The Economic Outlook, entitled Covid-19 takes heavy toll, details the potential impact of the coronavirus pandemic and ensuing lockdowns on the global economic climate including GDP and global trade growth. The impact on economies around the world is expected to result in the worst recession since 1980, with almost every country expected to experience negative growth in 2020. As the recession is reverberating through supply chains, Atradius expects global trade to shrink 15% this year.
On a global level, Atradius forecasts a 5% contraction in global GDP in 2020 followed by a recovery circa 6.5% in 2021. However, the pace of the recovery remains uncertain and depends on the lifting of lockdown measures. Across advanced markets, a GDP contraction of 6.6% is forecast in 2020 with a 6.0% recovery anticipated in 2021. All major emerging economies, except for China, will face a recession in 2020. In the UK, GDP is expected to fall 14% in Q2 with a drop in consumer spending of almost 20%. In the second half of 2020, recovery is expected with a decline in GDP of 10.8% before a return to growth of 10.2% in 2021.
The baseline forecast assumes that either a vaccine will be developed or that world economies will adapt to the new norm of social distancing in an economically viable way. Under these assumptions, Atradius anticipates a return to GDP growth in 2021, but with the growth coming at a slower pace than the rapid decline. However, if neither of these two assumptions take place, the outlook will become less positive.
With high levels of uncertainty ahead, forecasts are at significant risk of changing with the economic impact becoming greater and leading to a far deeper global recession.
The forecasts within the report are based on the current information as at publication July 1, 2020. In a rapidly changing commercial and economic environment, the data is subject to change and the content will be reassessed by economists and updated where appropriate on an ongoing basis.
Stuart Ramsden, who suceeds Alun Sweeney as Regional Director for Atradius, UK & Ireland said: “The rapid spread of Covid-19 across all markets is taking a heavy economic toll on both advanced and emerging economies. Lockdowns reduce consumption opportunities and create supply-side shocks as a large number of businesses are not able to operate. This has set the global economy on the path for a recession which is likely to be deeper than that of the 2008 financial crisis. During this unique period, detailed attention to credit management is essential to success.”
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