The outbreak of COVID-19 has quickly turned into a severe shock. The decline in economic output recorded in the first half of 2020 makes the fallout from the 2008 global financial crisis seem mild in comparison, while in real estate markets, transaction volume has slowed sharply and values are under pressure — notably in retail and hotels.
The highly uncertain nature of the current crisis — in which public health concerns and policy measures are intertwined with unprecedented economic and financial stresses — makes predicting its path a particularly difficult task.
There have been two major financial crises since the early 1990s — one contained in Asia in 1998 and one truly global and systemwide in the form of the global financial crisis — a long, drawn-out correction exacerbated by oversupply in the early 1990s and a temporary global demand shock in the aftermath of the dot-com-related financial market turmoil and U.S. recession in the early 2000s.
Despite obvious differences between the current situation and circumstances that influenced previous downturns, lessons can be drawn from history and certain observations can help make sense of events as they unfold.