NEW YORK: Moody’s on Tuesday projected all G20 economies will contract by 4% in 2020 amid coronavirus, deeper than its previous forecast as restrictions create high economic cost.
The global rating agency expect G20 economies to pick up recovery next year and grow 4.8%. The agency’s previous forecast unveiled last month was minus 0.5% for 2020 and 3.5% for 2021. Pointing to the rapid accumulation of economic costs of the coronavirus crisis amid the near shutdown of the global economy, Moody’s foresaw G20 advanced economies as a group to shrink by 5.8% this year. G20 advanced economies are projected to grow 4.2% next year, below pre-coronavirus levels. “However, it will likely take around two years for the global economy to reach pre-coronavirus real GDP levels,” it added.
The length of time and extent that countries lift restrictive measures and reopen their economies will determine the pace of the recovery, the report underlined. The US economy will contract by 5.7% in 2020, followed by a rebound of 4.2% growth next year, the agency noted. The eurozone is expected to shrink by 6.5% this year and expand by 4.7% in 2021. Moody’s forecast Chinese economy to grow 1.0% in 2020, followed by 7.1% growth in 2021, partially reflecting a revival in demand from its trading partners.
Turkish economy is foreseen to shrink by 5% this year and gain momentum next year, growing 3.5%. Noting that the global integration within the world economy will likely shift driven by coronavirus, Moody’s said: “For example, the coronavirus shock has created supply chain disruptions and could also fundamentally change consumption patterns, which could lead to a large-scale reorganisation of economies over time.”