• Sunday, July 03, 2022


World economy faces worst year since 2009

Representational image (iStock)

By: Pramod Thomas

THE Bank of America economists warned clients that they now expect 2.8% global growth this year, the weakest since 2009.

They said the US will expand the least in four years.

“The risks are still skewed to the downside,” BofA economists led by Ethan Harris said in a report. “Our forecasts do not include a global pandemic that would basically shut down economic activity in many major cities.”

The International Monetary Fund said it would likely knock only 0.1 percentage point from its global growth estimate of 3.3% for this year although it was studying more “dire” scenarios.

Recently, Standard Chartered Plc has joined HSBC Holdings Plc in saying it would miss profit targets because of the virus.

Bloomberg Economics calculates China economy ran at 60%-70% of normal this week, albeit up from 50%-60% a week ago.

European Central Bank President Christine Lagarde said: “it’s too soon to respond”. Federal Reserve Vice Chairman Richard Clarida also mirrored the same opinion.

JPMorgan Chase & Co. economists predict China, South Korea and Hong Kong will all ease fiscal policy. Morgan Stanley said in a report that while the fallout may now run into the second quarter, they still predict that “the recovery is being delayed, but not derailed.”

The economies of Japan, Italy and France already contracted in the fourth quarter, while U.S. government data showed underlying demand in the economy was slower than initially reported in that period.

A 2007 World Bank study estimated the cost of a mild flu pandemic at 0.7% of global gross domestic product, and 4.8% for a severe outbreak.

Eastern Eye

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