Latest Shape of Economic Recovery: How About a Bird’s Wing?

France’s central bank governor Francois Villeroy de Galhau has added a new shape to the lexicon economists are using to describe the economic recovery from the coronavirus: Bird wing.

Recent data indicates that French output might not have plunged as much as initially thought during the pandemic lockdown, and consumer spending has rebounded robustly since the reopening of shops a week ago.

But Villeroy reckons that won’t be enough to ensure a V-shaped recovery, the fastest form of upturn.

“If I had to give a shape to the recovery I’d say it’s a half-V because we have climbed up very fast and we forecast we will continue to climb more gently,” Villeroy said on RTL radio. “Fundamentally, it’s a recovery in the form of a bird’s wing.”

Economists have come up with an alphabet soup in their attempt to predict how fast the global economy will recover from the shock caused by the pandemic. The more pessimistic are looking at growth tracing an L, U or a W. Other suggested a tick-shaped recovery, also known as the “Nike swoosh.”

Villeroy said the key to the speed of the recovery from now on is the extent to which French households spend the excess savings they built up during the lockdown, which the Bank of France estimates reached 60 billion euros ($67 billion) by the end of May.

In that respect, the government’s pledge not to raise taxes is a move that could support confidence, he said.

Still, there remains a high degree of uncertainty surrounding the outlook, including which jobs are lost permanently and whether there will be a second wave of the virus. The French governor said authorities need to find way of boosting the capital of viable companies in the long term.

“We are far from being out of the woods,” Villeroy said, dipping back into more metaphors. “It will take time and we must remain very mobilized to use the fuel of savings, and tune the motor of that keeps businesses solid.”

©2020 Bloomberg L.P.

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