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Coronavirus to spark global recession in 2020: S&P Global

17th March 2020 - Author: Charlie Wood

As the coronavirus pandemic continues to accelerate, economists at S&P Global are expecting a global recession this year.

virusSince the company’s last update on March 3, coronavirus’ economic effect has worsened sharply.

Economic data remains scarce, but the long-awaited initial figures from China for January and February appear much worse than feared.

S&P says the spread of the virus, which the World Health Organization declared to be a pandemic on March 11, appears to be stabilizing in much of Asia.

However, the increasing restrictions on person-to-person contact in Europe and the US have sent markets reeling as risk-aversion rises and views on economic activity, earnings, and credit quality deteriorate sharply.

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Central banks have swung into action and are undertaking some combination of sharply reduced policy rates, resumed assets purchase and liquidity injections.

Fiscal authorities have generally lagged but have begun to loosen the purse strings; we suspect that larger and more targeted spending to the most affected groups is forthcoming.

“The initial data from China suggests that its economy was hit far harder than projected, though a tentative stabilization has begun,” said S&P Global’s Chief Economist Paul Gruenwald.

“Europe and the U.S. are following a similar path, as increasing restrictions on person-to-person contacts presage a demand collapse that will take activity sharply lower in the second quarter before a recovery begins later in the year.”

Economists note that central banks have swung into action and are undertaking some combination of sharply reduced policy rates, resumed assets purchase and liquidity injections.

Fiscal authorities have generally lagged but have begun to loosen the purse strings; S&P suspects that larger and more targeted spending to the most affected groups is forthcoming.

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