Coronavirus: global recession in 2020 now seen as guaranteed as outbreak ravages Europe, US

Hope for rapid global economic recovery has faded, with some analysts predicting the downturn may last until next year

Escalation of containment measures in Europe and the US, along with weak Chinese economic data, are seen as tipping points in the outlook for the economy

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Britain, in announcing its £330 billion (US$400 billion) stimulus package on Tuesday, said lockdowns could last up to 18 months until a vaccine becomes available, while the Australian government said quarantines could continue for six months. Photo: AP

Published: 9:15pm, 18 Mar 2020Updated: 10:59pm, 18 Mar 2020

A global economic recession is now all but guaranteed in 2020, with analysts worldwide continuing to slash their already grim forecasts as the rapid spread of the coronavirus pandemic outside China results in unprecedented containment measures and a rising number of businesses in danger of bankruptcy.

The moves by central banks around the world to cut their interest rates to record lows and by governments to pump huge amounts of money into their economies – including the new proposal in the United States to spend around US$1 trillion to bail out troubled businesses and provide a cash handout to every American – have come too late, according to analysts.

The question now becomes how deep the downturn will be, and how long it will last, with worst-case scenarios seeing weak growth continuing into 2021.

Analysts have already cut their global growth forecasts for this year to between 1 to 2 per cent, attributing the certainty of a recession to the shutdown of key economies in Europe and the US, worse than expected Chinese economic activity in the first quarter and the negative impact Covid-19 is having on “all aspects of life”.

The International Monetary Fund defines a recession as an annual global growth rate below 2.5 per cent. The global economy grew only 2.9 per cent last year.