The question coming back very often is if shall we face a deflation or an inflation after the COVID-19 pandemic situation.
Since 2008, we have seen the economical markets pushing the prices down. Situation mainly created by the outsourcing of FMCG from the LCC for the provision of manufactured goods to developed countries.
The consumers and government have continued to invest in consumer goods and new projects by financing their projects with loan and low-cost services, creating a global prices deflation and a higher level of competition on all markets world-wide.
This global consumption was sustained by the large utilisation of credit facilities boosted by the low interest rates, pushing all debts rates up and imposing the need to use loan to pay back existing loan fully coved by the dropping of interest rates.
It is important here to understand Milton Friedman theory showing the need for a constant celerity of transactions and a constant volume of monetary volume to sustain a low price variation thru time.
The Global GDP has dropped since the COVID-19 pandemic situation and stopped transactions world-wide, including the cash flow sustaining the markets and now imposing the need for countries to re-consider their local economical strategy and Tariff rules for 2020.
The countries are having a different situation depending of their currency and their financial situation. The central banks are now working on helping the market recovery with the creation of new bonds.
However the situations for the companies will depend of their cash flow and exposure to the COVID-19 by country, by market.
We will discuss about the different risks to consider on several key markets and the decision to be taken in order to go thru the COVID-19 pandemic situation.