Coronavirus scare: Global growth? may shrink to 1 pc in 2020

Following the coronavirus pandemic, global growth? may shrink to 1 per cent in 2020, down from 2.3 per cent before the outbreak started, as four major economies -- Japan, Italy, Germany, France -- are likely to experience a full-year recession, says a report.

According to The Economist Intelligence Unit (EIU), the situation appears grim in most countries around the world.

As per its assumption, the virus will infect around 50 per cent of the world population; 20 per cent of the cases will be severe, and 1-3 per cent will result in deaths.

"Global growth? will stand at 1 per cent for 2020, down from 2.3 per cent before the outbreak started. This is the lowest rate in global growth since the global financial crisis," The EIU said adding that at least four G7 countries will experience a full-year recession (Japan, Italy, Germany, France).

The EIU has revised the US growth forecast downwards to 1 per cent for 2020. It has also dragged China's growth to around 2 per cent in 2020 following the release of bleak industrial output data for January and February.

It further noted that the euro zone will register a full-year recession (-0.5 per cent).

As per the report, though quarantine measures will be effective to prevent the disease from spreading, but they will have a high economic impact on both supply and demand conditions.

On global trade The EIU said: "We have made a downward revision to global trade growth for 2020, to 0.4 per cent (from 2.3 per cent previously)".

It expects mild recovery in the second half of the year, but said the full-year picture looks "grim".

It further noted that most countries will introduce stimulus measures to prop up economic growth.

"Monetary stimulus would only have a limited effect (at least in developed countries), given the ultra-low interest rates environment. Fiscal stimulus therefore represents the only realistic option, raising the risk of a debt crisis in the coming months," The EIU warned.

According to The EIU, a vaccine will be available around end-2021 (at the earliest) and coronavirus will become a seasonal disease, with another outbreak in winter 2020/21.

The number of deaths around the world linked to the new coronavirus has topped 8,000.