POST TIME: 27 March, 2020 03:46:49 AM
Massive risks to world economy as coronavirus battle rages
AFP, London

Massive risks to world economy as coronavirus battle rages

This photo shows an ambulance sits outside the US Capitall in Washington on Monday. The US as well as economies all over the world will be hit hard by the virus and resulting lockdowns. AFP PHOTO


The coronavirus outbreak and resulting lockdown of billions of people threatens the global economy to the point where economists are predicting the most violent recession in recent history, perhaps even eclipsing the Great Depression.

The crash will almost certainly be accompanied by a surge in unemployment, especially in countries with weaker worker rights, such as the United States.

“The G20 economies will experience an unprecedented shock in the first half of this year and will contract in 2020 as a whole, before picking up in 2021,” economists from the rating agency Moody’s wrote on Wednesday.

Angel Gurria, head of the Organisation for Economic Co-operation and Development (OECD), told the BBC the world economy would suffer “for years”.

The current crisis is likely to be more severe than the 2008 financial crisis crash because it affects the entire economy, with a collapse in supply due to the shuttering of factories and a similar crash in demand with billions of people in lockdown.

The transport and tourism sectors have been the first to feel the pain, although some such as pharmaceuticals, health equipment, sanitary products, food and online trade have seen a boost.

The collective GDP of the G20 countries is predicted to contract 0.5 per cent, according to Moody’s, with the US down 2.0 per cent and the eurozone losing 2.2 per cent.

China is expected to buck the trend and grow, but at a much-reduced rate of 3.3 per cent, according to Moody’s.

Most major banks believe the US has already fallen into recession, with Goldman Sachs forecasting a contraction of 3.8 per cent this year and Deutsche Bank predicting the worst US slowdown since “at least World War II”.