will be in a V-model curve, which refers to an abrupt drop followed by a rapid recovery, even in 2021; whether the U-mode will prevail, with a rapid drop and slower recovery; whether the curve will be in a W-mode, with a strong drop, a slight rise followed by another drop and only then will the recovery begin - a predictable situation in the event of a second pandemic wave; or whether, in the worst case scenario, the recovery will be in an L-mode, which is a vertiginous drop followed by stability at a much slower pace and the prospect of recovery only in the long term.

In order to provide liquidity, governments have put up resources at low interest rates and with guarantees offering grace periods in order to have credit conditions with low interest rates and a long repayment period.

Study analyzing 15 pandemics which have killed more than 100,000 people each since the 14th century, shows that there is a downward trend in interest rates over long periods. The thesis is that the decline in the rate of return was caused by a lack of investment opportunities due to the excess of capital per unit of labor and that insecurity stimulated savings. The pandemic is different from wars that destroy capital.

Today we live in a different context. Economies are globalized, stock exchanges offer global investment opportunities, technological systems and data provide more transparency and better intelligence in decision-making. See the fluctuations in the stock markets signaling a return to confidence in the measures taken by governments. In loans as a whole, maintaining information on credit assessment systems is essential to avoid the uncertainty that restricts and increases interest rates.

These factors will lead to the economy recovering more quickly and interest rates returning to their pre-pandemic levels much faster. Others believe that in order to ensure that higher public debt does not inflate bond yields, central banks will have to exercise strong control over interest rates.

And as the share of debt in GDP is likely to rise sharply after the pandemic, monetary policy will be key to helping governments deal with debt in a way that avoids default or recessionary austerity. In short, although the Covid-19 health and humanitarian crisis will eventually pass, investors should prepare for a world with even lower real interest rates for some time to come.

Judging by the example of China, which has already begun to ease social isolation, reopen factories and recover some of its productive capacity, the outlook for the post-Covid-19 economy is not the most pessimistic. Similarly, the speed with which the central banks of the main economies are acting to provide liquidity to the market points, in principle, to a recovery between the V and U curves, the most benign. The trend is towards a U-shaped recovery because each geography has its own recovery model, and because economic sectors recover at different speeds. Transportation, for example, returns faster, and restaurants at a slower pace, with a slow recovery of the global supply chain expected.

But there are many dangers that could stand in the way of the recovery, which depends on factors outside the economy, such as how the virus will continue to develop and the ability of health systems to respond. And the greatest danger is the risk of rebounds in contagion, which could lead to intermittent periods of isolation and further downturns in economic activity.

What's more, each country will follow a path of recovery based on internal and external factors. Latin American countries, for example, depend to a large extent on the speed of recovery of the most important economies, such as China, the United States and the European Union. And also on how each Latin American country manages its problems in order to stimulate economic activity and avoid a financial crisis after years of low growth, as is the case in Brazil.

In the same way that it shook up the governments' economic policy plans, the new coronavirus pandemic has disrupted business planning. And, like the authorities responsible for governments, entrepreneurs need to rethink their activities in the light of this new normal, which has highlighted the importance of everyday hygiene habits, shown the importance of investing in public health, changed the way people work, revolutionized consumer relations and enthroned the virtual.

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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor