How bad could it get? Economists predict how the coronavirus could hurt the global economy
The number of people infected with the coronavirus has surpassed 114,000 worldwide….Economists have warned that a global recession might be inevitable.
The virus that started in China late last year is having consequences for all major economies with flight cancellations, panic buying and strict quarantine measures in some cases.
A range of banks and financial institutions have offered their worst-case scenarios for 2020, as the spread of the new coronavirus impacts the global economy and roils financial markets. The global uptick in gross domestic product (GDP) could be as low as 1% this year
“A global recession is now all but certain,” Analysts said Tuesday, while predicting global growth to hit 1.6% of GDP by the end of the year.
The world economy grew 2.9% in 2019, according to estimates from the International Monetary Fund.
The number of people infected with the coronavirus has now surpassed 114,000 worldwide!
The range of potential outcomes is large and depends on the spread of the virus and resulting economic fall-out, all of which are highly uncertain at this stage. Global growth could conceivably approach 1.0%, far below the 2.6% last year and the weakest since the global financial crisis.
It is now clear that the shock will additionally dampen domestic demand globally, which will affect a wide range of non-traded activities across countries and regions simultaneously. More people are working from home as the virus spreads to new countries and governments issue new advice. Some people in Europe are taking less trips on public transport and avoiding public spaces, such as museums, restaurants and movie theaters.
This is obviously an abnormal global economic slump!
Oil prices add pressure on global growth
Oil prices have plunged more than 20% — their worst performance since 1991 — amid divisions between Russia and Saudi Arabia over production cuts.
This could add further pressure on the global economy and lead to further downward revisions. The Oil price plunge makes things even worse for global GDP in the near term, as those who are hurt by the drop in oil prices (i.e. producers) typically react to the pain faster than those who benefit from it (i.e. consumers).
These Oil price slump will produce winners and losers depending on whether a country is a net oil importer or a net oil exporter respectively. However, the effects of the coronavirus outbreak will offset any positive economic effects for the net oil importers, whilst it will exacerbate the negative economic effects for the net oil exporters.”
