Pummelled into recession by the coronavirus pandemic, the global economy will suffer a steep contraction this year of 2.9 percent, according to a report by the Ifo Institute. Many countries are under lockdowns to curb the spread of an outbreak in which more than 3.21 million people worldwide have been infected and over 200,000 have died bringing global economic activity to a halt, particularly in the services industry.
Researchers Dorine Boumans, Sebastian Link and Stefan Sauer from the Ifo Institute, said: “This has been an unprecedented low since the survey began in 1989.”
The warning comes as the eurozone economy looks set for its deepest recession on record and the British economy is also expected to suffer its worst peacetime downturn ever.
The report, which 1,000 experts from 110 countries took part in April, predicted that the eurozone would be particularly hard hit and contract by 5.3 percent.
The world is on the brink of a global recession
The UK economy has been hit by the coronavirus
While the economies of EU members would also be crippled, including the fragile economy of Italy where the economy is expected to shrink by 7 percent.
Italy has registered 27,967 coronavirus deaths, the highest tally in Europe, and has introduced some of the world’s toughest lockdown measures, which look certain to tip the fragile economy into a deep recession.
While German economic institute Ifo said it expected the economy to contract by 6.6 percent in 2020 year-on-year due to the coronavirus.
Japan’s economy is expected to shrink
The experts also predicted the French economy would contract 5 percent and Spain’s economy would shrink by 3.4 percent.
It comes after the European Central Bank said it would make loans to banks even cheaper but kept the terms of its hallmark asset purchase scheme unchanged.
Lockdowns in place across Europe to curb the spread of the virus have already cost millions their jobs and governments are borrowing record amounts just to keep their economies going until restrictions on businesses and households can be eased.
ECB President Christine Lagarde made clear the central bank for the 19 countries that use the euro currency would do its part
Italy’s economy is on the brink
ECB President Christine Lagarde made clear the central bank for the 19 countries that use the euro currency would do its part but said political leaders must agree on more ambitious and coordinated action, a goal that has so far failed to happen.
The UK economy was expected to slump by 3.6 percent as businesses across the services sector shut up shop as millions of Britons feel the economic bite of COVID-19, which is spreading panic across the globe.
At the worst point of the 2008-09 recession, Britain’s economy shrank 2.1 percent in a single quarter.
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Global economies have been battered by the coronavirus
Meanwhile, The US economic recession looks to be much worse than thought just a few weeks ago.
The downturn has hammered the US labour market, where unemployment was near historic lows before the crisis.
A record 30 million Americans sought unemployment benefits over the last few weeks, confirming that all the jobs created during the longest employment boom in US history were wiped out in about a month.
The Ifo institute predicted the US economy would contract by minus 4.6 percent.
While Brazil’s economy would shrink by 4.2 percent and Russia and South Africa’s economies would both contract 3.4 percent each, while the world’s third-largest economy Japan was expected to shrink by 3.3 percent.
Even the growth world champions China and India will only grow marginally at 2.3 and 2.5 percent.