The global economy looks to be rebounding from the shortest and deepest economic shock in history, economists say. But markets and investors are not out of the woods just yet. Concerns remain over just how short-lived the current rebound will be, how consumer behavior will change as economies reopen and the course of the COVID-19 virus itself.

Developed market economies began to reopen in May and June, albeit with a number of cities and towns forced to revert to lockdowns as infection rates rose. A number of emerging markets remain deep in lockdown, with daily cases continuing to rise.

The coronavirus pandemic and subsequent lockdowns across the globe led to a bottoming out in global stock markets in March and April. The MSCI ACWI lost 32.06% year-to-date through March 23. Since then, global equities have rebounded to a -4.73% return through July 9, and up 40.22% from that March low point.

While economists agree markets are largely through the worst of the coronavirus-induced recession, they’re still trying to figure out just what this recovery looks like, with V-, U- and W-shaped recoveries still under debate.

“I don’t think we have a letter of the alphabet — I’ve even been through the Greek alphabet,” said Karen Ward, London-based managing director, chief market strategist for Europe, the Middle East and Africa at J.P. Morgan Asset Management. “I think it will be a little more stop-start, more jagged.”

Karen Ward thinks the recovery ‘will be a little more stop-start, more jagged.’ (Photo Credit: Casey Moore)

Assuming a second wave of infections doesn’t hit markets, the recovery might look like a “swoosh” or check mark, said Megan Greene, global chief economist and senior fellow at the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School, Cambridge, Mass. Any bounce back to good-looking data has to be put into context, that it’s “growth off a really low base.”

Ms. Greene does not see a V-shaped recovery due to the “asynchronous way that the virus is affecting emerging markets to developed markets — to have a V-shaped recovery you need everyone rebounding at the same time,” she said.

In June, the International Monetary Fund revised global GDP forecasts downward for 2020 to -4.9%. In April, the IMF had projected a 3% contraction. The IMF’s January, pre-COVID-19 global growth forecast, was for 3.3% expansion.

Group of 20 GDP fell 3.4% in the first quarter, compared with a 1.5% drop in the first quarter of 2009 — the height of the global financial crisis, according to the Organization for Cooperation and Economic Development. And economists think second-quarter GDP will be even worse. But third-quarter data is expected to look pretty good — although that projection comes with a warning not to get too complacent.