Global Macro Shifts – Navigating Uncertain Waters: Preparing For A Post-Pandemic World

Franklin Templeton

Michael Hasenstab

Research

30 Pages

May 2020

Franklin Templeton examines how COVID reshapes the global economy, arguing this downturn could be far deeper than 2008 and leave lasting structural shifts. The paper highlights a potential 5x contraction versus the financial crisis and suggests recovery may be slow, uneven, and politically destabilizing.

Key Takeaways

Deeper Recession Magnitude: Global growth is projected to contract at roughly 5x the pace of 2008, with US output decline about 2x worse than the financial crisis.

Persistent Unemployment Risks: US unemployment could reach levels not seen since the 1930s and remain elevated for years due to structural business disruptions post-lockdown.

Emerging Market Divergence: Not all emerging markets will default, but countries with stronger fundamentals are expected to recover faster, creating dispersion across regions during the recovery phase.

Global Macroeconomics

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