Real GDP to fall by 4.5 percent globally in 2020 due to pandemic — Moody’s
MANILA, Philippines — The real global gross domestic product (real GDP) will fall by 4.5 percent this year due to the coronavirus pandemic, a think tank said in an economic forecast.
According to Moody’s Analytics, the base case for the United States suggests that it will take until mid-decade for the economy to return to full-employment.
“COVID-19 has caused massive damage to the global economy. Quickly reopening economies will boost growth by unleashing pent-up demand, but will also raise the specter of a re-intensification of COVID-19 and another economic downdraft, which could lead to a worldwide depression. We construct our economic forecasts to help market participants navigate this daunting uncertainty and make better decisions,” Mark Zandi, Chief Economist at Moody’s Analytics, said in a forecast dated Thursday.
The group said its baseline economic forecast represents its view of the most likely trajectory for the global economy. The baseline forecast is part of a set of 12 forecast scenarios, updated monthly, that project alternative economic paths for more than 100 countries as well as sub-national regions in major markets.
Moody’s Analytics said these scenarios are driven by different assumptions regarding the epidemiology of COVID-19, demand-side factors including monetary and fiscal policies, and structural forces such as sovereign debt loads and globalization.
“Given the unprecedented uncertainty around the path of the virus and the policy response, we maintain several alternative scenarios that cover a range of possible outcomes to help users assess the impact on their businesses and portfolios,” said Zandi.
The group said its forecasts are based on Moody’s Analytics Global Macroeconomic Model, which balances economic theory and empirical behavior and is “fully documented and validated.”
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