Phil Smeaton, chief investment officer at Sanlam, says: “There’s some evidence of pent up demand out there. For example a lot of items that are non essential but desireable, are out of stock, because the supply chains are disrupted.
"But while people probably will buy many of those items when they can do so, but they won’t buy two, to make up for the one they couldn’t buy earlier. They won’t buy two haircuts for example.”
Ed Smith, head of asset allocation research at Rathbones is another market participant who is skeptical of the chances of a rapid recovery.
He puts the chances of such an outcome at no more than 50 per cent, and even in the best case scenario, and believes GDP would decline by 5 per cent in the 2020 calendar year.
For Fahad Kamal, chief market strategist at Kleinwort Hambros a potential best case, V-shaped economic scenario is now a "fantasy".
He adds: "The pandemic has led to a worst-case recession, and economic figures suggest a wasteland, with the expectation of even worse to come over the second quarter.
"However, assuming no second-wave – which remains our base case – a recovery will begin in the third quarter. The situation will only go from dire to bad over the next 18 months, with elevated levels of unemployment, bloated levels of debt and reticent corporate and consumer spending. A full return to January 2020 level of unemployment, jobs and spending will not occur until 2022 at best."
Meanwhile, Luke Bartholomew, UK economist at Aberdeen Standard Investments, says “there may be a quick upward movement in growth in terms of the data, but we will still be way behind where the economy would otherwise have been, so it won’t feel like growth”.
For Chris Ralph, chief global strategist at St James Place, "what is clear is that this recession will be deeper than that experienced in the Global Financial Crisis, as the 'catastrophic' jobs report from the US on Friday demonstrated".
"But if - and it’s a big if - most parts of the global economy can restart quickly without the feared second wave of infections, then the recession is likely to be shorter than that experienced a decade ago," Mr Ralph adds.
Stagflation
As the government works to steepen both the supply and the demand curves, there is a risk that only one of those steepens.
If the supply curve steepens as shops re-open, but the demand curve remains relatively flat because people are afraid, then the supply curve will flatten quickly as shops without customers choose to close, and make staff redundant.
