Moody’s Investors Service on Thursday said the credit downturn arising out of Covid will be short-lived but most economies will not return to pre-pandemic activity levels until 2022.

In the year since the World Health Organisation (WHO) declared Covid a pandemic on March 11, 2020, the virus has disrupted the global economy and triggered a credit downturn accompanied by a spike in bond defaults. “The credit challenges arising from Covid have been substantial, but the credit downturn likely will be relatively short-lived. Risks remain more significant for the sectors most vulnerable to restrictions on their normal activities,” Moody’s said in a global report on coronavirus.

Stating that most economies will not return to pre-pandemic activity levels until 2022, Moody’s said it expects a slow and bumpy global recovery and uncertainty around the macroeconomic outlook remains much higher than usual

However, a residual level of Covid likely will persist over time, raising the prospect of global pockets of risk in regions where vaccination progress is slow, and of localised outbreaks. “In addition, new mutations that increase the virulence or spread of the virus pose a key risk to efforts to normalise conditions. Rather than eliminating the virus, we expect to ‘learn to live with it’ at low case rates,” it added.

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