Coronavirus shock is pushing global growth toward zero, S&P says

With the worldwide economic turbulence wrought by the coronavirus crisis and nationally enforced lockdowns across major markets, global growth is set to be pushed toward zero, analysis from S&P Global Ratings predicts. “In response to the ongoing extraordinary impact of the coronavirus pandemic on economic activity and financial markets, we have marked down global growth to just 0.4% this year, with a rebound to 4.9% in 2021,” S&P’s global chief economist Paul Gruenwald wrote in a research note published Tuesday. “The decline in activity will be very steep.”

The dire 0.4% forecast would be a level the world hasn’t seen since the economic crash of 1982, when global growth was calculated at 0.43%, at the time the worst financial downturn since the Great Depression of 1929-1933. Before the coronavirus pandemic, S&P’s forecast for growth in 2020 was 3.3%.

The third week of March revealed a staggering 3.28 million Americans filed jobless claims, more than four times the previous record of 1982. Lockdowns have forced businesses deemed non-essential to shut their doors and/or work from home, with billions of people worldwide staying indoors to self-isolate in an effort to slow the spread of the coronavirus, which has so far killed more than 38,700 and infected more than 800,000.

Emerging markets also played a major role in the forecast drop, the largest of that category being India with an expected contraction of 3.5%. India announced a mandatory 21-day lockdown for its entire population of 1.3 billion people on March 22. China’s growth, already at a 30-year low of 6.1% for 2019, is forecast at 3% this year. The ratings firm emphasized the unpredictable course of the disease itself, noting that it based its forecast for recovery on some government estimates that the pandemic will peak halfway through the year. While S&P’s U.S. unemployment forecasts are high, they pale in comparison to some others — for instance that of the St. Louis Fed, which on Monday predicted total U.S. unemployment reaching as high as 47 million people, or a devastating 32.1% — higher than the Great Depression peak of 24%.

Coronavirus shock is pushing global growth toward zero, S&P says, CNBC, Mar 31