The Strategist

Fitch: COVID-19 pandemic will take away 4.6% of global GDP in 2020

05/28/2020 - 07:14

This year, the global economy will decline by 4.6% and will return to the pre-virus level no earlier than mid-2022, follows from an updated forecast by the Fitch rating agency. The most pronounced decline will be observed the euro area - in Italy, Spain and France it will exceed 9%.

edwin.11 via flickr
edwin.11 via flickr
Global GDP will decline this year by 4.6% (not by 3.9% as expected at the end of April). Next year, it will grow by 5.1%, say analysts at the international rating agency Fitch in their updated global forecast. In developed countries, the decline will be more pronounced - by 6.4% instead of 5.9% (growth by 4.1% in 2020), in developing countries - minus 1.7% (instead of minus 0.5%) in 2020 and 6.6% in 2021.

The revision is due to worsening expectations for the euro area and developing countries besides China. Although the global economy is already on the verge of collapse, it will return to the pre-virus level no earlier than mid-2022, the agency said.

In the euro zone, the decline will be 8.2% this year, but the next year the economy will grow by 4.4%; the most pronounced decline will be observed in Italy and Spain - minus 9.5% and 9, 6%, respectively, as well as in France (minus 9%). At the same time, the forecast for the United States was kept the same - minus 5.6% this year, an increase of 4% next year. In the UK, the recession will be stronger - minus 7.8% 2020 and 4.5% in 2021. In Japan, it will be 5% in 2020, and for 2021 the analysts expect an increase of 3.2%.

Among developing countries, the downward revision affected primarily Brazil (minus 6% with an increase of 3.2% in 2021) and India (minus 5% with a rebound of 9.5% in 2021). Whereas in China, as expected in the April forecast, the growth will be only 0.7% with the restoration of growth to 7.9% next year (in the first quarter, we recall, the decline was 9.8% quarter-on-quarter, 6.8 % year to year).


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