The International Monetary fund (IMF) forecasted that the global economy would decline sharply by three % in 2020. The decline is much steeper than in 2009, which was a time of Global financial crisis when it fell by 2.3%. If this forecast is correct, the economy may have a hard landing, the hardest since World War II.
It may be worth remembering that the IMF forecasted a growth of 3.3% of the world's GDP in January 2020 when the coronavirus already broke out in mainland China.
Recent cataclysms drastically differ from the standard cyclical crisis, even the one suffered in 2008-2009. The nature of the current circumstances is of another kind. There were no such artificial shrinkage of the demand during the global financial crisis and there was also no forced reduction of business activity due to quarantine measures. The revival of the demand and stimulating business activity is the keystone to prevent the slump in production. Besides, the restriction or even suspension of communications disrupts global supply chains, goods, services and labour force cyclical turnovers.
The damage to developed economies which shape global production, financial and trade flows in a decisive share would likely be more significant in terms of the Gross Domestic Product (GDP) absolute figures. The United States and the European Union are the first to be hit badly. They comprise major financial, trade flows and production. So, their vulnerabilities have become the extension of advantages. The disruption of economic communications and dramatic fall of the demand with these territories is multiplied by the same affect worldwide. The United States contribution to the world GDP is 15.1%, the Eurozone is responsible for 11% of the global GDP, according to the IMF. And those states are the most affected by the virus regarding the number of cases and deaths. That is the reason their economies are the ones with the utmost damage.
IMS suggests the overall GDP of developed countries would contract by 6.1% in 2020 and the emerging countries will lose only 1%. China and India according to the IMF, will remain in the positive zone regarding economic growth this year.
Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.
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. 75.42% 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.
© 2011-2021 Teletrade-DJ International Consulting Ltd
Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with Markets in Financial Instruments Directive (MiFID).
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. Telerade-DJ International Consulting Ltd ("TeleTrade") 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 TeleTrade 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.
TeleTrade 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.
Telerade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.