Coronavirus puts global economy at risk of worst year since 2009 crisis as hopes fade, stocks plunge
- Outbreaks from Europe to the Americas threaten activity elsewhere after already hurt supply chains, tourism and trade in Asia
- Stocks in Asia fall in tandem as rout in US benchmarks signals worst correction since the global financial crisis
The world economy may be heading for its worst performance since the financial crisis more than a decade ago as the spread of the coronavirus increasingly dashes hopes of a swift rebound.
Just weeks since most economists bet the China-led slump would quickly reverse once the virus was contained, many are rethinking that optimism as swathes of Chinese factories stay shut and workers idled. Having already cut supply chains and undermined tourism and trade, outbreaks from Europe to the Americas threaten activity elsewhere too.
Bank of America warned clients on Thursday that they now expect 2.8 per cent global growth this year, the weakest since 2009. They were already pencilling in the softest growth in China since 1990, but now say the US will expand the least in four years.
“The risks are still skewed to the downside,” BofA economists led by Ethan Harris said in a report. “Our forecasts do not include a global pandemic that would basically shut down economic activity in many major cities.
The outlook contrasts with that released by the International Monetary Fund just last Saturday, when it said it would likely knock only 0.1 percentage point from its global growth estimate of 3.3 per cent for this year although it was studying more “dire” scenarios.