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Are we heading towards a global recession? Here's what top brokerages say

Analysts fear that the impact this time would be deeper than that of the 8-month long economic downturn in 2001 and the one in early 1990s

Topics
recession | 2008 financial crisis | Coronavirus

Kanishka Gupta  |  New Delhi 

The rapid spread of has jolted the But this is no routine jolt and this time it appears the is headed for something similar to what we experienced in 2001 and 2008 - a global

Analysts fear that the impact this time would be deeper than that of the 8-month long economic downturn in 2001 and the one in early 1990s

Here's what top brokerages say about global recession:

Just a day after US President conceded the US slump alone is set to be “a bad one,” economists declared global for the first time since the

Morgan Stanley’s team, led by Chetan Ahya, said a worldwide is now its “base case,” with growth expected to fall to 0.9 per cent this year.

Here’s what she said in a report, co-authored with Derrick Y Kam, Nora Wassermann and Frank Zhao. “Assuming this outlook of Covid-19, we expect 2020 global growth to dip to 0.9 per cent, the lowest since the global (GFC). The global recession this year would be deeper than in 2001. We expect global growth to contract by 0.3 per cent in the first quarter (January – March) of 2020 (Q1-20) and 0.6 per cent in 2Q20.”

Meanwhile, credit rating agency S&P Global believes that the initial data from China suggests a deeper cut in the economy than projected, though a tentative stabilisation has begun.

Following China, Europe and the US are increasing restrictions on person-to-person contacts presaging a demand collapse which will take activity sharply lower in the second quarter before a recovery begins later in the year.

They are expecting that growth would range between 1 per cent to 1.5 per cent. But at Goldman, the prediction is 1.25 per cent.

While such a slump would be less jolting than the 0.8 per cent contraction of 2009, as measured by the International Monetary Fund, it would be worse than the downturns of 2001 and the early 1990s.

Both and anticipate a rebound in the second half, but warn that there is risk of even greater economic pain.

The projections will put further pressure on policy makers to do more to limit the health emergency and to deliver stimuli that help companies and consumers through the shock and then drive a rebound in demand afterward.

Securities' Fund Manager Survey (FMS) for March suggests...

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First Published: Wed, March 18 2020. 14:24 IST
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