Macro Monthly – What if there is a second lockdown and what if there isn’t?

What if we get a second round of lockdowns because the virus resurges? How great will the economic damage be? What will happen to unemployment and how can governments and monetary policymakers still intervene to protect jobs, businesses and banks?These are questions that we as economists are asked every day. There are also the optimists who dismiss the idea of a renewed lockdown. They ask us how fast the recovery will be, now that the major economies are out of lockdown and a vaccine is (most likely) on the way.Since the onset of the pandemic, uncertainty has been so pervasive that a scenario approach provides the best insight into what the future holds. Here we give our outlook on the Netherlands and the world’s major economies (China, the eurozone and the United States) for two scenarios: one with and one without a second wave of the virus. We will start with the Sour (second wave with major lockdowns) before moving onto the Sweet (no extensive lockdowns, which is our more probable baseline scenario).