The novel coronavirus disease (COVID-19) will halve the global Gross Domestic Product (GDP) growth to 1.3% in 2020 from 2.7% in 2019, according to Fitch Ratings forecasts.
In a Thursday report titled “Global economic outlook,” the credit rating agency expected that the world’s GDP growth will recover next year, recording 3.3%.
The global health crisis sparked by the outbreak of the coronavirus is taking an extraordinarily heavy toll on the world economy. The level of world GDP is falling and for all intents and purposes countries are in global recession territory, the report said.
In China, where the COVID-19 pandemic firstly appeared, GDP growth will fall to 3.7% this year from 6.1% last year before it will increase to 7.2% in 2021, the report added, noting that the shock to the Chinese economy – primarily resulting from the official lockdown’ response to contain the virus – has been very severe.
The United States GDP growth will increase only 1% this year in comparison with 2.3% then it will reach 1.9% next year, the report anticipated, noting that in Eurozone, the current epicentre of COVID-19 pandemic, GDP growth will negatively record -0.4% in 2020 from 1.2% last year before it will grow by 1.8% next year.
Oil prices will be at $41 for a barrel in 2020 and $48 for a barrel next year from $64.1 a barrel in 2019, the report mentioned, explaining that the shock has also upset the balance of the global oil market with prices immediately falling by $15 a barrel (30%) after Saudi Arabia and Russia – two of the world’s three largest producers – were unable to agree on supply cuts and are now planning to expand output and gain market share.
The report also expected US interest rates to hike to 0.25% by the end of 2020 and 0.50% by the end of 2021 from zero currently. In China, interest rates will be at 2.75% by the end of both 2020 and 2021 from 3.25% by the end of last year.
Inflation in the Eurozone will reach 1.5% by the end of 2021 while it will maintain its last year value of 1.3% by the end this year. US’ inflation will reach 1.8% by end of 2020 from 2.3% by end of last year and it will be at 2.1% by end of next year while Inflation in China will decrease to 2.2% this year, 2.1% next year from 4.5% last year, added the report.