Covid Impact on GDP and Financial Markets (4 marks) The comparative review of covid's impact on global GDP growth compared to other major historical financial market shocks is shown in the graph below. (real GDP growth, in percent) 10 9 00 N 6 5 M 4 3 COVID-19 2 Oil crisis and stock market crash Asian Global Financial Financial Crisis Crisis 1 o 1973 1978 1993 1963 1968 1983 1988 2020 2021 Source: IMF Staff calculations. 1998 2003 2008 2013 a. If you are a portfolio manager doing a long-term portfolio performance review, which shock event would you highlight as having had the worst impact on global GDP growth? Give one (1) reason for your answer. (2 marks) b. Below is the timeline of the S&P 500 index value and how the index behaved in the first 4 months of 2020 as the Covid-19 pandemic unfolded globally. Identify one financial intervention from the timeline above which would have given most assurance to investment portfolio managers. Give one (1) reason for your answer (2 marks) SGP 500 (Jan 2 to May 29, 2020 close) Souro Casio Chet VRC S&P500 ISO Index Value 4000 JANA WHO Announces Unknown Pneumonia Case in Wuhan 3,800 JAN 21 Washington State Confirms First Novel Coronavirus Case FEB 23 Stocks Plunge into Correction due to Coronavirus Fears MAR 11 COVID-193 Declaredo Pandemic by WHO MARZO Fed Announces Measures for Economic Support MAR 27 The U.S. Signs the CARES Act intolan MAY MAY 11 BLS Reports Moderna Historic Reports Positive Unemployment Results from its Rise to 14.7% Vaccine Candidata in Human Trials 3.500 3400 MAR 13 COVID-19 is Declared a US. National Emergency APR 3 SBA Paycheck Protection Program Opens 3,200 3,000 2,800 JAN 11 China Reports the First Known Virus Death JAN 23 Wuhan City is Quarantined by Chinese Authorities 2.000 2.400 2200 APR 24 APRO Paycheck New York Fed Protection Opens Program and Registration for Health Care the Commercial Enhancement Paper Funding Act Signed Facility into law 2.000 MAY 21 Global Virus Cases Surpass 5 Million 8 8 31 12 19 6 25 12 18 24 30 16 22 28 14 FEB 6 JAN 2, 2020 MAR 2 APR 3 MAY 4