Thursday 13 August 2020
 
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ANALYSIS

As Covid-19 eases unevenly, focus shifts to recovery: S&P

DUBAI, July 7, 2020

As the Covid-19 health and economic shock appears to have peaked in most developed countries and China, the focus has shifted to the recovery, said S&P Global Ratings in a new report.

Many emerging markets, however, are struggling to contain the virus and the economic fallout, added the RatingsDirect report titled "The Global Economy Begins A Slow Mend As Covid-19 Eases Unevenly”.

Global GDP is expected to contract 3.8% in 2020, worse than the 2.4% contraction previously expected, mainly reflecting a deeper, longer hit to emerging markets, led by India, the report said.
 
“We see a reasonably strong bounce in 2021-2023 with global growth averaging above 4%, but with permanent lost output from the Covid-19 shock,” the report said.

"The risks to our baseline are varied and remain on the downside," said Paul Gruenwald, global chief economist. "Health developments and related restrictions are key in the next year; productivity and public balance sheet risks lie further out."

GDP declined on the order of 30% to 40% at an annualized rate for a one-quarter shutdown in China (January-March), much of Europe (spanning the first and second quarters), and the US (April-June).

Services bore the brunt of the pain, in contrast to a typical business cycle downturn. Unemployment rates varied substantially across countries; they are highest in the US, although pressures to reduce employment due to plunging demand were present everywhere. In Europe and Asia these pressures showed up mainly as reductions in hours worked combined with modest rises in unemployment rates, while in the US the outcome was a meteoric rise in joblessness.

"The speed at which activity collapsed was unseen in modern economic history," Gruenwald added. – TradeArabia News Service




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