The coronavirus pandemic will inflict a deep recession on the world economy, and many major national economies, during the first half of 2020, according to the latest analysis by Oxford Economics.
Over the full year, Oxford Economics’ team now expect global growth to drop to zero. ”In the current (first) quarter of 2020, we expect the global economy to have contracted at a faster pace than during the global financial crisis, with a fall of some 2% in world GDP, and our baseline forecasts then projecting a further quarterly fall of 0.4% in Q2,” said in the analysis.
The zero growth – Oxford Economics forecasts for 2020 – will mark the second-weakest year for the global economy in almost 50 years of comparable data, with only 2009, in the depths of the financial crisis, worse.
”Our projection of zero growth in 2020 also compares with our pre-outbreak global forecast of 2.5% GDP growth, marking out largest-ever forecast revision over two months.”
For the year, Oxford Economics expects the US economy to shrink by 0.2%, eurozone GDP to contract by 2.2%, and China to grow by just 1%.
”The near-term outlook is extremely challenging. But we believe that − consistent with historical experience − the bounce back in activity will be very strong once social distancing measures are relaxed, and monetary and fiscal stimulus combine with a resumption in discretionary spending. Businesses that can weather the crisis should be prepared for a strong end to 2020 and start to 2021, with global growth rising as high as 5.3% in annual terms and averaging 4.4% for next year as a whole.”
”Still, we see huge uncertainty in this rapidly evolving environment. Therefore, we have also updated our downside scenario to incorporate a worsening of the outbreak, imposition of greater social restrictions, and financial stress. Under this more severe scenario, the global economy would enter outright contraction in 2020, with GDP falling 1.3%. The US, eurozone and China would then see 2020 GDP shrink by 2.6%, 3.2% and 0.9%, respectively,” said in the analysis.