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Coronavirus: Severe recession – Deutsche Bank

Covid-19 has become a pandemic and spread further and more rapidly than was generally expected several weeks ago. Economists at Deutsche Bank have revised down substantially their global growth forecasts in the first half of the year.

Key quotes

“We now see a severe global recession occurring in the first half of 2020, with aggregate demand plunging in China in Q1 and in the EA and US in Q2.”

“The fiscal response could turn out to be huge, with serious discussion in the US of stimulus packages amounting to 6% of GDP on top of already significant automatic stabilizers. In Europe, the fiscal rules have been effectively suspended and leaders pledge to spend ‘whatever it takes’.”

“Our baseline forecast assumes that the severe containment measures being taken will succeed in flattening the epidemic curves by midyear in the EA and US and that activity there will begin to bounce back in Q3 and Q4.”

“It is easy to imagine a still worse outcome. The virus could prove more difficult to contain in the US and EA than it was in China.”

 

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