Economic analysts have grown markedly more pessimistic over the last week as the coronavirus (Covid-19) continued to spread around the world and more countries adopted drastic containment measures that the economic analysts now see the virus shaving at least 1.5% off global growth, according to Focus Economics’ Coronavirus Weekly Survey.
“Close to a third of panellists now see the virus shaving at least 1.5 percentage points off global growth this year,” it said.
The coronavirus has spurred fears of a global recession. According to Focus Economics’ survey, 64% of panellists now expect a global recession in the next 12 months, up from 43% in last week’s poll, despite the slew of fiscal and monetary stimulus measures announced in recent days.
Unfortunately, in the poll of 80 analysts, most panellists forecast the recession to last for two quarters, with a small majority expecting a U-shaped recovery. This would mean economic activity will not suddenly rebound (referred to as a V-shaped recovery), but will instead stay subdued for longer.
Talking about the countries that would most suffer, Focus Economics said that Italy is expected to suffer the most severe economic damage, due to the high number of cases per capita; demographic factors; the extreme government response to the outbreak, which is severely hampering economic activity; and an economy which was already frail even before the Coronavirus struck.
Very unfortunate, when asked, 45% of panellists now see the virus continuing to affect the global economy beyond 2020, up from 36% last week, the report highlighted.
Dennis Shen, Director of Public Finance at Scope Ratings said that the global spread of Covid–19 has resulted in heavy global economic costs in areas of the world that now include China, Europe, and the United States.
“The severity of the anticipated severe downturn this year will depend on the degree to which the virus spreads further, and to what extent public health, regulatory, monetary and fiscal policy responses are effective in countering,” he said.