With the increasing spread of the coronavirus pandemic the consequences for the global economy and some countries may turn out to be even more severe than the most recent pessimistic forecasts released.
In a forecast released by the United Nations organisation (UN) in mid-January 2020, the outlook was discouraging. The world GDP growth forecast was just 2.3% in 2019 according to the report and that was a minimum for a decade. The basic scenario for 2020 suggested that global economy growth may accelerate to 2.5% if trade tensions were resolved and the world could escape geopolitical distress. In the worst-case, growth could deteriorate this year to 1.8%. The US economy was expected by the UN to grow by 1.7% in the worst-case scenario, and the European Union’s GPD was expected to increase by just 1.6% (1.4% in 2019).
The Standard & Poor’s rating agency released in mid-March forecast of “global economic depression” in 2020 with 1-1.5% overall economic global growth. Two weeks passed and the time for new apocalyptic forecasts has come. No growth is expected at all. Financial institutions’ forecast now slid sharply to the negative zone. The Fitch rating agency says the quarantine will have a severe impact on business activity and the economy itself. The longer the quarantine lasts the more adverse effect the world GDP will have. Global GDP, in a basic scenario, is expected to plummet by 1.9% in 2020, the US economy may contract by 3.3% and the European economy may fall by 4.2%.
But these shocking figures are fading as the Bank of America has suggested a nightmare global recession of 2.7%, The US may see economy contraction of six % and the European Union – 7.6% in 2020. Eastern European countries may face the worst recession with GDP to plummet from five to six %.
The revision of forecasts is reminiscent of the “Big Short” movie scenario which is ironically devoted to the Global Financial Crisis of 2008-2009. However, the comparison is also fading away while the record contraction that the world has faced this century is just 2.3%. Now we can only imagine what forecasts may be released by end of April when the world is likely to face the peak of the pandemic.
Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.
Indiscriminate reliance on illustrative or informational materials may lead to losses.
© 2011-2023 Top Markets Solutions Ltd
This website is operated by Top Markets Solutions Ltd which is registered with the Department of Registrar of Companies and Intellectual Property of the Companies of the Republic of Cyprus as a private limited company with registration number HE272810 and is authorized by the Cyprus Securities and Exchange Commission ("CySEC") to act as a licensed Cyprus Investment Firm ("CIF") with license number 158/11. Top Markets Solutions Ltd operates in accordance with Markets in Financial Instruments Directive (MiFID).
In accordance with CySEC Circular C108, please be informed that the previous name of Top Markets Solutions Ltd was TeleTrade-DJ International Consulting Ltd.
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Top Markets Solutions Ltd ("the Company") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
The Company cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
The Company currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime. The Company does not provide its services to residents or nationals of the USA.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63.37% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.