Shock and awe: Why the economic crisis is being caused by 'a series' of incidents

Moved beyond a 'single demand shock'

Though the focus of media reports is rightly on the Covid-19 virus and the human impact it is having on communities around the world, what makes this volatility episode in markets different to previous ones in the post-Global Financial Crisis era is that it is in fact composed of a series of shocks to the global economy rather than a single event such as investors have experienced in the recent past.

The crisis has morphed from a single, China-centric demand shock which was expected to be contained much like the 2002-03 SARS episode was. However, the regional infection has expanded into a global demand shock in the past month.  In Europe and the US in particular, it is changing its shape once again, infecting global credit markets and risking a global credit shock and without more aggressive policy responses, a global US dollar-denominated liquidity shock.  These new, emerging shocks are coming against a backdrop of growing demand shocks in both the US and Europe. Indeed,
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