The world economy is being pushed to a corner and the recession is widening while the pandemic is showing no signs of retreat.
The IMF forecast a week ago said the initial damage incurred since the coronavirus emerged in China at the start of the year will be considered as the starting point.
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France has estimated that the country’s economy contracted by around six per cent in the first three months of 2020, its worst quarterly performance since World War II while leading economists of the regions expect Europe’s top economy to contract by nearly 10 per cent in the second quarter.
This impact is expected to be twice as deep as the contraction Germany suffered after the 2009 recession.
If the United States is somewhat behind Europe in terms of shutting down businesses to stem the spread of the coronavirus and first-quarter figures will not be impacted, the effect is likely to make itself felt in the second quarter.
The World Trade Organization says it expects world trade to tumble by between 13 and 32 per cent in 2020. WTO chief Roberto Azevedo warned the world is facing the “deepest economic recession or downturn of our lives.”
The chief economist of the Organisation for Economic Co-operation and Development (OECD), Laurence Boone, told France Inter radio Wednesday that every month in lockdown would lead to 2.0-percent decline in annual gross domestic product.
“We have production levels dropping on the order of 25 to 30 percent across all of the countries” in the OECD club of industrialised nations, she said.
“Considering how slow China’s recovery is becoming, it is hard to argue that the US and European economies will recover quickly,” said Edward Moya, analyst at online forex trading firm OANDA.
“If China is only halfway back up and running, patience will be needed to see how the rest of the world will turn out,” he wrote in a note to investors.