Disruptions to supply chains, demand, international trade flows, and travel, along with lockdowns and collapsing stock prices, resulting from the coronavirus disease 2019 (COVID-19) virus have dealt a heavy blow to the global economy.
- The United States, Europe, and Japan are headed for recession.
- The IHS Markit forecast for world real GDP growth in 2020 has been revised down to 0.7% in response to the spread of the virus. Growth below 2.0% is classified as a global recession.
- The number of active world cases is assumed to top out by the third quarter.
- Nevertheless, the result will be a U-shaped rather than V-shaped cycle, as a sharp reduction in near-term growth is followed by a slow recovery.
- Forecast risks are overwhelmingly on the downside and depend crucially on how governments respond.
- Central banks have already taken emergency actions, but the fiscal response is more uncertain.
- The recent sharp drop in oil prices will help energy consumers and hurt energy producers. The net effect on global growth is likely to be negative, but small.
Click here to be directed to the IHS Markit Economics & Country Risk blog, for additional details and regional breakdown of the global economic forecast flash. For additional details on the IHS Markit forecast, click here.