Beware market carnage if policy support is rolled back prematurely

AS THE second quarter - the worst quarter for the global economy since World War II - draws to a close, upbeat hope-inducing macro data are emerging, thanks in no small part to higher production and consumer activity as economies reopen.

Business pessimism has eased from the horrid peak at the start of the quarter when travel was curbed and businesses crashed to a standstill. The slowing down of new cases and fatality rate of Covid-19 worldwide are further fuelling the promise of an imminent economic recovery. Reflecting this sanguine outlook is the nearly 30 per cent recovery by global equities from their lows.

While it's about time the pandemic-shaken world was cut a break, global economies have to brace for tougher times - particularly when the government-led stimulus packages to cushion the blow from Covid-19 and keep jobs and businesses afloat are eventually rolled back. These relief measures were not meant to last forever, even if they may be renewed or extended.