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Coronavirus: A "massive" hit on the global economy, worse global recession than forecast, says S&P Global Ratings

Wednesday, March 25, 2020

Laxman Pai, Opalesque Asia:

A global recession will occur later this year, S&P Global forecasts. Moves to slow the spread of the coronavirus will have a "massive" impact on the global economy, S&P Global Ratings warned.

As more data come in on the effects of stay-in-place and other coronavirus-containment measures, there is a growing downside risk to S&P Global Ratings' forecasts, even from just one week ago, said a statement.

Analysts in the financial and official sectors are revising their estimates of global GDP growth for the first half of 2020 on a near-daily basis. Whether these new forecasts imply a corresponding large downward revision in annual GDP growth depends critically on governments' policy response - particularly fiscal policy.

S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak.

"Some government authorities estimate the pandemic will peak between June and August, and we are using this assumption in assessing the economic and credit implications," it said.

"We believe measures to contain COVID-19 have pushed the global economy into recession and could cause a surge of defaults among nonfinancial corporate borrowers."

"Restrictions on movement in Europe and the US are putting a severe dent in economic activity. COVID-19 is affecting all aspects of life," the company wrote in its report.

Given the growing size of the demand shock and the corresponding potenti......................

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