Around 1,000 economic experts from 110-odd countries and regions expect a global recession at 1.9% in 2020 due to the coronavirus crisis, according to a survey published by Germany’s influential Ifo institute on Thursday.
With a global recession of this magnitude, it was “lowest number since the survey began in 1989,” the ifo researchers noted.
Europe has been hit “particularly hard” as gross domestic product (GDP) in the 19-member eurozone is expected to fall by 5.3% in 2020, according to the ifo survey.
Within the eurozone, the recession is expected to be the most severe in Italy with a 7% decline. For both Germany and France, the experts predict a GDP decrease of 5%, according to the survey.
Only a few countries, such as China and India, are expected to increase their economic output albeit at “historically” low rates, the ifo noted.
Economic output in the United States is expected to fall by 4.6%. GDP would decrease by 4.2% in Brazil and by 3.4% in Russia and South Africa each. Japan would experience a 3.3% recession, according to the survey.
The pandemic has had a negative impact on worldwide economic activity through a “variety of different channels,” the ifo found. Investment cutbacks in particular have had a significantly negative impact.
Rising national budget deficits, lower consumer spending, company closures as well as production stops, quarantine measures and disruptions in international supply chains further impeded the global economy, according to the ifo survey.
However, the experts surveyed by the ifo considered potential bankruptcies of banks a minor issue only, the survey found.
Liquidity support for small and large companies, tax deferrals for companies as well as the purchase of securities by central banks and temporary reductions in value-added tax (VAT) are considered “helpful countermeasures” during the COVID-19 crisis.
In the emerging and developing countries, 34% of the experts surveyed believed that a return to a “pre-crisis performance level” would already happen this year. For the European Union (EU), on the other hand, only 6.7% of the experts expected an upswing as early as in 2020.
Experts predict worldwide recession of 1.9% in 2020: German ifo Institute
