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. Also, once the virus 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. Also, outbreaks from Europe to the Americas threaten activity elsewhere too.
The world economy heading for its worst performance since the financial crisis
Bank of America Corp. economists warned clients on Thursday that they now expect 2.8% global growth this year, the weakest since 2009. They were already penciling in the softest growth in China since 1990, but now say the U.S. will expand the least in four years.“The risks 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 when it said it would likely knock only 0.1 percentage point from its global growth estimate of 3.3% for this year although it was studying more “dire” scenarios. Now the Washington-based fund reconsidering the scale and scope of policy meetings it scheduled to host in mid-April. As stocks plunge, companies are also sounding the alert. Standard Chartered Plc on Thursday joined HSBC Holdings Plc in saying it would miss profit targets because of the virus.