The Institute of International Finance last weekend revised its estimates of global GDP growth down to 0.4 percent.
According to the International Institute, since the global economic growth forecast was revised down two weeks ago, there have been some changes that have changed the picture dramatically, as OPEC price war has contributed to the destabilization of the already fragile markets.
Emerging markets also witnessed outward cash flows as investor exits concentrated outside China, as the “Covid-19” shock that erupted in China turned into a much larger shock in the rest of the world.
The estimates for the growth of the world economy for 2020 were revised downward this month from 2.6 percent to 1.6 percent, due to the performance expected from China.
The sharp drop in oil prices coupled with increased uncertainty about “Covid-19” caused a sudden sudden stop in economic activity.
The Institute of Finance also expected that the United States, the euro area and Japan will enter into a state of economic stagnation in the first half of this year, and that they will witness a recovery in the last half of 2020.
This means that the US economy will see a 0.4 percent decline in the whole of 2020, while China will grow by 3.5 percent.
The euro area is also expected to witness an economic contraction of about 2.8 percent in 2020, while Japan is likely to suffer from a decline in its GDP by 1.5 percent this year.
These estimates are based on the assumption of recovery in the second half of this year on the basis of the argument that the Corona virus should be limited by the summer, so that the fear factor that impedes global demand fades away.
But the risk of a sudden halt in global capital markets means that a recovery can be achieved at a slower pace, which means that uncertainty and negative risks dominate expectations significantly.
Given the obstacle of social exclusion and other measures, the Institute of Finance expects the US economy to contract at an annual pace of 0.8 percent in the first quarter of this year on a quarterly basis, followed by a contraction of about 8.9 percent in the second quarter.
As the situation was exacerbated by Corona, the question no longer lay as to whether the world would face economic stagnation or not. But it is how will the economy suffer?
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Source :” Direct (economy) ”