The economy is stabilizing faster but economists are concerned about the arrival of a financial crisis | The NY Journal

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A new report says the economy may be stabilizing faster than expected amid the coronavirus pandemic but efforts to preserve it could lead to a financial crisis.

A group of economists at Deutsche Bank, led by Peter Hooper, the bank’s global head of economic research, say that the global economic recovery “has evolved faster than we had anticipated in the gloomy days in early May.”

Economists estimated that the world economy has already recovered about half of the GDP it lost and that it would return to pre-pandemic levels in mid-2021, which is a couple of quarters ahead of the bank’s forecast. However, the price of stability could be high in the long run.

The improvement in the forecast comes from an anticipation of a stronger economic recovery during the second and third quarters of the year, driven by supportive fiscal and monetary policies in the United States and Europe together with measures that have helped curb the spread of COVID-19 especially in Asia.

Related: Why the worst of the financial crisis unleashed by the coronavirus is only beginning.

According to the study, the optimistic outlook on vaccines has also played a key role in improving GDP.

Hooper said there are more than 170 vaccinations in development and nine of them are in phase three trials. The bank estimates that widespread vaccinations will begin next summer.